0001 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 TEXAS LOTTERY COMMISSION 4 AUSTIN, TEXAS 5 A public hearing to receive comments regarding proposed 6 amendments to 16 TAC §§402.200 (General Restrictions on the Conduct of Bingo), 402.203 (Unit Accounting), 402.300 7 (Pull-Tab Bingo), 402.402 (Registry of Bingo Workers), 402.500 (General Records Requirements), 402.503 (Bingo Gift 8 Certificates), 402.511 (Required Inventory Records), 402.702 (Disqualifying Convictions), and 402.706 (Schedule of 9 Sanctions). 10 11 12 13 NOVEMBER 6, 2019 14 10:00 A.M. 15 AT 16 TEXAS LOTTERY COMMISSION 17 611 East 6th Street Austin, Texas 78701 18 19 20 21 22 Proceedings reported by electronic sound recording; 23 transcript prepared by Verbatim Reporting & Transcription LLC. 24 25 0002 1 APPEARANCES 2 ASSISTANT GENERAL COUNSEL: Tyler Vance 3 DIRECTOR OF THE CHARITABLE BINGO OPERATIONS DIVISION: Michael Farrell 4 WITNESSES: 5 Trace Smith 6 Tom Stewart Kimberly Kiplin 7 Steve Bresnan Stephen Fenoglio 8 Sharon Ives 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0003 1 P R O C E E D I N G S 2 MR. VANCE: I’d like to commence the public 3 hearing on the rule making. We’re here at the Texas Lottery 4 Commission headquarters. This is November 6th. The time is 5 approximately 10:10. My name is Tyler Vance, Assistant 6 General Counsel Texas Lottery Commission, here with Michael 7 Farrell, Director of the Charitable Bingo Operations 8 Division. 9 And again, this is a chance for oral 10 testimony, public comment, on the rules that have been 11 proposed to House Bill 914 and 1342. These were all 12 published in the October 25th edition of the Texas Register. 13 If anybody would like to make a comment, we 14 have forms outside that we need you to fill out. I’ve got a 15 number of them here, but if you haven’t signed one yet, 16 please go ahead and do that and turn them back in to me, 17 please. 18 With that, we’ll start at the top. Mr. Trace 19 Smith. 20 MR. SMITH: Morning. My name is Trace Smith. 21 I’m the Chairman of the Bingo Advisory Committee. Yesterday 22 we had our meeting that everyone was at. I’ve got a report 23 you should have up there. Do you have that yet? 24 MR. VANCE: I don’t -- 25 (Pause) 0004 1 MR. SMITH: Just I’ll be very brief. We 2 discussed all of the rules up for proposal yesterday and this 3 report lines out where the BAC stands on that. We had 4 several agreements and several recommendations for staff. 5 I’m not going to go through all of them line by line, it’s in 6 the report. 7 If you have any questions, I’ll be glad to 8 answer that at this time. 9 MR. VANCE: All right. Thank you, sir. And 10 of course, if anybody submits something like this in writing 11 here today, we will accept it as a -- as a comment and we’ll 12 respond to it before the rules are revised or adopted. 13 Okay. Next up is Tom Stewart. 14 MR. STEWART: Hi, good morning. My name is 15 Tom Stewart. I serve as Executive Director of Texas Charity 16 Advocates. TCA is a trade association made up of charities, 17 lessors, distributors, manufacturers, and others who are 18 active in the charitable bingo industry here in Texas. 19 We have roughly 400 members. Nearly 90 20 percent of them are charitable organizations. Our purpose is 21 simple. We engage in activities designed to promote and grow 22 the game to the benefit of our charity members. 23 There are three sections of the proposed rules 24 that I want to address today. 25 First 16 TAC 402.200. TCA strongly opposes 0005 1 the wording used currently -- the proposed wording currently 2 used to define a cash bingo prize. As written, it defines 3 Amazon or other gift cards as cash, and we believe that’s a 4 very narrow and restrictive definition. 5 TCA supports revisions that provide more 6 flexibility in the type of non-cash merchandise conductors 7 may offer and we support the direction that was endorsed by 8 the Bingo Advisory Committee in yesterday’s meeting. 9 Second, 16 TAC 402.701. We’re very supportive 10 of these rule revisions, which eliminate the consideration of 11 all criminal activities and establishes mitigating factors to 12 consider when an applicant for the bingo registry has 13 industry-related conviction. 14 In addition, we also support the position 15 adopted by the Texas VFW that requests inclusion of language 16 to allow the Commission to consider a veteran’s status, 17 including discharge status, as a mitigating factor. And we 18 hope that the staff will move in that direction as it moves 19 forward. 20 And then finally, HB914 allows an organization 21 that conducts back to back sessions to account for both at 22 the end of the second session. However, it failed to take 23 into account a bingo unit where two different organizations 24 might conduct back to back sessions. TCA believes the 25 Commission has the authority to include bingo units as a part 0006 1 of this rule. We hope that the staff will consider -- 2 seriously consider and move forward in that direction. 3 On behalf of all our membership, thank you for 4 your consideration. 5 MR. VANCE: Thank you, Tom. Okay. Next up 6 Kimberly Kiplin. 7 MS. KIPLIN: Good morning. My name’s Kimberly 8 Kiplin, I’m an attorney here in Austin, Texas. I’m here 9 today on behalf of the Department of Texas Veterans of 10 Foreign War. 11 I just spoke to Tom Stewart, the TCA Executive 12 Director, and I think he’s mentioned 701 and wanted me to 13 confirm it’s really 702, 402.702, his comments. 14 I’m here today on two rules; 402.200 and in 15 particular, want to comment on proposed Subsection (G) 16 defining cash bingo prize. The VFW is opposed to including 17 as part of the definition of cash bingo prize what I’ll 18 characterize as a stored value card. I provided each of you 19 the written comment, and so that’s fleshed out and I’m not 20 going to take up time on the record today. You can read 21 that. 22 We think that cash means cash and cash is not 23 defined in the Bingo Enabling Act and just code construction 24 laws indicate that words that have ordinary meaning should be 25 given an ordinary definition. And so we look to the 0007 1 dictionary, I know that’s very simplistic, but that’s where 2 you -- you’re going to get the ordinary definition. In that 3 cash is defined to mean ready money, or money or its 4 equivalent such as a check paid for goods or services at the 5 time of purchase or delivery. 6 The Lottery does have the discretion to 7 determine its enabling statutes and its rules and the VFW 8 requests that you interpret cash to mean cash and stored 9 value cards is not to be a part of the definition of a cash 10 bingo prize. 11 The next rule, the last rule that we’re 12 providing comment is on 16 TAC 402.702, disqualifying 13 convictions. 14 We understand that the proposed amendments, 15 and this is specifically on Subsection (H), the new language, 16 was to implement House Bill 1342. We’re not opposed to that, 17 but we are opposed to the outright deletion of the Commission 18 being able to consider as a mitigating factor when 19 determining whether an applicant should have an occupation 20 license to their veteran status, including their discharge 21 status. 22 That was the subject of the 2013 rule making 23 when the Commission was first faced with having to implement 24 Chapter 53 and occupations code -- the occupational code. 25 And we put comment on it in 2013, in the fall of 2013, on 0008 1 this very same issue. The Commission then agreed to include 2 as a mitigating factor veteran status, including the 3 discharge status, and so we would request that the Commission 4 retain the language that is currently existing in the 5 Subsection (H). 6 That’s the totality of my comments. I’m happy 7 to answer any questions. 8 MR. VANCE: All right. Thank you, Kim. 9 MS. KIPLIN: Thank you. 10 MR. VANCE: Next up is Steve Bresnan. 11 MR. BRESNAN: Thank you. My name is Steve 12 Bresnan, I’m here on behalf of the Bingo Interest Group. 13 I want to support the VFW’s position on what 14 used to be the disqualifying convictions provision, ask that 15 -- we support the rule in general, but would ask that the 16 veteran status be added back in. 17 With regard to the definition of cash bingo 18 prize, we would support the BAC’s recommendation on that and 19 understanding the staff’s concerns of -- about the unknown 20 impact of that, we would recommend that if -- if you’re 21 uncomfortable with doing what the BAC has suggested, that you 22 go ahead and do that and then maybe put a two year sunset on 23 it where you could judge the impact of it. 24 I’m not -- I’m not asking you to put a two 25 year sunset on it, but I’m suggesting if -- if as a policy 0009 1 matter that makes it easier for the Commission and gives you 2 some comfort with the unknown effect of that, then it would 3 be understandable. 4 With respect to the consecutive back to back 5 bingo occasions, we would urge you to include units in that. 6 Without going line by line, I think we acknowledged yesterday 7 at the BAC meeting, there are a number of different places 8 you’d have to make some tucks and changes to do that. I 9 think all of the policy reasons for that obtain and even more 10 so because I think the legislature has tried to incentivize 11 people to get into units, and anything that detracts from 12 that is inconsistent with the legislature’s policy. 13 I personally think we made a real strike in 14 favor of the charities years ago when we authorized the 15 units, because they can act so much more efficiently than -- 16 than otherwise. And this would be consistent with that, it 17 would save them money and to do one accounting rather than 18 twice and not stop in the middle of the games. 19 We support the definition of the 24-hour 20 period. Oh, also on the provision that authorizes -- I think 21 the language is just being moved from one part of the rules 22 to another, but it authorizes the bundling of bingo pull-tab 23 tickets and it repeats the language from existing rule that 24 says may sell those bundled pull-tab tickets during their 25 license times. 0010 1 We’d recommend striking the words, “during 2 their license times,” because House Bill 914 authorizes the 3 sale of pull-tabs up to one hour before the start of the 4 license time. 5 Give me just one minute, make sure that I’ve 6 hit all of my points. 7 Other changes in the rules other than the ones 8 that I have stated we would -- we would support, including 9 the redemption of tickets only during your license time and 10 we’re always available for follow-up questions should staff 11 have any. 12 Also, just as a personal note, I want to thank 13 all of y’all for the amount of time and effort you put in to 14 working with us on 914 and that you’re putting in now, and I 15 appreciate the flexibility that you’ve shown in the 16 discussion about these issues. All very much in the interest 17 of charitable bingo and the whole purpose we’re here, which 18 is to see that the charities thrive. Thank you. 19 MR. VANCE: Thank you, Steve. All right. 20 Next up is Stephen Fenoglio. 21 MR. FENOGLIO: Good morning. For the record, 22 my name is Stephen Fenoglio and I had a printer malfunction 23 so I have one copy of my written comments, I can email those 24 to you, Tyler. 25 MR. VANCE: Please do. 0011 1 MR. FENOGLIO: For the record, my name is 2 Stephen Fenoglio, I’m an attorney in Austin. I’m a board 3 member and Executive committee member of TCA and I also 4 represent the River City Bingo Association and about a dozen 5 commercial lessors and charities around the state. 6 I support the comments that have been made 7 regarding the discussion we had on cash bingo prize and to 8 follow-up on Ms. Kiplin’s comment, the House Bill 914 talked 9 in terms of no five percent prize fee on merchandise prizes 10 and the definition of merchandise in the Webster’s dictionary 11 is as I’ve written, commodities or goods that are bought and 12 sold in business. 13 I’ve brought with me a Chili’s gift card to 14 prove a point. And I -- this has not been activated, so it’s 15 not $50 worth, but to prove the point that if you honestly 16 think that the way the draft rule is written this would be 17 considered a cash bingo prize, then I’m sure the Commission 18 employees would all want to be paid in cash bingo prizes of 19 Chili’s gift cards or whatever else. And the answer of 20 course is no, you can’t pay your water bill, your mortgage, 21 your rent, your car payment, your babysitter if you have a 22 babysitter, with a Chili’s, but you can with U.S. currency. 23 Cash is cash money. 24 One of the stated purposes for proposing this 25 language was because of Commission -- or staff’s concern that 0012 1 there could be a loss of revenue. And I believe Ms. Ives is 2 going to testify, Sharon Ives, about her discussion with a 3 number of bingo hall operators who have said, all said they’d 4 like to have the flexibility to award some sort of a gift 5 card, an Amazon card or what have you, but it’s not going to 6 be prevalent and won’t be in every session won’t be a $500 7 gift card. Bingo players want cash money not a gift card. 8 But it gives them an opportunity to do 9 something a little different, something creative, which is 10 what good managers are always trying to do is find a reason 11 for customers to stay and play. 12 The discussion I had yesterday I know is not 13 part of the record, so I’m going to encumber the record with 14 the following: 15 I’ve been involved in charitable bingo since 16 the lottery inherited bingo regulation in 1994. And every 17 time I’ve had a discussion with a bingo director since 1994, 18 they all come back to well, our statutory authority, Steve, 19 is found in the -- I call it the Bible, the Bingo Enabling 20 Act, Section 2001.051, which says the Commission has broad 21 authority and shall exercise strict control and close 22 supervision over all bingo conducted in this state so that 23 bingo is fairly conducted and the proceeds derived from bingo 24 will be used for an authorized purpose. 25 The stated purpose, underlying purpose for 0013 1 trying to prohibit the award of these cards is not within 2 that ambit. Contrast that with the Lottery Act, which does 3 require the lottery not the bingo division, but the lottery, 4 to develop a business plan that includes quote, “an amount of 5 lottery revenue that’s generated for state purposes other 6 than the payment of prizes,” close quote, and that’s Section 7 466.028(a)(2)(d). 8 So the lottery side has that as a core 9 function a deliverable, the bingo division does not have as a 10 function. So we think cash is cash and we support what the 11 BAC voted on yesterday and encourage the Commission to follow 12 what cash is. 13 We also support the change in the rule as it 14 relates to criminal history record information. And I want 15 to highlight something that I handled which the new language 16 would give the Bingo Director and ultimately the 17 Commissioners, the authority to consider the following facts: 18 A person has been working bingo for many 19 years, it turns out that he, when he was 21, had a gambling 20 offense. The person’s now 60 years old. That’s the only 21 mark on his record is a simple misdemeanor gambling offense. 22 Under the current view, he could not be a 23 bingo worker, could not be a caller. Under the new draft 24 language, you would have the authority, the Bingo Director 25 and the Bingo Division, to consider the time frame by which 0014 1 he was -- had been convicted some 30 years ago, that 2 specifically the language that staff has drafted, quote, the 3 amount of time that has elapsed since the last -- person’s 4 last criminal activity. Also, the age of the person when the 5 crime was committed. 6 He was 21, he’s now 60, he hasn’t had 7 anything. And the conduct and work activity of the person 8 before and after the activity and the evidence of 9 rehabilitation and rehabilitative efforts. So under that 10 scenario, this would result in if that’s all there is to that 11 person’s record, then that person could be a bingo caller. 12 And it makes perfect sense when you look at 13 the legislative history of the House Bill that was passed. 14 Finally, we support -- and we do support the 15 language of what Ms. Kiplin laid out as far as VFW, because 16 that would be another beneficial mitigating factor. 17 I’d be happy to answer any questions and I 18 will submit via email, Tyler, the verbiage I have. 19 MR. VANCE: Perfect. Thank you. All right. 20 The last form I have is from Ms. Sharon Ives. So again, if 21 anyone else would like to make a comment, please fill out the 22 form and submit it. Ms. Ives. 23 MS. IVES: Good morning. Sharon Ives Fort 24 Worth Bookkeeping. My firm handles the bingo bookkeeping for 25 18 different bingo halls in the Dallas/Fort Worth area. This 0015 1 is regarding Rule 402.200(G). 2 I have personally spoken with the managers in 3 all 18 halls and they agree on only providing gift cards as a 4 door prize or a promotional type matter. Giving out gift 5 cards as a bingo prize would affect cash flow, especially on 6 the tab sales. 7 I’m telling you as a bingo player myself, if I 8 had a choice of playing bingo and winning a gift card or 9 winning cash, which hall do you think I would go to? I would 10 choose the cash. Cash is king in the bingo world. 11 Gift cards are not cash. They are 12 merchandise, prizes, but we would appreciate having that 13 option and having the flexibility. 14 I also agree with the previous testimony from 15 Tom Stewart, Kim Kiplin, Trace Smith from BAC, Steve Bresnan 16 and Steve Fenoglio, and I think you know, I’ve already 17 submitted my written comments via facsimile. 18 You know, life is difficult enough and bingo 19 shouldn’t be. Thank you. 20 MR. VANCE: Thank you, Ms. Ives. 21 Okay. Well, I have no other forms, so that 22 will wrap up this public hearing. Again, we’re accepting 23 comments via email at legal.input@lottery.state.tx.us through 24 the 25th of this month. So anybody who would like to do that 25 or you can email to me personally, email Michael, find a way 0016 1 to get it to us we’ll certainly consider it, these rules will 2 be up for adoption at the next Commission meeting, which I 3 believe is December 12th. 4 MR. FARRELL: Oh, December 12th. 5 MR. VANCE: Sometime in December. And we’ll - 6 - we’ll of course be required to respond to all these 7 comments substantively prior to any adoption or modification 8 of the rules that have been proposed. It is December the 9 12th. 10 Thank you all for coming, this adjourns it, at 11 10:32. Thank you. 12 (Proceedings concluded at 10:32 a.m.) 13 14 15 16 17 18 19 20 21 22 23 24 25 0017 1 C E R T I F I C A T E 2 STATE OF TEXAS ) 3 COUNTY OF HARRIS ) 4 I, Kimberly C. McCright, Certified Vendor and 5 Notary in and for the State of Texas, do hereby certify that 6 the above-mentioned matter occurred as hereinbefore set out. 7 I FURTHER CERTIFY THAT the proceedings of such were 8 reported by me or under my supervision, later reduced to 9 typewritten form under my supervision and control and that 10 the foregoing pages are a full, true and correct 11 transcription of the original notes. 12 IN WITNESS WHEREOF, I have hereunto set my hand and 13 seal this 18th day of November, 2019. 14 15 /s/ Kimberly C. McCright Kimberly C. McCright 16 Certified Vendor and Notary Public 17 Verbatim Reporting & Transcription, LLC 1322 Space Park Drive, Suite C165 18 Houston, Texas 77058 281.724.8600 19 20 21 22 23 24 25