Minutes: November 28, 2001

2 MISSOURI GAMING COMMISSION

PUBLIC MEETING

9 Wednesday, November 28, 2001

10 City Council Room

11 525 Spring Street

12 Boonville, Missouri

IN RE: ISLE OF CAPRI-BOONVILLE, INC.

Reported by:

Stacy Brandes

22 BALLEW REPORTING SERVICES

2213 State Route W * 7430 Highway 40 West

23 Fayette, MO 65248 * Columbia, MO 65203

660-248-3014 * 573-446-6455

1 A P P E A R A N C E S

Missouri Gaming Commission:

Commissioners:

4 ROBERT SMITH, Vice Chairman

DR. MURIEL W. BATTLE

5 LYNNE R. NIKOLAISEN, via telephone

6 KEVIN MULLALLY, Executive Director

ANGIE FRANKS, Secretary

7 SERGEANT RICH MASON, Highway Patrol Team

STEVE JOHNSON, Deputy Director

8 PATRICIA CHURCHILL, Deputy Director for Legal and

Legislative Affairs

10 ISLE OF CAPRI-BOONVILLE, INC.:

11 TOM CAMPBELL, MO Regulatory Counsel for Isle of Capri

TOM CARR, Regional Vice President for Operations

12 JEFF KING, Vice President/General Manager

JACK GALLAWAY, President and Chief Operating Officer

14 CITY OF BOONVILLE:

15 BUD KEMPF, Mayor

TRACY WALKUP, City Manager

1 I N D E X

2 Page

3 Public Hearing called to order . . . . . . . . 4

4 Roll Call of Commissioners . . . . . . . . . . 4

5 Consideration of Suitability for Licensure . . 5

6 Presentation from Isle of Capri-Boonville, Inc. 6

7 Presentation from City of Boonville. . . . . . 21

8 Presentation of Highway Patrol Background

Investigation. . . . . . . . . . . . . . . . . 36

Presentation of Operational Issues . . . . . . 44

Presentation from Legal Representative . . . . 53

Taking up Resolution No. 01-073. . . . . . . . 54

Motion to adopt Resolution No. 01-073,

13 made by Commissioner Nikolaisen, seconded by

Commissioner Battle. . . . . . . . . . . . . . 54

Roll call of Commissioners on

15 Resolution No. 01-073. . . . . . . . . . . . . 54

16 Taking up Resolution No. 01-074. . . . . . . . 55

17 Motion to adopt Resolution No. 01-074,

made by Commissioner Battle, seconded by

18 Commissioner Nikolaisen. . . . . . . . . . . . 55

19 Roll call of Commissioners on

Resolution No. 01-074. . . . . . . . . . . . . 56

Public meeting adjourned . . . . . . . . . . . 57

1 P R O C E E D I N G S

2 COMMISSIONER SMITH: I guess we need to

3 call the meeting to order, so if everybody would have a

4 seat. If you want to join us, there are some extra seats

5 over here.

6 I'm Bob Smith and I'm the vice chairman of

7 the commission. I'm acting because the chairman has

8 retired and the Governor hasn't appointed a new one yet.

9 So I'm here and Muriel Battle is here with us and on the

10 telephone is Lynne Nikolaisen, three members of the

11 Commission. The fourth member of the Commission is

12 somewhere in the Himalayan Mountains, so we can't reach

13 him, but we do have a quorum and are prepared to go ahead.

14 I apologize, first, for having the meeting

15 start late, but we did take an extensive tour of the

16 facility and went through it in detail this morning before

17 we came here. I apologize for keeping you all waiting.

18 I do want to say, first, that I'm happy to

19 be here in Boonville, and it's the first time I've been in

20 your new City Hall, which I understand Mr. Kempf was

21 responsible for and always -- since I live in Columbia, we

22 get over here quite a bit, but we are very pleased to be

23 here and glad you made this available to us. With that

24 opening, I guess we need to call the roll.

25 ANGIE FRANKS: Commissioner Smith.

1 COMMISSIONER SMITH: Present.

2 ANGIE FRANKS: Commissioner Nikolaisen.

3 COMMISSIONER NIKOLAISEN: Present.

4 ANGIE FRANKS: Commissioner Battle.

5 COMMISSIONER BATTLE: Present.

6 ANGIE FRANKS: Commissioner Adorjan.

7 COMMISSIONER SMITH: All right. The roll

8 has been called. I guess we'll reconvene this open

9 session at this time, and I guess the primary

10 consideration is the suitability for the issuance of a

11 license to Isle of Capri.

12 I'll first call on our executive director,

13 Mr. Mullally, to give us the preliminary report.

14 KEVIN MULLALLY: Thank you, Mr. Chairman.

15 I'd also like to thank the City of Boonville, Mayor Kempf,

16 Tracy, for hosting us today, and I appreciate the

17 accommodations.

18 As we mentioned, the only item on the

19 agenda today is the consideration of suitability for

20 licensure for the Class A Licensee the Isle of Capri-

21 Boonville. I want to clarify that this is not the actual

22 licensing. This is the culmination of a lengthy

23 background investigation into the parent company's

24 activities in developing this site, all the principals

25 involved, and their financial suitability. And this will

1 simply be a finding that the company is suitable to hold

2 license. There are still some operational hurdles that we

3 need to get through before making a final determination on

4 licensure.

5 The order of the presentation this

6 morning: First, we will hear from the company, and then

7 we will hear from the City of Boonville. We will then

8 have the opportunity for any member of the public that

9 would like to offer any comments on this project or the

10 applicant. Then, finally, we will have a presentation

11 from the background investigation team regarding the

12 results of the background investigation.

13 So without objection, Mr. Chairman, I'll

14 call on Tom Campbell, representative for Isle of Capri-

15 Boonville, to make his company's presentation.

16 COMMISSIONER SMITH: Lynne, first, can you

17 hear us all right so far?

18 COMMISSIONER NIKOLAISEN: Yeah. I heard

19 Kevin just fine, so if Mr. Campbell gets in the same place

20 as Kevin, I should be able to hear him.

21 COMMISSIONER SMITH: Why don't you try

22 speaking there first and see if she can hear you, if not,

23 then you can move.

24 TOM CAMPBELL: Okay. Thank you,

25 Commissioners. Good morning, Director Mullally. My name

1 is Tom Campbell. I'm a partner with the St. Louis law

2 firm of Gallop, Johnson & Neuman, which serves as Missouri

3 regulatory counsel for the Isle of Capri Casinos, Inc. and

4 it's subsidiaries in Missouri, specifically,

5 IOC-Boonville.

6 COMMISSIONER SMITH: Before you go further,

7 Lynne, can you hear him all right?

8 COMMISSIONER NIKOLAISEN: I can hear him

9 just fine, thank you.

10 TOM CAMPBELL: Jack Gallaway, who is the

11 president and chief operating officer over the Isle of

12 Capri, flew in for the meeting and he's en route, so he

13 will be arriving later, and he will probably like to say a

14 few words. Along with him are a number of key executive

15 management officers of the corporation who wanted to be in

16 Boonville because of the interest they have in making sure

17 that this project, as they have with their other projects,

18 opens efficiently and without a problem and continues over

19 the years to be a good operation.

20 On my right is Tom Carr, who is regional

21 vice president for operations, and on my left is Jeff

22 King, who is vice president/general manager for the

23 IOC-Boonville development. They will each respectively

24 make a presentation. Tom will make his first on the

25 project as it is now evolving.

1 TOM CARR: I think I'm going to go over to

2 the podium. It would be easier. Good morning, again.

3 You have my welcome to Boonville. I'll suspect you'll

4 get welcomed to Boonville several times today because we

5 really are --

6 COMMISSIONER SMITH: I should mention that

7 Mr. Carr was our guide in going through the casino

8 facilities, so we appreciate you taking us through there.

9 TOM CARR: It's always a pleasure to show

10 off your new baby, so we were very pleased to be able to

11 do that this morning. Can she hear me all right?

12 COMMISSIONER NIKOLAISEN: Yes.

13 TOM CARR: Okay. Good. Thank you. We

14 have a relatively brief slide presentation that Jeff and I

15 are going to go through, but we wanted to reacquaint you

16 with a couple of things and talk about a few facts that I

17 hope will be useful to you this morning. Jeff, go ahead.

18 As an overview of the property, and clearly

19 you just walked it so you've seen most of this, but there

20 is a 28,000-square foot casino there contained on the

21 barge with 900 slot machines and 28 tables. Are we

22 actually opening with exactly 28, Jeff?

23 JEFF KING: Yes.

24 TOM CARR: Exactly 28, because at one time

25 I think we talked in the low thirties, but we are going to

1 have 28 tables, which you saw this morning.

2 Off the barge, there's 25,000 square feet

3 of public space. We have our Calypsos Buffet. These are

4 signature restaurants within the Isle of Capri, so if you

5 go to an Isle of Capri, you will see similarly named

6 restaurants. The buffet has 275 seats. We have a

7 Farraddays' Restaurant, which has 75 seats, which is our

8 fine dining restaurant that is used by our best customers.

9 We have a Tradewinds Marketplace, which is a fast food.

10 It's certainly more than a snack bar, but it offers a

11 variety on the menu. It offers people a quick and

12 relatively inexpensive place to get a meal. Then we have

13 a retail area, a gift shop, if you will. And we have an

14 upstairs area that is kind of a multipurpose room that we

15 will be able to have parties and break-out rooms. The

16 kind of thing that has a lot of flexibility to offer

17 events for the property as well as for the community.

18 And there will be a historic display area

19 on the property. I don't know whether it was pointed out

20 when you walked in the front door as to where it's going

21 to be, but as you enter the property, there's going to be

22 an area that will display historical items from the

23 Boonville community. That is being put together by a lady

24 named Judy Shields, if I've got her name right, who is

25 involved with the local historical society. She's putting

1 together a collage, montage if you will, of artifacts for

2 the area that will be displayed there. In addition to

3 that display, there is going to be a mural that is going

4 to be hung in the entrance to the left as you go in. That

5 is being done and it is done specifically for Boonville

6 and is about Boonville. And I think we're going to have a

7 lot of fun in showing it off in the area.

8 The other thing that is historic on the

9 property is the Katy Trail. We've had our issues in

10 getting the Katy Trail accomplished here, and I'll show

11 you how it moves through the property, but running on the

12 east side of the property, south and kind of east of the

13 property, is the Katy Trail. And I'll show you in a

14 minute where that goes.

15 The other thing I wanted to mention is we

16 have designed this project to put a hotel in, and I'm

17 looking forward to -- when it opens as successfully as I

18 know it will, I'm looking forward to going into our board

19 and getting the money to put a hotel here. And if Jack

20 was here, and he is here.

21 JACK GALLAWAY: I think I came in a few

22 minutes early.

23 TOM CARR: I will put the arm on Jack

24 fairly soon. We've designed it in the project so we can

25 do it in a way that really doesn't disrupt the business,

1 but we think it will be a good addition.

2 Go ahead, Jeff. That's the site plan.

3 You've obviously just walked it. That site plan is early

4 in April of -- March of 2001, I believe. You'll see the

5 Katy Trail, if you look at that site plan, in the upper

6 right-hand corner. You can see how the Katy Trail enters

7 near Main Street and proceeds through the site. That is

8 an old -- that was where it was initially going to be

9 placed, and I'll show you on the next slide where it is

10 today. But other than that, the placement of the Katy

11 Trail, everything on there is as we had contemplated, and

12 you will see marked as -- is it "C" Jeff?

13 JEFF KING: Yes, "C."

14 TOM CARR: That's the site of the future

15 hotel. It's back -- it will actually be out where the

16 loading dock area is, and we've planned it in such a way

17 that we can build that as soon as it makes sense for us to

18 do that.

19 Go ahead to the next one, Jeff. This shows

20 where the Katy Trail is actually located today. On the

21 far right of that it enters near Main Street, comes along

22 the south side of the project, and then moves east back

23 towards -- ultimately ends up, I guess, at Water Street.

24 So the Katy Trail moves through that site, and we expect

25 that that will have quite a bit of use. So that's the

1 site as it lays out.

2 Go ahead, Jeff. Now, we wanted to give you

3 a little bit of a historical perspective in the sense of

4 showing you kind of what was there. Most of you saw that,

5 I didn't. I didn't join the project until late 2000. Go

6 ahead, Jeff, and kind of flip through that. It's a little

7 bit dark and a little bit hard to see, but that's the site

8 as it was as development was contemplated. That was a

9 road that was there. Go ahead, Jeff. This is the

10 railroad track looking back towards the bridge, and this

11 is looking up Second Street, all of which has been

12 substantially improved today.

13 Go ahead, Jeff. Then, as you can see, the

14 superstructure begins to come out of the ground. Mother

15 Nature was not completely our friend last year as we went

16 through a tough winter here, but in spite of all of that,

17 we really have all been pretty well on time. There is the

18 superstructure, more of the superstructure.

19 Go ahead, Jeff. Obviously, it begins to

20 take shape. And then the first look at kind of the

21 interior, which you saw in a pretty well-finished way

22 today, use of the neon color, the openness. Go ahead,

23 Jeff. The exterior shot. That's now -- we were pleased

24 to see today that we got the logo up on the side of the

25 paddle wheel. At night, I haven't been here yet to see it

1 at night, looking forward to doing that this weekend, but

2 I understand at night with the light, it really is a

3 pretty impressive view. Tom Campbell told me that as he

4 was flying over from wherever you were flying, from

5 Phoenix, I guess, that he was able to look down and see it

6 from the air. So it's really taking shape.

7 Go ahead, Jeff. That was taken a little

8 bit earlier in the construction phase. Inside, that's the

9 entrance as you come to it down Second Street. That is

10 the bridge crossing over from the parking lot up to the

11 site. As you can see, it all begins to come together.

12 So the physical aspect of it coming out of

13 the ground, it really looks great today, but birthing

14 these things in terms of particularly dealing with the

15 river and all the other issues that you have, it's a

16 tribute to the construction guys. They've done a great

17 job here in making this happen.

18 In terms of the impact of the project, we

19 had budgeted and are spending $75 million in the project

20 as we'll open it. We're going to have permanent employees

21 and we expect to have between 700 and 725. We've got a

22 bit more than that now because we know there is turnover

23 in certain areas when you open a casino, the cage area and

24 some others, so we got a few more than that now. But we

25 would expect that as this settles down after 90 days,

1 that's about the level of employees we're going to have.

2 An annual payroll of about $21 million.

3 We expect the project to do about $70

4 million a year in annual gross gaming revenue. That would

5 throw off $12.6 million in state gaming tax annually, and

6 $1.4 million to the city. And we expect $3 million in

7 admissions a year, and a dollar for each admission goes to

8 the state and a dollar goes to the city. When you add it

9 all together, it generates about $20 million dollars in gaming

10 taxes of one form or another, $15.6 million goes to the state

11 and $4.4 million goes to the city. And, obviously, those are

12 projections. I mean, as we get closer to it, we learn a

13 little bit more. I'm hoping that we will certainly do

14 better than that, but I think that is a very reasonable

15 number.

16 In terms of our development agreement with

17 the City of Boonville, we've leased the land that the

18 project sits on from the city. We paid the city

19 $1,500,000 in advance, prepaid, for the term of the lease,

20 which is for 99 years. In addition to that payment, we

21 will escrow three and a half percent of our revenue as we

22 open the project until it accumulates to a million dollars

23 to do an additional community project related development

24 with the city that needs to happen within three years.

25 Based upon our performance, we would expect to reach that

1 level within the first year.

2 We've also given $850,000 as a one-time

3 payment to the city for historical projects that have been

4 managed by the city.

5 I'm going to, actually, turn it over at

6 this point to Jeff, because he's the person on the ground

7 here, to talk about the community stuff that happens here

8 in Boonville.

9 JEFF KING: Good morning, Commissioners.

10 My name is Jeff King. I'm the vice president/general

11 manager of Isle of Capri-Boonville. Certainly happy to be

12 here.

13 I want to talk to you a little bit about

14 community involvement. The first piece of our community

15 involvement, we have an inclusive employment purchasing

16 program. We have filed our strategic plan with our

17 licensing application. It's an outreach program for both

18 minority and women employment, as well as purchasing from

19 our vendors. We will diligently work with this document

20 as we go forward in making sure that we reach those goals.

21 We also have responsible gaming programs.

22 Our company is committed to responsible gaming. Our

23 president, Mr. Jack Gallaway, actually serves on the board

24 of the National Center for Responsible Gaming. We provide

25 all of our employees with training on how to recognize

1 compulsive gamblers and how to direct them to the

2 appropriate counselors. In addition to our company-

3 sponsored training, the commission staff has actually

4 helped us during this pre-opening phase by providing

5 additional training, which is an hour and a half course, as

6 we go through the opening process.

7 Underage gaming. We will diligently deter

8 underage gaming and are training our staff to be cognizant

9 of that. We have a heightened sense of awareness due to

10 our location and our proximity to the colleges. And as a

11 result, we have scheduled experts with the commission

12 staff to train our employees how to identify fraudulent

13 IDs, in addition to the training that we provide on

14 underage gaming.

15 In terms of disassociated person

16 compliance, we have built the systems and are training our

17 staff as well on how to operate and identify the DAPS that

18 enter through the door, and we will make every effort

19 possible to ensure that they do not enter our facility.

20 Additionally, our company will make every effort not to

21 market, for all properties, not to market to a

22 disassociated person.

23 We certainly encourage community service.

24 Many of our fellow employees, my fellow employees, have

25 become very active in the Boonville area. I myself am a

1 member of the Kiwanis Club. I've got Mr. Roy Evans and

2 Mr. Mike Tamburelli and Mr. Michael Lynch back here who

3 are participating in Rotary and various other community

4 service programs. And we are certainly proud citizens and

5 glad to be a member of the Boonville community.

6 TOM CARR: Jack, would you like to say

7 something?

8 JACK GALLAWAY: I never pass up an

9 opportunity to talk to the Commission. First of all,

10 forgive me for the way we are dressed. As I mentioned to

11 you, we are on the road.

12 COMMISSIONER SMITH: I just thought you

13 were a working president.

14 JACK GALLAWAY: That works, too. It

15 certainly is more fun to be here this time than last

16 time.

17 COMMISSIONER SMITH: Yes, it is.

18 JACK GALLAWAY: I want to tell you how

19 excited we are. We weren't really going to stop here, but

20 we want -- because what happens is when all of us, you

21 know, the vice president and everyone arrive a week before

22 opening, you know, on the theory we're here to help you,

23 it just messes everything up. You've got a great staff

24 out there opening this place and the worse thing we can do

25 is come in and try to help them. Our goal here is to let

1 them do their job, get this place open. It's a terrific

2 facility, and we can't tell you how pleased we are to be

3 here.

4 The cooperation that has come from the

5 mayor and the rest of the city has been great. There is

6 always going to be some problems along the way and we've

7 gotten through them and we've worked with the commission

8 on various little things. Just checking with the guys, I

9 think we are in good shape and it seems to be going well,

10 and it's exciting. And I guess I came here just to say

11 hello, stop by, and thank everybody for their cooperation

12 and answer any questions. And then grab Mr. Carr and get

13 out before the snow storm hits. Can I answer anybody's

14 questions? Yeah, Mr. Mayor.

15 BUD KEMPF: Yeah, Jack. I just heard Tom

16 say they are going to build a new hotel.

17 JACK GALLAWAY: I heard him say that too.

18 TOM CARR: I said I would ask for a hotel.

19 JACK GALLAWAY: The guys in Kansas City

20 said the same thing. I'll be very honest with you about a

21 hotel. We love hotels and hotel rooms. We have a hurdle

22 rate, a certain return on investment that we need. And,

23 basically, the way we evaluate it is we take, and I don't

24 want to belabor the point, but I want you all to know our

25 thinking process. We look at it from every room occupied,

1 we look at the cash gaming and room revenue of that room.

2 We go through and know a certain amount of it is going to

3 flow down to that famous EBITDA line, and on that we

4 use as a basis to determine the reinvestment on a hotel.

5 Typically, hotels do very well for a casino. That's why

6 Las Vegas has 120,000 hotel rooms. You know, to be a

7 success in the gaming business, you should always say I

8 want more hotel rooms, and then you become a hero.

9 The dilemma, and this is not a shot at the

10 state, a cheap shot, and I don't mean it that way in any

11 way. Because of the comparably high tax rate of this

12 state, it makes it more difficult for those numbers to

13 work. That tied in with the fact that our capital program

14 this year, you know, as we are kind of scaling down and

15 getting through a lot of the construction we've finished

16 as a corporation and looking to repay some debts.

17 I certainly do not believe we would commit

18 to a hotel this year. In my heart of hearts, and I speak

19 with hotel companies, we like hotel rooms, we want to do

20 hotel rooms, we think it will work here, but it's tougher

21 to make it work here to be honest with you. Having said

22 that, I look for something to be built a few years down

23 the road, but it's not going to be next year, Mr. Mayor.

24 I would love it to be. And I think we will get a better

25 reading on the market. You know, there's a lot of

1 business potential, business down south that we can bring

2 people up where it's a hour and a half, two-hour drive,

3 maybe, where a hotel room makes a lot more sense to have

4 them come up and game. And we think that's where the

5 opportunity is. Does that answer your question?

6 BUD KEMPF: Thank you.

7 COMMISSIONER SMITH: I would like to make a

8 further comment. From the Gaming Commission's point of

9 view, we have considered this project with no hotel being

10 guaranteed. There have been some where the economics

11 justify it. Mr. Gallaway has indicated earlier that he

12 wants to have one sometime, but I think our decision is

13 going to be based upon the fact that there is no hotel

14 guarantee. I think you should understand that. We have

15 to decide whether it's good or bad at that point.

16 JACK GALLAWAY: Thank you. Anything else?

17 Okay. Thank you, everyone.

18 COMMISSIONER SMITH: Thank you for coming.

19 Does that complete your presentation?

20 TOM CARR: Yes. Any questions?

21 BOB SMITH: Does anyone have any questions

22 for the presenters?

23 COMMISSIONER BATTLE: I would like to make

24 a comment, Mr. Chairman. I enjoyed the tour very much

25 today. The initial response was how large the place is,

1 and I hope it does very well for the state.

2 COMMISSIONER SMITH: I guess the only

3 question I have is one of the things we look at, we have

4 an original presentation from your company about what

5 you're proposing to do, and it looks like you've done most

6 of it. I notice that there is some change in design over

7 the original pictures that we saw, and I wondered, from

8 the city's point of view, are you comfortable with the

9 final design, Mr. Mayor, or the city manager or whoever

10 wants to answer?

11 BUD KEMPF: Yes, we are.

12 COMMISSIONER SMITH: It's attractive to me,

13 but this is a community and if there's any problems, we

14 need to know about them now, and if you are comfortable

15 with it.

16 Are there any other questions from anybody

17 in the audience? If not, then we will proceed with the

18 rest of the presentation. Thank you very much.

19 KEVIN MULLALLY: Mr. Chairman, at this time

20 we are prepared to hear from the City of Boonville.

21 TRACY WALKUP: Good morning. It's actually

22 kind of nice to get to go second because they covered most

23 of what I have to cover. First of all, as far as Isle of

24 Capri complying with our agreement, the lease agreement,

25 they have done so. They have covered every aspect that we

1 have expected them to cover, and we have been very pleased

2 with the outcome. There's a section that I need to

3 address on the licensing of the corporate system that's

4 very difficult to address at this point in time when they

5 are not opened yet. But I will say that although they are

6 not even in business and making money here that they have

7 been donating to some of our local causes. They have

8 supported the Chamber, Heritage Days, Thespian Hall,

9 YMCA. And we do expect that when they get open and

10 actually have cash flow going in this community that we

11 will see greater donations to community projects.

12 The economic impact of the boat being here

13 is very difficult to gauge at this point. What we have

14 are indirect impacts from the employment that has been

15 created through the construction. We do expect after the

16 licensing is completed and we do start receiving gaming

17 taxes and their employees are all on board, that there

18 will be a significant direct economic impact to the city,

19 to the entire community.

20 It's difficult also, at this point with

21 them not being open, to discuss the effect of gaming on

22 crime rates within the city. We have sent our police

23 chief off to a couple of different communities to address

24 with them what their increases have been. It seems that a

25 lot of the problems that they've had in other communities

1 have dealt with speeding and things of that nature. We

2 are addressing that through bringing on some additional

3 reserve officers to assist us on the weekends when we

4 expect our traffic to be the highest. We are budgeting to

5 add at least one new officer next year. We are also

6 budgeting for overtime for the officers for this year so

7 that we can increase the amount of hours that they are all

8 spending out on the road, just to make sure that

9 everyone safely gets to their destination.

10 The gaming revenues that the city has

11 received thus far have been reported on by Isle of Capri.

12 There was a $1.5 million advance payment that was to be

13 spent on the streets and $850,000 that was to be spent on

14 preservation. Thus far, approximately half of the

15 $850,000 has been earmarked for the organizations that are

16 using it to rehab their buildings. The rest will be

17 earmarked when the council decides where it should go.

18 Of the $1.5 million that we received for

19 street work, we have spent $200,000 on the Second Street

20 project doing a complete rehab of Second Street. We have

21 spent approximately half a million dollars on the Spring

22 Street and Santa Fe Trail Route into the boat. We have

23 recently entered into a contract for $250,000 for new

24 stoplights in the downtown area so that when the trees are

25 foliated next spring, the stoplights that we are all used

1 to won't be hidden behind those trees. We will have mast

2 arms so that people who aren't familiar with our streets

3 will be able to see them.

4 We spent approximately $200,000 three years

5 ago redoing our Main Street in preparation for this

6 project; $150,000 was earmarked for preliminary

7 engineering, and there are some additional funds that are

8 being spent for engineering inspection while the work is

9 going on. In addition to this, Isle of Capri has assisted

10 us in setting up a transportation development district.

11 They will be assessing a one percent additional tax on all

12 retail sales on the boat so that we can use that money for

13 further street improvements should they be warranted.

14 As far as the economic development and the

15 impact on the waterfront area, you saw some of the

16 pictures that they have, the before and after shots.

17 COMMISSIONER SMITH: We were there

18 personally and we saw it.

19 TRACY WALKUP: Yes, you have seen it

20 before. It is just amazing. Those photographs don't do

21 it justice as to what was down on that waterfront when we

22 first started this project before all the demolition went

23 through. We have effectively cleaned up our waterfront,

24 not only to the eye, but the contaminated soil. This is a

25 wonderful thing for the city, irregardless of whether it

1 was for a casino or another development. This is

2 something that we really needed to get accomplished, and

3 we are very pleased with the progress that's been made.

4 They have also relocated a rail spur that

5 was in the project area, and the rail spur that they have

6 built is much more user friendly than the one that was

7 down there. I think it's a good addition to our

8 community.

9 And I don't think I can say enough about

10 the Katy Trail. We have an absolute beautiful section of

11 the Katy Trail going through our community now. And it

12 sees use, not only from people in our community and in our

13 state, but national and international visitors will be

14 using that trail. That has been a wonderful addition to

15 our waterfront.

16 As far as the affirmative action of Isle of

17 Capri, they have briefly touched on this. I've been

18 reviewing some of their hiring numbers based upon women

19 and minorities. They have not only mirrored our women and

20 minority population, but they have hired more than what

21 our demographics show would be the norm for this area. I

22 was very impressed to see that. This is something that we

23 will continue to monitor to make sure that they are in

24 compliance with that and that they are hiring women and

25 minorities as much as they possibly can.

1 And on the revenue-sharing agreement, that

2 is something that I have provided to the Commission

3 before, but we do have a revenue-sharing agreement where

4 we do share the funds of this with neighboring counties'

5 prosecutor's office, sheriff's office. As a matter of

6 fact, I had a call from one today. He was doing his

7 budget and needed to know when I was going to start

8 sending the checks. We hope that this works out not only

9 for the City of Boonville, but for the surrounding area.

10 I want to thank you. I would be happy to

11 answer any questions you have.

12 COMMISSIONER SMITH: Do you have any

13 questions, Muriel?

14 COMMISSIONER BATTLE: No, I don't. This

15 really is a very pleasant day because I've talked to so

16 many people, accidentally, from Boonville and everybody

17 seems to be very pleased, especially with the new economy

18 and all the new jobs they will provide. So this is very

19 pleasant to be here.

20 TRACY WALKUP: That's nice to hear.

21 COMMISSIONER SMITH: To pursue that a

22 little further, one of the things that the Commission

23 looks at is the public response to gaming facilities of

24 this sort. I know initially there was some reservation on

25 the part of some of the people in Boonville. Do you

1 detect any change in the attitude towards the Isle of

2 Capri project?

3 TRACY WALKUP: I do. I don't know if it is

4 necessarily that those people who weren't for it are

5 suddenly for it or if they've decided that it's going to

6 happen and that it doesn't do any good now at this point

7 to come in to public forums and complain. But, you know,

8 I would also point out that we had gaming issues on the

9 ballot a number of times, not only just for Boonville but

10 statewide, and every time there was a gaming issue on the

11 ballot it did pass in Boonville. So there is always going

12 to be a section of population that just doesn't want

13 gaming, not only in their community, but just doesn't want

14 it. The majority of our population when they went to the

15 ballot said, yes, they did.

16 COMMISSIONER SMITH: Sometimes people have

17 a fear before something comes in and they see it. Has the

18 general response to the facility itself been favorable

19 around here?

20 TRACY WALKUP: Yes, it has. I don't know

21 if you remember back -- you were on the Commission at the

22 time that I was where Capri first came in and made their

23 presentation, and when they first presented the graphics

24 of what they intended to build, we were horrified. I

25 think you probably remember that. It looked nothing like

1 what we had in mind, and we simply told them that that

2 just wasn't it. And they came back two weeks later and

3 had a historic-looking structure that does fit within our

4 community. And everyone was very pleased with that.

5 COMMISSIONER SMITH: Well, I guess the only

6 other concern I have is the question of traffic flow. I

7 know you are looking ahead, I just wonder if you are

8 prepared for what might be an onslaught of traffic early

9 until you can do some of these improvements that you have

10 talked about.

11 TRACY WALKUP: Well, a lot of these

12 improvements are already done. And I'm not going to stand

13 here and tell you that for the first 30 to 60 days it's

14 not going to be a mess, because we're going to have during

15 that first period the people that just want to come in and

16 have a look at the new casino. What we have done to

17 address this is we have completely redone the back route

18 coming into the casino, and all of our signage will direct

19 people that way. That street can hold a significant

20 amount of traffic, and that does help route them off of

21 Main Street. We also, as I alluded to earlier, have

22 additional officers that will be on duty. If we have

23 difficulty, we will have officers out helping to direct

24 traffic.

25 COMMISSIONER SMITH: I might also comment

1 that I am pleased with the revenue-sharing. I think some

2 other facilities in the state should appreciate and

3 observe what you have done with the adjoining counties

4 which are affected, and I think it's a neat arrangement.

5 TRACY WALKUP: Well, we hope that it works

6 out well for everyone.

7 COMMISSIONER SMITH: Does anyone else have

8 any questions? If not, thank you very much.

9 TRACY WALKUP: You are welcome. If I may,

10 the Mayor would like to make just a few comments.

11 COMMISSIONER SMITH: As a former mayor, I'm

12 going to always let a mayor speak if he wants to.

13 MAYOR KEMPF: Good morning and welcome to

14 the City of Boonville. It's my pleasure to stand before

15 you and welcome the Gaming Commission and the Isle of

16 Capri. I think this is a day that I dreamed of; that

17 many, many people in the City of Boonville dreamed of. I

18 know Tracy did. I know Ted Bleil did. I used to go out there

19 every two weeks on the radio station and Ted Bleil and I --

20 probably that was the big question. You think that boat

21 will ever get here? Well, I tell you what folks, it's

22 here. Drive down to the waterfront, look at it, and next

23 week I hope that the Gaming Commission will see to open

24 this thing and see these cars flow down.

25 Now, I'm concerned, too, about the

1 traffic. That's a big one. But, you know, I've been to

2 some of them. I'm not a big gambler, but I'm going to

3 spend some money at Isle of Capri, because I know the food

4 will be great, I know the atmosphere will be great. I've

5 been down there and seen the waterfall, and I love water.

6 I'm a plumber, and I work in water all the time. Don't

7 like it in the winter now, but I do love water. And my

8 wife is a fond, pleased lady of water. She was raised out

9 in Portland, Oregon, and there's water there. You know,

10 she's always talked about how beautiful the water is. And

11 you go down there, and I'm sure when you enter these doors

12 and you look at that waterfall, it's going to enhance you

13 and you're going to want to come back. Jeff, and they're

14 going to come back.

15 Like Tracy said a while ago, and I think

16 our chief of police is here, but we will help on this

17 traffic problem. At peak times, we will have extra

18 officers out there that will control and help with this

19 traffic. And we will see that these people get down to

20 the Gaming Commission -- sorry, not the Gaming Commission.

21 Well, yeah, the Gaming Commission, the casino, and get

22 there safely and get back safely.

23 That's the big plus, because already we've

24 heard from somebody, I don't know the people, but somebody

25 on High Street said, "Oh, the lights are too bright."

1 Well, let me tell you, Jeff, they're not too bright.

2 Because if I walk down there with $100 in my pocket and

3 I'm in an area where I can't be seen, you know, where it's

4 dark, I don't want someone to hit me in the head and take

5 my $100. You know, I want to spend it in the casino,

6 that's what I'm coming for. And I think that's what we

7 are all coming for down there, is to enjoy the casino and

8 the City of Boonville.

9 Another thing is, and I've always said

10 this, if you would have driven down there two years ago --

11 and I appreciate Bob saying we've seen it, and he did see

12 it in a rough time. If you would have driven down there

13 two years ago and you drive down there now, which would

14 you pick? I mean, which would you pick? Would you pick

15 what you see down on the river front now versus what was

16 there two years ago? I say you would. If not, you

17 wouldn't like anything very pretty and anything very nice

18 or anything you could enjoy. Because that's what it's

19 here for. It's for enjoyment of the people and it's for

20 everything that we want to help the people do in the City

21 of Boonville plus the surrounding communities. And I

22 appreciate -- Bob told me he was from Columbia. I didn't

23 realize that. You know, but I called Darwin Hindman and

24 Ray Beck and offered them the opportunity to come down

25 next Tuesday from two to four.

1 COMMISSIONER SMITH: They are going to get

2 invitations.

3 MAYOR KEMPF: They have an invitation, sir,

4 but they cannot acknowledge it. They will be in Atlanta,

5 Georgia, at the National League of Cities Convention. And

6 I was supposed to be there on my birthday, December 4th,

7 and make a speech on December 5th on public safety and

8 crime. I will not be in Atlanta, Georgia, Jeff, I will be

9 at the boat. I just want that clear. And that's my first

10 to miss in 12 years. I mean, people around here know that

11 I love conventions, because I think when you go there,

12 you meet people and you bring back ideas.

13 And even last year, you know, people were

14 talking because I'm handing out this pin, you know, of the

15 boat. Oh, where's Boonville? I said, well, you've heard

16 of the Missouri Tigers, you know they play nationally.

17 You've heard of the University of Missouri, which is a big

18 college and a lot of people, I know, have graduated that

19 have gone to the University of Missouri, and we are only 23

20 miles from there. We are 150 from St. Louis, we are 100

21 from Kansas City. Oh, they say, that's great.

22 I said, yes, they have them in St. Louis

23 and Kansas City, but we want you to come to the casino in

24 the City of Boonville because we're going to have

25 something different. We are going to make you feel

1 comfortable. You are not going to have the traffic except

2 on I-70, but once you leave that -- now, I got to back up

3 a little bit because I don't know how the traffic is going

4 to be, Jeff, going down Main Street. It may be quite a

5 bit of traffic, and, of course, when I heard you talk

6 about the numbers or Tracy talk about the numbers, we want

7 the numbers to come down on Main Street, any street they

8 can get down to the casino, right, Jeff?

9 JEFF KING: That's right.

10 MAYOR KEMPF: Any street. And they will

11 finally learn their way. We all do. Whenever we travel,

12 which I've traveled a lot in the years since my children

13 have left here. I have one in Ohio, which is a doctor,

14 and I have one in Texas, which is an engineer. So I go

15 both ways, I go east and I go west and south. And, you

16 know, traveling is fun, but traveling isn't fun when you

17 get in traffic and you are just bumper to bumper and can't

18 go very far. But we will take care of that, won't we,

19 Chief Gholson?

20 CHIEF GHOLSON: Yes, sir.

21 MAYOR KEMPF: Yes, sir. You heard that, Bob.

22 Okay. We're going to take care of that so we're going to

23 be really, really enthused when somebody gives the time

24 and effort and says, hey, you can open the big doors to

25 Isle of Capri Casino in the City of Boonville.

1 And I just want to thank everybody. And I

2 talked a while ago back here to, and I didn't realize

3 they'd be here this morning, but Highway Patrol. You

4 know, I was a little concerned because I thought Chief

5 Gholson could take care of me if I got out of line. But

6 we do have Highway Patrolmen here. I know they are with

7 the Commission, and we're glad to have them on site, Jeff,

8 to take care of things that have to be done. A lot of them

9 that are going to be down there are local guys that we've

10 known, but we are going to have so many strangers coming

11 in that, you know, they won't know everybody. And, hey,

12 if I get out of line and I want to run around and drink

13 too much and chase these cocktail girls, I want you guys

14 to put me in jail. Okay?

15 COMMISSIONER SMITH: I think I better stop

16 you before you go any further. Well, thanks so much for

17 coming and we really appreciate your remarks and we are

18 delighted that you are here.

19 MAYOR KEMPF: Bob, I get long-winded, but

20 when I get excited, I get more long-winded. So I'll have

21 a little presentation for you --

22 COMMISSIONER BATTLE: I think Bob

23 understands that.

24 COMMISSION SMITH: I think I understand

25 that.

1 MAYOR KEMPF: Thank you very much. I

2 appreciate everybody coming, and come back to Boonville

3 and enjoy the casino.

4 COMMISSIONER SMITH: Before you go, let's see

5 if there are any questions. Lynne, I keep forgetting that

6 you are here and I haven't given you a chance to ask

7 questions.

8 COMMISSIONER NIKOLAISEN: No questions so

9 far, Bob. Thank you.

10 COMMISSIONER SMITH: If you have a

11 question, please don't hesitate to jump in. Muriel, do

12 you have any questions for the Mayor?

13 COMMISSIONER BATTLE: I have no questions.

14 COMMISSIONER SMITH: Thank you very much.

15 MAYOR KEMPF: I love to see her here. And

16 I'll tell you why. Because I've been asked by two lovely

17 ladies that will be here that have received invitations,

18 and they wanted to know if African Americans will be, you

19 know -- and I said you two ladies are going to be here

20 because I've got an invitation for you. And one is coming

21 from Indianapolis, Indiana, and one is coming from

22 Minneapolis, Minnesota. So, you know, we are going to

23 have people coming from all over. Thank you very much and

24 have a good day. Don't forget to come back to Boonville

25 and help us support this casino.

1 COMMISSIONER SMITH: Is there anybody else

2 from Boonville that needs to speak at this point? If not,

3 Kevin, we can go ahead and make your presentation on

4 behalf of the Commission reporting your investigation.

5 KEVIN MULLALLY: Mr. Chairman, at this

6 point, this is the point in our proceedings where we ask

7 anybody from the public, not just the city, but anybody

8 from the public if they would like to offer any commentary

9 regarding the Isle of Capri-Boonville application. Seeing

10 none, I would ask that Sergeant Rich Mason come forward

11 and present the results of the background investigation.

12 COMMISSIONER SMITH: I might state at the

13 outset that the Commission has received a written report

14 from the administration, which we have studied ahead of

15 this meeting. So we appreciate having that ahead of time.

16 We thank the staff for getting it to us.

17 SERGEANT RICH MASON: Commissioners, on May

18 16th, 2001, an investigation was done by the Missouri

19 Gaming Commission Background Investigative Teams located

20 in Jefferson City and Kansas City and the Missouri Gaming

21 Commission Financial Investigative Agents to determine the

22 suitability of IOC-Boonville, Inc. to operate a

23 riverboat gaming facility in Boonville, Missouri.

24 IOC-Boonville, Inc. is a wholly owned subsidiary

25 of Isle of Capri Casino, Inc., a public

1 corporation with headquarters in Biloxi, Mississippi.

2 Isle of Capri, Inc. currently

3 operates 13 casinos in six different jurisdictions, to

4 include Black Hawk, Colorado; Marquette, Iowa; Bettendorf,

5 Iowa; Davenport, Iowa; Bossier City, Louisiana; Lake

6 Charles, Louisiana; Biloxi, Mississippi; Natchez,

7 Mississippi; Vicksburg, Mississippi; Lula, Mississippi;

8 Tunica, Mississippi; Kansas City, Missouri; and Las Vegas,

9 Nevada. IOC also operates a harness racing facility in

10 Pompano Beach, Florida.

11 In order to complete a thorough and

12 comprehensive investigation of suitability for licensure

13 as a riverboat gaming facility, the Key and Level One

14 applicants for the Isle of Capri-Boonville were

15 scrutinized. The investigation of the aforementioned

16 applicants consisted of criminal, civil, character,

17 previous employment, and financial inquiries into their

18 backgrounds.

19 The criminal, civil, character, and

20 previous employment background checks included, but were

21 not limited to, checks with federal, state, county, and

22 municipal law enforcement agencies where the individuals

23 have lived, worked, and frequented, and interviews of the

24 applicant's previous employers. Gaming jurisdictions in

25 which the applicants are or were licensed were contacted

1 to ascertain the applicant's licensing history.

2 The financial background investigation of

3 the Key and Level One applicants included, but was not

4 limited to, the examination of individual tax returns, the

5 examination of bank and brokerage statements, the

6 examination of all sources of income including all

7 nontaxable income, the examination of executive employment

8 agreements.

9 The following individuals were investigated

10 for licensure: J. Jeffrey King, vice president and

11 general manager; John R. Teats, director of casino

12 operations; Michael J. Tamburelli, senior director of

13 operations; Michael L. Schafersman, director of safety and

14 facilities; Michael K. Young, director of table games; Roy

15 E. Evans, Jr., senior director of finance; Kevin S.

16 Wright, surveillance manager; Treva E. Gage, electronic

17 data processing manager; Paul R. Brandt, security manager;

18 Michael R. Coca, slot department manager; Debra L. Stubbs,

19 casino manager; Michael J. Lewis, table games manager, and

20 Mary M. Giancola, operations manager.

21 The corporate investigation of Isle of

22 Capri Casino, Inc., consisted of, but was not

23 limited to, disciplines and fines and license status in

24 gaming jurisdictions in which IOC is licensed, examination

25 of civil or criminal litigation, and a financial

1 investigation.

2 The financial background investigation of

3 the corporation included, but was not limited to, a review

4 of corporate tax returns, the source and application of

5 funds, cash flow analysis and bad debt write-offs, and the

6 review of all corporate litigation.

7 No discrepancies or concerns were found in

8 the background investigation that would preclude licensing

9 Isle of Capri-Boonville, Inc. as a riverboat

10 gaming operator in the State of Missouri. There were no

11 discrepancies or concerns disclosed that would preclude

12 permanent licensure of the Key or Level One applicants

13 associated with the Isle of Capri-Boonville Inc.

14 COMMISSIONER SMITH: Lynne, do you have any

15 questions?

16 COMMISSIONER NIKOLAISEN: I have one and

17 it's referring to looking to the various individuals that

18 we were licensing. There's one individual on page 43 who,

19 I guess, a year ago had a negative net worth, I believe,

20 of around $20,000 and has since got that down to almost

21 zero, but commented that due to the nature of this

22 business and the job, that the commission would continue

23 to monitor that individual's status and financial

24 condition to make sure there weren't any potential

25 problems. But at the same time, there's another

1 individual on page 47 who currently has a negative net

2 worth of about $9,000, but no mention of continuing to

3 watch or monitor that individual.

4 And, again, I hope I'm not coming across as

5 picking on people, but we both know the type of jobs these

6 are in the gaming industry and that we are very aware of

7 people's financial conditions and want to make sure that

8 we do not put them in an awkward situation because of

9 their own situation. So I'm just wondering why one was

10 being monitored and one was not.

11 KEVIN MULLALLY: Mr. Chairman, before we

12 get into this, Commissioner Nikolaisen very artfully

13 avoided any details regarding identifying these

14 individuals, and she did a very good job of doing that. I

15 just want to caution that if we need to talk specifics, we

16 need to go in closed session about financial backgrounds.

17 COMMISSIONER SMITH: I don't think any of

18 us need to mention names.

19 KEVIN MULLALLY: Okay. Sure.

20 COMMISSIONER NIKOLAISEN: Right. And I

21 tried to keep it that way. I hope I didn't --

22 KEVIN MULLALLY: You did. You did very

23 good.

24 COMMISSIONER NIKOLAISEN: Okay.

25 SERGEANT RICH MASON: Ms. Nikolaisen, it

1 would be hard for me to comment on that right now as I

2 don't know that the same financial investigator worked

3 each individual. And I don't believe we have those

4 financial investigators in here right now who did the

5 corporate -- or I'm sorry, the Level One and the Key

6 Person. I think that in the investigative files, if we

7 could get those to you, it would probably clarify that

8 better for you than for me to stand up here and say

9 something that I truly do not know anything about.

10 I represent the fact that I just did the

11 boat itself. And we have wonderful investigators and

12 financial agents that did a very thorough examination, and

13 if they determined that's the way it should be, I would

14 probably agree with them that that is the way it should

15 be. But we can get you those investigative files and have

16 those people talk to you, if you wish. We don't have them

17 here right now.

18 COMMISSIONER NIKOLAISEN: To be honest with

19 you, I really am not looking for any files, just to make

20 sure that, I guess, we apply the same level of monitoring

21 to individuals in similar situations. In other words,

22 that we don't favor one or not favor one or the other.

23 SERGEANT RICH MASON: Right. And I

24 understand that. And I think it was because of their

25 different financial standings at the time that the

1 investigation was done and their outlook in the future.

2 COMMISSIONER NIKOLAISEN: Okay.

3 COMMISSIONER SMITH: I think what the

4 Commission would be interested in is not seeing the

5 details, but be assured those things are going to be

6 monitored.

7 SERGEANT RICH MASON: They are going to be

8 monitored.

9 COMMISSIONER NIKOLAISEN: Exactly.

10 SERGEANT RICH MASON: They will be.

11 COMMISSIONER SMITH: Anything else, Lynne?

12 COMMISSIONER NIKOLAISEN: No.

13 COMMISSIONER SMITH: Muriel?

14 COMMISSIONER BATTLE: No.

15 KEVIN MULLALLY: And, Commissioners, I will

16 say that there is some measuring that goes on here

17 depending on the position of the Level One. Certainly we

18 hold all Level Ones to a certain very high standard.

19 However, if somebody's going to be handling a great deal

20 of money, if they are in a position to handle accounting

21 records and money, we are going to hold that person to

22 even a higher standard than you would somebody in an area

23 where they may be dealing with security or something else

24 with regard to finances.

25 COMMISSIONER SMITH: Sergeant Mason, did

1 you make the investigation in other states, the

2 relationship with the gaming authorities in other states,

3 or did someone else handle that?

4 SERGEANT RICH MASON: I did, sir.

5 COMMISSIONER SMITH: I notice that the Isle

6 of Capri, I think the reports that you gave us, indicated

7 that they are in very good standing in other states. The

8 only background situation at one time was in the state of

9 Louisiana. Has that been cleared up to our satisfaction?

10 SERGEANT RICH MASON: Yes, sir, it has

11 been.

12 COMMISSIONER SMITH: You don't have any

13 concerns about what happened there at this point then?

14 SERGEANT RICH MASON: No, sir, I don't.

15 COMMISSIONER SMITH: Otherwise, the other

16 gaming commissions have given you, I noticed, positive

17 reports on the activities everywhere else.

18 SERGEANT RICH MASON: Exactly. Yes, sir.

19 COMMISSIONER SMITH: Call your next

20 person.

21 KEVIN MULLALLY: Mr. Chairman, I would like

22 to thank Sergeant Mason and his team. This is a very,

23 very lengthy, painstaking background investigation. I

24 think that many of the individuals with Isle of Capri have

25 been through background investigations in other states,

1 and I think that they would probably agree that we know

2 more about them than their doctor and maybe their wife or

3 significant others. It is a lengthy thing. Rich and his

4 team are very thorough, and we appreciate their efforts.

5 I would also like to, once again, clarify

6 what we are presenting here today and what we are asking

7 the commission to consider and that is simply that the

8 corporation and the local entity that is developing this

9 property be found suitable for licensure. This is not

10 licensing. So I will say to our friends in the media, if

11 it is reported that we licensed Isle of Capri today, that

12 would be erroneous. There are still a lot of operational

13 issues that we need to get through, some regulatory tests

14 that they have to undergo before we are prepared to

15 consider final licensing. This is simply the results of

16 the background investigation to say that they have cleared

17 that hurdle.

18 To identify a few of those operational

19 issues that we still need to get through, I'll ask Deputy

20 Director Steve Johnson, who is overseeing that effort, to

21 make a short statement to you.

22 STEVE JOHNSON: Thank you, Mr. Director,

23 Mr. Chairman, and members of the Commission. I'd also

24 like to extend my appreciation for the thoroughness and

25 professionalism reflected in the investigations by the

1 Highway Patrol Background Team. Captain Bloomberg,

2 Lieutenant Wilhoit and his team of investigators have,

3 again, provided an exemplary and comprehensive report, and

4 that's very much appreciated.

5 There are, in fact, issues remaining that

6 have a potential to delay the opening of the facility.

7 Now, please listen to me, a potential to delay the opening

8 of the facility. And this is not an unusual occurrence in

9 what I call the compression zone in the week or so

10 immediately preceding the opening. And there's a reason

11 why these things occur. Corrections and modifications to

12 resolve these issues, that I'm going to mention briefly,

13 are being addressed as we speak. And we are working very

14 closely with the company to point out issues in what we

15 consider to be a timely fashion.

16 These problems almost always surface, these

17 little small operational concerns, and then, again,

18 potentially delaying concerns, always surface as systems

19 are brought online and final inspections are conducted.

20 So there is no cause for undo alarm, but in the interest

21 of keeping the Commission very accurately informed as to

22 the progress of this. Again, echoing on Director

23 Mullally's comments, the business of suitability has been

24 discussed, and we are going to ask that you pass on that

25 business of suitability. However, operationally there are

1 still issues that need to be resolved prior to the

2 issuance of a license.

3 Things related to audible alarm, decibel

4 levels, emergency lighting issues, fire stop material

5 applications, rather routine sorts of things, third-party

6 alarm monitoring, adjustments to the surveillance system.

7 These things must occur prior to our passing in an

8 operational sense on this facility to open. I'm confident

9 that these things will occur, but it would be very unfair

10 to not suggest to you that we are working through these

11 things in a very tight time frame to get them resolved.

12 Our enforcement managers, agents, and

13 policy analysts are involved in these inspection

14 processes, and will continue to be. We've had an

15 excellent working relationship with the Isle of Capri and

16 their staff. It is not unusual to see these things

17 occur. I feel confident that we can work through them,

18 but there are issues there in an operational sense, and

19 certainly Mr. King is aware of that, and we are working to

20 resolve them. I'd be happy to answer any questions you

21 might have.

22 COMMISSIONER SMITH: Lynne, do you have any

23 questions?

24 COMMISSIONER NIKOLAISEN: Not at this

25 time.

1 COMMISSIONER SMITH: Muriel?

2 COMMISSIONER BATTLE: I think we had the

3 ones that we were concerned about answered when we did the

4 tour. We were concerned about the smoking areas and the

5 alarms and sprinklers and those type of things, and they

6 were answered during the tour.

7 STEVE JOHNSON: Good. Good. We're on top

8 of those issues.

9 COMMISSIONER SMITH: I understand that this

10 is not unusual for these things to be happening in the

11 final wrap-up of the opening of other boats, too.

12 STEVE JOHNSON: No, sir, it is not unusual

13 for it to occur. As a matter of fact, if the systems are

14 brought online, this is when you detect problems and

15 notice the variances that need to be repaired. So, no,

16 it's not at all unusual. But in the interest of accuracy,

17 we thought that you should know that there are issues that

18 we are addressing.

19 COMMISSIONER SMITH: The manager mentioned

20 that in one boat opening that the sprinkler system went

21 off the first night and people were there, so we hope

22 something like that doesn't happen.

23 KEVIN MULLALLY: We do, too.

24 COMMISSIONER SMITH: Things can occur, but

25 really what we're doing is making kind of a last minute

1 check and the final decision, if the resolution is

2 adopted, will be made by the director himself. You've got

3 to pass off on these things you've raised.

4 STEVE JOHNSON: Yes, sir. And, of course,

5 the two-hour practice or the practice excursion will be a

6 very key part of it.

7 COMMISSIONER NIKOLAISEN: Bob, you just

8 made me think of a question.

9 COMMISSIONER SMITH: All right. I don't

10 know whether that's good or bad.

11 COMMISSIONER NIKOLAISEN: Well, I know in

12 light of what will go down in history as September 11th,

13 we have asked the boats to kind of relook at many of their

14 emergency plans. And I just wanted to make sure upon

15 opening that the Boonville casino has, I guess what I

16 would call for lack of a better term, an updated plan that

17 meets with our needs that we have requested of the other

18 boats across the state as well.

19 COMMISSIONER SMITH: That's a very good

20 question.

21 STEVE JOHNSON: They do. We have reviewed

22 it. It's an excellent plan.

23 COMMISSIONER SMITH: We have some sort of a

24 state director now on this type of thing. Is this

25 something that's been cleared with him?

1 STEVE JOHNSON: No, sir, it has not. We've

2 worked it out internally. It meets with the general

3 guidelines, the policing and emergency response guidelines

4 that have been established and published, but it's kind of

5 an independent effort with specific compatibility and

6 consistency of requirements, on property to property, on

7 contact lists and those sorts of things. But in almost

8 all cases, always matters involving evacuation of the

9 boat, foreign substances on the boat, these sorts of

10 issues that we may encounter, we hope that we don't, are

11 handled by the local first responders or the local fire

12 departments and we worked to establish an immediate

13 liaison with those folks who make those decisions.

14 COMMISSIONER SMITH: So you do have a plan

15 then?

16 STEVE JOHNSON: Yes, sir, property by

17 property.

18 COMMISSIONER SMITH: One thing that I

19 noticed in going through the boat, it looks like we have a

20 state-of-the-art monitoring equipment here, which is

21 better than some that I've seen earlier. So it looks like

22 you've gone out of the way to have careful monitoring of

23 every bit of that boat from these control points.

24 STEVE JOHNSON: We're working with them on

25 the surveillance-related issues now, and it does appear to

1 be a very good system.

2 COMMISSIONER SMITH: Do you feel

3 comfortable with the equipment that is provided to the

4 Highway Patrol for the monitoring that you do?

5 STEVE JOHNSON: Yes, sir, we do. Once it's

6 operational and it's passed our final examination to

7 ascertain lighting issues and those sorts of things

8 relative to the camera placement and those kinds of

9 things, but we feel very comfortable with it at this

10 juncture.

11 COMMISSIONER SMITH: Are there any further

12 questions? I will thank you very much. This goes without

13 stating that we appreciate the efforts that all of our

14 staff go through in trying to meet the deadlines that they

15 have to meet opening these boats. We do appreciate your

16 effort.

17 KEVIN MULLALLY: Jeff, if your sprinkler

18 system goes off, the public may take the Isle of Capri

19 literally rather than figuratively.

20 Mr. Chairman, before we take up the

21 resolution, I would like to add some additional thanks.

22 Donna Watson and her processing team have been here for the

23 last several weeks. They have processed over 636 people

24 that will be employed at the casino. About 30 of those

25 did not make it through the screening process that, again,

1 is very thorough. I can attest for you that the people

2 that are working at this facility have passed the scrutiny

3 of the Gaming Commission and have the appropriate

4 background to work in this industry.

5 I would also like to thank Larry Buschjost

6 who's been our operations guy on the ground here. I think

7 he knows every one of the Isle of Capri guys by name, and

8 his team. They've put in many, many, many hours here.

9 Sergeant Mike Cunningham has some

10 experience in other facilities around the state on the

11 west side. He will be leading the enforcement team here,

12 and they are prepared and ready and anxious to go.

13 Also, Todd Nelson, our slot tech who's been

14 working with our consultant, Gaming Laboratories

15 International, to inspect all of the slot products and

16 electronic gaming devices that are on the floor and make

17 sure that they are operational and in compliance with our

18 standards and treat the public fairly.

19 And finally, Steve Johnson, who's

20 overseeing the entire effort from the management level. I

21 will second Jack Gallaway, I think he's left, but

22 sometimes the director can get in the way of people doing

23 their jobs. And our people here have done an outstanding

24 job. If I've left anybody out, I hope Steve will clear

25 that up before we leave.

1 COMMISSIONER SMITH: Well, you've left one

2 person out, and I think we need to also congratulate you

3 for pulling everything together to get this boat opened on

4 time. I know it's been a tight schedule considering some

5 of the other issues that the commission had pending during

6 this period. We appreciate the effort you've put in on

7 that.

8 COMMISSIONER NIKOLAISEN: Agreed.

9 KEVIN MULLALLY: Thank you very much.

10 COMMISSIONER SMITH: One other thing before

11 we get to the resolution that is important to me, and I

12 want to address the question to you and you may want to

13 address it to somebody else. I think it's very important

14 when a Gaming Commission applies for a boat that they make

15 certain representations to us before we adopt a resolution

16 to study the suitability of the company before we make a

17 decision, and I think it's important that presentations

18 are made so we know whether they were followed or not

19 followed. I assume your staff has made that

20 recommendation. I would like to have some comment as to

21 whether there has been any deviation from what was

22 originally represented to us.

23 KEVIN MULLALLY: Certainly. Thank you,

24 Mr. Chairman. Our legal staff has looked at that issue

25 and I'll ask Patricia Churchill, our deputy director for

1 legal and legislative affairs, to address that for you.

2 PATRICIA CHURCHILL: Good morning. I took

3 a look at the transcript from the April 26, 2000, meeting

4 and have gone through everyone that spoke on behalf of

5 Isle of Capri and any representations that they made. And

6 according to the documentation that I obtained from

7 Sergeant Rich Mason, who shepherded the investigation,

8 each of their representations were accurate and have come

9 to pass today, as well as their predictions have come to

10 pass today.

11 In particular, they've provided stats about

12 the square footage of the casino and the public space and

13 the number of employees. There are no unreasonable

14 variances. The employees are just a little bit less, but

15 that could be just a ramp-up issue. And also they, in

16 reference to permits that they mentioned they had, in

17 fact, every permit that they had stated they had already

18 acquired, they had received prior to April 26, 2000.

19 COMMISSIONER SMITH: You don't think we're

20 going to get any surprises on this particular application?

21 PATRICIA CHURCHILL: Certainly hope not.

22 COMMISSIONER SMITH: Thank you very much

23 for making that study, and it's something that I think we

24 should always do on any future applications.

25 Well, I guess if you have nothing else, we

1 are ready to consider a resolution. And what we will be

2 considering is a resolution to approve the suitability of

3 this project, but it will be subject to the executive

4 director's final action, because there are all these odds

5 and ends that have to be finally tied together. And if

6 they are not tied together, then the executive director

7 will have the authority to delay final approval until it's

8 done.

9 We have the Resolution No. 01-073 before

10 us, which will, in effect, approve what has been done as

11 far as the suitability subject to the final decision of

12 the director when he's satisfied that you've complied with

13 all the terms. You will be able to operate a gaming boat

14 in accordance with our act.

15 Is there any -- do we have a motion to

16 approve this resolution adopted?

17 COMMISSIONER NIKOLAISEN: So moved.

18 COMMISSIONER SMITH: Lynne Nikolaisen moves

19 the adoption of the resolution. Is there a second?

20 COMMISSIONER BATTLE: I second.

21 COMMISSIONER SMITH: Commissioner Battle

22 seconded the motion. Is there any discussion? If not,

23 Angie, would you please call the roll?

24 ANGIE FRANKS: Commissioner Smith.

25 COMMISSIONER SMITH: Yes.

1 ANGIE FRANKS: Commissioner Nikolaisen.

2 COMMISSIONER NIKOLAISEN: Favor.

3 ANGIE FRANKS: Commissioner Battle.

4 COMMISSIONER BATTLE: Favor.

5 ANGIE FRANKS: By your vote, you've adopted

6 Resolution No. 01-073.

7 COMMISSIONER SMITH: I think there's one

8 other item on the agenda. Does that still apply in

9 connection with the --

10 KEVIN MULLALLY: Yes. Mr. Chairman, that's

11 Resolution No. 01-074 regarding the Level One and Key

12 applicants. These are all the individuals that have

13 undergone a background investigation. They are the key

14 people involved in the project.

15 COMMISSIONER SMITH: And they were the

16 people listed in the written report that you gave to us?

17 KEVIN MULLALLY: That's correct.

18 COMMISSIONER SMITH: And the ones that

19 Sergeant Mason discussed?

20 Do we have a motion to adopt Resolution No.

21 01-074?

22 COMMISSIONER BATTLE: I so move.

23 COMMISSIONER NIKOLAISEN: Second.

24 COMMISSIONER SMITH: Commissioner Battle

25 moved the adoption of the resolution and Commissioner

1 Nikolaisen seconded it. Is there any discussion? If not,

2 would you call roll on this resolution?

3 ANGIE FRANKS: Commissioner Smith.

4 COMMISSIONER SMITH: In favor.

5 ANGIE FRANKS: Commissioner Nikolaisen.

6 COMMISSIONER NIKOLAISEN: Favor.

7 ANGIE FRANKS: Commissioner Battle.

8 COMMISSIONER BATTLE: In favor.

9 ANGIE FRANKS: By your vote, you've adopted

10 Resolution No. 01-074.

11 COMMISSIONER SMITH: Is there anything else

12 that should come before the meeting is adjourned?

13 KEVIN MULLALLY: No. Mr. Chairman, the

14 staff, for the next week or so, will be diligently

15 focusing on the mock cruise that will occur at the

16 facility on December 5th. We know that a good number

17 of the public will join us for that. We hope they

18 understand that we are working and that the gaming

19 employees are being tested, so they keep that in mind. We

20 hope they enjoy themselves, and we look forward to a

21 successful completion of that process.

22 COMMISSIONER SMITH: Hopefully the opening

23 day will be December 6th?

24 KEVIN MULLALLY: If everything goes well

25 with the mock cruise, that is what we are prepared to do.

1 COMMISSIONER SMITH: Again, we want to

2 thank the City of Boonville for their help in this

3 project, your help was very important too. And also thank

4 you for letting us use your fine facility here.

5 Do we have a motion to adjourn?

6 COMMISSIONER NIKOLAISEN: So moved.

7 COMMISSIONER SMITH: Is there a second?

8 COMMISSIONER BATTLE: I second.

9 COMMISSIONER SMITH: All in favor say aye.

10 COMMISSIONERS: Aye.

11 COMMISSIONER SMITH: The meeting is

12 adjourned.

1 C E R T I F I C A T E

STATE OF MISSOURI )

4 ) ss.

COUNTY OF COLE )

I, Stacy C. Brandes, a reporter of the firm of

Ballew Reporting Services, do hereby certify that I was

employed by the Missouri Gaming Commission to report

verbatim, by machine shorthand, the proceedings herein and

thereby became the official reporter for the Commission in

this matter; that I was personally present at said hearing

and reported said proceedings; that the machine shorthand

notes so made at the time and place mentioned on the title

page hereof were transcribed by means of computer-aided

transcription, and the foregoing 57 pages constitute a

true, complete, and accurate transcript of my said machine

shorthand notes.

Given at my office in the City of Jefferson

City, County of Cole, State of Missouri, this 12th day of

December, 2001.

25 Stacy C. Brandes