1 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 TEXAS LOTTERY COMMISSION 4 AUSTIN, TEXAS 5 6 PUBLIC COMMENT HEARING § 7 ON PROPOSED AMENDMENTS § TO 16 TAC 402.321, § 8 402.322, 402.323, and § 402.325 § 9 10 11 PUBLIC COMMENT HEARING 12 MONDAY, AUGUST 4, 2014 13 14 15 16 17 BE IT REMEMBERED THAT on Monday, the 4th day of 18 August 2014, the Texas Lottery Commission meeting was 19 held from 10:01 a.m. until 10:37 a.m., at the offices of 20 the Texas Lottery Commission, 611 East 6th Street, 21 Austin, Texas 78701. The following proceedings were 22 reported via machine shorthand by Lorrie A. Schnoor, 23 Certified Shorthand Reporter, Registered Merit Reporter, 24 Certified Realtime Reporter and Texas Certified Realtime 25 Reporter. 2 1 APPEARANCES 2 ASSISTANT GENERAL COUNSEL: 3 Mr. James Person 4 CHARITABLE BINGO OPERATIONS DIRECTOR: 5 Mr. Alfonso Royal, III 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 P R O C E E D I N G S 2 MONDAY, AUGUST 4, 2014 3 (10:01 a.m.) 4 MR. PERSON: We can go ahead and get the 5 hearing started. For the record, my name is James 6 Person, and I'm an Assistant General Counsel here at the 7 Commission. With me today is Alfonso Royal, the 8 director of the Charitable Bingo Operations Division. 9 The time is 10:01 on August 4th, 2014. 10 The purpose of this hearing is to receive 11 public comments on the proposed amendments to Rule 12 402.321, Rule 402.322, Rule 402.323, and Rule 402.325. 13 These proposed amendments were the result of a 14 rulemaking petition submitted by K&B Sales and The 15 Veterans of the Foreign Wars. 16 The primary purpose of these amendments is 17 to allow bingo patrons the opportunity to set up and use 18 a customer account at bingo premises. The patron could 19 then use money in their customer account to purchase 20 various bingo products. 21 The Commission first voted to propose 22 these amendments on the February -- on February 13th of 23 this year at a public meeting. The proposed amendments 24 were published in the February 28th issue of the Texas 25 Register and on the Commission's website. 4 1 In addition to this public comment 2 hearing, I want to note that we're currently accepting 3 written comments on these proposed rules until the end 4 of the day. 5 We also held another public hearing on 6 these proposed rules back on March 19th, and we received 7 several comments at that hearing. We also received 8 several written comments during the initial comment 9 period. 10 To begin today's hearing, representatives 11 of the petitioners will be making a presentation to 12 demonstrate what these proposed rules will actually 13 allow. This presentation is being recorded and that 14 recording will be placed in the record. A similar 15 presentation was previously made to Lottery Commission 16 Staff, and a recording of that presentation will also be 17 placed in the record. 18 And with that, I'd like to ask the 19 petitioners to begin their presentation. And I believe 20 that is Darin Peters and Sam Hahn. 21 MR. FENOGLIO: Good morning. 22 MR. PERSON: And Stephen Fenoglio. 23 MR. FENOGLIO: Yes. 24 MR. PERSON: Okay. 25 MR. FENOGLIO: Good morning, Mr. Person. 5 1 MR. PERSON: Good morning. 2 MR. FENOGLIO: Mr. Royal. 3 My name is Stephen Fenoglio. I'm an 4 attorney in Austin. I represent the petitioner, K&B 5 Sales, Inc. d/b/a Good-Time Action Games, and the 6 charities at River City Bingo here in Austin, Texas. 7 We are ready to start. And without any 8 further adieu, we'll start a demo of an existing system 9 in operation today, and then we'll quickly segue into 10 the proposed system -- it's a mockup -- that would 11 operate with -- if the rules were adopted. And we'll be 12 happy to answer any questions. 13 Gentlemen. 14 MR. PETERS: Good morning, and thank you. 15 I'm Darin Peters, president of K&B Sales d/b/a Good-Time 16 Action Games. This is Sam Hahn, our lead tech for K&B 17 Sales, Good-Time Action Games. 18 Thank you for your time, letting us do 19 this today. We have two systems set up for you today -- 20 pardon me, Sam -- two systems set up for you today. 21 This -- the first one we'll be showing right now, and 22 also we're doing a -- a representation up on the big 23 screen of what this will look like. We'll sell and show 24 this system, then we'll move over to the newer system -- 25 proposed, pardon me. 6 1 Sam, if you'd go ahead. 2 Currently, customers that come into a 3 hall -- for instance, myself would be a customer, I'd 4 come to a counter and say, "Sell me" -- "I see a list of 5 your products, and I need a blue or a gold package." 6 With that, I will receive a number of cards, up to a 7 limit of 66 for each game. Then I will normally get 8 either a handset or I will get a receipt, for which I 9 will go to a unit and I will punch in the appropriate 10 information. 11 Go ahead -- would you put -- go ahead and 12 put the stationary up. 13 So while I show you this, Samuel will go 14 ahead and put another one on the -- on the big screen 15 for us. 16 So I have this system right here, for 17 which -- if you wouldn't mind helping me out. It makes 18 it a little difficult here. 19 It's asking for a Player ID. Touch the 20 screen. And then a password is right down here. And 21 Sam has not got us in the session yet, so as soon as he 22 puts us in session -- you'll notice, by the way, on this 23 receipt -- and, Sam, if you don't mind, can you send us 24 to the receipt part of that, show us what we have -- 25 what products we have in there? 7 1 This will tell you the number of cards 2 that you have for each game. There's a button on there, 3 I believe, that says -- that will say -- pardon me -- 4 "Receipt" on yours. If you'll touch that receipt 5 button, it'll also tell you the number of cards you have 6 for the regular games, and our -- our purposes here, we 7 have 18 cards for each game. Okay. And I believe yours 8 has as well. 9 Is that right, Sam? 18 cards for each 10 game. All right. 11 MR. HAHN: No, they should have 33. 12 MR. PETERS: I'm sorry. You have 33. 13 Thank you. 14 Now once this has happened, this is -- you 15 can check for all of your games to see the number of 16 cards you have in each in case you -- the limit, again, 17 is 66 cards, so we want to make sure that we're not over 18 that, but we can purchase additional if we need to. 19 Sam, if you'll go ahead -- can you run 20 through this first game real quick? 21 These are approved auto-daub units. 22 There's no need for you to touch these. Daub the -- the 23 screens. 24 Now while he's doing that, I'm looking at 25 my receipt, and you'll notice that's set. And I'm 8 1 looking to say -- I have some room to put some 2 additional cards on there. So as a player -- there's a 3 bingo notification. And now that I didn't bingo, I've 4 decided that I want to add additional cards to my unit 5 because I have room for it. So now as a customer, I'll 6 need to raise my hand, and I'll need to get a floor 7 worker over and say, "Look, I need to add some 8 additional cards; if you would sell me some more cards." 9 And generally, they'll -- they'll go back to the point 10 of sale and they'll ring that up for you, or they'll 11 take your ID number and put it directly in there, either 12 which are -- are acceptable. 13 So he's going to add us some more cards in 14 there. Now, I've given him my money. He has to walk 15 all the way back there. He's got to come back to me now 16 and give me my receipt because I paid for them, and my 17 change, at which time he has to then enter you the 18 additional receipt number. If you remember, we had 18 19 cards per -- per game. 20 MR. FENOGLIO: And you're getting the idea 21 how, A, labor intensive this is and, B, how much this 22 delays the game. And we believe charities miss out on 23 sales because of the cumbersome nature of the process 24 that's being demonstrated right now. 25 MR. PETERS: And what Sam is doing right 9 1 now is he'll verify this bingo, and then he'll move on 2 to the next game, which we didn't do before we -- we 3 sold tickets. 4 This can occur while the -- while the game 5 is being played. Sam is our only guy right now. 6 Generally, we'll have people at the -- the point of sale 7 and someone working the -- the blower. 8 All right. Sam's on Game 2, but he's 9 going to show us now the number of cards we have. There 10 he sold himself an additional three cards, and there 11 they show up right there. So we now have 21 cards for 12 that game. 13 MR. FENOGLIO: And in the upper left, we 14 show -- we're showing we're playing a 50-dollar game. 15 Correct, Darin? 16 MR. PETERS: Yeah, that's a prize. And I 17 believe that's on your screen as well. It's a prize, 18 not what we've won. We haven't won anything. You and I 19 didn't bingo, so we didn't win any money. That's -- the 20 prize for this next game is $50. 21 MR. FENOGLIO: And what the existing 22 system is also showing you is, it's a straight-line 23 bingo. Any straight line will win the bingo, so the 24 pattern is being displayed. 25 MR. PETERS: Up at the top left. Right. 10 1 Good. All right. So that's -- in effect, that's the 2 current system. Now what we'll do is we'll move on to 3 the second side. Sam's going to move equipment over. 4 You can keep that here, if you like, or you can set it 5 back. We're going to loan you another handset. 6 So we have -- back there for -- so at this 7 point, I'm a customer. And instead of coming to the 8 point of sale for an extended conversation with the -- 9 with the floor -- I'm sorry, with the Staff, I come in 10 and I have money in my hand now, for which I give him an 11 amount of money, $10, a hundred dollars, whatever it 12 might be, and he'll create an account for me. 13 Okay. You've already done that? Right 14 here? 15 MR. HAHN: Yeah. 16 MR. PETERS: Okay. So I gave him my -- 17 how much did I give you? 18 MR. HAHN: $250. 19 MR. PETERS: $250 I gave him, and he just 20 gave me a receipt and said, "Congratulations, go get 21 whatever unit you'd like and sit down." And you're 22 going to do that again up on the screen. 23 MR. HAHN: Yeah. 24 MR. PETERS: So now we have this unit, and 25 it works the same way, which is an ID number and a 11 1 password/PIN number. 2 MR. FENOGLIO: So what's up on the screen 3 right now is the account balance. Is that correct, 4 Darin? 5 MR. PETERS: Let me catch -- let him catch 6 up. 7 MR. FENOGLIO: Okay. Sorry. 8 MR. PETERS: Make sure he's looking at the 9 same thing. 10 Okay. So I'm sure that you're looking at 11 the same thing. We have the account balance up at the 12 top left, which will stay. It will stay in perpetuity 13 till the money runs out or till we close the session. 14 The prize amount for each game is underneath it. 15 There's your bingo pattern again, number of balls 16 called, and your flashboard, just as we saw on this unit 17 right here. So the only addition would be the prize. 18 So, Sam, if you would be so kind, let's -- 19 now what we have to do is we have to buy cards. We have 20 no cards in there. We just have money. So at this 21 point, you can hit your buy cards button. And Samuel is 22 going to show you this. 23 We have the opportunity to buy any product 24 available on electronic cards. I can't buy any 25 pull-tabs with this. I can't buy any -- any -- anything 12 1 else on this unit except for electronic cards. This is 2 the options I have to purchase electronic cards. This 3 is the same as what you could buy at the counter and 4 from floor workers as they go around, not necessarily 5 all the packages but all the single cards. 6 So Sam is going to go ahead and buy ten 7 games for 33 cards. You'll notice he pushed that one 8 button. It's showing the receipt there on his right. 9 And go ahead and tend that. 10 He hits "Buy." Okay. And you'll notice 11 at the top left, his account balance is now $220. Yours 12 won't be unless you buy. So now we can go ahead and 13 play, Sam, if you don't mind. Let's go through the 14 first game again. 15 MR. FENOGLIO: And I think it's clear, but 16 the caller would be calling balls out of the blower. 17 MR. PETERS: We're -- we're skipping that 18 step, you know. 19 So he's now won again. 20 So, Sam, if you'll go ahead and verify 21 that out, the red -- by the way, the red blinking there 22 means you're one away on those cards. That's the 23 numbers you need. 24 MR. FENOGLIO: And the last number drawn 25 was 067. 13 1 MR. PETERS: And I -- and I apologize. 2 Let me jump in. 3 The prize amount is showing up there at 4 the top left as well. So Sam is going to verify that, 5 and he has done that. 6 If you'll accept that. 7 And there's been no change. Now Sam or a 8 floor worker will have to take this amount of money -- 9 I'm sorry -- this sheet, get it from the paymaster and 10 then hand-pay you. So his machine just won the 11 50-dollar prize. There is no change in his account 12 balance. 13 Okay. Now Sam's going to go to the next 14 game and decide, Wait a minute, I want to buy some 15 additional product for game three, just as we did 16 originally. So he's going to go -- and I have that 17 option right there, game three -- game two, excuse me. 18 MR. FENOGLIO: And, Sam, tell us what 19 you've purchased or what the customer has elected to 20 purchase. 21 MR. PETERS: Here you go. 22 MR. HAHN: I'm buying, I think, six 23 regular action cards and two double action. It might be 24 six double action as well. 25 MR. PETERS: Let's go ahead and look at 14 1 your -- 2 MR. FENOGLIO: All right. It went from 3 $230 on your balance down to 212. 4 MR. PETERS: 212. And right now, you are 5 reviewing all of the tickets in -- that you have -- or 6 I'm sorry -- all the bingo faces that you have. 7 MR. FENOGLIO: Right. 8 MR. PETERS: So you can see, we have some 9 double action in there as well, and the -- 10 MR. FENOGLIO: And you get the sense of 11 how quick that transaction happened as opposed to 12 flagging a runner down, getting the runner to go get the 13 product and bring it to you in some fashion. 14 MR. PETERS: And that is all accounted for 15 up here on the -- in the system itself as well as the 16 machine. 17 MR. FENOGLIO: And when you say the 18 "system," the site system. 19 MR. PETERS: Site system. Excuse me. 20 MR. FENOGLIO: Correct. 21 MR. PERSON: Correct. 22 MR. FENOGLIO: Which, by rule, has to 23 retain that data for at least four years. 24 MR. PERSON: And that's the brief demo we 25 have for you today, to show you the difference in that. 15 1 If you have -- glad to answer any questions or review 2 any of this if needed. 3 MR. ROYAL: No questions. 4 MR. PERSON: No questions. 5 MR. PETERS: Thank you for your time. You 6 want to keep this or -- 7 MR. ROYAL: No, thank you. 8 MR. FENOGLIO: So in substance, what this 9 rule does do is it digitizes the transaction that 10 occurred before where you had a runner come to the -- be 11 flagged down, if you will, by the customer, receive the 12 order and the money, and either the runner has the cards 13 on her system -- unlikely -- she has to go back to the 14 point of sale, get the data, bring the receipt back, you 15 enter it, and all the while, money is floating, if you 16 will, in the hall; as opposed to the way the rule would 17 work, the money is given to the point-of-sale cashier 18 and, in the beginning, the money is held in that 19 account. 20 At the end of the session, if you have 21 money left over, the rule -- and the Staff wanted it -- 22 to make it very clear, the customer needs to go get the 23 $212 in this hypothetical or else that money becomes the 24 charity's money. We don't believe there are going to be 25 many instances where someone's going to leave any money 16 1 knowing bingo customers like we do. 2 There was a concern that had been raised 3 at some point, Darin, about was this video confirmation. 4 The language in the existing rule on video confirmation 5 was adopted, if memory serves me correct, in '08 or '09. 6 It's in 402.300, the definition of video confirmation, 7 under (a) I believe it's (19), and then under (e)(10), 8 the operative use of video confirmation allows what it 9 can and cannot do. That language has never been 10 requested by us to be amended. 11 And if you'll note -- and, Mr. Person, 12 when you started out, the notice of the rules that we're 13 going to amend, we're not amending 402.300, which 14 contains the only language on video confirmation. 15 I can tell you, though, obviously there is 16 some video confirmation going on in the existing 17 card-minder today when, for example, on -- on the 18 screen, it shows you have a bingo. The customer has to 19 announce "bingo," and then it's confirming that bingo as 20 it exists today. 21 That's a protection for the customer. It 22 also is a protection for the charity, and 23 parenthetically, it's all -- also easy for the auditors 24 in the room to then go back later if someone complains 25 about he didn't really bingo or she didn't really bingo. 17 1 That data is going to be saved for at least four years, 2 and you can go back and look at that. 3 We'll be happy to answer any questions. 4 And if anyone wants an additional demonstration after 5 the rules hearing over, if y'all will allow us to keep 6 the room, we'll be happy to do that as well. 7 MR. PERSON: Thank you. We can go ahead 8 and move on to the public comment period. I have -- I 9 have several witness affirmation forms up here as of 10 now, but if anyone has not turned in an -- an 11 affirmation form and they wish to speak, you can go 12 ahead and fill one of those out now and get it up to us. 13 And we'll begin with Roy Gron (phonetic). 14 MR. GRONA: Good morning. My name is Roy 15 Grona. I serve as the State Adjutant/Quartermaster for 16 the Department of Texas Veterans of Foreign Wars. 17 As you know, the VFW is one of the 18 petitioners requesting the adoption of amendments to 19 these rules to allow, but not require, charities to 20 offer bingo customers the opportunity to set up 21 individual customer accounts that could be used by the 22 customers. We support the adoption of the proposed 23 amendments. 24 The proposed amendments should generate an 25 increase in net proceeds for the licensed authorized 18 1 organizations and improve the charity's and commission's 2 audit capabilities by electronically tracking purchases. 3 We request the Commission adopt the proposed amendments. 4 Thank you for the opportunity to provide 5 customer comments on this rulemaking. We look forward 6 to working with the Commission on this matter and other 7 matters that impact charitable bingo. Thank you. 8 MR. PERSON: Thank you. Next, Philip 9 Sanderson. 10 MR. SANDERSON: Good morning. For the 11 record, I'm Philip -- Phil Sanderson with Sanderson 12 Consulting Services. I'm here today representing Texas 13 Charity Advocates, an organization comprised of over 150 14 licensed authorized organizations, as well as commercial 15 lessors, distributors and manufacturers, as well as K&B, 16 a licensed distributor here in Texas. 17 First, I want to thank you for the 18 opportunity to comment on the proposed amendments to 19 Rules 402.321, 402.322, 402.323, and 403.23 -- I'm 20 sorry -- 325. 21 TCA is in support of the amendments to 22 these rules. The proposed amendments would generate 23 increased net revenue to the charities that utilize 24 customer accounts and electronic card-minding devices. 25 The Commission, in their preamble to the 19 1 initial rulemaking process, requested that charities 2 comment on whether or not the implementation of these 3 amendments would actually be a detriment to their 4 organization as far as increased cost, and we believe 5 that they would not hurt the charities as far as 6 increased cost. There might be a slight increase, but 7 the overall increase in revenue would outweigh any cost 8 of the additional capabilities of this system. 9 Additionally, allowing this type of 10 technology enhancement would make the charitable bingo 11 operations more efficient. There would be fewer cash 12 transactions that would lower the opportunity for money 13 that is lost through theft and -- and slippage, 14 potentially increasing net profits. 15 Regulatory benefits is that all 16 transactions will be recorded on the card-minding site 17 system. Currently, organizations are only required to 18 ring up the electronic card-minding device transactions 19 on the card-minding system point of sale. All other 20 disposable paper and pull-tab sales can be recorded on a 21 stationary cash register or other type of point of sale 22 system. 23 According to the amendments in this rule, 24 if an organization chooses to utilize customer accounts, 25 then they will be required to record all transactions on 20 1 the point-of-sale system, the card-minding system. What 2 that does for the auditing benefits, all transactions 3 will be stored in one place on a -- on the computer 4 system. The Commission has 24/7 access to the data on 5 those systems. They can access any time they want. 6 They can look at a particular session, a particular day, 7 a particular week. It helps their oversight and 8 monitoring of the financial activities that trans -- 9 that transpose at the -- at the halls. 10 We request that the Texas Lottery 11 Commission adopt the amendments to these proposed rules 12 at their August 2014 meeting so that the earliest 13 implementation may take effect for the organizations to 14 increase their net proceeds. 15 I appreciate the opportunity to provide 16 comment, and I'll be glad to answer any questions. 17 MR. PERSON: Okay. Thank you. 18 MR. SANDERSON: Thank you. 19 MR. PERSON: Next, Rob Kohler. 20 MR. KOHLER: Good morning. My name is Rob 21 Kohler. I'm -- I'm here on behalf of the Christian Life 22 Commission of the Baptist General Convention of Texas. 23 This whole concept of -- of -- of 24 increasing the functionality of card-minding devices 25 cannot be done without turning a -- a blind eye to the 21 1 existing language that's already in the rule at 402.300 2 (19) that Mr. Fenoglio mentioned earlier ago -- earlier. 3 It reads, "Video confirmation, a graphic and dynamic 4 representation of the outcome of" -- "outcome of a bingo 5 event ticket that will have no effect on the result of 6 the winning or losing event ticket." 7 What we've seen here is really a static 8 display of -- though with some representation, dynamic 9 representation, of what I call regular bingo. That's 10 not why I'm here talking. 11 What's -- what concerns us is the 12 electronic representation of the outcome of an instant 13 game, an instant game whether it be a pull-tab ticket, 14 whether it be a pull-tab event ticket, which are both 15 pull-tab games. 16 First like to -- to talk about -- there -- 17 there -- there's two arguments. And in fairness, I had 18 a discussion before I came here with representatives 19 from the industry. And I hold him, I said, "Look, this 20 could be pretty simple. If you didn't contemplate video 21 confirmation being played on these card-minding devices, 22 simply add the language in the rule that -- that there 23 will be no video confirmation on these devices." And, 24 two, our other problem with it is just the Lottery's 25 Commission authority to change the functionality of 22 1 these card-minding devices. 2 And -- and I want to go real quick back to 3 the video confirmation. This is a very controversial 4 decision by the Lottery Commission, and I would 5 encourage anyone who's looking at -- at how it affects 6 introducing this new terminal -- this new terminal 7 functionality of the card-minding devices to go and 8 review the transcripts, not only the transcripts in -- 9 in the Lottery Commission meetings but the transcripts 10 in the Bingo Advisory Committee where you get into such 11 finite discussions of whether it's a validator or a 12 verifier. 13 What we're talking about when we say 14 "video confirmation" is if you have a pull-tab ticket, 15 which most folks don't realize in the bingo industry, 16 you have what is, in essence, like a scratch ticket in 17 the lottery business, where -- where a player buys that 18 card, opens up the pull-tab and sees whether it's a 19 winning -- winning ticket or not. 20 The video confirmation aspect or the 21 electronic representation of a pull-tab ticket that's 22 themed as a horse race game, for example, or a car race 23 game is watching the horse race game or watching the car 24 race game. And it's that aspect and -- and what -- what 25 also, along those same lines in providing testimony 23 1 regarding video confirmation, what it means, you can't 2 go down this path at all without viewing what -- what is 3 electronic pull-tab bingo? What, at its essence, is 4 electronic pull-tab bingo? 5 You look at the Kickapoo tribe down in -- 6 in Eagle Pass and you see the pictures. Those are not 7 slot machines. Those are not legal gambling devices. 8 Those are electronic pull-tab bingo machines; 9 technological age to play pull-tab bingo. 10 There's a clear legislative history that 11 we feel that shows that this is a creature for the Texas 12 Legislature, not the Texas Lottery Commission. 13 Card-minding devices were created back in 14 '95 by dear Mr. Representative Kuempel, who was just 15 a -- one of the dearest men to serve in the Texas 16 Legislature. 17 If you then begin looking at attempts to 18 modify those functionalities, and -- and when you're -- 19 when you're dealing with amending or looking to amend 20 card-minding devices, please go look at Mr. Kuempel's 21 original language when that bill was passed. Not only 22 that, but go look at the discussions in the hearings. 23 There was clear legislative intent, in 24 fact, there was a -- there were stipulations that only 25 certain members of folks that were attending a bingo 24 1 occasion could even play an electronic card-minding 2 device, which I think clearly points to really the 3 history of bingo and its social aspect and what the 4 people considered whenever they passed and allowed bingo 5 in this state. 6 After Mr. Kuempel filed the bill to allow 7 card-minding devices in the 75th regular 1997 session, 8 there were a total of three bills that were filed: 9 HB2086, HB3371, SB22, all dealing with changing 10 functionality of card-minding devices. 11 The next session, 76 regular 1999, there 12 was one bill, Senate Bill 575, relating to the 13 regulation of bingo, including the authorization of 14 linked bingo games. 15 77th regular session in 2001. HB1795, 16 SB1720, HB3324, and SB1504. 17 In the 78th regular 2003, there were -- 18 there was six more attempts: HB2442, HB2792, SB1422, 19 SB1736, House Bill 2519 and SB270. In the 78th first 20 called session 2003, Representative Wilson introduced 21 HB55. Please look at that. Now is it -- are these -- 22 are these attempts word for word? My understanding of 23 this proposal that's before you is -- is that -- that 24 re-wagering of winnings is not allowed. Well, just 25 because re-wagering and winnings was present in some of 25 1 these legislative proposals but not in this one doesn't 2 change the essence and (indiscernible) of changing the 3 functionality of the card-minding device. 4 The 79th first call, 2005, SB3; again, in 5 that same first call, SB38 by Senator Armbrister 6 relating to the authorization, regulation, of electronic 7 pull-tab bingo, not authorizing the use of slot machines 8 or video (indiscernible) terminals. 9 In the 80th regular in 2007, HB2206 by 10 Representative Hag -- Haggerty relating to the use of a 11 card-minding device to play bingo; also in that session, 12 Senate Bill 1110 by Carona. 13 In the 81st regular 2009, we find no 14 bills. 15 82nd regular 2011, which is -- is -- 16 probably gives you the most insight of recent activity, 17 HB2728 by Thompson; it reads, in part, Section 2001.002 18 Occupations Code is amended by adding (6)(A) and 19 amending sub -- subdivision (8-a) to read as follows: 20 Card-minding device player count value means the amount 21 of money accounted for by a card-minding device that is 22 a sum of money deposited to the player's account through 23 a point-of-sale transaction; credits to the player's 24 account as a bingo prize for winning a game of bingo; 25 deductions from the player account for authorized 26 1 purchases made by players or in exchange of value. 2 Now from my reading, it's clear that this 3 rule doesn't contemplate those last two. It's not 4 allowing a player to accumulate winnings and then 5 re-wager it from that terminal, those winnings. But you 6 can't get wrapped around the actual -- with -- that's -- 7 that single aspect. This is clearly an issue in the 8 functionality that were contemplated by the Texas 9 leger -- Legislature. 10 If you look at 2728, which I'd ask you to, 11 and look at -- look at the section-by-section analysis 12 of the Senate amendments versus the House amendments, 13 House amendments have functionality of card-minding 14 devices. Senate doesn't. And, in fact, I -- I would 15 tell you -- and if you're -- I would share with you the 16 discussions that were going on between the time 17 regarding voice mails and emails. 18 And on May 18th, 2011, I sent an email to 19 Representative Thompson's office to -- to -- to Milda, 20 and I'm going to read it. It says, Hi, Milda. I was 21 contacted by Amber in Senator Van de Putte's office this 22 morning regarding Senate State Affairs Committee 23 substitute for HB2728. Can you confirm that 24 Representative Thompson has agreed to accept the changes 25 to HB2728 and will concur with Senate amendments? On 27 1 May 18th, eight -- at 8:57 in the evening, Milda 2 responds back, Yes, we will concur with the Senate 3 amendments. 4 I would ask that if -- you didn't get a 5 demonstration of video confirmation. And in all 6 fairness, that's -- that's why I'm here. We have fought 7 a long battle. And -- and even in the testimony of 2728 8 on the Senate floor, in testimony, you can see video 9 confirmation and how that -- that -- the Senate's -- in 10 the rules we have viewed for a very long time as the key 11 to the car. What they haven't had is the car to provide 12 a more instant type of -- of gambling. 13 And my offer, very -- well, identical to 14 the first offer that -- first discussion I had regarding 15 when all this happened when I was contacted by 16 Mr. Fenoglio was do a request for an attorney general's 17 opinion. If you're right and I'm wrong or we're wrong, 18 then that's -- that's -- that's the most objective way 19 to go about this process. 20 So with our two disagreements with this 21 proposal, the effect of video confirmation and what 22 it -- what it will mean with increased functionality of 23 the card-minding device, if you're not intending to do 24 it or you didn't contemplate it, then it certainly 25 wasn't demonstrated to you right now, (indiscernible) 28 1 rules. Say there will be no video confirmation on it. 2 Takes that one off the table. 3 The second -- the remaining objection to 4 this would be we don't believe you have the authority to 5 do it. Simply do a request of attorney general's 6 opinion and ask them. We'll get a shot. 7 And -- and I told Stephen earlier today, 8 We haven't always got back from the AG what we wanted, 9 but you know what? At the end of the day, it -- it kind 10 of substantiates, there's -- everybody has a right to 11 have a differing opinion in this enterprise, and 12 that's -- that's a very objective mechanism that you 13 have at your disposal. 14 That's all my comments, and I'll be happy 15 to answer any questions you may have. 16 MR. PERSON: Thank you. Kim Kiplin. 17 MS. KIPLIN: Good morning. My name is Kim 18 Kiplin. I'm an attorney here in Austin with the law 19 firm of Duggins Wren Mann & Romero. 20 I'm here today on behalf of K&B Sales and 21 also the Department of Texas Veterans in Foreign War, 22 and I do appreciate the opportunity to come back and 23 comment on the proposed amendments. I want to address 24 some of the comments that have been made today. 25 They're -- they're just not correct. 29 1 Contrary to what you've heard today, the 2 proposed amendments don't expand gaming in Texas. They 3 don't go beyond the Commission's statutory authority 4 with regard to the regulation of bingo. 5 The customer account functionality that's 6 set out in the proposed amendments was not the same 7 functionality that was contained in prior legislation. 8 A key distinction is that the customer account 9 functionality in prior legislation allowed for the 10 tracking, the storing and replaying of winnings on a 11 card-minding device and the ability to credit a player's 12 account with any winning so that the player could replay 13 the winnings directly from the card-minding device. 14 The proposed amendments expressly prohibit 15 this functionality. The proposed amendments expressly 16 prohibit card-minding devices from being used to 17 purchase or play pull-tab bingo tickets. 18 The proposed amendments expressly provide 19 that a card-minding device may not accept money or 20 tokens to pay for playing bingo or dispensing any 21 prizes. 22 The proposed amendments have nothing to do 23 with the video confirmation of a pull-tab bingo ticket. 24 They have nothing to do with pull-tab bingo at all. 25 The proposed amendments on the customer 30 1 accounts do not address video confirmation. If there's 2 any -- any suggestion to that, that's not true. If 3 there's any reference to video confirmation, that's in 4 existing rules. The proposed amendments do not -- do 5 not -- are silent as to the video confirmation. 6 I submitted a letter dated April 9th, 7 2014, to Mr. Person that responded to comments that 8 previously had been filed that also contained incorrect 9 statements and representations. And so to the extent 10 that my -- my comments in that letter are germane to 11 this rulemaking, I ask that it be incorporated into this 12 rulemaking record. 13 The idea of requesting an AG opinion, the 14 Commission, in proposing the amendments, has established 15 that it has a statutory authority, and we don't see any 16 reason for a request for an AG opinion simply to 17 authorize a customer account functionality on an 18 existing card-minding system. 19 I think through the demonstration today, 20 it's very clear that this does not change the way that a 21 card-minding device or card-minding system is used in 22 terms of the play of a particular bingo game. All it's 23 doing is allowing for a customer account that, frankly, 24 we believe will enhance the revenue for the -- for the 25 charities and creates clear audit capabilities for both 31 1 the charities and the Commission. 2 So with that, we recommend and request 3 that you do adopt the amendments to the rule. 4 Happy to answer any questions that you 5 have. 6 MR. PERSON: Thank you. I only have one 7 more witness affirmation form. It's for Albert Garcia, 8 but it indicates he does not wish to testify but he is 9 for the proposed amendments. 10 Is there anyone else wishing to speak? 11 (No response) 12 MR. PERSON: Okay. I'd like to thank 13 everybody for attending today's hearing. The time is 14 10:37, and we are adjourned. 15 (Proceedings concluded at 10:37 a.m.) 16 17 18 19 20 21 22 23 24 25 32 1 C E R T I F I C A T E 2 STATE OF TEXAS ) 3 COUNTY OF TRAVIS ) 4 I, Lorrie A. Schnoor, Certified Shorthand 5 Reporter in and for the State of Texas, Registered Merit 6 Reporter, Certified Realtime Reporter and Texas 7 Certified Realtime Reporter, do hereby certify that the 8 above-mentioned matter occurred as hereinbefore set out. 9 I FURTHER CERTIFY THAT the proceedings of such 10 were reported by me or under my supervision, later 11 reduced to typewritten form under my supervision and 12 control, and that the foregoing pages are a full, true, 13 and correct transcription of the original notes. 14 IN WITNESS WHEREOF, I have hereunto set my hand 15 and seal this 5th day of August, 2014. 16 17 _________________________________ LORRIE A. SCHNOOR, RMR, CRR, TCRR 18 Certified Shorthand Reporter CSR No. 4642 - Expires 12/31/15 19 Firm Registration No. 276 20 Kennedy Reporting Service, Inc. 7800 North Mopac, Suite 120 21 Austin, Texas 78759 512.474.2233 22 23 24 25