1 1 2 3 4 5 6 *************************************************** 7 8 TEXAS LOTTERY COMMISSION 9 MEETING 10 11 January 29, 2001 12 *************************************************** 13 14 15 16 17 18 BE IT REMEMBERED that the TEXAS LOTTERY 19 COMMISSION meeting was held on the 29TH day of 20 JANUARY, 2001, beginning at 8:30 a.m. and ending at 21 1:37 p.m., before Suzanne T. Lane, RPR, CSR in and 22 for the State of Texas, reported by machine 23 shorthand, at the Offices of the Texas Lottery 24 Commission, 611 East Sixth Street, Austin, Texas, 25 whereupon the following proceedings were had: WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 2 1 APPEARANCES 2 Chairman: 3 Mr. C. Tom Clowe, Jr. 4 Commissioners: Mr. Anthony J. Sadberry 5 Ms. Elizabeth D. Whitaker (not present) 6 General Counsel: Ms. Kimberly L. Kiplin 7 Executive Director: 8 Ms. Linda Cloud 9 Charitable Bingo Operations Director: Mr. Billy Atkins 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 3 1 INDEX 2 Appearances................................... 2 3 AGENDA ITEMS 4 Item No. 3.................................... 4 5 Item No. 4.................................... 7 Item No. 5.................................... 12 6 Item No. 15................................... 18 Item No. 6.................................... 21 7 Item No. 7.................................... 22 Item No. 8.................................... 22 8 Item No. 10................................... 27 Item No. 11................................... 31 9 Item No. 14................................... 43 Item No. 15................................... 65 10 Item No. 16................................... 72 11 12 Reporter's Certificate........................ 84 13 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 4 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 CHAIRMAN CLOWE: I would like to 2 call the meeting of the Texas Lottery Commission 3 to order. It's January the 29th, 2001. The 4 time is 8:30 a.m. I am C. Tom Clowe, Jr. 08:30 5 Commissioner Anthony Sadberry is here this morning. 08:30 6 Commissioner Betsy Whitaker is absent. We have a 08:30 7 quorum present, so we are going forward with this 08:30 8 meeting. 08:30 9 And in reference to the agenda, we 08:30 10 will pass Item 2 and go to Item 3, which is 08:30 11 recognition, possible discussion and/or action on 08:31 12 the length of service to the State of Texas by the 08:31 13 executive director and/or the charitable bingo 08:31 14 operations director. 08:31 15 MS. KIPLIN: Commissioners, there 08:31 16 are two certificates that have been prepared 08:31 17 that recognize the length of tenure for both 08:31 18 Billy Atkins and Linda Cloud that are for the 08:31 19 Commission's signature, and I'd like to be able 08:31 20 to present those to you at this point in time and 08:31 21 have you go ahead and make a motion to take an 08:31 22 action to acknowledge their service. 08:31 23 CHAIRMAN CLOWE: Would you hand 08:31 24 those over, please. 08:31 25 MS. KIPLIN: Yes, I will. They were 08:31 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 5 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 previously routed and -- 08:31 2 CHAIRMAN CLOWE: Would you read 08:31 3 those, Commissioner Sadberry, so that can be part 08:31 4 of the record, and make a motion if you are so 08:31 5 moved to do so. 08:31 6 COMMISSIONER SADBERRY: I'd be happy 08:31 7 to, Mr. Chairman. 08:31 8 The State of Texas, the Texas 08:31 9 Lottery Commission is pleased to present this 08:31 10 Certificate of Recognition to Linda Cloud in 08:31 11 appreciation for five years of outstanding service 08:32 12 and dedication to the State of Texas and the Texas 08:32 13 Lottery Commission. And it provides for signatures 08:32 14 of C. Tom Clowe, Jr., Chairman; Anthony Sadberry, 08:32 15 Commissioner; and Elizabeth D. Whitaker, 08:32 16 Commissioner. 08:32 17 And the State of Texas, Texas 08:32 18 Lottery Commission is pleased to present this 08:32 19 Certificate of Recognition to Billy Atkins in 08:32 20 appreciation for 15 years of outstanding service 08:32 21 and dedication to the State of Texas and the Texas 08:32 22 Lottery Commission. It provides signatures for 08:32 23 C. Tom Clowe, Jr., Chairman; Anthony Sadberry, 08:32 24 Commissioner; Elizabeth D. Whitaker, Commissioner. 08:32 25 Mr. Chairman, I am pleased to so 08:32 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 6 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 move adoption. 08:32 2 CHAIRMAN CLOWE: Got a second. All 08:32 3 in favor, say aye; opposed, no. 08:32 4 The vote is 2-0 in favor. 08:32 5 And we would like to present these 08:32 6 at this time to both Linda and Billy. And I 08:32 7 presume that we will have Commissioner Whitaker's 08:33 8 signature, since this motion is approved by the 08:33 9 Commission, when she is available. 08:33 10 MS. KIPLIN: You know, I don't see a 08:33 11 problem with that because it's a vote, and this is 08:33 12 the action of the Commission. So I don't see a 08:33 13 problem with that. 08:33 14 CHAIRMAN CLOWE: We'd like to have 08:33 15 her signature at the time that she is available. 08:33 16 Do we have a photographer in the 08:33 17 house? 08:33 18 MS. KIPLIN: I bet we could round 08:33 19 one up before the end of the day. 08:33 20 MS. CLOUD: That's okay. Let's 08:33 21 don't break the cameras this morning. 08:33 22 CHAIRMAN CLOWE: Let's take a break 08:33 23 when that's available. We don't have to do it 08:33 24 right this minute. But we will hold off for the 08:33 25 official presentation of these certificates until 08:33 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 7 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 that time. I want this recorded for posterity, and 08:33 2 I know Commissioner Sadberry will, too. 08:33 3 MS. CLOUD: Well, I want to go on 08:33 4 the record that I actually have nine years, but 08:33 5 since these are five-year increments, I didn't get 08:33 6 my nine-year. 08:33 7 MR. ATKINS: I want to know where 08:33 8 the last 15 years have gone. 08:34 9 CHAIRMAN CLOWE: Very well. We'll 08:34 10 move on to Item 4 on the agenda, which is the 08:34 11 report and possible discussion and/or action on 08:34 12 lottery sales and trends. 08:34 13 And Linda, I believe that will be 08:34 14 you and Toni. 08:34 15 MS. SMITH: Good morning, 08:34 16 Commissioners. For the record, I'm Toni Smith, 08:34 17 marketing director of the Texas Lottery Commission. 08:34 18 Let's take a quick look at fiscal 08:34 19 year to date. Total fiscal year 2001 sales are 08:34 20 1,190,985,719. This is up 13.4 percent from fiscal 08:34 21 year 2000 sales to date of 1,050,233,630. 08:34 22 To look at year to date by product, 08:34 23 instant tickets are up 14.47 percent from this time 08:34 24 last year. We're currently at 726,492,102 versus 08:34 25 634,681,935. Lotto Texas is also up 22.93 percent 08:35 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 8 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 at 301,298,543, versus 245,092,887 last year. 08:35 2 Cash 5 has declined somewhat by 08:35 3 9 percent. Pick 3 is kind of holding its own, and 08:35 4 it's up about 4 -- a little over 4 and a half 08:35 5 percent. And Texas Million has continued to 08:35 6 decline and shows a negative of 18.45 percent. 08:35 7 And then just a quick look at this 08:35 8 week compared to last week, overall we were up 08:35 9 5.58 percent, and that was pretty much due to Lotto 08:35 10 Texas. There was very little change on instants. 08:35 11 But we, because of the jackpots, were up a little 08:35 12 on Lotto Texas by 31 percent. 08:35 13 MS. CLOUD: Commissioners, the new 08:36 14 proposed game, Texas Two Step, the rule making 08:36 15 process will be ripe for adoption on the 6th of 08:36 16 February. Somewhere between the 6th and the 16th, 08:36 17 we need to schedule another Commission meeting for 08:36 18 us to address any comments that we have received 08:36 19 and the adoption or not of that rule so we can move 08:36 20 forward, if that's the wish of the Commissioners. 08:36 21 CHAIRMAN CLOWE: Very good. 08:36 22 Toni, we have -- since we've changed 08:36 23 the matrix, we have not seen any tremendous 08:36 24 jackpots, which was a possibility. 08:36 25 MS. SMITH: Yes, sir. 08:36 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 9 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 CHAIRMAN CLOWE: Have you-all 08:36 2 discussed where the jackpots have gone? I think 08:36 3 the largest was, what, 40-some-odd million? 08:36 4 MS. SMITH: Larry King has with him 08:36 5 this morning -- do you have the jackpot, Larry -- 08:36 6 Larry was just showing me that this morning. 08:36 7 CHAIRMAN CLOWE: Yeah. I think we'd 08:37 8 like to have some input on what the thought is 08:37 9 about that, if you have it. 08:37 10 MS. SMITH: I'll show it to Linda, 08:37 11 and then she can -- 08:37 12 MS. CLOUD: We have had -- since 08:37 13 we've changed the matrix, we have had a $60 million 08:37 14 jackpot. Right? 08:37 15 MR. KING: One 60. 08:37 16 MS. CLOUD: But, Commissioners -- 08:37 17 and I'll pass this around -- we definitely have an 08:37 18 incline in our sales; this being after the 08:37 19 proposed -- after the Lotto matrix change and this 08:37 20 being prior (indicating) -- 08:37 21 CHAIRMAN CLOWE: An increase? 08:37 22 MS. CLOUD: An increase. And our 08:37 23 jackpots are higher. We are not getting hit at the 08:37 24 four and the six levels since we changed the 08:37 25 matrix. It's still a winnable game, and we still 08:37 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 10 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 have the opportunity to roll and hit that -- the 08:37 2 major big jackpots. But the players have been 08:37 3 picking the right numbers, and that's all it takes 08:38 4 to win this game. 08:38 5 CHAIRMAN CLOWE: I thought that was 08:38 6 an interesting situation that it is a winnable 08:38 7 game. 08:38 8 MS. CLOUD: Yes. 08:38 9 CHAIRMAN CLOWE: And although it is 08:38 10 now 54 balls, these jackpots are not building, and 08:38 11 people are winning the Texas Lottery. 08:38 12 MS. CLOUD: That's right. We have a 08:38 13 $40 million jackpot winner that has not come in to 08:38 14 claim his prize yet. And now, after this past 08:38 15 weekend, we have a $23 million jackpot winner. 08:38 16 CHAIRMAN CLOWE: Very good. 08:38 17 Any comments, Commissioner Sadberry? 08:38 18 COMMISSIONER SADBERRY: Well, I 08:38 19 think that is an interesting situation because as 08:38 20 we went through the process, the two-step process 08:38 21 of the matrix change -- the first one, of course, 08:38 22 was pooled down -- but in both stages, I think, the 08:38 23 concerns expressed of those who have some 08:38 24 opposition to that change was the fact that it 08:39 25 would make it unreasonable in the winning column in 08:39 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 11 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 order for us to achieve the objectives in sales 08:39 2 increase. And it seems like we're experiencing 08:39 3 both. 08:39 4 MS. CLOUD: Absolutely. 08:39 5 COMMISSIONER SADBERRY: If there is 08:39 6 such a thing as a win/win situation, that comes 08:39 7 awfully close, it seems to me. 08:39 8 CHAIRMAN CLOWE: I'm so glad you 08:39 9 said it. I was afraid to. 08:39 10 COMMISSIONER SADBERRY: So let's 08:39 11 hope that continues. 08:39 12 Back to cash -- Texas Million. I'm 08:39 13 sorry. I'm trying to recall, did we put forward 08:39 14 the bilateral process of the new game, Two Step, as 08:39 15 well as Texas Million being pooled down? The 08:39 16 reason I ask that is because that drag on us is -- 08:39 17 even with a new game, we want to be in a position 08:39 18 to eliminate a game that obviously isn't drawing 08:39 19 attention. I thought we had done it that way or we 08:40 20 had some discussion on whether we could do it that 08:40 21 way or not. 08:40 22 MS. KIPLIN: Yes. Both rules, one 08:40 23 proposing a new rule and one proposing the repeal 08:40 24 of Texas Million, were filed simultaneously, and 08:40 25 both will be ripe for your consideration for 08:40 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 12 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 adoption in early February -- the adoption of the 08:40 2 repeal -- 08:40 3 COMMISSIONER SADBERRY: Right. 08:40 4 MS. KIPLIN: -- and of the new rule. 08:40 5 COMMISSIONER SADBERRY: What you're 08:40 6 reading on my face is I'm just one question shy of 08:40 7 being finished on this point; and that is, I'm 08:40 8 assuming that in the absence of any indication of 08:40 9 major comments, that we don't need to schedule a 08:40 10 trip or any of us review comments like we did on 08:40 11 the matrix change. 08:40 12 MS. KIPLIN: At this point, I have 08:40 13 received no comments on either rule making. 08:40 14 CHAIRMAN CLOWE: Very good. Thank 08:40 15 you. 08:40 16 We're ready, then, to take up 08:40 17 Item 5: Report, possible discussion and/or action 08:40 18 on lottery advertising, promotions, and that 08:40 19 includes print media criteria. 08:40 20 Toni, do you have anything for us on 08:40 21 that? 08:41 22 MS. SMITH: Yes, sir. We just 08:41 23 wrapped up TV production and radio production for a 08:41 24 new campaign with the King Group for our minority 08:41 25 markets that has been kind of a fun aspect of 08:41 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 13 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 different ways people scratch their tickets and 08:41 2 different ways people pick their numbers. So that 08:41 3 should be sort of a fun and entertaining campaign, 08:41 4 and it will start next week. Fogarty, 08:41 5 Klein & Monroe is working on some radio to support 08:41 6 Lotto Texas and also on some new concepts and ideas 08:41 7 for the proposed new game. 08:41 8 And in another project that we're 08:41 9 working on and I'm excited about working with and 08:41 10 that Linda and Patsy have given us the approval to 08:41 11 do is with Texas Tech in Lubbock. We have been 08:41 12 invited by Dr. Keith Johnson, who is part of their 08:41 13 mass communications department, to participate in a 08:41 14 course that they offer; and the course is called 08:41 15 Advertising, Research and Campaigns. 08:41 16 Basically, what they do is, the 08:41 17 students for the semester have a client, and they 08:41 18 work on a campaign for that client. And then in 08:41 19 May, towards the end of the semester, they do 08:41 20 presentations and pitches like any ad agency would. 08:41 21 And then the lottery becomes the judges and decides 08:41 22 which would be the agency awarded that project. 08:42 23 And so we're looking forward to working with the 08:42 24 students there. And I think it will be something, 08:42 25 in addition to our visits to San Antonio and to 08:42 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 14 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 Houston, to work with the students and educate 08:42 2 people about the lottery. 08:42 3 CHAIRMAN CLOWE: Very good. 08:42 4 Anything else, Toni? 08:42 5 MS. SMITH: No, sir. 08:42 6 CHAIRMAN CLOWE: Linda? 08:42 7 MS. CLOUD: Yes, sir. I wanted to 08:42 8 bring the Commissioners up on our print media 08:42 9 criteria meetings that we've been having. As you 08:42 10 know, we had a meeting for our rural -- mostly 08:42 11 rural newspapers that had the USPS audits that they 08:42 12 were having done for their newspapers. And we had 08:42 13 basically made the decision to not acknowledge the 08:42 14 USPS audit as being the type of audit that we 08:42 15 needed to have in order to secure our feelings 08:42 16 about where we are placing our advertising dollars. 08:42 17 Well, needless to say, the rural 08:42 18 newspapers weren't very happy with that decision, 08:43 19 and they have voiced their opinions quite loudly. 08:43 20 And we did call a meeting for them to come in and 08:43 21 meet with me one-on-one, and we had about 50 08:43 22 newspapers in that meeting. 08:43 23 They did present a good argument for 08:43 24 why they qualified to have USPS audits. And at 08:43 25 this time, our legal counsel has reviewed the 08:43 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 15 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 video -- we had it videoed -- the whole meeting 08:43 2 videotaped. And she has reviewed the tapes, and we 08:43 3 have written letters back to the consultant that we 08:43 4 hired to come in asking specific questions about 08:43 5 their opinion and their recommendation and also the 08:43 6 Postmaster. 08:43 7 So we're waiting now to hear back 08:43 8 from those two letters in order to make a final 08:43 9 decision in the direction that we'll take. 08:43 10 CHAIRMAN CLOWE: Very good. 08:43 11 MS. CLOUD: It's my feeling that, 08:43 12 based on the information proposed, that -- that we 08:43 13 would go forward and allow these newspapers to 08:44 14 continue with the USPS audit so we find a way to 08:44 15 random audit their newspapers. The problem with 08:44 16 the USPS audits, it's a self-report once a year. 08:44 17 But these newspaper editors have to sign an 08:44 18 affidavit, which would put them subject to criminal 08:44 19 charges if they -- the information they provided in 08:44 20 that report was incorrect. So they feel that their 08:44 21 life is on the line with the signing of that 08:44 22 affidavit, and they're not going to lie. 08:44 23 But the problem with that, unless 08:44 24 there are circulation changes, they really don't 08:44 25 have a physical circulation audit. The Postmaster 08:44 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 16 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 does not go out and audit their accounts. 08:44 2 So that's -- the verification of the 08:44 3 numbers they present is where we are, and so we're 08:44 4 working to try to tie this up, to make it so that 08:45 5 it is feasible for the lottery to take proper 08:45 6 action for everybody concerned. 08:45 7 MS. KIPLIN: Commissioners, the 08:45 8 information that Ms. Cloud laid out is, I think, 08:45 9 what she has been told by a bunch of different 08:45 10 votes. And what we're trying to do now is actually 08:45 11 get confirmation of what exactly the United States 08:45 12 Postal Service does do in conjunction with the 08:45 13 verification of the information that's submitted on 08:45 14 these self-reports. 08:45 15 And we're also asking our consultant 08:45 16 the consultant's opinion as to the feasibility of 08:45 17 requiring these audits -- independent circulation 08:45 18 verification audits. You know, it's a balance in 08:45 19 terms of money that is paid for compensation for 08:45 20 the advertising versus the payment for the audit. 08:45 21 And then also their -- this 08:45 22 particular consultant's opinion as to the 08:46 23 self-report or any -- for that matter, any 08:46 24 recommendation that the consultant would have in 08:46 25 lieu of requiring the audits. And so that's what 08:46 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 17 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 we are awaiting. 08:46 2 CHAIRMAN CLOWE: So in the broadest 08:46 3 sense, what you're attempting to arrive at here is 08:46 4 a balance between verification of the fact that the 08:46 5 dollars that the Commission is spending with the 08:46 6 media are, in fact, resulting in advertising and 08:46 7 the people are being served insofar as your 08:46 8 responsibility on one hand; and on the other, a 08:46 9 reasonable and working solution to achieving the 08:46 10 knowledge that there is circulation, and there are 08:46 11 publications fulfilling the contracts that we have 08:46 12 for the dollars that we're spending. 08:46 13 MS. CLOUD: That's correct. 08:46 14 CHAIRMAN CLOWE: If you can come to 08:46 15 a middle point there where those obligations are 08:46 16 fulfilled and discharged, then you'll satisfy both 08:46 17 sides. 08:47 18 MS. CLOUD: That's my goal right 08:47 19 now. 08:47 20 CHAIRMAN CLOWE: Very good. Do you 08:47 21 think you'll be able to report back to us at the 08:47 22 next meeting on that? 08:47 23 MS. CLOUD: I think so. 08:47 24 CHAIRMAN CLOWE: Excellent. Very 08:47 25 good. 08:47 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 18 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 Anything else, Toni? 08:47 2 MS. SMITH: No, sir. 08:47 3 CHAIRMAN CLOWE: Thank you. 08:47 4 Can I get under this item to our 08:47 5 people in public relations that are receiving 08:47 6 awards and call attention to that? 08:47 7 MS. KIPLIN: I think you can, not 08:47 8 only under that item, but probably also under 08:47 9 Item 15 regarding discussion and/or action on the 08:47 10 agency's operational status. 08:47 11 CHAIRMAN CLOWE: I'd like to get to 08:47 12 it now, if I may. 08:47 13 MS. KIPLIN: I think you can take it 08:47 14 any way you wish. 08:47 15 CHAIRMAN CLOWE: Keith, will you 08:47 16 come up and talk to us about these awards that our 08:47 17 people have received and congratulate them on the 08:47 18 record. Do you have that information with you? 08:47 19 MR. ELKINS: I don't have the 08:47 20 specific names of the awards -- 08:47 21 CHAIRMAN CLOWE: Let me give it to 08:48 22 you right here. 08:48 23 MR. ELKINS: Good morning, 08:48 24 Commissioners. For the record, my name is Keith 08:48 25 Elkins, communications director of the Texas 08:48 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 19 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 Lottery. I'm very proud today to announce that the 08:48 2 audiovisual section of the communications division 08:48 3 has won three communicator awards for audiovisual 08:48 4 production, the first time that the Lottery 08:48 5 Commission has entered and won these particular 08:48 6 categories, two Crystal Awards of Excellence. 08:48 7 The top award was one for the Texas 08:48 8 Millionaire Family video that was produced by 08:48 9 myself and Philip Bates and assisted with -- was 08:48 10 the broadcast studio manager Glenn Hill. Philip 08:48 11 took the lion's share of the work, as both 08:48 12 photographer and the editor. Philip is in the room 08:48 13 and deserves a lot of credit for this video. 08:48 14 The Millionaire Family was very 08:48 15 pleased with the production, and, of course, the 08:48 16 result -- the purpose of that particular videotape 08:49 17 is to provide to respective claimants in hopes that 08:49 18 they might join the Millionaire Family so that they 08:49 19 can get some guidance from people that have walked 08:49 20 the same path that they're about to embark on and 08:49 21 have a good experience as new millionaires for 08:49 22 Texas. That was for -- Texas Millionaire Family 08:49 23 video won in both the State and Low Budget 08:49 24 categories. We're trying to stay fiscally sound. 08:49 25 CHAIRMAN CLOWE: We're appreciative 08:49 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 20 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 of that. 08:49 2 MR. ELKINS: In our budget, that's 08:49 3 very good. 08:49 4 And one of the video news releases 08:49 5 that we put out every week and that we've started 08:49 6 just over -- about a year ago that -- the subject 08:49 7 was who is that person standing next to the 08:49 8 drawings machines. Of course, we understand that 08:49 9 it's a member of the security staff to guarantee 08:49 10 the security and integrity, but it's one of the big 08:49 11 mysteries out there in TV land. 08:49 12 A lot of people don't realize what 08:49 13 that person does. A lot of people think they're 08:50 14 just standing there to look pretty. That was a 08:50 15 video news release that was produced by myself with 08:50 16 Leticia Vasquez and Philip Bates, and that won a 08:50 17 Communicator Award of Distinction for the Video 08:50 18 News Release category. So these three: Two 08:50 19 Crystals and one Award of Distinction. And my 08:50 20 compliments to the staff. They worked very hard. 08:50 21 CHAIRMAN CLOWE: Very impressive. 08:50 22 So often, people who do this sort of work direct 08:50 23 publicity in other directions and don't receive 08:50 24 publicity when they are so successful. And we're 08:50 25 very proud of the work that your group is doing and 08:50 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 21 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 appreciate your leadership. And we wanted to see 08:50 2 that recognition come on the record in the 08:50 3 Commission meeting this morning. 08:50 4 MR. ELKINS: Thank you very much. 08:50 5 I'm lucky to have the staff that I do. 08:50 6 CHAIRMAN CLOWE: Very good. 08:50 7 (Applause.) 8 CHAIRMAN CLOWE: Next we'll go to 08:50 9 Item No. 6: Status report, possible discussion and 08:50 10 action on the lottery operator procurement and/or 08:51 11 lottery operator consultant. 08:51 12 Linda, I think this is your subject. 08:51 13 MS. CLOUD: And I'm going to refer 08:51 14 it to Ridgely Bennett. 08:51 15 CHAIRMAN CLOWE: Very good. 08:51 16 Good morning, Ridgely. 08:51 17 MR. BENNETT: Good morning, 08:51 18 Commissioner. For the record, my name is Ridgely 08:51 19 Bennett. I'm the deputy general counsel. 08:51 20 Reporting on the lottery operator 08:51 21 procurement, the drafting committee is still in the 08:51 22 process of drafting the RFP, and we should have a 08:51 23 document out on the street either sometime in 08:51 24 February or March. 08:51 25 CHAIRMAN CLOWE: Very good. 08:51 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 22 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 Anything further? 08:51 2 MR. BENNETT: Nothing further on 08:51 3 this topic. 08:51 4 CHAIRMAN CLOWE: Questions? 08:51 5 Then we'll move on to Item No. 7: 08:51 6 Consideration of and possible discussion and/or 08:51 7 action on state audit reports relating to the Texas 08:51 8 Lottery Commission. 08:51 9 Debra McLeod. 08:51 10 MS. MCLEOD: Good morning, 08:51 11 Commissioners. For the record, my name is Debra 08:51 12 McLeod, internal audit director, and I'm going to 08:51 13 pass this back to Linda Cloud. I don't have 08:52 14 anything new to report on this particular item. 08:52 15 CHAIRMAN CLOWE: Very good. 08:52 16 MS. CLOUD: No -- no new news on 08:52 17 this one. 08:52 18 CHAIRMAN CLOWE: Very good. Then we 08:52 19 are ready to go to Item No. 8: Report, possible 08:52 20 discussion and/or action on the production studio 08:52 21 procurement. 08:52 22 MR. BENNETT: Once again, my name is 08:52 23 Ridgely Bennett. I'm the deputy general counsel. 08:52 24 On the production studio RFP, the 08:52 25 Commission has received letters of intent and has 08:52 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 23 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 responded to written questions. The next milestone 08:52 2 for this RFP is the receipt of proposals, which is 08:52 3 currently scheduled for February 9th. And I'd be 08:52 4 happy to answer any questions. 08:52 5 CHAIRMAN CLOWE: I believe there are 08:52 6 none. Thank you, Ridgely. 08:52 7 The next item, 9: Report, possible 08:52 8 discussion and/or action on the agency's Minority 08:52 9 Participation Report. 08:52 10 Robert Hall. 08:52 11 Good morning, Robert. 08:52 12 MR. HALL: Good morning, 08:52 13 Commissioners. For the record, my name is Robert 08:52 14 Hall. I'm the director for minority development 08:53 15 services. 08:53 16 What I have to bring before you is a 08:53 17 quick, hopefully -- just a recall of what was 08:53 18 produced in the last meeting. As you know, last 08:53 19 week we provided you with the Minority 08:53 20 Participation Report for the FY2000 year. 08:53 21 Subsequently, after the report was released, there 08:53 22 were several changes that were made. And we're 08:53 23 here today just to bring those changes before you 08:53 24 and ask for your consideration and approval. And 08:53 25 I'll be happy to highlight those changes for you 08:53 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 24 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 one by one. 08:53 2 The first change was in the cover 08:53 3 letter. As we know, Governor Bush has subsequently 08:53 4 moved on to the great White House, and he is now 08:53 5 our President of the United States. Subsequently, 08:53 6 after that fact, Lieutenant Governor Perry became 08:53 7 our governor of the State of Texas. So our cover 08:53 8 letter actually reflects now the Honorable Rick 08:53 9 Perry as governor. 08:54 10 And then subsequently, after that 08:54 11 fact as well, the Honorable Bill Ratliff as our 08:54 12 Lieutenant Governor. And we made those changes to 08:54 13 reflect that in the cover letter. In addition to 08:54 14 that, the actual report was released January 22nd 08:54 15 as opposed to January 8th. 08:54 16 The next change is identified on 08:54 17 page 2. The word "statutes" was changed to reflect 08:54 18 the correct language there, and we made that change 08:54 19 after the report was actually released. 08:54 20 On page 19, there was also another 08:54 21 change, which relates to the actual expenditures in 08:54 22 terms of all lottery spending under category -- 08:54 23 without -- without GTECH. There was a change there 08:54 24 from 12,000 -- excuse me, $12,817,769, to the 08:54 25 correct amount of $48,238,403. And then the total 08:54 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 25 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 with GTECH was changed to reflect -- instead of the 08:55 2 $12,817,769, to reflect $134,807,929. 08:55 3 And the actual percentages in both 08:55 4 those categories should reflect 5.34 percent 08:55 5 without GTECH; and also with GTECH, 5.11 percent. 08:55 6 We made those changes accordingly. 08:55 7 In addition to that, at the end of 08:55 8 the Commission meeting during December, there was 08:55 9 an action to move and do an executive director's 08:55 10 report. We actually had you approve the total 08:55 11 expenditures, which were only for FY2001 fiscal 08:55 12 year that were reflected within this report. That 08:55 13 was incorrect. The total expenditures for FY2000 08:55 14 is what you see here today. If I'm not making 08:55 15 myself clear, we can start over again. 08:56 16 The total expenditures -- I'm sorry. 08:56 17 The total expenditures for FY2000 has to reflect 08:56 18 what is actually in the report today. At the end 08:56 19 of the meeting, with an executive director's 08:56 20 report -- and we had -- we actually had the 08:56 21 Commissioners adopt their expenditures that were 08:56 22 reflective of the FY2000 year, which were from 08:56 23 September 1 through the end of November. And we 08:56 24 submitted a corrected change for that amount as 08:56 25 well. 08:56 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 26 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 I'll be happy to answer any 08:56 2 questions that you may have. 08:56 3 CHAIRMAN CLOWE: Is there any action 08:56 4 you are requesting today, Robert, as a result of 08:56 5 announcing these changes to us? 08:56 6 MS. KIPLIN: If I may, I think what 08:56 7 I would prefer is that you make a motion to ratify 08:56 8 the changes that have been made to accurately 08:56 9 reflect the Commission's spending. My sense is 08:56 10 that there were several that were nonsubstantive 08:56 11 changes, and the last two could potentially fall in 08:56 12 the category of substantive. 08:56 13 So just to be on the safe side, I 08:57 14 would request that you make a motion to ratify the 08:57 15 actions that Mr. Hall took on behalf of the agency 08:57 16 in filing a corrected report. 08:57 17 COMMISSIONER SADBERRY: Okay. And 08:57 18 the action is the report, not authorization of 08:57 19 expenditures? 08:57 20 MS. KIPLIN: That is correct. The 08:57 21 report was filed, and all we're looking at is a 08:57 22 motion to ratify Mr. Hall's actions in making the 08:57 23 changes that he just spelled out in the Minority 08:57 24 Participation Report that has been filed -- I 08:57 25 believe it's this month. 08:57 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 27 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 MR. HALL: Yes. 08:57 2 COMMISSIONER SADBERRY: I would so 08:57 3 move, Mr. Chairman. 08:57 4 CHAIRMAN CLOWE: Second. 08:57 5 All in favor, say aye; opposed, no. 08:57 6 The vote is 2-0 in favor. 08:57 7 Anything further, Robert? 08:57 8 MR. HALL: No, sir. Thank you, 08:57 9 Commissioners. 08:57 10 CHAIRMAN CLOWE: Thank you very 08:57 11 much. 08:57 12 The next is Item 10; the report, 08:57 13 possible discussion and/or action on the agency's 08:57 14 demographic study of the lottery. 08:57 15 And Linda, that's your subject, I 08:57 16 believe. 08:58 17 MS. CLOUD: Okay. Commissioners, 08:58 18 you have a copy of the demographic study in the 08:58 19 pocket of your binders, in the front. I'm just 08:58 20 going to read a couple of excerpts from this 08:58 21 report. 08:58 22 (Reading) The results of the 08:58 23 demographic study reveal that approximately 08:58 24 63 percent of all adult Texans have purchased at 08:58 25 least one Texas Lottery ticket in the last year. 08:58 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 28 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 This is down 5 percent from the 1999 survey. The 08:58 2 typical Texas Lottery player reported an average 08:58 3 annual spending of 572.64, or about $11 per week. 08:58 4 This percentage is up approximately 25 percent from 08:58 5 the 1999 survey. 08:58 6 So we have fewer people playing and 08:58 7 spending a little more money when they do play. 08:58 8 The age of the Texas Lottery players 08:58 9 falls in the range between 26 to 65 years old. 08:59 10 Approximately 63 percent of Texans in this age 08:59 11 range play the Texas Lottery. Approximately 08:59 12 53 percent of adult Texans in the youngest age 08:59 13 range, between 18 and 25 years old, describe 08:59 14 themselves as lottery players. Adult Texans over 08:59 15 65 years of age represent the least frequent 08:59 16 players. 08:59 17 Compared with the 1999 Texas Lottery 08:59 18 demographic study, the reported play for the age 08:59 19 groups is similar. Figure -- and then you have a 08:59 20 chart down here to show what the age group is and 08:59 21 the percentage breakout -- 18 to 25 is 11 percent; 08:59 22 26 to 35 is 20 percent; 36 to 45 is 25 percent; 46 08:59 23 to 55 is 22 percent; and 56 to 65 is 13 percent; 08:59 24 and 65 and over is 9 percent of play. 09:00 25 This is the report that we provide 09:00 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 29 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 to the legislature every two years. This is done 09:00 2 by -- the gathering of information was done by the 09:00 3 UT school. So it would take you some time to read 09:00 4 this, but it's a real interesting report. It does 09:00 5 show that the people who have the least are not the 09:00 6 ones that are playing the most. 09:00 7 CHAIRMAN CLOWE: Linda, this report 09:00 8 is dated January of this year; and when I came on 09:00 9 the Commission, I think I received the one that was 09:00 10 current prior to this one, which would have been 09:00 11 two years prior. 09:00 12 MS. CLOUD: Right. 09:00 13 CHAIRMAN CLOWE: This is compiled by 09:00 14 the Office of Survey Research -- 09:00 15 MS. CLOUD: Right. 09:00 16 CHAIRMAN CLOWE: -- at the 09:00 17 University of Texas. And in my mind, this is the 09:00 18 most credible answer to the question of who is 09:01 19 playing the lottery -- 09:01 20 MS. CLOUD: Yes, sir. 09:01 21 CHAIRMAN CLOWE: -- in the State of 09:01 22 Texas that I've ever seen. And I think in your 09:01 23 comments, you covered the fact that we are sending 09:01 24 this to not only the legislature but to the 09:01 25 leadership, as well. 09:01 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 30 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 MS. CLOUD: That's correct. 09:01 2 CHAIRMAN CLOWE: And Keith, do the 09:01 3 members of the -- do the members of the media 09:01 4 receive a copy of this, our press friends? 09:01 5 MR. ELKINS: They do upon request. 09:01 6 We haven't -- we haven't sent them out as a regular 09:01 7 part of our media information. But we can. 09:01 8 CHAIRMAN CLOWE: I wish you would, 09:01 9 because I think it would be helpful. I think 09:01 10 oftentimes reporters are told things by people that 09:01 11 this answers, in a very precise way, what the facts 09:01 12 are. And if you would include this, I think the 09:01 13 media would benefit from having this information 09:01 14 available. 09:01 15 MR. ELKINS: We'll certainly do 09:01 16 that. 09:01 17 CHAIRMAN CLOWE: It's very credible. 09:01 18 And it really tells you who is playing in so many 09:01 19 different ways. It's a great study, and I think 09:02 20 it's very beneficial to anyone who will take the 09:02 21 time to read it. 09:02 22 MS. CLOUD: I agree. 09:02 23 CHAIRMAN CLOWE: Very good. 09:02 24 MS. KIPLIN: Commissioners, this is 09:02 25 not an action item for you. The statute requires 09:02 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 31 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 the executive director report the results to the 09:02 2 Commission, the Governor, and the legislature 09:02 3 before the convening of each regular legislative 09:02 4 session. It's not an action item for you. 09:02 5 CHAIRMAN CLOWE: Okay. Then we're 09:02 6 ready to move to item No. 11: Report, possible 09:02 7 discussion and/or action on the 77th Legislature, 09:02 8 including the agency's legislative proposals. 09:02 9 Nelda Trevino. Good morning, Nelda. 09:02 10 MS. TREVINO: Good morning, 09:02 11 Commissioners. For the record, I'm Nelda Trevino, 09:02 12 the director of the governmental affairs 09:02 13 department. 09:02 14 Just very briefly this morning, I 09:02 15 wanted to give you a summary on where we are this 09:02 16 legislative session. As of this morning, there 09:03 17 have been 1,577 bills and/or resolutions that have 09:03 18 been filed, and we are tracking 60 of them. A good 09:03 19 majority are those are related to State agencies 09:03 20 across the board, particularly regarding human 09:03 21 resource matters and employee benefits. 09:03 22 I want to briefly summarize about 09:03 23 12 bills for you today, and Colin has distributed 09:03 24 an updated tracking report for each of you. So 09:03 25 this includes all the bills, again, that we are 09:03 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 32 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 tracking as of this date. 09:03 2 In regards to House Bill 1 and 09:03 3 Senate Bill 1, that's the general appropriations 09:03 4 bill. And I want to thank all the Commissioners 09:03 5 for participating in the Senate Finance Committee 09:03 6 hearing last week. Again, with all of you in 09:03 7 attendance, I think you have a direct understanding 09:03 8 as to what took place at that committee hearing. 09:03 9 And information that was requested by 09:03 10 Senator Haywood has been provided to him, and 09:04 11 information that has been requested by 09:04 12 Senator Lucio is being compiled and will be 09:04 13 forwarded to him as soon as we put that together. 09:04 14 As you also are aware, the general 09:04 15 government subcommittee on the House appropriations 09:04 16 committee is meeting this week on Wednesday, 09:04 17 January 31st. The committee hearing begins at 09:04 18 7:00. There are five agencies that the committee 09:04 19 will be taking up that day, and we are the fourth 09:04 20 agency. 09:04 21 CHAIRMAN CLOWE: So we need to be 09:04 22 there, what, about 5:30 in the morning? 09:04 23 MS. TREVINO: Probably about 5:30, 09:04 24 but that would cover it pretty well, Mr. Chairman. 09:04 25 Those are hard things to predict. 09:04 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 33 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 And today the committee is 09:04 2 meeting -- the subcommittee is meeting for the 09:04 3 first time. And so we will be monitoring their 09:04 4 progress to see how they handle their business 09:04 5 today and tomorrow and see if we can get a good 09:04 6 reading on how things will go on Wednesday. 09:05 7 A couple of bills that -- 09:05 8 CHAIRMAN CLOWE: In regard to that, 09:05 9 before you move on, I want to compliment you and 09:05 10 Colin for the work that you have done in meeting 09:05 11 with those various offices to answer so many of the 09:05 12 questions that come up prior to the actual 09:05 13 committee meeting. I think that that is a 09:05 14 tremendously important part of this agency's role 09:05 15 in dealing with the legislative process. And it is 09:05 16 very difficult for Linda, the Commissioners, or 09:05 17 anyone else to answer so many of the questions that 09:05 18 come up at that time. 09:05 19 The work that you-all are doing is 09:05 20 of great value. I want to express on behalf of 09:05 21 Commissioner Sadberry, I'm sure, and 09:05 22 Commissioner Whitaker who were, as you pointed out, 09:05 23 both with myself -- we had the full commission 09:05 24 there -- appreciative of the work that you-all are 09:06 25 doing along those lines. 09:06 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 34 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 We did have a Commission meeting, 09:06 2 which was formally convened and adjourned. We were 09:06 3 on the record since we had a quorum there. And I 09:06 4 might mention that at the meeting that you're 09:06 5 speaking about now, coming up Wednesday, both 09:06 6 Commissioner Sadberry and Whitaker have expressed 09:06 7 interest in being there. 09:06 8 But, in fact, because we have not 09:06 9 had the opportunity to timely post notice, neither 09:06 10 of them will come. And I will represent the 09:06 11 Commission, along with Linda, and we think that's 09:06 12 the proper way to do that. There is a high level 09:06 13 of interest among the Commissioners to appear at 09:06 14 these committees and all be involved in it, along 09:06 15 with you and others who are doing this work. 09:06 16 MS. TREVINO: Mr. Chairman, thank 09:06 17 you for your kind words in regards to the efforts 09:06 18 that we've been making in preparing for these 09:06 19 hearings. 09:07 20 And just so you'll know, Colin and I 09:07 21 did have an opportunity to have some discussions 09:07 22 with Chairman Talmadge Heflin and expressed to him 09:07 23 the interest that all the Commissioners had in 09:07 24 attending the committee hearing this coming 09:07 25 Wednesday -- again, just as you explained, just 09:07 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 35 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 based on the circumstances and having to post open 09:07 2 meetings; that is, he's fully aware of our 09:07 3 situation. 09:07 4 CHAIRMAN CLOWE: I think 09:07 5 Senator Ellis commented that was the first 09:07 6 Commission meeting he had ever attended. 09:07 7 MS. TREVINO: That's right. 09:07 8 Again, on your tracking report, 09:07 9 first of all, they are listed in sequential order, 09:07 10 and you have there the bill history on each of the 09:07 11 bills that we're tracking. And again, just very 09:07 12 briefly, I want to highlight several of them for 09:07 13 you. 09:07 14 House Bill 514 and its companion 09:07 15 bill, Senate Bill 253, that's relating to a defense 09:07 16 to certain gambling related offenses, for gaming 09:07 17 activity conducted by an Indian tribe. This could 09:07 18 provide opportunities for the expansion of Indian 09:08 19 gaming, and therefore, it could have a negative 09:08 20 impact on both the charitable bingo and lottery 09:08 21 ticket sales. 09:08 22 House Bill 646 and its companion 09:08 23 bill, Senate Bill 413, would exempt from the sales 09:08 24 tax bingo equipment and the supplies purchased by 09:08 25 all licensed conductors of charitable bingo games. 09:08 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 36 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 House Bill 891 by 09:08 2 Representative Robert Puente would authorize the 09:08 3 Texas Lottery Commission to participate in a 09:08 4 multi-state lottery game. We have had a request 09:08 5 from the legislative budget board to prepare a 09:08 6 fiscal note, and we're in the process of compiling 09:08 7 that information to forward to the LBB. 09:08 8 House Bill 965 by 09:08 9 Representative Dunham, this would provide the 09:08 10 Lottery Commission with the authority and the means 09:08 11 to screen new and renewable lottery retail 09:08 12 applications for any sort of delinquent liabilities 09:08 13 that are owed to the State, and this was part of 09:08 14 our legislative package. So that has been filed. 09:08 15 HJR43 by Representative Ron Wilson 09:09 16 poses a constitutional amendment which would 09:09 17 authorize the legislature to permit the State of 09:09 18 Texas to operate casinos in the State of Texas. We 09:09 19 did receive a fiscal note request from the 09:09 20 legislative budget board and did respond to that, 09:09 21 and we indicated that while we're not able to 09:09 22 quantify it, we believe that the introduction of 09:09 23 casino gaming in Texas would compete with some of 09:09 24 the discretionary dollars that are currently used 09:09 25 to purchase either lottery tickets or participate 09:09 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 37 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 in charitable bingo games. 09:09 2 Senate Bill 170 by 09:09 3 Senator Wentworth, that provides that -- and this 09:09 4 certainly impacts our agency as we go before these 09:09 5 legislative committees -- provides that a quorum of 09:09 6 a governmental body, such as ours, at a meeting of 09:09 7 a legislative committee, is not considered to be a 09:09 8 meeting of that body if deliberations at the 09:09 9 meeting by the members consist of public 09:09 10 communications. 09:09 11 This bill has been voted out of the 09:09 12 Senate Administration Committee, has been 09:10 13 recommended for the local and consent calendar on 09:10 14 the Senate floor. So it appears that that bill is 09:10 15 moving pretty quickly and could have an immediate 09:10 16 effect. And that might address our issues as we go 09:10 17 forward in going before these legislative 09:10 18 committees. 09:10 19 Senate Bill 257 -- excuse me, 257 by 09:10 20 Senator Corona would make it a Class C misdemeanor 09:10 21 for a minor to purchase a lottery ticket. 09:10 22 Currently, it's a misdemeanor for the retailer to 09:10 23 sell to a minor. So this would also make it an 09:10 24 offense for the actual minor purchasing the ticket. 09:10 25 Senate Bill 390, also by 09:10 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 38 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 Senator Wentworth, is intended to allow the 09:10 2 Commissioners of our agency to meet in executive 09:10 3 session to deliberate and negotiate a contract with 09:10 4 the lottery operator. And this also is part of our 09:10 5 legislative package and, again, it has been filed 09:10 6 by Senator Wentworth. 09:11 7 In regards to other bills or other 09:11 8 legislative proposals that we have talked about 09:11 9 regarding our agency, we have commitments by both a 09:11 10 House and Senate member regarding the surveillance 09:11 11 van for our security division. So we hope to see a 09:11 12 bill filed on that very soon. 09:11 13 We are currently in discussions with 09:11 14 potential bill authors regarding the enforcement -- 09:11 15 peace officer retirement bill and hope to provide 09:11 16 you some updates on that. 09:11 17 In regards to our bingo legislative 09:11 18 package, we have been in discussions with some of 09:11 19 the effective members of the bingo industry, and we 09:11 20 hope to provide you further progress on that -- on 09:11 21 those matters at our next Commission meeting. 09:11 22 And that summarizes my report, 09:11 23 unless Billy or Linda or Kim have something to add 09:11 24 to it. I'll be happy to answer any questions. 09:11 25 MR. ATKINS: One thing I wanted to 09:12 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 39 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 say, Commissioner, is at a previous Commission 09:12 2 meeting -- I believe it was Commissioner Whitaker 09:12 3 who wanted to ensure that we were receiving as much 09:12 4 comment as possible on those; specifically, bingo 09:12 5 proposals. And I wanted to let you know that we 09:12 6 have posted those proposals on our web site with a 09:12 7 link where individuals can submit any comments or 09:12 8 questions relating to those proposals directly to 09:12 9 us. It's been up, I believe, approximately two 09:12 10 weeks now. 09:12 11 CHAIRMAN CLOWE: Very good. 09:12 12 Any comments, Commissioner? 09:12 13 COMMISSIONER SADBERRY: Just on one 09:12 14 bill, Nelda. The negotiation in executive session 09:12 15 matter has come up before, probably as early as -- 09:12 16 well, actually, it wasn't a bill; it was an 09:12 17 observation -- as early as one of the first 09:12 18 amendments to the contract, I believe, when 09:13 19 Chairman Meyers was serving. And I know at points 09:13 20 past that, moving -- coming forward, we've had 09:13 21 issues of the Commissioners' direct involvement in 09:13 22 negotiation as opposed to serving as a -- an 09:13 23 appellant body, more or less. 09:13 24 So I guess my question is -- and I 09:13 25 know these bills can change -- but as it presently 09:13 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 40 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 stands, does the bill make reference and provisions 09:13 2 for the role of the Commissioners in the 09:13 3 contracting process? 09:13 4 I know that has come up before, and 09:13 5 I think there may have been some references in an 09:13 6 audit report -- I think more of a general 09:13 7 reference. But the ability to discuss it in 09:13 8 executive session, I know, has been brought on 09:13 9 before. I haven't read this bill. I don't know if 09:13 10 you are familiar with all of its contents -- Kim, 09:13 11 you might know that -- to whether it would address 09:13 12 the role of the Commissioners in the negotiation 09:14 13 and contracting process itself. 09:14 14 MS. KIPLIN: No. The bill does not 09:14 15 address that issue at all. And the bill, as it has 09:14 16 currently been filed, allows the Commission and a 09:14 17 lottery operator to be in executive session to 09:14 18 negotiate the contract. My understanding is that 09:14 19 that will be addressed at a later time. 09:14 20 MS. TREVINO: This bill was filed 09:14 21 last session, also. And there was, I think, just 09:14 22 an error made in the bill drafting. So I think 09:14 23 that it's our understanding that Senator Wentworth 09:14 24 certainly has a clear understanding as to the 09:14 25 intent as to what we're trying to reach. 09:14 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 41 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 And again, the last session or -- 09:14 2 excuse me, what's happened this session happened 09:14 3 last session as the bill got filed, again, with not 09:14 4 the clear intent. And so there was a committee 09:14 5 substitute that was presented during the committee 09:14 6 hearing. And that's the intent to happen this time 09:14 7 around, also, to clarify that language. 09:15 8 And I'm not sure, 09:15 9 Commissioner Sadberry, if I'm answering your 09:15 10 question. 09:15 11 COMMISSIONER SADBERRY: Well, I 09:15 12 think the combination of your comments and Kim's 09:15 13 comments -- I think what you're saying is you're 09:15 14 working on a different problem. The issue I'm 09:15 15 talking about is different from what's addressed by 09:15 16 this bill. 09:15 17 MS. KIPLIN: Right. 09:15 18 COMMISSIONER SADBERRY: And I don't 09:15 19 know that this issue will get addressed, but it 09:15 20 comes up from time to time; and that is, our role. 09:15 21 MS. KIPLIN: Right. 09:15 22 COMMISSIONER SADBERRY: And this is 09:15 23 the first time the entire contract will be up for 09:15 24 mandatory negotiation. We've had amendments. 09:15 25 We've never had the opportunity to pool it down -- 09:15 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 42 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 I mean, put it out for bid again. It never 09:15 2 actually had gotten to a point of negotiating at a 09:15 3 level where a new contract was beginning. We'll do 09:15 4 that this time around -- really, for the first time 09:15 5 in the life of this agency -- the issue of this 09:15 6 agency. 09:15 7 And I was just wondering if there 09:15 8 would be an anticipation that that issue might be 09:15 9 addressed at some point as to what our role might 09:16 10 be as Commissioners in the overall contracting 09:16 11 process. It doesn't sound like this bill is aimed 09:16 12 at that, but it might come up. 09:16 13 MS. TREVINO: And I would defer to 09:16 14 Kim on how to respond to that. 09:16 15 MS. KIPLIN: I hear exactly what 09:16 16 you're saying. The bill, as it has currently been 09:16 17 filed, does not address that. 09:16 18 COMMISSIONER SADBERRY: That's what 09:16 19 it says. 09:16 20 CHAIRMAN CLOWE: Will that be 09:16 21 interpreted? 09:16 22 MS. KIPLIN: We'll look at that 09:16 23 issue. 09:16 24 CHAIRMAN CLOWE: You're not prepared 09:16 25 to comment on it now? 09:16 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 43 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 MS. KIPLIN: No. 09:16 2 CHAIRMAN CLOWE: Okay. 09:16 3 Thank you, Nelda. 09:16 4 MS. TREVINO: Thank you again. 09:16 5 CHAIRMAN CLOWE: Counselor, is there 09:16 6 any reason we can't go to Item 14 and handle our 09:16 7 other public business? 09:16 8 MS. KIPLIN: None that I'm aware of. 09:16 9 CHAIRMAN CLOWE: If the staff is 09:16 10 ready, then, we'll go to Item 14, consideration of 09:16 11 the status and possible entry of orders in various 09:16 12 cases lettered A through T. 09:17 13 MS. KIPLIN: Commissioners, if I may 09:17 14 just go ahead and take up in one fell swoop letters 09:17 15 A through M, those are all contested case 09:17 16 proceedings that are on the lottery side. They're 09:17 17 all a recommendation by the ALJ for revocation of a 09:17 18 license, and they're all based on insufficient 09:17 19 funds to the lottery. 09:17 20 And so I would ask at this time that 09:17 21 you make a motion -- recommend that you make the 09:17 22 motion to adopt the ALJ's recommendation in the 09:17 23 contested case proceedings that are identified in 09:17 24 letters A through M. 09:17 25 CHAIRMAN CLOWE: Any questions on 09:17 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 44 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 those? 09:17 2 COMMISSIONER SADBERRY: I would so 09:17 3 move. 09:17 4 CHAIRMAN CLOWE: Second. All in 09:17 5 favor, say aye; opposed, no. 09:17 6 The vote is 2-0 in favor of adoption 09:17 7 of the recommended order in letters A through M. 09:18 8 MS. KIPLIN: Commissioners, if I 09:18 9 could, then, take up the letters S -- sorry to do 09:18 10 this, but there is a method to why I wanted to do 09:18 11 that -- letters S and T. Those are agreed orders 09:18 12 on the lottery side of the House. 09:18 13 And as I recall, in both of those 09:18 14 cases you had coupons that were not issued by the 09:18 15 lottery being used to redeem lottery tickets. The 09:18 16 recommendation in the agreement was to -- for the 09:18 17 licensee to have to incur a 14-day suspension. And 09:18 18 that would be the recommendation of the staff on 09:18 19 those two matters, S and T. 09:18 20 CHAIRMAN CLOWE: Are you saying "S"? 09:18 21 MS. KIPLIN: Yes. "S" as in "Sam"; 09:18 22 "T" as in "Tom." 09:18 23 CHAIRMAN CLOWE: Okay. So moved. 09:18 24 COMMISSIONER SADBERRY: Second. 09:18 25 CHAIRMAN CLOWE: All in favor, say 09:18 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 45 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 aye; opposed no. 09:18 2 That motion is approved by a vote 09:19 3 of 2-0. 09:19 4 MS. KIPLIN: Okay. And then, 09:19 5 Commissioners -- and I'm holding these back just so 09:19 6 I'm -- I've got them pretty well organized. 09:19 7 Letters Q and R are also agreed orders, and they're 09:19 8 on the bingo side. It's Amvets Post 72 and Amvets 09:19 9 Post 72 Auxiliary. 09:19 10 In each of those cases, an 09:19 11 investigation occurred, and it was determined that 09:19 12 the charitable organizations played with 09:19 13 card-minding devices that were more than 40 percent 09:19 14 of the attendance, which is in violation of the 09:19 15 Bingo Enabling Act. 09:19 16 The agreed order is for the 09:19 17 Commission to enter an agreement, and it's a 09:19 18 consent order. So it will be an order that no 09:19 19 action at this point would be taken against the 09:19 20 licensee, but that they would file with the agency 09:19 21 their plan or their written procedures on how to 09:19 22 avoid this issue occurring again in the future; and 09:19 23 that should there be a violation in the future, 09:20 24 that we would obviously enter this consent order 09:20 25 into the record at the appropriate time. 09:20 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 46 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 And that's, I believe, the staff's 09:20 2 recommendation on those two matters. 09:20 3 CHAIRMAN CLOWE: Any comment? 09:20 4 MR. ATKINS: Commissioners, 09:20 5 Ms. Kiplin is correct. These consent orders come 09:20 6 about as a result of a complaint that was filed 09:20 7 against the organization and a subsequent 09:20 8 investigation done by our security division. And 09:20 9 upon reviewing that investigation, which I believe 09:20 10 to be very thorough, the only violation that they 09:20 11 were able to substantiate was the one dealing with 09:20 12 exceeding the 40 percent requirement. 09:20 13 This was brought to the attention of 09:20 14 the organization, who promptly responded to the 09:20 15 agency's request to address this situation. They 09:20 16 do have on file, which I believe is attached to the 09:20 17 order, their written procedures to prevent this 09:20 18 problem from occurring in the future. We believe 09:20 19 that those procedures will do that. 09:20 20 CHAIRMAN CLOWE: Very good. 09:21 21 MS. KIPLIN: So at this time, it 09:21 22 would be the staff's recommendation that you adopt 09:21 23 the proposed agreed order and consent order -- 09:21 24 agreed and consent order on those two cases. 09:21 25 COMMISSIONER SADBERRY: I wanted to 09:21 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 47 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 ask a question. 09:21 2 Billy, I was trying to recall -- and 09:21 3 I don't recall one -- is this the first violation 09:21 4 of the 40 percent rule that you've had? Have you 09:21 5 had others that you've dealt with? 09:21 6 MS. KIPLIN: I think it is. 09:21 7 MR. ATKINS: I think that's correct, 09:21 8 Commissioner Sadberry. I think -- and that's one 09:21 9 of the reasons I wanted to point out that this was 09:21 10 the only violation that was substantiated by the 09:21 11 investigation. I believe that there have been 09:21 12 other instances where the 40 percent violation has 09:21 13 been cited in conjunction with other violations. 09:21 14 So I do believe we have taken 09:22 15 administrative action on the 40 percent, but it was 09:22 16 part of a mitigating circumstance that included 09:22 17 other violations. 09:22 18 COMMISSIONER SADBERRY: And you see 09:22 19 my question? 09:22 20 MR. ATKINS: Yes, sir. 09:22 21 COMMISSIONER SADBERRY: What is 09:22 22 this? Is this a two-year-old or four-year-old 09:22 23 standing, the 40 percent? 09:22 24 MR. ATKINS: I believe it's 09:22 25 four-year-old. 09:22 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 48 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 COMMISSIONER SADBERRY: A 09:22 2 four-year-old. We haven't seen it a lot. 09:22 3 MR. ATKINS: Not a lot. 09:22 4 COMMISSIONER SADBERRY: I hope that 09:22 5 means it's not a problem. 09:22 6 MR. ATKINS: We see it. When we see 09:22 7 it, we address it either through those 09:22 8 investigations, through agreed orders. There have 09:22 9 been early-on instances where I believe we had 09:22 10 issued warnings to the organization. And of 09:22 11 course, this is a matter that we've included, you 09:22 12 know, extensive advice in the Bingo Bulletin, as 09:22 13 well as it's included on the operator training 09:22 14 program. 09:22 15 COMMISSIONER SADBERRY: A final 09:22 16 comment on that -- and probably in your report 09:22 17 today, we'll talk about this, however you want to 09:22 18 describe it -- that I think we cleared up at the 09:23 19 last meeting the three strikes issue. 09:23 20 And so I'm just making certain that 09:23 21 we are not in any way creating an issue by a 09:23 22 consent order, or I guess you could say 09:23 23 appropriated -- a term or sentence that might come 09:23 24 back later to be cited to you as some precedent. 09:23 25 At least if it is raised, you will have a 09:23 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 49 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 reasonable justification for it that won't water 09:23 2 down the rule or your enforcement of the rule. 09:23 3 MR. ATKINS: Well, again, to the 09:23 4 best of my recollection, I don't remember a time 09:23 5 when we've taken action solely based on the 09:23 6 40 percent. So it's my opinion that by entering 09:23 7 into this consent order, it would be consistent 09:23 8 with any other action that we would have taken 09:23 9 solely on the 40 percent issue. 09:23 10 I believe part of the reason that we 09:23 11 want to start going the route of the consent orders 09:24 12 is -- bring to the Commission's attention some of 09:24 13 those enforcement actions that the division takes 09:24 14 outside of a suspension or revocation. 09:24 15 COMMISSIONER SADBERRY: And I'm in 09:24 16 agreement with that. I know we haven't taken 09:24 17 action yet. I think we're creating a record, so if 09:24 18 someone needs to look at it -- 09:24 19 MR. ATKINS: That's right. 09:24 20 COMMISSIONER SADBERRY: Since we 09:24 21 haven't had a history of dealing with this 09:24 22 business, we ought to set the table for it and 09:24 23 speak to this in the event it might come up -- is 09:24 24 clear -- be clear, your considerations and reasons, 09:24 25 as well as the documentation. 09:24 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 50 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 I'm ready to move -- 09:24 2 MS. KIPLIN: Well, if I could just 09:24 3 follow up, before you do, on one statement. I 09:24 4 think Mr. Atkins indicated about taking up agreed 09:24 5 orders outside of suspension or revocation. You 09:24 6 know, I think it would be the preference of the 09:24 7 staff to, as much as possible, enter into agreed 09:24 8 orders or an agreed disposition of the case. 09:25 9 And it may be that an agreement in 09:25 10 the future would be a suspension of the license for 09:25 11 a particular period of time or, for that matter, a 09:25 12 revocation. There may be reasons why an 09:25 13 organization would go ahead and agree to that. 09:25 14 So I don't want to leave the 09:25 15 Commission with the impression that every time 09:25 16 there would be a suspension or revocation, it would 09:25 17 be in the guise of a contested case proceeding, 09:25 18 because I'm hopeful that we are on the road to 09:25 19 developing, under Mr. Atkins' stern of the 09:25 20 charitable bingo division, an uncontested docket 09:25 21 where we can reach agreement as much as possible 09:25 22 amongst the parties. 09:25 23 MR. ATKINS: And Kim raises a good 09:25 24 point. Those consent orders -- there are a variety 09:25 25 of administrative actions that could be included in 09:25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 51 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 a consent order, including but not limited to 09:25 2 suspension, revocation, temporary suspension for a 09:25 3 number of occasions, a monetary penalty, et cetera. 09:25 4 MS. KIPLIN: Commissioner, the two 09:26 5 matters that have raised this as a discussion item, 09:26 6 I would like to point out that the root procedures 09:26 7 have been filed and are part of the package I'm 09:26 8 going to send to you or just provide to you so that 09:26 9 you can see that there are -- even though you-all 09:26 10 have not actually entered into an agreed order, 09:26 11 their organizations, I think, are doing the best 09:26 12 they can to try to comply as quickly as they can 09:26 13 with the contents of the agreed order. 09:26 14 COMMISSIONER SADBERRY: I would so 09:26 15 move. 09:26 16 CHAIRMAN CLOWE: I would second. 09:26 17 All in favor, say aye; opposed, no. 09:26 18 The vote is 2-0 in favor. 09:26 19 And since we've had this discussion, 09:26 20 this is in reference to Items Q and R. 09:26 21 MS. KIPLIN: Correct. 09:26 22 Amvets Post 72 and Amvets Post 72 Auxiliary. 09:26 23 Commissioners, that leaves three 09:26 24 cases: N, O, and P. I would like to discuss the 09:26 25 three of these together. And in the notebook, of 09:26 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 52 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 course, you have the Proposal for Decision on all 09:26 2 three of these cases; and you also, in two of them, 09:27 3 have exceptions that were filed by the staff. 09:27 4 These, in my view, are egregious 09:27 5 violations. They are based on an audit report and 09:27 6 audit findings. And I can just go through -- and I 09:27 7 won't do that -- a litany of them. But it's for 09:27 8 items where there's money that's been paid that's 09:27 9 not authorized expenditures under the Bingo 09:27 10 Enabling Act. And it's a sizable amount of money. 09:27 11 Moneys -- for example, one, a failure to accurately 09:27 12 record over $50,000 in transactions relating to its 09:27 13 conduct of Bingo. 09:27 14 The one thing I would like to point 09:27 15 out to you on all three of these cases, it appears 09:27 16 to me in reading the findings -- and I am happy to 09:27 17 be corrected by either the charitable bingo 09:27 18 director or the staff attorney that handled these. 09:27 19 But there are principals, Steve and Martha 09:27 20 Ghassemi, that seem to be involved in all three of 09:28 21 these cases with expenditures and, as I recall, all 09:28 22 three of them going directly into these people's 09:28 23 personal accounts. 09:28 24 And that does give rise to an issue 09:28 25 that I know that the charitable bingo director is 09:28 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 53 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 concerned about, and that has to do with how we 09:28 2 monitor individual accountability for these 09:28 3 charitable organizations. 09:28 4 At this point, it's the charitable 09:28 5 organization that's on the hook. And I know that 09:28 6 there has been a concern on the division's part to 09:28 7 be able to keep focusing on the individual action 09:28 8 and holding the individuals accountable. But under 09:28 9 the current structure of the Enabling Act, that's 09:28 10 not possible in an administrative forum or 09:28 11 proceeding. 09:28 12 The acts of the individual, of 09:28 13 course, go to the organization. The organization 09:28 14 is the one who loses their license or has some 09:28 15 disciplinary action taken against their license. 09:28 16 I take the time on these three -- 09:29 17 and I have not in the past done this -- to point 09:29 18 out how egregious I believe these violations are 09:29 19 and the actions of the individuals in three 09:29 20 organizations. 09:29 21 And in another finding that I would 09:29 22 point out is that there were payments that were 09:29 23 made to organizations that appear not to exist or 09:29 24 there is no -- I guess no license held and no 09:29 25 location can be found for these. Now, that's one 09:29 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 54 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 issue that I want to bring up that covers all 09:29 2 three. 09:29 3 Another issue had to do with the 09:29 4 attorney who appeared in some fashion at the 09:29 5 hearing for these three licensees. It's my 09:29 6 understanding that the attorney appeared and made a 09:29 7 legal argument that the notice of hearing was 09:29 8 insufficient because it placed the burden of proof 09:29 9 on the applicant and not on the charitable bingo 09:29 10 division. 09:30 11 And then after the legal argument 09:30 12 was received, the attorney left the hearing and did 09:30 13 not stay while the staff put on evidence in the 09:30 14 record. You should know that the attorney, as I 09:30 15 understand it, left. And like I said -- 09:30 16 Ms. Schultz can correct me if I'm wrong -- in three 09:30 17 of these, that was the legal argument that was 09:30 18 propounded. 09:30 19 You have two different 09:30 20 administrative law judges. One administrative law 09:30 21 judge took up two of the matters; that would be Red 09:30 22 Men Council 7 White Cloud Pocahontas, and Amvets 09:30 23 Post 5. Another ALJ -- administrative law judge -- 09:30 24 took up the remaining matter, which was Red Men 09:30 25 Tribe 14 Caddo. 09:30 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 55 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 In the Red Men Tribe Caddo, we 09:30 2 believe that the administrative law judge correctly 09:30 3 recited the law that is contained -- expressly 09:30 4 contained in the Bingo Enabling Act that the burden 09:31 5 of proof is on the applicant to show why they 09:31 6 should be granted or issued a license. 09:31 7 In the two cases -- the other cases 09:31 8 that I mentioned previously, there was no 09:31 9 conclusion of law propounded or offered by the 09:31 10 administrative law judge regarding the burden of 09:31 11 proof issue. But there was dicta in both of the 09:31 12 proposals for decision indicating that the 09:31 13 administrative law judge believed that the burden 09:31 14 of proof went to the staff. Exceptions were filed 09:31 15 by the staff, commission staff, to that point. 09:31 16 We did not receive an amended 09:31 17 Proposal for Decision from the administrative law 09:31 18 judge. And, for that matter, the attorney for the 09:31 19 licensee did not file replies. 09:31 20 Depending on how you decide these 09:32 21 cases today, if you are to go with the 09:32 22 recommendations of the administrative law judges -- 09:32 23 by the way, that's what we are recommending for 09:32 24 sure, wholly, on Red Men Tribe 14 Caddo, but in 09:32 25 part on the other two -- we would request that the 09:32 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 56 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 Commission entertain entering into an order that 09:32 2 would adopt all of the administrative law judge's 09:32 3 proposed findings and conclusions on Red Men 09:32 4 Council 7 White Cloud Pocahontas, and on Amvet 09:32 5 Post 5; but also include an additional conclusion 09:32 6 of law that would make clearer that the burden of 09:32 7 proof is on the applicant on a license denial under 09:32 8 the Bingo Enabling Act. 09:32 9 And it's my understanding that what 09:32 10 you would be adopting is a clear recitation of the 09:32 11 provision in the Bingo Enabling Act that expressly 09:32 12 provides that it's the applicant that has the 09:33 13 burden of proof in these matters. 09:33 14 While it is dicta, and it is not 09:33 15 binding in any further case or proceeding since it 09:33 16 is not embodied in a finding or fact or conclusion 09:33 17 of law, I personally am concerned that in a 09:33 18 subsequent proceeding, this dicta would be used in 09:33 19 a manner, at least for persuasive argument, to 09:33 20 persuade an administrative law judge in a 09:33 21 subsequent proceeding to shifting the burden of 09:33 22 proof to the staff. 09:33 23 And that is the reason that the 09:33 24 staff is here today recommending that you adopt 09:33 25 what I've asked for you to adopt; but also adopt 09:33 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 57 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 this additional conclusion of law to -- if for no 09:33 2 other reason, to make clearer that the Bingo 09:33 3 Enabling Act does place the burden on the applicant 09:33 4 on a license denial. 09:34 5 And I'll be happy to answer any 09:34 6 questions that you may have or, I'm sure, other 09:34 7 staff. At this point, we make that recommendation 09:34 8 and ask that you take that vote. 09:34 9 COMMISSIONER SADBERRY: The ALJ, on 09:34 10 page 2, seems to rest on his or her -- the 09:34 11 perception that what really was at issue was a 09:34 12 disciplinary matter, not a -- 09:34 13 MR. ATKINS: I'm sorry, 09:34 14 Commissioner. What case are you on? 09:34 15 COMMISSIONER SADBERRY: I'm sorry. 09:34 16 This is the Pocahontas. This is the one which we 09:34 17 received -- I received the fax, exceptions where 09:34 18 the statute is -- Ms. Schultz, I believe, filed 09:34 19 this in the statutes and provisions set out, which 09:34 20 deals with the denial of an application, which is 09:34 21 what the ALJ seems to make the distinction on; a 09:34 22 disciplinary action, not a denial. It goes on to 09:34 23 say it's not important, more or less, but he 09:35 24 thought he'd raise it anyway. 09:35 25 So what you are suggesting, then, is 09:35 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 58 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 that it would be appropriate, in your mind, Kim, 09:35 2 for the Commissioners to state what the statute 09:35 3 already states in these three cases -- 09:35 4 MS. KIPLIN: Yeah. 09:35 5 COMMISSIONER SADBERRY: -- just in 09:35 6 case. 09:35 7 MS. KIPLIN: Yes. And it's in two 09:35 8 of the three because in the other one, the 09:35 9 administrative law judge did clearly indicate in 09:35 10 its proposal -- his Proposal for Decision, the 09:35 11 burden of proof is on the applicant, which is, in 09:35 12 our view, a correct interpretation of the law. 09:35 13 And as you note, there are very 09:35 14 narrow reasons for why a Commission could not adopt 09:35 15 a proposed finding or conclusion of law. And one 09:35 16 has to do with an incorrect interpretation of the 09:35 17 law; and we believe that the dicta, as written, is 09:36 18 an incorrect interpretation of the law. 09:36 19 COMMISSIONER SADBERRY: It is 09:36 20 interesting language, and it does not get picked 09:36 21 up, as you stated, in any of the operative 09:36 22 portions, which would be findings or conclusions. 09:36 23 And you are agreeing with the 09:36 24 results reached and requesting that we adopt the 09:36 25 results, or you're concerned about precedent? 09:36 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 59 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 MS. KIPLIN: Yes, that is correct. 09:36 2 We are recommending that you adopt all of the 09:36 3 proposed findings and conclusions of the 09:36 4 administrative law judge in all three cases; but in 09:36 5 two of the three, you also adopt an additional 09:36 6 conclusion of law. 09:36 7 COMMISSIONER SADBERRY: And we can 09:36 8 do that? 09:36 9 MS. KIPLIN: Yes. This is clearly 09:36 10 under the Administrative Procedure Act. You can 09:36 11 have additional conclusions of law. You can modify 09:37 12 if you believe that there is an incorrect 09:37 13 interpretation of the law -- and I've earmarked it. 09:37 14 Just let me go ahead and read it into the record so 09:37 15 that we don't have an issue. You can -- and we are 09:37 16 changing, in essence, the conclusion of law because 09:37 17 we're adding 2A. 09:37 18 (Reading) A State agency may change 09:37 19 a conclusion of law made by an administrative law 09:37 20 judge only if the agency determines that the 09:37 21 administrative law judge did not properly interpret 09:37 22 applicable law. 09:37 23 There's a bunch of others, but I'm 09:37 24 pinpointing the main point. So in this case, what 09:37 25 we're doing is -- expanding, I guess, would be a 09:37 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 60 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 better way of looking at it, on Conclusion of Law 2 09:37 2 because we're adding 2A. 09:37 3 COMMISSIONER SADBERRY: Which one is 09:37 4 that? 09:37 5 MS. KIPLIN: That's on Red Men 09:37 6 Council 7 and on Amvets Post 5. 09:37 7 COMMISSIONER SADBERRY: 09:38 8 Mr. Chairman, I'm in agreement with 09:38 9 the result that the staff -- should I make a 09:38 10 motion, or what should I do? 09:38 11 MS. KIPLIN: Well, you can certainly 09:38 12 deliberate, and then I need a motion. 09:38 13 COMMISSIONER SADBERRY: Okay. I 09:38 14 would be in agreement with the -- I understand what 09:38 15 the staff is saying, and I'm in agreement with it. 09:38 16 I get -- I won't say "concerned." I 09:38 17 guess I should say I get interested when we take on 09:38 18 an administrative law judge because we want to do a 09:38 19 certain result, but we have the integrity of that 09:38 20 office at issue. And as the language is stated, 09:38 21 you know, there is no particular harm to our 09:38 22 agency. 09:38 23 I agree that we would certainly want 09:38 24 to make it clear on a going-forward basis and I -- 09:39 25 I'm comfortable with doing that. I'm wondering if 09:39 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 61 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 there is another way to do it, if you can ask the 09:39 2 ALJ to take another look at it. Or what's the -- 09:39 3 what in your -- if you got a sense that we wanted 09:39 4 to go with the staff on this, what is the best way, 09:39 5 in your mind, to do that? 09:39 6 MS. KIPLIN: Well, the best way is 09:39 7 to file exceptions to bring the issue to the 09:39 8 attention of the ALJ, and we did it in both cases. 09:39 9 COMMISSIONER SADBERRY: That was 09:39 10 done. 09:39 11 MS. KIPLIN: In one case, the ALJ 09:39 12 indicated that he saw no reason to amend his 09:39 13 Proposal for Decision. I mentioned that. 09:39 14 In the other case, I don't believe 09:39 15 we heard back. We called in, and that was very 09:39 16 recently -- I think it was late last week -- and 09:39 17 have not heard back from the ALJ about whether he 09:39 18 intended to amend his Proposal for Decision. 09:39 19 My sense is that he did not intend 09:39 20 to because he did not in the first case, and the 09:39 21 exceptions were, but for it being a different 09:39 22 licensee, excepting to the same issue in the 09:39 23 Proposal for Decision. 09:40 24 Now, I will say it is dicta, and 09:40 25 it's not binding. My concern is somebody in a 09:40 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 62 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 future case precedent -- that's what it is -- 09:40 2 trying to make an argument, persuasive argument to 09:40 3 shift the burden of proof. And of course, I do 09:40 4 have the one that goes the other way, a different 09:40 5 administrative law judge. 09:40 6 COMMISSIONER SADBERRY: 09:40 7 Mr. Chairman, on this record, I'm 09:40 8 prepared to make a motion. I would move the 09:40 9 adoption of staff's recommendation concerning the 09:40 10 conclusions at issue and the proper placement of 09:40 11 the burden of proof as stated under the statute. 09:40 12 And I'm presuming that, if I'm going to request 09:40 13 that, orders be prepared to pick that up. 09:40 14 MS. KIPLIN: We have orders prepared 09:40 15 for your review. I'll be happy to provide those if 09:40 16 you'd like to take a look at them. 09:40 17 CHAIRMAN CLOWE: Okay. And I second 09:40 18 the motion. 09:40 19 My understanding, then, is that this 09:40 20 states our position but it does not have the same 09:41 21 effect, for example, as making case law. The 09:41 22 Commission is stating its position on the statute 09:41 23 as it is. 09:41 24 MS. KIPLIN: That's correct. 09:41 25 CHAIRMAN CLOWE: On the action. 09:41 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 63 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 MS. KIPLIN: We're simply just 09:41 2 lifting the language from the Bingo Enabling Act 09:41 3 and putting it in as a conclusion of law. 09:41 4 CHAIRMAN CLOWE: So we're sending a 09:41 5 clear signal. 09:41 6 And a second comment, before we have 09:41 7 a vote, is there is no one present representing 09:41 8 these individuals. There have been no public 09:41 9 witness forms passed to me, so I assume there is no 09:41 10 one here that wishes to comment. 09:41 11 MS. KIPLIN: No. But I will tell 09:41 12 you that the staff attorney has spoken with the 09:41 13 attorney for these licensees and he -- Mr. Rogers, 09:41 14 and he does know there is a Commission meeting 09:41 15 today in which these matters are noticed for your 09:41 16 consideration. 09:41 17 Is that correct, Ms. Schultz? 09:41 18 MS. SCHULTZ: That's right. 09:41 19 For the record, I'm Kaye Schultz, 09:41 20 assistant general counsel. And I spoke with 09:41 21 Mr. Rogers last week and notified him that these 09:41 22 three cases -- he represented the organizations in 09:42 23 all three cases and that all three would be coming 09:42 24 before the Commission at today's meeting. 09:42 25 CHAIRMAN CLOWE: All right. So 09:42 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 64 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 there has been good notice. 09:42 2 COMMISSIONER SADBERRY: And if I 09:42 3 may, Mr. Chairman, while my motion is being 09:42 4 considered -- I think I've asked this before in 09:42 5 previous cases. In the event any motions for 09:42 6 rehearing and things of that nature were brought on 09:42 7 these matters and Commissioner Whitaker would be 09:42 8 present, would she be entitled to participate in 09:42 9 those proceedings despite her absence? 09:42 10 MS. KIPLIN: Yes, she should. It 09:42 11 would be a motion for a hearing that would be 09:42 12 before her, and she -- it would be ripe for her 09:42 13 consideration should all the time lines be met. 09:42 14 COMMISSIONER SADBERRY: I'm 09:42 15 comfortable. 09:42 16 CHAIRMAN CLOWE: I am, too. Then 09:42 17 we'll go forward with the vote as aye. 09:42 18 COMMISSIONER SADBERRY: Aye. 09:42 19 CHAIRMAN CLOWE: And the vote is 2-0 09:42 20 in favor. 09:42 21 And the motion covers those items 09:42 22 covered in letters N, O, and P: Red Men Council 7 09:42 23 White Cloud Pocahontas, Ren Men Tribe 14 Caddo, and 09:43 24 Amvets Post 5. 09:43 25 MS. KIPLIN: Commissioners, there is 09:43 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 65 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 a camera now in the room, should you wish to -- 09:43 2 CHAIRMAN CLOWE: Okay. Let's just 09:43 3 hold that for the moment, if Linda and Billy can 09:43 4 stem their eagerness. And Commissioner Sadberry 09:43 5 and I will go forward into Item 15, the report by 09:43 6 the executive director on those subjects in the 09:43 7 notice. 09:43 8 Linda? 09:43 9 MS. CLOUD: Commissioners, on 09:43 10 January 12th, we transferred to the Foundation 09:43 11 School Fund $68,712,804. That gives a total 09:43 12 transfer from startup until now of $8,446,743. 09:43 13 Under the FTE status, we have 306 09:43 14 active FTEs. We have 26 vacant positions. We have 09:44 15 8 in the selection acceptance pending. We have 17 09:44 16 positions in the recruiting, screening, and 09:44 17 interviewing. And we have only one vacant position 09:44 18 with no activity. 09:44 19 CHAIRMAN CLOWE: What is the 09:44 20 situation in regard to Robert Bell's position? 09:44 21 Linda, would you comment on that 09:44 22 specifically? 09:44 23 MS. CLOUD: That job has been 09:44 24 posted -- let me see. I think I've got a close 09:44 25 date here. 09:44 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 66 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 I don't think it has closed yet, 09:44 2 Jim. I don't -- can't put my hands on it right 09:44 3 this second, for some reason, in this report -- 09:44 4 yes, the information technology director job 09:45 5 posting is open until filled. We have 31 09:45 6 applications received to date. 09:45 7 CHAIRMAN CLOWE: That's 09:45 8 IT No. 00143? 09:45 9 MS. CLOUD: Yes, sir. 09:45 10 The 31 applications, Jim, are being 09:45 11 screened -- 09:45 12 MR. RICHARDSON: Jim Richardson, 09:45 13 human resources director. So we're still 09:45 14 recruiting and screening for that position. 09:45 15 CHAIRMAN CLOWE: Linda, both you and 09:45 16 I made strong recommendations to the committee last 09:45 17 week on funds being made available for compensation 09:45 18 for State employees. I assume this would be one 09:45 19 position that this is most applicable to. Are 09:45 20 either you or Jim in a position to comment on the 09:45 21 applications that you've received or how difficult 09:45 22 it's going to be to find a replacement for Robert 09:46 23 at this point in time? 09:46 24 MS. CLOUD: I haven't seen the 09:46 25 applications. Jim can -- 09:46 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 67 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 MR. RICHARDSON: Right. I haven't 09:46 2 reviewed them specifically myself. This is going 09:46 3 to be a unique position because it's IT. It is 09:46 4 such a competitive market, so we are going to be 09:46 5 challenged a little bit in filling that position. 09:46 6 But I think we'll fill it pretty quickly. 09:46 7 MS. CLOUD: We have posted in all 09:46 8 the publications for the lottery industry, as well 09:46 9 as locally. 09:46 10 MR. RICHARDSON: Right. And in some 09:46 11 IT journals as well. 09:46 12 CHAIRMAN CLOWE: What's the salary 09:46 13 range on this position? You may -- 09:46 14 MS. CLOUD: 65 to -- 09:46 15 MR. RICHARDSON: 92, yes. 09:46 16 MS. CLOUD: Yeah. 09:46 17 MR. RICHARDSON: It's a B19 in the 09:46 18 classification salary schedule. 09:46 19 CHAIRMAN CLOWE: This is a highly 09:46 20 qualified position. 09:46 21 MS. CLOUD: When we hired Robert 09:47 22 Bell, the salary range was lower than that. It was 09:47 23 83. 09:47 24 MR. RICHARDSON: We -- it was 76 09:47 25 when we first hired him. 09:47 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 68 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 MS. CLOUD: Right. And we hired him 09:47 2 in at the very top of the range to get him. So it 09:47 3 is a tough one to try to fill. Right now, Chuc 09:47 4 Wilson is acting director, and he's doing a very 09:47 5 good job. 09:47 6 CHAIRMAN CLOWE: And Chuc has been 09:47 7 the assistant director. Is that correct? 09:47 8 MS. CLOUD: Yes, assistant systems 09:47 9 administration director. 09:47 10 CHAIRMAN CLOWE: Yeah. Okay. Fine. 09:47 11 I think we'll make that continuing recommendation 09:47 12 as we go before these future committees, asking for 09:47 13 strong consideration for increased funding for 09:47 14 compensation for these State employees. 09:47 15 MS. CLOUD: Commissioners, we 09:47 16 equally, probably, to this position have a 09:47 17 tremendous amount of difficulty in hiring qualified 09:47 18 people in our financial department as well. 09:48 19 Accountants are very hard to hire in. They make 09:48 20 more money in the private industry than they do in 09:48 21 State government, so it's very difficult to -- 09:48 22 we've had a position for assistant director open 09:48 23 for almost six months now. 09:48 24 CHAIRMAN CLOWE: Okay. Very good. 09:48 25 Any other questions? 09:48 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 69 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 COMMISSIONER SADBERRY: I don't have 09:48 2 any. 09:48 3 MS. CLOUD: We had a town hall 09:48 4 meeting in Corpus Christi last Thursday -- 09:48 5 CHAIRMAN CLOWE: Thank you, Jim. 09:48 6 MS. CLOUD: -- and it was a very 09:48 7 successful meeting. We had about 60 retailers 09:48 8 there, about 90 people altogether. They brought 09:48 9 members of their staff or their spouses. It was a 09:48 10 very good meeting, very positive. And we had some 09:48 11 real good feedback, as usual, from this meeting. 09:48 12 And that's all I have to report, 09:48 13 Commissioners. 09:48 14 CHAIRMAN CLOWE: When is your next 09:49 15 town hall meeting, Linda? 09:49 16 MS. CLOUD: I think it's May. I 09:49 17 think we spread this one out because of the session 09:49 18 and being in town. 09:49 19 CHAIRMAN CLOWE: Where do you think 09:49 20 it will be? 09:49 21 MS. CLOUD: I'm not real sure. I 09:49 22 can get that schedule before we end the meeting 09:49 23 today. 09:49 24 MS. SMITH: I can -- 09:49 25 CHAIRMAN CLOWE: Toni says she has 09:49 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 70 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 it, I think. 09:49 2 MS. SMITH: I'll go get it. 09:49 3 CHAIRMAN CLOWE: That's fine. Get 09:49 4 it to us when you can, please. 09:49 5 Any questions or comments? 09:49 6 COMMISSIONER SADBERRY: Linda, it 09:49 7 was either the fax or it was in the package about 09:49 8 one of your roundtable meetings with the media. Is 09:49 9 that the same one you've already had, or is that 09:49 10 the one you're planning in the future? 09:49 11 MS. CLOUD: That was the one we had 09:49 12 on the 9th of January. 09:49 13 COMMISSIONER SADBERRY: Well, my 09:49 14 observation is -- and I believe it was about a year 09:49 15 ago -- that we were having issues that the minority 09:49 16 media, the King Group -- and if I am perceiving it 09:50 17 correctly, it sounds like you have dealt with those 09:50 18 issues very effectively. 09:50 19 MS. CLOUD: We -- I think we have. 09:50 20 This one is a little bit more difficult, only 09:50 21 because we're requiring certain types of 09:50 22 circulation to have an audit. 09:50 23 COMMISSIONER SADBERRY: And as I 09:50 24 say, I think it's been a year ago. 09:50 25 MS. CLOUD: That's right. 09:50 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 71 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 COMMISSIONER SADBERRY: And my 09:50 2 belief is, my feel is that particularly the 09:50 3 minority media came up two or three meetings -- at 09:50 4 least two meetings consecutively, maybe three -- is 09:50 5 that there was a recognition that there was a need 09:50 6 to do that and felt you had reason to address those 09:50 7 issues and were working with you -- just asked that 09:50 8 you have some consideration with that position. 09:50 9 And again, it sounds to me like all 09:51 10 the feedback I have received is that you've been 09:51 11 effective in dealing with that. And it's always 09:51 12 good to see something like that accomplished. A 09:51 13 lot of times, that's not always obvious or apparent 09:51 14 because you'd know more about it if it were blowing 09:51 15 up in your face with a problem, other than as it 09:51 16 appears now, when you've effectively dealt with it. 09:51 17 The same I could say for the 09:51 18 King Group. We were virtually at the loss of that 09:51 19 contract -- all I hear was indicators that -- 09:51 20 MS. CLOUD: Everything's working 09:51 21 well. 09:51 22 COMMISSIONER SADBERRY: Very well. 09:51 23 I think those are just, from my perspective, two 09:51 24 good examples of how things can be -- how dealing 09:51 25 with them, the way you do it, can produce such 09:51 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 72 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 positive results. And it benefits the agency. 09:51 2 We can deal with it that way rather 09:51 3 than having to address it in other ways that causes 09:51 4 us more problems and creates problems with the 09:51 5 agency; or more importantly, may serve to the 09:52 6 detriment of our relationship in the communities 09:52 7 that we serve. 09:52 8 So I'm just -- I thought I was 09:52 9 getting a correct read on it, and I'm just pleased 09:52 10 to see that. 09:52 11 MS. CLOUD: Thank you. I think it's 09:52 12 working out. I think the feedback that I'm getting 09:52 13 is -- even though they may not agree with me 09:52 14 totally, they think I'm trying to do the right 09:52 15 thing. 09:52 16 COMMISSIONER SADBERRY: That's 09:52 17 what's important. 09:52 18 MS. CLOUD: And that's what's 09:52 19 important to me. 09:52 20 CHAIRMAN CLOWE: Very good. Thank 09:52 21 you. 09:52 22 We're now at Item 16, report by the 09:52 23 charitable bingo operations director and possible 09:52 24 discussion and/or action on the charitable bingo 09:52 25 operations division's activities. 09:52 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 73 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 Billy? 09:52 2 MR. ATKINS: Commissioners, I'd just 09:52 3 back up what Linda had said about the problem that 09:52 4 they've had with getting positions in the finance 09:52 5 division. As you know, there have been a number of 09:52 6 positions in our Dallas regional office that have 09:52 7 been posted for several months. There are three 09:52 8 positions currently vacant. We have two applicants 09:52 9 currently going under the background investigation. 09:53 10 So hopefully, if that's successful, we'll be able 09:53 11 to fill two of those three positions. 09:53 12 There is still an advisory committee 09:53 13 meeting tentatively scheduled for February 14th. 09:53 14 And I wanted to draw your attention -- we have, in 09:53 15 January, two conferences; one on the 18th for the 09:53 16 VFW, and one on the 26th for the American Legion. 09:53 17 The one on the 18th that we did for 09:53 18 the VFW, we held in conjunction with their annual 09:53 19 conference, our operator training program. And I'm 09:53 20 happy to report that there were about 39 of their 09:53 21 organizations represented at that training program. 09:53 22 And we received a lot of favorable response as far 09:53 23 as holding that in conjunction with their 09:53 24 conference. 09:54 25 Currently, there are 81 percent of 09:54 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 74 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 the conductor licensees that have completed the 09:54 2 training. As you know, through rule, all 09:54 3 organizations will have to have at least one person 09:54 4 on their record who has attended the training 09:54 5 effective September 1st of this year. So we're 09:54 6 working on getting notice to all licensees, making 09:54 7 sure that they are mindful of that date and are 09:54 8 making plans on getting someone trained. 09:54 9 We have a couple of more conferences 09:54 10 tentatively scheduled for the remainder of the 09:54 11 year, including the Elks Conference in June, where 09:54 12 they have also asked us to operate the training 09:54 13 program in conjunction with their conference. So 09:54 14 that suggestion has been well received. 09:54 15 MS. CLOUD: Commissioners, if I may, 09:54 16 Toni has brought me the update on the town hall 09:54 17 meetings. The next one is in Lubbock. It will be 09:55 18 the end of February or first of March. It has not 09:55 19 been scheduled for the exact date yet. 09:55 20 CHAIRMAN CLOWE: Billy's advisory 09:55 21 committee is going to meet on Valentine's Day. 09:55 22 MR. ATKINS: I certainly hope that 09:55 23 doesn't go very long. 09:55 24 CHAIRMAN CLOWE: While we're on the 09:55 25 subject of meetings and we're under the executive 09:55 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 75 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 director and the charitable bingo operations 09:55 2 director subjects, in our appearance last week 09:55 3 before the Senate Committee, other agencies were 09:55 4 asked the question about are there meetings in 09:55 5 Austin and out of Austin, around the state. And 09:55 6 that subject comes to mind. I'd like for us to 09:55 7 just take a minute to review our practice. 09:55 8 We have stuck to the practice of 09:55 9 having Commission meetings in Austin. Linda, you 09:55 10 have had the retail forum meetings around the 09:55 11 state. You've done a good job of getting out, 09:56 12 which I think is very important because the 09:56 13 retailers are not going to come in to Austin, and 09:56 14 you've proven that to yourself. 09:56 15 And then, Billy, your advisory 09:56 16 committee meetings continue to be in Austin. That 09:56 17 subject has been covered, and you've made the 09:56 18 conscious decision to continue to have those here, 09:56 19 if I remember correctly. 09:56 20 I'd just like, at this time, to make 09:56 21 certain that's the track we want to be on. Do we 09:56 22 want to reexamine having Commission meetings 09:56 23 outside of Austin and other cities, or what would 09:56 24 our answer be if we were asked that question by the 09:56 25 legislature in regards to that? 09:56 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 76 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 COMMISSIONER SADBERRY: 09:56 2 Mr. Chairman, like you heard, those 09:56 3 discussions -- and, quite frankly, I was trying to 09:56 4 discern which way the members of the Senate Finance 09:56 5 Committee were going on it. It seemed like, in 09:56 6 some instances, they were in favor of moving the 09:56 7 meetings beyond the City of Austin -- and I think 09:57 8 of the workers' compensation as an example -- and I 09:57 9 can understand the reasons for that. 09:57 10 And yet I also -- I don't think 09:57 11 anybody made a definitive statement, but I got a 09:57 12 gist of something in kind of a contrary direction, 09:57 13 where it's a regulatory agency meeting at its 09:57 14 headquarters for regulatory purposes. 09:57 15 And then thinking back, I recall a 09:57 16 specific time -- and this would go all the way back 09:57 17 to when we were in the Founders Building -- where 09:57 18 we actively investigated that. And I think we were 09:57 19 poised to move in the direction of having it -- 09:57 20 having the Lottery Commission meetings actually 09:57 21 rotated and be held on a pretty systematic basis 09:57 22 outside of Austin. 09:57 23 That never happened, and I'm at a 09:57 24 loss now to recall, but I just think there was 09:57 25 something that we were advised by maybe staff -- 09:57 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 77 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 expense or something of that nature -- to cut 09:57 2 against that. So there was a thinking that maybe 09:57 3 the State would like to see that. 09:57 4 I do know that when we were looking 09:57 5 at the matrix change, we did have meetings, 09:58 6 although we understood that to be for forums to 09:58 7 receive input. But they were official meetings. I 09:58 8 attended one in Houston, and I think there were 09:58 9 meetings held in other places. 09:58 10 And of course, if we go to 09:58 11 conventions now, Kim, depending on how the 09:58 12 legislature comes out on it, you'll have to tell us 09:58 13 whether that's going to have to be posted as 09:58 14 meetings. 09:58 15 I think, Mr. Chairman, I have not 09:58 16 heard any inquiry in any of the sessions I've 09:58 17 attended of the legislature, but we've not been 09:58 18 asked those kinds of questions, nor did we get 09:58 19 asked that the other day, obviously. 09:58 20 I think for specific purposes like 09:58 21 matrix change issues and things of that nature, 09:58 22 where we know it's a broad-based public appeal 09:58 23 issue and we have printing in the media, you're 09:58 24 having it in Austin at 10:00 on Wednesday 09:58 25 morning -- "I can't get there" -- you know, you'll 09:58 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 78 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 eliminate so much of the public by doing it that 09:58 2 way. 09:59 3 Those situations seem to cry out for 09:59 4 accessibility to the public, making ourselves 09:59 5 available. It's always interesting to me to see 09:59 6 how diverse our participation is from a broad 09:59 7 spectrum of the state here in Austin on our 09:59 8 regulatory purpose meetings. 09:59 9 I think my own view is, 09:59 10 Mr. Chairman, we should continue to be sensitive to 09:59 11 the issue, realizing the geographic expansiveness 09:59 12 and diversity of our state, where reasons come up 09:59 13 to do that. I've seen in the media where members 09:59 14 of the university regents more or less 09:59 15 traditionally will have meetings outside of the 09:59 16 location of their particular university. Of 09:59 17 course, they might have recruitment issues and 09:59 18 business reasons for doing that. 09:59 19 I think our meetings generally being 09:59 20 scheduled here in Austin has worked. I don't think 09:59 21 we've been criticized or come up short for not 09:59 22 being available and accessible to the public. 09:59 23 We do call on our staff so much. 09:59 24 And as you often see, the staff will need to go 10:00 25 back and check records and confer when we've asked 10:00 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 79 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 for information and we have administrative 10:00 2 procedures that require sometimes testimony, 10:00 3 presentations, and what have you. 10:00 4 So I think in general, it would seem 10:00 5 like the trend we've been on would be the one to 10:00 6 stay on. But we should always be mindful of the 10:00 7 legitimate reasons for meeting outside the City of 10:00 8 Austin where the need might justify it or the 10:00 9 interest might be served to do so. 10:00 10 CHAIRMAN CLOWE: Thank you. That's 10:00 11 just exactly the introspective view I wanted on 10:00 12 this subject at this time. I totally agree with 10:00 13 your comments, and I think that it needed to be 10:00 14 reviewed in a conscious decision that we're on a 10:00 15 schedule, normally, of meeting once a month. I 10:00 16 think we want to continue to do that because we 10:00 17 have a great amount of work and deliberation that 10:01 18 requires us to meet monthly. 10:01 19 The staff consideration is a major 10:01 20 one. There are a great number of people in this 10:01 21 room this morning who are staff members who are 10:01 22 participating in the meeting, need to be here, and 10:01 23 need to be close to their reference material or 10:01 24 their records. 10:01 25 And yet we have reached out, when 10:01 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 80 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 necessary, to meeting places around the state. We 10:01 2 can continue to do that. But I wanted just to talk 10:01 3 about it, review it, and make a conscious decision 10:01 4 that we're comfortable with this program. 10:01 5 And I appreciate your comments, 10:01 6 Commissioner Sadberry. And I think the two of us 10:01 7 agreed informally we'll continue on this path until 10:01 8 some reason, other than that which we might see at 10:01 9 this time, appears and would change it. 10:01 10 Very good. My records indicate we 10:01 11 have covered, now, all of the public agenda items. 10:01 12 Commissioner Sadberry, I'm puzzled 10:02 13 by the fact that you and I can do in an hour and a 10:02 14 half what it takes -- when Commissioner Whitaker is 10:02 15 here, it takes us all day to -- 10:02 16 COMMISSIONER SADBERRY: And I can 10:02 17 only think of two possible events that -- 10:02 18 CHAIRMAN CLOWE: Would you care to 10:02 19 mention those? 10:02 20 COMMISSIONER SADBERRY: I won't go 10:02 21 into either one of those. I just want to encourage 10:02 22 you to continue to chair our meetings. 10:02 23 CHAIRMAN CLOWE: It's not me, I can 10:02 24 tell you. 10:02 25 MS. KIPLIN: Commissioner Clowe, I'm 10:02 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 81 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 not sure -- I didn't know if I heard you take up 10:02 2 the public comment item. 10:02 3 CHAIRMAN CLOWE: I'm going to do 10:02 4 that. I'm going to do that before I make another 10:02 5 motion, and that is the last item on the agenda. I 10:02 6 do not see any public person that I think would 10:02 7 want to make a comment, nor have there been any 10:02 8 witness forms handed to me. 10:02 9 Is there anyone who wishes to make a 10:02 10 public comment? 10:02 11 Hearing none, at this point, I move 10:02 12 the Texas Lottery Commission go into executive 10:02 13 session to deliberate the duties and evaluation of 10:02 14 the executive director, the internal auditor, and 10:02 15 the charitable bingo operations director, pursuant 10:03 16 to Section 551.074 of the Texas Government Code; 10:03 17 To deliberate the duties of the 10:03 18 general counsel and security director pursuant to 10:03 19 Section 551.074 of the Texas Government Code; 10:03 20 To receive legal advice 10:03 21 regarding pending or contemplated litigation 10:03 22 and/or to receive legal advice pursuant to 10:03 23 Section 551.071 (1) (A) or (B) of the Texas 10:03 24 Government Code and/or to receive legal advice 10:03 25 pursuant to Section 551.071 (2) of the Texas 10:03 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 82 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 Government Code, including but not limited to: 10:03 2 Matters involving the Department of 10:03 3 Justice pursuit of a complaint regarding the 10:03 4 Americans with Disabilities Act; 10:03 5 Matter involving Request for Open 10:03 6 Records Decision in Attorney General Open Records 10:04 7 file No. 119718-98 related to request for 10:04 8 information in connection with the lottery operator 10:04 9 audit; 10:04 10 Assignments of prize winnings and 10:04 11 related litigation; 10:04 12 Employment law, personnel law, 10:04 13 procurement law, and general government law. 10:04 14 Is there a second? 10:04 15 COMMISSIONER SADBERRY: Second. 10:04 16 CHAIRMAN CLOWE: All in favor, say 10:04 17 aye. 10:04 18 2-0 in favor. 10:04 19 The Texas Lottery Commission will 10:04 20 now go into executive session. The time is 10:05 10:04 21 a.m. The date is January 29, 2000. 10:04 22 (EXECUTIVE SESSION.) 23 CHAIRMAN CLOWE: The Texas Lottery 13:36 24 Commission is out of executive session. The time 13:36 25 is 1:37 p.m. Is there any action to be taken as a 13:36 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 83 TEXAS LOTTERY COMMISSION MEETING, 1-29-01 1 result of the executive session? 13:36 2 COMMISSIONER SADBERRY: (Shakes 13:36 3 head.) 13:36 4 CHAIRMAN CLOWE: If not, we are 13:36 5 ready to adjourn. This meeting is adjourned at 13:36 6 1:37. 13:36 7 (Proceeding concluded.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363 84 1 REPORTER'S CERTIFICATION 2 3 STATE OF TEXAS ) 4 COUNTY OF TRAVIS ) 5 6 I, SUZANNE T. LANE, Certified Court 7 Reporter for the State of Texas, do hereby certify 8 that the above-captioned matter came on for hearing 9 before the TEXAS LOTTERY COMMISSION as hereinafter 10 set out, that I did, in shorthand, report said 11 proceedings, and that the above and foregoing 12 typewritten pages contain a full, true, and correct 13 computer-aided transcription of my shorthand notes 14 taken on said occasion. 15 16 Witness my hand on this the _______ 17 day of ______________, 2001. 18 19 20 SUZANNE T. LANE 21 Texas CSR No. 6992 Expiration Date: 12/31/01 22 1609 Shoal Creek Boulevard Suite 202 23 Austin, Texas 78701 (512) 474-4363 24 25 JOB NO. 010129STL WRIGHT WATSON STEN-TEL (800) 375-4363 (512) 474-4363