0001
1 BEFORE THE MISSOURI GAMING COMMISSION
STATE OF MISSOURI
2
3 Meeting
Thursday, December 6,
2001
4 518 Vine Street
Boonville, Missouri
5
6
COMMISSIONERS PRESENT:
Robert Smith, Vice Chairman
7
Lynne R. Nikolaisen, Secretary (Via Telephone)
J. Joe Adorjan (Via Telephone)
8
9
10
11
12
13
14
15
16
17
18
19
20
21 REPORTED BY:
TRACY L. CAVE, CSR
22 Associated Court Reporters
714 West High Street
23 Jefferson City, Missouri 65101
24
25
0002
1 I N D E X
2
Call to Order
3
Update of State on Isle of Capri 5
4
Consideration of Relicensure of Class A Licensees: 10
5
Resolution No. 01-081
Resolution No. 01-075
6
Consideration of Relicensure of Certain
Suppliers: 73
7
Consideration of Licensure of Certain
Supplier: 77
8
Consideration of Disciplinary Action:
9
DC-01-062 80
DC-01-063 83
10 DC-01-064 85
11 Consideration of Approval of Change in
Control: 87
12 Consideration of Licensure of Certain
Level I/Key Applicant: 89
13
Consideration of Proposed Rules &
Regulations: 90
14
Consideration of Renewal of Bingo
15 Manufacturers & Suppliers: 96
16
17
18
19
20
21
22
23
24
25
0003
1 VICE CHAIRMAN SMITH: I think it's time to
2
begin the meeting. Everybody
take a seat.
3 Looks like this is not only a historic
4
occasion for Boonville, but we're in a historic building.
5
This is very impressive and we appreciate someone making
6
this available to us for this meeting.
7 I want to welcome everybody here first, and I
8
also want to explain why I'm the only one here. We have a
9
problem this time with one of our Commissioners being out of
10 the country. The former Chairman's term has expired and
11 they have not appointed a replacement. And two of the other
12 members of the Commission couldn't get
here, but are
13 available by telephone.
14 The Missouri statutes
authorize us to have
15 telephonic meetings and we don't do this
very often. We
16 like to have everybody here, but it was so
important to have
17 everything set here in Boonville, we
decided to go ahead
18 today, but Commissioner Adorjan and
Commissioner Nikolaisen
19 are on the speaker telephone. They both had copies of all
20 of the documents and materials ahead of
time and a chance to
21 look at them. So they'll be free to ask questions as we go
22 along.
23 EXECUTIVE DIRECTOR
MULLALLY: Mr. Chairman,
24 I'll speculate that when you were mayor of
Columbia, you
25 would have preferred that the City Council
not show up.
0004
1 VICE CHAIRMAN SMITH: That applied to one or
2
two people in the audience that always showed up for every
3
meeting too. But -- well, I'm
glad everybody's here.
4 I guess the next order of business is to call
5
the role.
6 MS. FRANKS:
Commissioner Smith?
7 VICE CHAIRMAN SMITH: Present.
8 MS. FRANKS:
Commissioner Nikolaisen?
9 COMMISSIONER NIKOLAISEN: Present.
10 MS. FRANKS: Commissioner Battle?
11 (No response.)
12 MS. FRANKS: Commissioner Adorjan?
13 (No response.)
14 MS. FRANKS: Commissioner Adorjan?
15 VICE CHAIRMAN SMITH:
Looks like we've lost
16 him.
17 MR. MULLALLY: Joe, are you there?
18 COMMISSIONER ADORJAN: Yes, I am.
19 MR. MULLALLY: We're calling the role.
20 COMMISSIONER ADORJAN: Okay.
I can barely
21 hear Bob.
I can hear you fine, Kevin.
22 VICE CHAIRMAN SMITH: Maybe I can get closer
23 to this.
Can you hear me now?
24 COMMISSIONER ADORJAN: Yes, sir.
Thank you.
25 VICE CHAIRMAN SMITH: I've got some fancy
0005
1
machine here on an arm and I'll see if I can keep my mouth
2
close to it.
3 I think the first item of business should be
4
the report on where we are on the Isle of Capri. The
5
Commission, at a previous meeting in November, authorized
6
the opening of the Isle of Capri subject to the final review
7 by
the executive director and the staff.
8 And, Kevin, I'd like to call on you first for
9 a
report on where we are on that.
10 MR. MULLALLY: Thank you, Mr. Chairman.
11 Before I get into the actual
report, I had a
12 nice conversation with one of the local
news reporters this
13 morning and one of the things that she
asked was how
14 yesterday's exercise differed from some of
the others in the
15 early days.
16 And it caused me to reflect,
and somewhat
17 awestruck by the depth and complexity of
yesterday's
18 exercise as opposed to the ones we did back
in 1994. And
19 there are -- Matt Brown I think is here and
a few others,
20 Rick Wilhoit, that were probably there in
1994.
21 And I just can't tell you how
pleased I am
22 with the staff, the level of expertise that
we have
23 developed and the thoroughness and
complexity of the
24 simulations and the review that the Isle of
Capri employees
25 underwent yesterday.
0006
1 And I think that Steve Johnson will give a
2
report that will describe and summarize what we did
3
yesterday, but I think that I can say with all confidence to
4
the people of the State of Missouri that the Isle of Capri
5
operation has been given the most thorough review possible
6
for any gaming operation in the country and I couldn't be
7
more pleased with our employees.
8 I'd like to specifically mention Larry
9
Buschjost who coordinated this effort from day one really.
10 It's been a multi-month long ordeal. He's been a constant
11 presence in Boonville. And Clarence Greeno has also played
12 a significant role in this thing. And I'm sure Steve will
13 have many, many more to thank, but at this
time I'll call
14 him forward to give you a little more
detailed report on
15 yesterday's activities.
16 MR. JOHNSON: Mr. Chairman, members of the
17 Commission, thank you.
18 In a word, the mock cruise
yesterday went
19 very, very well. We noticed and documented very crisp table
20 play and table interaction. The guest services and
21 ticketing area was crisp and well
executed.
22 We put enough pressure on
them, the crowds
23 created additional pressure for these
people. It was
24 handled very well. Some adverse issues related to irate
25 folks at ticketing were resolved in a very
timely manner and
0007
1
very well. The slot activity was
good. The drop went very
2
well.
3 The accountability in the cage
seems to be to
4
the standard that we would want and expect and, in fact,
5
reflects the experience of the company in terms of depth of
6
management and those functions.
7 And we're pleased to report that the only
8
issues that we noticed last night that had a potential to
9
delay this opening were related to surveillance, which has
10 been -- of course, it's a vastly
complicated system
11 involving a lot of hardware, wiring issues
and camera
12 placement issues, lenses and inevitably
when you're working
13 with devices of this type, you have
failures and problems.
14 They surfaced and they were
resolved
15 overnight.
An absolutely outstanding effort on behalf of
16 Isle of Capri to address these issues in
the interim period.
17 We can report that it was a
very good overall
18 practice excursion and we believe from the
operational
19 standpoint that the Isle of Capri is ready
to open today.
20 The director mentioned
offering appreciation
21 to various folks that were involved. He has mentioned the
22 gaming enforcement managers. This has been a team effort
23 within the confines of the core concept in
every sense of
24 the word.
And if I start listing folks that we owe
25 appreciation to, I will inevitably miss
some.
0008
1 You look out in this room and if they're
2
assigned to the Gaming Commission, they were involved in the
3
preparation for testing the Isle of Capri and the
4
preparation for the opening of this facility.
5 From our standpoint, barring any concerns that
6
you may have, we certainly feel like our recommendation to
7
the director to open is justified.
8 VICE CHAIRMAN SMITH: Thank you.
9 I notice that one of the suppliers couldn't
10 spell Boonville, but everything else seemed
to work pretty
11 well.
12 MR. JOHNSON:
Lots of E's floating around in
13 Boonville.
14 VICE CHAIRMAN SMITH: Anything else to report
15 on, Kevin?
16 MR. MULLALLY: No, sir.
17 VICE CHAIRMAN SMITH: Do we have anybody else
18 to appear on this, Kevin, or is that --
19 MR. MULLALLY: No.
Mr. Chairman, as you know,
20 last week the Commission delegated to the
director the
21 authority to issue the license. This morning I have signed
22 and have prepared for you the license for
the Isle of Capri
23 of Boonville.
24 I can state based on the
staff's review with
25 all confidence that we believe they are
prepared and ready
0009
1 to
open this casino and do so in accordance with the
2
Missouri laws and regulations.
You have found them suitable
3
and we think they're ready to go.
So if you would like to
4
call someone forward and --
5 VICE CHAIRMAN SMITH: Let's find out first if
6
either of the other commissioners have any questions before
7 we
go ahead and issue the license.
8 COMMISSIONER NIKOLAISEN: I have none.
9 COMMISSIONER ADORJAN: I have none.
10 VICE CHAIRMAN SMITH: Fine.
Is there a
11 representative here from the Isle of
Capri? We'll go ahead
12 and --
13 MR. MULLALLY: I believe Tom Carr is here
14 representing the Isle of Capri.
15 MR. CARR: Excuse my appearance. I have my
16 casino opening clothes on as opposed to my
Commission
17 clothes.
18 VICE CHAIRMAN SMITH: That's all right. We'd
19 rather see you in working condition.
20 It's our pleasure to present
you with your
21 license for the Isle of Capri at Boonville
and wish you lots
22 of luck and wish the people of Boonville a
lot of luck with
23 the new project.
24 MR. CARR: Thank you very much. I just would
25 like to thank the Commission for their
confidence. We
0010
1
really appreciate it. This has
been a long process for
2
Boonville and I know this is going to be a casino this
3
community is going to be proud of.
4 I also want to thank the staff. When I first
5
met with Kevin and staff early on, we talked about
6
partnering and being there as a resource and that's really
7
been the case here. It's
somewhat unique in my experience.
8 We've worked through some issues. Larry is
9
our partner, but a demanding partner, let's say, but we've
10 worked through a lot of things and their
help has really
11 allowed us to get here and I do appreciate
that.
12 With those few words, I'm
going to go open a
13 casino, if that's all right.
14 VICE CHAIRMAN SMITH: That's fine.
15 MR. CARR: Thank you very much.
16 VICE CHAIRMAN SMITH: The next order of
17 business is consideration of relicensure of
Class A
18 licensees.
And the first item on the agenda is Ameristar
19 Casino of Kansas City, Incorporated.
20 MR. MULLALLY: Mr. Chairman, there are --
21 these two items are somewhat related in
that it's the same
22 parent company that owns both Kansas City
and St. Charles,
23 so with the permission of the Commission, I
think what we
24 would suggest is that Troy Stremming will
present on both --
25 will combine his presentation with regard
to Ameristar
0011
1
Kansas City and Ameristar St. Charles.
2 We would then hear from representatives from
3
the City of Kansas City and the City of St. Charles, then
4
open the agenda for public comment.
And then Sergeant Jeff
5
Smith would present the staff investigative report with
6
regard to both facilities and then you could vote on them
7
individually, if that's all right.
8 VICE CHAIRMAN SMITH: That will be fine. We
9
still have separate resolutions at the end.
10 MR. MULLALLY: That's correct.
11 VICE CHAIRMAN SMITH: We'll go ahead and
12 proceed then.
13 MR. STREMMING: Morning, Commissioners and
14 Executive Director Mullally. My name is Troy Stremming.
15 I'm vice president of legal and government
affairs for
16 Ameristar Casinos.
17 I have with me today Tony
Raymon, who's our
18 senior vice president and general manager
of our St. Charles
19 facility; and Tom Burke, who's our senior
vice president and
20 general manager of our Kansas City
facility.
21 Let me start by apologizing
this morning that
22 our corporate officers were not able to be
here. They're
23 currently out on an equity finance offering
on a road show.
24 And we -- we would like to think that
that's going to even
25 more strengthen the balance sheet of our
company. So I
0012
1
apologize they couldn't be here.
2 VICE CHAIRMAN SMITH: That means that they'll
3
build a new garage in Kansas City?
4 MR. STREMMING:
That's absolutely correct.
5
We'll report on that to you a little later, Tom will.
6 Our presentation this morning will begin by
7
providing you with the requested information pursuant to the
8
memorandum that we received from the staff, then I'll turn
9
the presentation over to the general managers to discuss
10 some of the exciting future developments
that we have at our
11 two properties. And, lastly, we'll entertain any questions
12 that the Commission or the staff might
have.
13 The first area we were --
that we were asked
14 to report on was the -- were the
development agreements that
15 we have with our home dock cities. Ameristar Casino
16 St. Charles enjoys a wonderful relationship
with the City of
17 St. Charles through its Mayor, Patti York,
and its City
18 Council.
19 Ameristar Casino St. Charles
does not have a
20 development agreement with the City of St.
Charles.
21 However, Ameristar intends to continue to
work very closely
22 with the city leaders to further the
economic impact
23 resulting from riverboat gaming in the City
of St. Charles.
24 We believe this is evident
from our recent
25 commitment to invest $170 million in the
completion of the
0013
1
new entertainment facility and riverboat casino within the
2
city. This is in addition to the
substantial capital
3
investment that Ameristar has already made within the city.
4
And I believe Lyn Porterfield, the City attorney, is here
5
today who can speak to our relationship a little further.
6 Similar to Ameristar Casino St. Charles,
7
Ameristar Kansas City has a great relationship with city
8
government as well. However,
unlike Ameristar Casino
9
St. Charles, Ameristar Casino Kansas City is party to a
10 development agreement with the Port Authority
of the City of
11 Kansas City.
12 Ameristar Casino assumed
those obligations
13 pursuant to this development agreement as a
result of the
14 purchase of the Station Missouri
properties. Ameristar
15 Casino Kansas City is currently in full
compliance with all
16 obligations pursuant to the agreement.
17 In addition to other
obligations, Ameristar
18 Casinos makes the following annual payments
to the Port
19 Authority of Kansas City each year: $100,000 to the Problem
20 Gaming Awareness and Scholarship Fund and
$250,000 to the
21 Riverfront Project Fund, which was
developed for the
22 marketing and development of the Kansas
City riverfront.
23 Mike Burke, who is the
counsel to the Port
24 Authority, is also here today and he can
show you some of
25 the marketing materials that some of those
funds have been
0014
1
used for.
2 This agreement originated in January of 1997.
3
Ameristar Casino will continue to make these annual payments
4
for the duration of the development agreement, which is
5 10
years. Ameristar has also agreed to
make an additional
6
$200,000 annual payment for the next five years into a
7
foundation to be set up by the Port Authority for the
8
benefit of minority and women business enterprises.
9 Ameristar Casino is currently waiting for the
10 Port Authority to present us with a formal
structure for the
11 foundation in which Ameristar will deposit
its
12 contributions.
13 Although this foundation
structure was
14 intended to be completed by year's end, the
Port Authority
15 has not yet established a formal
structure. Accordingly,
16 Ameristar expects to enter into a six-month
extension with
17 the Port Authority to reach an agreement as
to the
18 foundation structure. It is presently contemplated that the
19 foundation structure will be presented to
Ameristar for
20 approval in early 2002 and at that time
we'll make our first
21 contribution into the foundation.
22 As part of the development
agreement,
23 Ameristar is also obligated to use its best
efforts to meet
24 certain minority and women goals in
purchasing and
25 employment. Currently 40 MBEs and WBEs are among our
0015
1
vendors and suppliers at Kansas City.
2 Pursuant to the development agreement and
3
consistent with our corporate policy, we provide equal
4
opportunity to prospective vendors and suppliers
5
irrespective of their race, color, religion, sex, age or
6
national origin. It is also our
policy to take affirmative
7
action to identify and engage the services of qualified MBEs
8 and
WBEs.
9 During the current period of licensure,
10 Ameristar has purchased approximately
$2,128,540 worth of
11 goods and services from qualified MBEs and
WBEs. This
12 accounts for 13 percent of Ameristar's
total purchase of
13 goods and services this year.
14 Although this falls short of
Ameristar's goals
15 as set forth in the development agreement,
the property has
16 shown consistent and steady growth each of
the last two
17 years in MBE and WBE utilization. This is the result of the
18 establishment and implementation of a
strategic plan
19 instituted in the last two years which the
Port Authority,
20 through their private contractor, helped us
to establish.
21 Ameristar is also proud to announce that more
22 than 60 percent of the construction costs
associated with
23 the building of our new $20 million parking
garage in Kansas
24 City will be paid for services and products
provided by MBEs
25 and WBEs.
In addition, Ameristar Casino Kansas City
0016
1
substantially exceeds its goals for the employment of
2
minorities and women pursuant to the development agreement.
3
And I'll touch more on those just a little later in the
4
presentation.
5 The second piece of information that we were
6
requested to respond to was our projections and actual
7
performance to AGR. When
Ameristar Casino submitted its
8
application in late 2000, the AGR budget through
9
September 30th was set at just over $94 million. In
10 St. Charles our actual AGR through
September 30th was
11 $104,505,000.
12 You'll also notice in the
presentation -- or
13 in the flip book that we provided, we've
made a
14 comparison -- not only are we exceeding the
budget, but
15 we've made a comparison to the AGR for 2000
as opposed to
16 2001 and there's an increase of almost $20
million over
17 2000.
So it's a substantial increase in AGR in the City of
18 St. Charles.
19 Regarding Kansas City, the
budget that was
20 submitted by Ameristar was about
$144,400,000. Our AGR
21 actual through September 30th, 2001 is
$143,764,000, just
22 shy of the budget but at the same time was
almost $7 million
23 more in AGR than what was gained in
2000.
24 So, again, we've shown steady
growth.
25 Although we set our budget a little high, I
believe we have
0017
1
continued to show steady growth in Kansas City as well.
2 Similarly, admissions -- our admissions in the
3
city or in the -- at the property in St. Charles budgeted by
4
Ameristar in their original application were 4,483,000
5
through September 30th. Our
actual admissions through
6
September 30th were 4,261,260.
And that number is slightly
7 up
over 2000 on actual numbers.
8 In Kansas City we've seen a little bit of a
9
different trend. I think when we
opened the Kansas City
10 property, we were somewhat of a tourist
attraction. We
11 obviously are still a tourist attraction,
but I think we had
12 a lot of lookers and a lot less gamblers
when we first
13 opened that property and we've seen a
decrease in our number
14 of admissions.
15 Ameristar Casinos budgeted
through
16 September 30th on their application just
over 7 million
17 admissions. And our admissions actual through
18 September 30th were 6,547,546. And that number is also down
19 over
actual numbers in 2000 slightly.
20 Next, we were asked to
provide a summary of
21 the total capital investment in the
project. And I'll start
22 with St. Charles. The acquisition cost -- and all this is
23 broken out in your flip chart, but the
acquisition cost of
24 Ameristar for the St. Charles property --
and this is on
25 page 13 of the flip chart -- was
$160,000,000.
0018
1 Since that time, through capital improvements
2 at
the property as well as the first phase of investment in
3
the build-out in St. Charles, an additional $14,277,000 has
4
been invested in the St. Charles project for a total through
5
September 30th of 2001 of $174,277,000.
6 In addition to that, there's obviously a
7
substantial amount of money that's being invested in the
8
finishing of that project. We
recently announced that that
9
project, as I stated earlier, would be expanded to an
10 additional $170,000,000 in the
project.
11 In Kansas City, at our
property there, the
12 original investment was $328,000,000 by
Ameristar in the
13 acquisition from Station Casinos. Since that time, in
14 capital improvements, slot product, etc.,
that property has
15 spent an additional $5,340,000 for a total
investment
16 through September 30th of
$333,340,540.
17 And obviously that number
will be expanded
18 even further with our commitment to build
-- which we've
19 already broken ground on the parking garage
in Kansas City
20 for another $20 million.
21 Next, we were asked to
compare the projected
22 employment with the actual
performance. In December of
23 2000, when Ameristar Casinos took over
operations of Station
24 Casino St. Charles, the casino employed
approximately 1,040
25 individuals in 12 various departments.
0019
1 Currently, Ameristar Casino St. Charles
2
employs 1,037 full-time employees with an average hourly
3
wage of $8.96. In addition,
toked employees receive, on the
4
average, $2.72 per hour in the slot department, $7.99 per
5
hour in the valet department, 51 cents per hour in the cage
6
department and $10.56 per hour in the table games
7
department.
8 In addition, Ameristar Casino St. Charles
9
anticipates that we will be hiring an additional 700 to 800
10 employees between now and mid-2002 when we
anticipate
11 opening the new Ameristar Casinos
entertainment venue and
12 riverboat casino.
13 In Kansas City, in December
of 2000 when
14 Ameristar Casinos took over the operations
from Station
15 Casino, the casino employed approximately
1,859 employees,
16 again in 12 various departments. Currently, Ameristar
17 Casino Kansas City employs 1,713 full-time
employees with an
18 average hourly wage of $8.37, very similar
to St. Charles.
19 In addition, the toked
employees receive, on
20 the average, $2.87 per hour in the slot
department, $8.10
21 per hour in the valet department, 29 cents
per hour in the
22 cage department, and $10.85 in the table
games department.
23 So that's our update on the
employment at both
24 the properties. Our employment numbers are slightly down in
25 Kansas City, but that's come through some
operational
0020
1
efficiencies that Tom can speak to shortly.
2 Next, we were asked to explain our affirmative
3
action plan and our minority hiring practices. And I'll
4
address both of these -- obviously our company policies are
5
the same at both properties, so I'll address both of these
6
simultaneously. And this is on
page 19 in your flip book.
7 Ameristar Casino St. Charles and
Ameristar
8
Casino Kansas City's affirmative action plans specifically
9
outline the commitment we make in providing equal employment
10 opportunities to all employees and
applicants in full
11 compliance with all applicable laws.
12 Ameristar Casino St. Charles
and Kansas City
13 recognize each employee and applicant as an
individual
14 without regard to race, age, gender, color,
religion,
15 national origin or disability.
16 These plans extend to all
persons in all
17 aspects of the employment relationship
including, but not
18 limited to, recruiting, advertising,
hiring, promoting,
19 upgrading, transferring and terminating, as
well as the
20 selection for training and educational
assistance, social
21 and recreational programs and all other
privileges, terms
22 and conditions of employment.
23 In St. Charles, currently
over 26 percent of
24 our employment force are minorities. This number exceeds
25 the actual local demographic composite of
minorities as
0021
1
compiled in the 2000 census by 10 percent. Ameristar Casino
2
St. Charles routinely advertises employment opportunities in
3
publications targeted to minorities and regularly solicits
4
new recruitment sources that provide qualified minority
5
applicants.
6 In addition, Ameristar Casino strives to
7
promote qualified minorities and women from within its work
8
force into supervisory and management positions within the
9
company.
10 Like Ameristar Casino St.
Charles, Ameristar
11 Kansas City strives to provide equal
employment
12 opportunities to all employees. Ameristar Casino Kansas
13 City also uses its best efforts to meet or
exceed its
14 minority and women employment goals
pursuant to the
15 development agreement that I previously
discussed. Those
16 goals are 25 percent and 10 percent
respectively.
17 During the current period of licensure,
18 Ameristar Casino of Kansas City has
significantly exceeded
19 these goals. Currently, 30 percent of our employees at the
20 Kansas City property are minorities and 47
percent of the
21 work force are women.
22 Like Ameristar Casino St.
Charles, Kansas City
23 routinely advertises employment
opportunities in
24 publications targeted at minorities and
regularly solicits
25 new recruitment sources that provide qualified
minority
0022
1
applicants.
2 In addition, in Kansas City, something a
3
little different that we have established which was led to
4
through our strategic plan, was the establishment and
5
implementation of a mentorship program to recognize mentors
6
and promote qualified minorities and women into supervisory
7
and management positions within the company.
8 In addition, we were asked to provide a
9
demographic breakdown of the employees included by state of
10 residence as well as the minority
percentages that I just
11 discussed.
And this is on page 24 through 27 of your flip
12 chart.
13 Ameristar Casino St. Charles,
approximately
14 91 percent of our employees are Missouri
residents and
15 9 percent are residents of the State of
Illinois.
16 In Kansas City, approximately
88 percent of
17 our employees are Missouri residents and 12
percent are
18 residents of the state of Kansas.
19 Next, we were asked to submit
a report
20 regarding our employee turnover rate. We've provided a
21 monthly breakdown of our turnover rate in
your flip book,
22 which is located on pages 29 and 30, but
I'll just give you
23 the summary report.
24 Ameristar Casino St. Charles,
the turnover
25 rate for employees through September 30th
of this year is
0023
1
32.85 percent through this period of licensure. And during
2
that same period of time, the turnover rate for employees at
3
Ameristar Casino Kansas City is 42.73 percent.
4 Although these percentage rates appear high at
5
first glance, they're actually lower than the industry
6
average, which generally is in excess of 50 percent.
7 VICE CHAIRMAN SMITH: Is it higher because
8
you've taken over recently or do you think this will
9
continue?
10 MR. STREMMING: No.
Actually, those
11 numbers -- if you were to compare it, those
numbers have
12 actually decreased since Ameristar has
taken over the
13 property.
But if you were to compare those numbers to the
14 other operators, even similarly situated in
the State of
15 Missouri, you'll find that they're very
consistent or might
16 even actually be a little lower. It just tends to be
17 standard in our industry to have a high
turnover rate.
18 Next, we were asked to submit
the monthly
19 unemployment figures for the county or
metropolitan area in
20 which we operate. And, again, we've given both a 2000 and a
21 2001 comparison and broken those down by
month. But in the
22 average -- on the average the year-to-date
in the City of
23 St. Charles is 2.8 percent, which is up
just slightly over
24 last year of an annual average of 2.2
percent.
25 In Kansas City, that same 2.2
percent average
0024
1
was in place in 2000, and again, it's also slightly up
2
year-to-date to 2.6 percent.
3 As you would imagine, when you operate in
4
environments that have such a very low unemployment rate, it
5
becomes extremely difficult to locate, to train and to
6
maintain full-time employees.
However, we believe by
7 offering competitive wages and superior
benefits, we're able
8 to
attract quality employees.
9 In addition, it also results in competitive
10 hiring practices and strong benefits for
the employees of
11 other casino operators.
12 Next, we were asked to
provide a description
13 of our policy regarding utilization of
minority contractors
14 and provide the data indicating the
percentage of minority
15 contracts issued during the current licensure
term.
16 This was very easy to do at
our Kansas City
17 property.
Because of our development agreement we continue
18 to monitor those purchases on a regular
basis. However,
19 it's something new that we've just started
implementing in
20 the City of -- or at our St. Charles
property so some of our
21 number -- our numbers are a little low in
St. Charles, but I
22 think that there's the potential that there
are purchases
23 that we just haven't been able to log at
this point in time,
24 but we have implemented a structure going
forward.
25 As I stated, Ameristar Casino
St. Charles has
0025
1
recently implemented an affirmative action policy for
2
vendors and suppliers. It is our
policy to provide equal
3
opportunity to prospective vendors and suppliers consistent
4
with Ameristar's purchase requirements and the ability of
5
prospective vendors and suppliers to supply the equipment,
6
furnishings, materials, supplies, and goods which may be
7
required from time to time irrespective of their race,
8
color, religion, sex, age, or national origin.
9 It is also our policy to take affirmative
10 action to identify and engage the services
of qualified
11 minority and female vendors and suppliers
subject to their
12 availability to meet Ameristar Casino St.
Charles
13 requirements.
14 Rhonda Proffer, our director
of purchasing in
15 St. Charles, has been given full authority
for the
16 administration, implementation and
monitoring
17 of the policy. All potential providers of goods and
18 services are encouraged to communicate
freely with her or
19 her designee concerning ambitions to
provide goods or
20 services or concerns that they may have with
the purchasing
21 policies and procedures.
22 If a vendor is a minority
business enterprise
23 or a woman business enterprise, that means
51 percent of the
24 ownership of the company or greater,
they're particularly
25 encouraged to identify themselves to Rhonda
in order that
0026
1
such information can be for record keeping purposes and
2
utilization and monitoring.
3 ACSC has currently established that we've
4
utilized the services of 17 minority-owned or women-owned
5
businesses throughout this current period of licensure. The
6
purchase of these goods and services has totaled $609,605
7
over the period of licensure. As
I stated, it's possible
8
that those numbers would be low just because we established
9
this midstream.
10 In Kansas City we follow the
same affirmative
11 action policies so I won't go through those
again. In
12 Kansas City, June White is our director of
compliance. And
13 with the assistance from the Urban League
of Greater Kansas
14 City, which is an independent third-party
consultant and
15 advisor to our property there, we've been
-- she has been
16 given full authority for the
administration, implementation
17 and monitoring of the policy. Again, we encourage MBEs and
18 WBEs to communicate freely with June so
that we can better
19 utilize their services.
20 Through the period of
licensure, Ameristar
21 Casino Kansas City has utilized the
services of 40
22 minority-owned or women-owned businesses
and those purchases
23 and services have totaled $2,128,540 or
approximately
24 13 percent of our total purchases at the
property.
25 We look at these figures as
building blocks
0027
1
and will continue to strive to meet or exceed our target
2
goals.
3 Next, we were asked to report on the per
4
capita crime rate before and after the current period of
5
licensure and how that crime rate compares with other high
6
visitation areas near the home dock city.
7 It was a little difficult to do in St. Charles
8
because in the City of St. Charles or even the county of
9
St. Charles we don't have a lot of high visitation areas.
10 It's a little easier to do in Kansas
City.
11 So as opposed to doing a
comparison in
12 St. Charles, we pulled the Federal Bureau
of Investigation
13 Uniform Crime Report for calendar years '98
through 2001.
14 And I won't bore you with all of those
numbers. They are in
15 your packet on page 38.
16 But you'll see a consistent
downturn in the
17 number of crimes on -- or total index
crimes from '98
18 through year-to-date 2001.
19 VICE CHAIRMAN SMITH: I was curious why you
20 couldn't do that in St. Charles like you
did in Kansas City
21 if --
22 MR. STREMMING: Well, we don't have a lot of
23 other high visitation areas in St. Charles
to compare
24 ourselves too; whereas, in Kansas City we
have Worlds of Fun
25 that's not far from us as well as the Metro
Mall, which
0028
1
creates a lot of traffic.
2 We would like to think that the downturn
3
decrease in crimes in St. Charles is a result of our
4
contribution to very visible security in the riverfront
5
area, the revitalization of the riverfront area in
6
St. Charles and the city's use of our tax dollars generated
7
from gaming.
8 In Kansas City, like I stated, we were able to
9 do
a little bit different of a comparison.
Ameristar Casino
10 Kansas City is located within a county that
has other high
11 visitation areas.
12 VICE CHAIRMAN SMITH: Excuse me just a minute.
13 Let me ask a question on that chart.
14 MR. STREMMING: Sure.
15 VICE CHAIRMAN SMITH: What is ACKC?
16 MR. STREMMING: Ameristar Casino Kansas City.
17 VICE CHAIRMAN SMITH: And ADKC?
18 MR. STREMMING: It's probably just a misprint.
19 VICE CHAIRMAN SMITH: Oh, I'm sorry. ACKC
20 again.
Okay. I understand.
21 MR. STREMMING: Okay.
Ameristar Casino Kansas
22 City and Ameristar Casino St. Charles.
23 Ameristar Casino Kansas City
is located within
24 a county that has other high visitation
areas. Granted, the
25 other high visitation attractions do not
have near the
0029
1
volume of foot traffic that our ACKC property generates;
2
however, it gives some evidence to the fact that the crime
3
rate at Ameristar Casino Kansas City is consistent with, if
4
not lower than, other local attractions.
5 The following table reflects the crime
6
comparison between Ameristar Casino Kansas City, Metro North
7
Mall and Worlds of Fun. It
should be noted that several
8
factors bear on this comparison.
For example, Worlds of Fun
9 is
only open from spring through fall and it does not offer
10 alcohol to its guests. Further, Metro North Mall obviously
11 does not offer alcohol to its customers and
operates at a
12 reduced number of hours in comparison to
the casino.
13 We have recently implemented
some new
14 procedures at the property to assist us in
the area of
15 security in our parking lot. I'm sure that you, as
16 Commissioners, are familiar with our
facility and its pretty
17 vast parking lot. And we've noticed that it's tended to
18 attract people who are trying to steal --
like a mall would
19 or something -- someplace like that,
attract people that are
20 trying to steal things out of cars or even
steal cars.
21 And if you look at the
numbers that are on
22 your chart in the flip book on page 39,
that's one area of
23 concern that we have. The other areas I think are pretty
24 consistent with other local attractions,
but that's --
25 VICE CHAIRMAN SMITH: Of course, the other
0030
1
areas are very low except for your parking area.
2 MR. STREMMING:
Yeah. They really are. And
3
we've also been working with the City of Kansas City even
4
running stings from the roof of our facility, where they
5
come out and they actually put themselves out in cars,
6
hidden in cars and they do surveillance from the rooftop of
7
the facility. We've been able to
do that twice over the
8
last two years now.
9 Next, we were asked to report on our program
10 for dealing with problem gamblers. And, again, I will deal
11 with Kansas City and St. Charles
simultaneously, as our
12 policies are consistent.
13 Ameristar Casino St. Charles
and Ameristar
14 Casino Kansas City take matters concerning
the problem
15 gambler very seriously. Both of our properties have taken
16 several steps to curb problem gaming and
these are all set
17 out, again, in the flip chart on page
41.
18 At both of our properties we
laminate posters
19 on every ATM machine on the property, as
well as various
20 other locations throughout the property,
with the
21 888-BETSOFF message. In addition, the 888-BETSOFF brochures
22 are at each of our guest services desks
which are
23 prominently displayed for guest use.
24 We also have a STEP program
in place with
25 brochures at each of the cages on the
property which are
0031
1
prominently displayed for guest use.
We also have provided
2
our employees with business cards with the 888-BETSOFF
3
message on them and, if approached by a guest about problem
4
gaming, team members have been trained to give the guest a
5
card and encourage them to get assistance.
6 All of our guest service desk team members
7
have been trained to notify the Missouri Gaming Commission
8
immediately should a guest request information about the
9
Disassociated Persons Program.
All of our printed
10 advertising and television advertisements,
along with
11 various property off -- or off-property
advertising, contain
12 the "Gambling Problem? Call 1-888-BETSOFF in Missouri"
13 message.
14 In addition, both of the
properties
15 participate in the Problem Gaming Awareness
Week and
16 encourage team members to be involved by
attending seminars,
17 wearing problem gaming awareness buttons
and participating
18 in video and poster making competitions in
accord with
19 Problem Gaming Awareness Week.
20 Lastly, in Kansas City we've
been able to do a
21 couple of different things there just
because of the nature
22 of the facility. We've -- we've produced and run problem
23 gaming awareness advertisements on the
video wall at the
24 property.
And then we also, pursuant to a development
25 agreement, contribute $100,000 annually to
the Port
0032
1
Authority of Kansas City for the awareness and treatment of
2
problem gambling. So those are
the procedures that we've
3
put in place to deal with problem gambling.
4 In accord with that, we were asked to report
5 on
the Disassociated Persons Program and explain our method
6 of
identifying disassociated persons and our -- and their
7
attempts to cash checks, use or obtain VIP cards or cash
8
large jackpots.
9 And, again, our policies and procedures that
10 are set out on page 46 of your flip chart
are consistent at
11 both properties, so I'll address them
simultaneously.
12 Each time an updated version
of the
13 Disassociated Persons List is released by the
Missouri
14 Gaming Commission, our database teams check
every name on
15 the list to ensure that all DAPs are
properly flagged in our
16 respective systems. If the DAP is not currently in our
17 database, we enter their name into the
system and flag it as
18 disassociated.
19 In addition, the address is
changed in the
20 system to the respective Ameristar Casino
St. Charles or
21 Ameristar Casino Kansas City property
address to guarantee
22 that no mail is sent to that person. Therefore, if
23 something accidently gets through the
database system, it
24 just gets returned, mailed back to the
property address.
25 The state code is also changed to XX as an
additional
0033
1
parameter check so that it won't be able to go out through
2
the mail system.
3 Most important, the flagging that is attached
4 to
the account restricts turnstile activation.
When
5
activation is attempted, a message flashes on the screen
6 prompting
the guest services representative to inform the
7
guest that there is a problem with the magnetic strip on the
8
card. The guest is sent to the
main guest services desk and
9
simultaneously the guest services representative informs
10 security that there has been a DAP that has
attempted to
11 gain entry into the casino. Security, in turn, notifies the
12 Missouri Gaming Commission.
13 Other precautions that are
set out on page 47
14 that have been taken include data entry
guidelines to ensure
15 that duplicate accounts are not entered and
that guests are
16 looked up and entered into the system in
the same fashion
17 for easy detection. Team members are trained on data entry
18 guidelines during their orientation program
and are
19 retrained quarterly.
20 Regarding the question to
checks and large
21 jackpots, to protect against DAPs cashing
checks or claiming
22 large jackpots, binders containing the
printout of the most
23 recent printout DAP lists are kept at each
cage and jackpot
24 service station.
25 Before cashing a check or
paying a reportable
0034
1
jackpot, team members are trained to make certain the guest
2
that is not listed on the DAP list.
If the team member
3
finds the guest is on the DAP list, security and the
4
Missouri Gaming Commission are notified immediately. And
5
that sets forth our policies for the Disassociated Persons
6
Program.
7
Equally important to
us, and what we were
8
asked to report on, is our program to deter underage
9
gambling. Like problem gambling,
both Ameristar Casino
10 St. Charles and Ameristar Casino Kansas
City take the matter
11 of underage gambling very seriously.
12 To that end, ACSC and ACKC
have taken the
13 following steps to detect and deter problem
gambling.
14 First, a valid state or government-issued
photo is required
15 to obtain a new account, as well as a
reprinted card on an
16 existing account at the guest services
desk.
17 The I.D. presented is checked
carefully by the
18 staff for validity. If there are any questions regarding
19 the I.D., a security officer is called to
verify the
20 validity of the identification. If the security officer is
21 still not comfortable with the validity of
the I.D., the
22 Missouri Gaming Commission will be called
for assistance.
23 All of our marketing team
members are
24 certified in TIPS training, which involves
extensive
25 training regarding alcohol awareness and
underage detection
0035
1
techniques. Underage detection
training is done during
2
orientation and also conducted during quarterly retraining.
3 In addition, signage indicating the acceptable
4
forms of identification is located at the location where
5
guests obtain their players' cards at the facilities. At
6
the turnstiles, all guests who appear to be under the age of
7 30
are required to present a valid photo I.D. before gaining
8
entry into the casino.
9 Videos are played at the turnstiles -- and
10 this is in Kansas City -- on televisions
outside the casino
11 and on the video wall deterring underage
guests from
12 attempting to gain access to the
casino. "Must be 21 or
13 older" is printed on almost all of our
advertising material
14 at both properties, our direct mail and our
players' cards.
15 And, finally, at Kansas City we've implemented
16 a new program which we are exploring using
in St. Charles as
17 well.
At the Kansas City property, team members are awarded
18 $100 for each underage guest that they
detect trying to gain
19 entry or having gained entry into the
casino. In addition,
20 any team member who detects five underage
guests, which we
21 hope doesn't happen, is awarded an
additional $500 bonus.
22 VICE CHAIRMAN SMITH: How's that worked out?
23 MR. BURKE: It's worked out very well. We've
24 turned a negative into a positive with the
team members
25 doing that.
0036
1 VICE CHAIRMAN SMITH: Pretty good incentive.
2 MR. STREMMING:
And that's our program
3
regarding underage gambling.
4 Next, we were asked to report on the number of
5
business closings during the current period of licensure as
6
well as the number of business start-ups. During the
7
current period of licensure, there have been 104 business
8
start-ups in the City of St. Charles according to city
9
statistics.
10 One very large business
start-up was the Bass
11 Pro facility which sits across Fifth Street
from our
12 property.
The close proximity to Ameristar Casino
13 St. Charles has brought some real synergy
to the entrance of
14 the city.
And this is something we're very excited about.
15 The city -- we've also been
working with the
16 City -- as you enter into the city on Fifth
Street, some of
17 the traffic that's been created by both the
Bass Pro Shop as
18 well as our new facility when it opens, the
City is working
19 with us and Bass Pro and trying to work out
some of the
20 traffic problems that are there at that
juncture.
21 Unfortunately, neither the
City of St. Charles
22 or the local Chamber of Commerce currently
monitor business
23 closures and we were unable to provide that
information.
24 In Ameristar -- at Ameristar
Casino Kansas
25 City during the current period of
licensure, there have been
0037
1
2,042 business start-ups in the Kansas City metropolitan
2
service area, according to the economic development
3
marketplace.
4 During the same period of time, the Kansas
5
City Area Development Council reports 11 major businesses
6
that have closed, resulting in a loss of 3,053 jobs. In
7
addition, 19 major businesses in the Kansas City
8
metropolitan area have suffered a downsizing in operation
9
that results in the reduction of 4,578 jobs. Of course,
10 3,000 of those have been at the Sprint
World headquarters.
11 Unfortunately, the City has
informed us that
12 it's impossible to gather the same
information for small
13 business failures. But there has been a downturn obviously
14 in the economy and some of that's been felt
in the -- in the
15 City of Kansas City through some of its
large business
16 operators, Sprint, TWA and some of the
larger businesses.
17 We're getting close to the
end here.
18 Page 58, we were asked to --
in our flip book
19 we were asked to provide information on
charitable
20 contributions in our home dock community in
the State of
21 Missouri.
During the current period of licensure, Ameristar
22 Casino St. Charles has made approximately
425 separate
23 contributions to various local and state
charities, schools,
24 communities, clubs, fraternal
organizations, churches,
25 hospitals, foundations, etc., totaling over
$90,000 through
0038
1
the period of licensure.
2 In Kansas City during that same period, we
3
have made approximately 451 separate contributions to
4
various charities totally $134,000.
And this figure does
5
not include the annual payment that -- made to the County of
6
Clay of $200,000, nor does it include any of the
7 contributions
that are made to the Port Authority of the
8
City of Kansas City.
9 We were also asked to disclose efforts by our
10 employees of the company to volunteer time
to charitable
11 causes in the community. And although we have no way of
12 monitoring the many hours of individual
acts of volunteerism
13 performed by all of our employees, we do
know that Ameristar
14 Casino St. Charles employees are currently
active in several
15 charitable and civic organizations and I've
listed several
16 of those in your flip chart.
17 In addition, Ameristar Casino
St. Charles
18 continues to campaign for the United Way of
Greater
19 St. Louis.
This year, team members of Ameristar Casino
20 St.
Charles contributed $20,000 to the United Way.
21 Other activities which
Ameristar Casino
22 employees significantly participated in
this year include
23 the Juvenile Diabetes Foundation Walk,
they've held two
24 blood drives for Gateway Community Blood
Bank, our annual
25 participation in the Adopt a Road Litter
Control Program and
0039
1
the Christmas Giving Tree and Needy Families Program in
2
St. Charles.
3 And this year our senior vice president and
4
general manager, Tony Raymon, will be serving as director on
5
the St. Charles Chamber of Commerce Board, so we are
6
actively involved within the city.
7 I have to apologize. We made these copies of
8 the
flip book at Kinko's and they shorted us one page, so
9
you're missing I believe page 62 in the flip chart, which
10 sets out a lot of the organizations that we
are involved in
11 in the city of Kansas City, but we will get
that sent over
12 to
the Commission office.
13 In addition to those various
entities to which
14 we belong and are actively involved such as
the MDA
15 Telethon, the MDA Blades Night, United Way
Day of Caring,
16 the AIDS Walk, Kansas City's Caring
Christmas, and again the
17 Juvenile Diabetes Foundation Walk,
Ameristar Casino Kansas
18 City continues to strongly support the
United Way campaign
19 of Greater Kansas City.
20 This year our senior vice
president and
21 general manager, Tom Burke, served as vice chairperson of
22 the Northland United Way Services and the
team members of
23 Ameristar Casino Kansas City contributed --
and it's a
24 pretty impressive number -- $134,000 this
year to the United
25 Way.
0040
1 We continue to profile all of our charitable
2
efforts and encourage team members' involvement through our
3
team member newsletter, our guest newsletter and our video
4
wall at the property.
5
And I'm sure, as you're
grateful, this finally
6
concludes my portion of the presentation. And now I will
7
turn it over to Tony and Tom to discuss some of the
8
operational efficiencies and some of the future developments
9 at
the properties.
10 VICE CHAIRMAN SMITH: Before you get started,
11 let me ask the other Commissioners, do you
have any
12 questions of Mr. Stremming while he's here?
13 COMMISSIONER NIKOLAISEN: I think I'm going to
14 wait until the conclusion of all the
presentations --
15 COMMISSIONER ADORJAN: I don't.
16 COMMISSIONER NIKOLAISEN: -- and see if any
17 questions may or may not pop up at that
time.
18 VICE CHAIRMAN SMITH: Joe, do you have a
19 question?
20 MR. STREMMING: I think he said he didn't.
21 VICE CHAIRMAN SMITH: Did not?
22 MR. STREMMING: No.
23 VICE CHAIRMAN SMITH: Fine.
24 COMMISSIONER ADORJAN: No.
I don't have any
25 questions.
0041
1 MR. STREMMING:
Okay. We will -- I'll turn it
2
over to Tony Raymon then for discussion of St. Charles.
3 MR. RAYMON:
Good morning. Again, my name is
4
Tony Raymon. I'm the senior vice
president, general manager
5 of
St. Charles.
6 And what I'd like to discuss very quickly is
7
the new facility scheduled for completion in mid 2002 in
8
St. Charles that will include the following amenities:
9
115,000 square feet of casino, 3,000 slot machines, 104
10 table games, a 12-table poker room, a VIP
players' lounge, a
11 450-seat state-of-the-art buffet with
multiple serving
12 stations, a 262-seat sports bar and grill
with a 40-foot
13 video wall, 154-seat steakhouse, which will
include -- which
14 will also provide a 46-seat lounge and a
20-seat private
15 dining room. Another restaurant will be a 211-seat casual
16 dining restaurant, 106-seat oyster bar, the
Bottle Neck
17 Blues Bar, a video game arcade and a gift
shop.
18 That wraps up our new project
and it is still
19 scheduled for mid 2002.
20 VICE CHAIRMAN SMITH: Will that basically fill
21 in the area in which the superstructure is
sitting out
22 there?
Is that where that's being constructed?
23 MR. RAYMON: Yes.
It's within that structure.
24 There will still be plenty of space for
future expansion.
25 MR. STREMMING: There's still about another
0042
1
200,000 square feet of space that's developable there.
2 MR. RAYMON:
But that will be transparent to
3
the guests because, of course, it will be walled off and --
4 VICE CHAIRMAN SMITH: That's something we've
5
been very interested in on the Commission, and I'm glad to
6
see that moving forward.
7 MR. STREMMING:
Commissioner Smith, I also
8
provided the staff with the recent prospectus that we have
9
right now, the most current prospectus that's out for the
10 equity offering. And in there there are some color
11 photographs both in the front and in the
back of the
12 properties as well as some renderings of
the St. Charles
13 facility as we anticipate it being
completed.
14 VICE CHAIRMAN SMITH: Thank you.
15 MR. BURKE: Good morning, Commissioners. I'm
16 Tom Burke.
17 First of all, thank you for
having us. And it
18 gives me great pleasure to be here this
morning to report on
19 some of the exciting -- actually two of the
major exciting
20 things that have happened, are happening
and will happen
21 during the coming year in Kansas City.
22 In particular, in August of
2001, the Kansas
23 City team, in conjunction with the
Commission staff,
24 completed the consolidation of our two
casinos into one
25 gaming facility. In addition to providing our guests with a
0043
1
convenient and exciting experience, the new facility has
2
certainly resulted in some operating efficiencies,
3
enhancements and a lot of increased positive guest
4
experience.
5 We now operate a 115,000-square foot casino
6
with approximately 3,000 slot and video poker machines and
7 95
table games. And in the process, we've
replaced or
8
upgraded approximately 350 slot machines. The -- basically
9
the entire casino floor layout has been redone and enhanced,
10 the guest experience flowing and creating
one contiguous
11 space.
12 We've relocated and are
expanding and
13 redesigning and upgrading the high limit
area.
14 MR. STREMMING: We'd also like to introduce
15 our new mascot.
16 VICE CHAIRMAN SMITH: We have a new guest
17 that's joined us now. We have an open door policy here, you
18 see.
19 MR. BURKE: I think he had a question.
20 One of the other things that
this has caused
21 to happen is the relocation of the poker
room, which may not
22 seem like much, but we've had a lot of
comments over the
23 years from poker players.
24 Our poker room used to be
located on the
25 second deck, which caused some
inconvenience to people as
0044
1
far as accessing it. And that's
now down on the main floor
2
located near the delicatessen and also the bathroom, which
3 is
very important to our poker players.
4 Speaking of the delicatessen, one of the other
5
things that has occurred is we've been able to take the two
6
delicatessens and combine them into one expanded one now
7
that we have one open space.
8 Very exciting.
And we, as a team, look very
9
forward to it opening, and we believe that it will very much
10 enhance the property operationally and
every other way is
11 the new parking garage.
12 As some of you may be aware, construction is
13 well underway and is expected to be
completed in July of
14 2002.
At this point in time almost a majority of the piles
15 are in and we expect pre-cast to begin
arriving sometime in
16 January.
17 The garage itself is a
state-of-the -- cutting
18 edge state-of-the-art design for a parking
garage. It is
19 almost 2,700 spaces consisting of five
levels of parking, it
20 has a speed ramp design which allows people
to access all of
21 the levels by going straight up instead of
going around and
22 around.
In addition, the lighting in the garage, which is
23 often a concern, substantially exceeds all
of the industry
24 standards for a parking structure.
25 Once arriving in the garage, guests will be
0045
1
able to move from their cars into the main entertainment
2
facility through a climate controlled walkway. So once they
3
enter the elevators, they'll be out of the elements.
4 We're anticipating the cost to be
5
approximately $20 million and we're very proud to say that
6 50
percent of that -- of the primary construction will be
7
performed by MBEs and approximately 10 percent by WBEs.
8
And, finally and most
importantly, not only
9
does it certainly enhance our business, I believe it
10 strengthens our investment in and shows our
continued
11 commitment to the Kansas City
community. Thank you.
12 VICE CHAIRMAN SMITH: I hate to show my
13 stupidity, but what is MBEs and WBEs?
14 MR. STREMMING: Minority business enterprise
15 and women business enterprise
16 VICE CHAIRMAN SMITH: Okay.
Thank you.
17 Well, this is the end of your presentation?
18 MR. STREMMING: This is the end of our
19 presentation.
20 VICE CHAIRMAN SMITH: Do either of the
21 Commissioners have any questions at this
point?
22 COMMISSIONER NIKOLAISEN: I have two.
23 COMMISSIONER ADORJAN: I do.
24 VICE CHAIRMAN SMITH: All right.
Let's have
25 the --
0046
1 COMMISSIONER ADORJAN: Can you hear me okay,
2
Bob?
3 VICE CHAIRMAN SMITH: I can hear you okay.
4
Can everybody else hear him?
5 MR. STREMMING:
Yes.
6 VICE CHAIRMAN SMITH: Go ahead, Joe.
7 COMMISSIONER ADORJAN: I had a question on not
8 so
much the operation, but I was looking at the last meeting
9
and I just have a question as we move forward. Do we
10 receive -- and I know this is proprietary
information, but
11 do we receive a copy of the road show materials
on their
12 equity offering at Capri or can we receive
that?
13 MR. MULLALLY: In the form of the prospectus
14 we do.
Were you looking for something in addition to that?
15 COMMISSIONER ADORJAN: I think Mr. Stremming
16 mentioned that they had a road show going
on and I'd like to
17 get a copy of that, if I can, because I
assume that's public
18 information.
19 MR. MULLALLY: Sure.
We can get that to you.
20 MR. STREMMING: Absolutely.
21 COMMISSIONER ADORJAN: Thank you.
22 COMMISSIONER NIKOLAISEN: I just have two
23 questions, if you can hear me.
24 MR. STREMMING: Yes, we can.
25 VICE CHAIRMAN SMITH: Lynne, you're coming
0047
1
through fine.
2 COMMISSIONER NIKOLAISEN: The first question,
3
and it relates to all casinos, all businesses, but I think
4
it's just the appropriate time to ask it.
5
Has Ameristar seen any
changes either relative
6 to
costs in their insurance and/or any notification from
7
their insurance carriers of changes in coverages or
8
exclusions of coverages in light of what has happened in
9
September?
10 MR. STREMMING: We have not had any
11 discussions about exclusions or anything
along those lines.
12 However, we did recently go through our
corporate, you know,
13 negotiations with our contracts of
insurance. And, as you
14 would imagine with the things that are
going on in the world
15 today, insurance is substantially going
up. And the numbers
16 were very high. So we've seen a huge impact from the events
17 of September 11th.
18 COMMISSIONER NIKOLAISEN: Would you say --
19 based on what you've seen, as a guess,
would you say a huge
20 increase is 25 percent, 50 percent, kind of
a ballpark or a
21 range even?
22 MR. STREMMING: Commissioner Nikolaisen, I
23 couldn't tell you exactly. I could surely find that out for
24 you.
I do know that there are some providers that have
25 provided insurance in the past to our
company and other
0048
1
casino operators that are -- that are looking to no longer
2
extend contracts of insurance.
3 COMMISSIONER NIKOLAISEN: Okay. Do you think
4
there will be a problem obtaining that insurance from other
5
providers?
6 MR. STREMMING:
No. I mean, we've -- you
7 know,
I don't know what the other operators have done, but
8
like I said, we've recently went through this and we were
9
able to obtain insurance, but the cost has substantially
10 went up.
11 COMMISSIONER NIKOLAISEN: Okay.
Another
12 question, again this applies to all
casinos, but I guess
13 it's coming to Ameristar first.
14 The trend that we all have
noticed in the
15 decline in patrons and the increase in win
per patron. And
16 I am somewhat curious as to how much of
that do you think
17 can occur before you have to change your
strategy, and is
18 that something that would have -- I'm not
phrasing this
19 right -- but an immediate effect?
20 It's one thing if the win per
patron goes up
21 and patron volume goes down and you decide
you're going to
22 change that, but how quickly does it turn
around and the
23 patrons start coming back?
24 And I'm asking that question
not so much to
25 question the business decision of how
you're running things,
0049
1
but more of a concern down the road if there's a problem
2
with numbers and profits and AGR not being exactly where
3
people want them to be and then do we, in turn, start
4 hearing from casino operators as a body saying that they
5
need some relief from taxes or, you know, something like
6
that because of what's going on relative to the decline in
7
patrons and increase in win per patrons?
8 MR. STREMMING:
Right. I would say -- and I
9
don't want to -- I've got operators sitting beside me and
10 I'm the attorney, but I can tell you that
obviously after
11 September 11th, the numbers were a little
soft. I don't
12 think that anyone has had any drastic
downturn in numbers,
13 but granted, what you're seeing is a steady
downturn in
14 numbers.
And I think that that comes from a maturing
15 market.
16 And particularly in our
Kansas City property,
17 you're doing away with a lot of the
sightseer -- sightseers
18 that we've had in the past and you're
getting a more mature
19 market that are actually coming there to
gamble.
20 Along with that, I would say
that we are
21 always looking to grow that market and that
the operators --
22 I know we get, you know, the advertisements
that the other
23 operators put out. I'm sure they get ours. We are all
24 trying to consistently grow that market and
that is a
25 concern I think that all of the operators
have.
0050
1 I will tell you that before I think you would
2
look to tax relief, and I'm only speaking for Ameristar, you
3
know, doing away with the loss limit, which I think as an
4
industry, we think is something through the Missouri
5
Riverboat Gaming Association should happen, that is where
6
you're going to get a very large immediate impact.
7 Because as we know from looking at the
8
St. Louis market, that we're not getting our fair share in
9
the state of Missouri of those people that live in that
10 metropolitan area. And if that loss limit were not there, I
11 think we're all firm believers that a large
portion of those
12 individuals that are going to the State of
Illinois, the
13 State of Kansas and the State of
Mississippi would stay in
14 the State of Missouri if they didn't have
to deal with the
15 inconveniences of the $500 loss limit.
16 COMMISSIONER NIKOLAISEN: I understand what
17 you're saying, but I still question is that
entirely the
18 problem when you are increasing the win per
patron on a
19 consistent basis? In other words, what each person is
20 leaving behind is going up, so how can you
say the problem
21 is exclusively related to a loss limit when
you're
22 withholding more or the cost of doing
business, if you will,
23 from a patron's perspective is going
up.
24 In my mind -- and maybe I'm
just having a hard
25 time understanding it -- has to do
something with it. The
0051
1
last few numbers I saw said the hold-back or the win per
2
patron should increase on average 18 percent.
3 MR. STREMMING:
Well, and I think that --
4 again, it goes back to two factors. In any market that you
5
were -- if you were to look at any of the other gaming
6
markets, historically the longer gaming is there the more
7
mature, the more educated the gambler becomes, and the more
8 mature and educated that the gambler becomes, the more money
9
that is actually spent.
10 In addition to that, what's
pushing down that
11 number are a lot of the sightseers that are
no longer coming
12 to the property to just look at the
facility and look at the
13 stained glass in the ceiling in Kansas
City. They've seen
14 it and they're not coming back. And the people that are
15 coming are the people that are actually
gambling.
16 And also, you know, we've
also gone through
17 open boarding and that's also had a small
effect. I don't
18 think it's had a drastic effect, but I
think it has also had
19 an effect on pushing that win per patron up
and the number
20 of admissions down, the people that crossed
back and forth
21 from side to side when we had two
facilities.
22 COMMISSIONER NIKOLAISEN: Right.
And I think
23 that -- I understand where you're coming
from. And as staff
24 knows, because I've talked to them over the
course of a
25 couple times, I'm still having a bit of
trouble perhaps -- I
0052
1
don't want to say understanding it, but buying in completely
2 to
the argument that if that win per patron goes up, that
3
that somehow isn't partially -- I'm not saying totally --
4
but partially responsible for some decline of your perhaps
5
more casual clients, you know, visitor who is just not
6
seeing what they used to be seeing and, therefore, is
7
pulling back somewhat.
8 MR. STREMMING:
Uh-huh.
9 COMMISSIONER NIKOLAISEN: Just a comment. I
10 understand what you're saying. I'm not sure I'm comfortable
11 with the buy-in yet. So I'll keep asking the question and
12 keep studying it from people from our staff
and operators as
13 well.
14 VICE CHAIRMAN SMITH: Kevin has a comment,
15 Lynne, in response to your question.
16 MR. MULLALLY: Thank you, Mr. Chairman.
17 Lynne, I think there's a couple of other
18 observations that play into this. One, it was a legislative
19 initiative that went into effect a little
over a year ago
20 that allowed vend-to-meter.
21 As you may recall, under the
previous law, if
22 you went to a slot machine, you'd have to
put a $20 bill in,
23 the tokens would have to dump into the tray
and then you'd
24 have to lift them back out and put them
back into the
25 machine before you could commence play.
0053
1 The legislative change that went into effect
2
August 28th of 2000 now allows you to put a $20 bill in,
3
those -- that currency goes to credits on the machine and
4
you can immediately initiate play.
We think that has driven
5
the win per patron up some.
6 I think the other factor that you have to
7
consider is I think the casino companies have recognized
8
that there is a certain cost to doing business. I mean,
9
Troy mentioned the fact that they had some casual or
10 tourists.
You know, those -- those people cost the company
11 anywhere from $2 to $4 depending on when
they entered the
12 casino.
13 Because of open boarding, you
could only be
14 there maybe 15, 20 minutes and depending on
when you enter,
15 you could cost the casino as much as
$4. So I think they've
16 recognized that and they have targeted
their marketing to
17 people who are interested in gambling, not
those who are
18 interested in coming in there and looking.
19 And I think you're also
seeing, in some of the
20 table game play, because of, you know,
capacity issues and
21 the cost of doing business and manning a
table on the
22 weekends, you're seeing fewer and fewer $5
tables in the big
23 metropolitan areas on a weekends. They're -- they're --
24 they're -- casino companies are really
catering to the
25 gambler that is interested in serious --
more serious table
0054
1
game play. And I think those two
issues are still driving
2
the number.
3 But I think we also need to recognize we're
4
still substantially behind Illinois, that we are still
5
losing a great deal of the Missouri population to Illinois.
6
You can do it both by looking at the numbers and by
7
casual -- our informal parking lot surveys that Jim and I do
8
occasionally over at the Casino Queen.
9 And they're doing it -- they're taking these
10 customers away from Missouri with vastly
insuperior
11 facilities -- inferior facilities. Insuperior's not even a
12 word, is it? Inferior facilities.
13 And I don't think any
reasonable person could
14 go to the Casino Queen and on any level,
marketing,
15 location, convenience, access, on any level
compare those to
16 the facilities you've got in St. Charles
and Maryland
17 Heights and yet they -- they consistently
draw a good
18 portion of Missouri customers who spend
greater amounts
19 there.
And I think the only thing we can say is that that's
20 the loss limit.
21 COMMISSIONER NIKOLAISEN: And I do understand,
22 but I do know also that I guess from the
last market
23 analysis from October there still was
sufficient growth,
24 particularly in AGR, although there was
still a decline in
25 patron volumes, but it stated that the
growth reflected that
0055
1
the Missouri boats were capturing market shares from their
2
Illinois competitors in doing this without the benefit of no
3
loss limit.
4 MR. MULLALLY:
Yeah. And I think that they're
5
doing it with the things that they have. They're doing it
6
with the better access, they're doing it with the superior
7
facility.
8 COMMISSIONER NIKOLAISEN: Right. With the
9
better product.
10 MR. MULLALLY: Yeah.
11 MR. STREMMING: Right.
12 COMMISSIONER NIKOLAISEN: And I do agree with
13 Kevin and I understand it, but I think it's
a good thing to
14 point out that the vend-to-meter I do know
is a big thing.
15 It's just -- I don't know how long it's
been in place, over
16 a year, how long you can attribute that win
per patron to
17 that.
And I'm stating that just as a fact.
I don't know,
18 but it's something that I'm concerned about
and I'm just
19 watching because of the concern.
20 MR. MULLALLY: Yeah.
And we're really seeing
21 that growth in win per patron flattening
out. And we're
22 seeing the decline in number of patrons
flattening out. And
23 it can only go on so long.
24 But clearly that St. Louis
market, in
25 particular, I think the analysts across the
country are
0056
1
seeing it as one of the hottest markets there -- there is.
2 VICE CHAIRMAN SMITH: The other Commissioners
3
have any other questions?
4 COMMISSIONER NIKOLAISEN: No, thank you.
5 VICE CHAIRMAN SMITH: Joe, anything else from
6
you?
7 Okay. I
have a couple of questions. One,
8
we've been reading about the drop in patrons and money in
9
Las Vegas. And I wonder if this
has had any serious adverse
10 effect on your principal company, which may
ultimately
11 result in problems in Missouri?
12 MR. STREMMING: No, it hasn't. And actually
13 there's been several analyst reports that
have come out.
14 And two of the companies that are looked
upon most favorably
15 right now in the market are Argosy and
Ameristar, because we
16 have no assets on the strip in Las
Vegas. And the downturn
17 in business in Las Vegas has really had no
effect on us.
18 We're -- both companies are
entrenched in the
19 riverboat market areas and it really has
had no effect on
20 us.
As a matter of fact, our stock was trading yesterday, I
21 believe, at almost $23 a share. And when Ameristar bought
22 the two Missouri properties, it was trading
at $4.64 a
23 share.
So we've had substantial corporate growth over this
24 last year.
25 VICE CHAIRMAN SMITH: Well, that's encouraging
0057
1
certainly. I'm wondering in the
long run, or at least in
2
the near future, maybe the riverboats will do better with
3
the reluctance of people to travel long distance to Las
4
Vegas.
5 MR. STREMMING:
I think we've seen that to
6
this point after the tragedy on September 11th.
7 VICE CHAIRMAN SMITH: I'd like to commend you
8 on
one other thing I saw in your report was that you had no
9
disciplinary problems with the Commission during the period
10 of this -- the last period and I'm glad to
see that. Shows
11 you're doing a good job.
12 MR. STREMMING: Great.
13 VICE CHAIRMAN SMITH: Thank you.
14 MR. STREMMING: Thank you.
15 VICE CHAIRMAN SMITH: We'll excuse you all
16 then if that concludes your
presentation.
17 MR. BURKE: Thank you.
18 MR. RAYMON: Thank you, Commissioner.
19 VICE CHAIRMAN SMITH: Kevin, do you want to
20 make a report?
21 MR. MULLALLY: The next presentation,
22 Mr. Chairman, would be from the City of
Kansas City. Mike
23 Burke is here to comment on the status of
MS-- Ameristar as
24 a corporate citizen in Kansas City.
25 MR. BURKE: Mr.
Chairman, and other
0058
1
Commissioners, my name is Michael Burke. I'm the general
2
counsel for the Port Authority of Kansas City. I will be
3
brief today in hopes of not being interrupted by any more
4
dogs.
5 VICE CHAIRMAN SMITH: That will be
6
appreciated.
7 MR. BURKE:
I do have a handout, which I will
8
ask that Commissioners participating by phone receive a copy
9
of.
10 First of all, and at the
outset, I bring the
11 greetings of Mayor Barnes of Kansas
City. She regrets that
12 she cannot be here today, but has included
a letter in
13 support of this application.
14 And, in addition, Mayor
Barnes has asked me to
15 convey to the Commission that upon its next
meeting in
16 Kansas City, if they have the opportunity
to tour our
17 riverfront, we have many things happening
on the riverfront,
18 some of which I will describe briefly later
in this
19 presentation.
20 We enjoy, in the Port
Authority, an excellent
21 working relationship with -- with the
Commission staff. And
22 I would like to take just a minute to
compliment the
23 professionalism both of Kevin Mullally and
the investigative
24 staff and, as always, they are a pleasure
to work with.
25 I'm pleased to report on
behalf of the Port
0059
1
Authority that Ameristar Casino Kansas City is in full
2
compliance with all of its obligations under the development
3
agreement with the Port Authority and with the City of
4
Kansas City.
5 I have included in your packet a breakdown of
6
how the City of Kansas City has directly benefited in its
7
budget from the use of gaming funds.
The combined revenue
8 of
the two Kansas City riverboats, Ameristar and Isle of
9
Capri, to the City of Kansas City is in the area of
10 $23 1/2 million.
11 The City makes excellent use
of that money for
12 both deferred maintenance and capital
improvement projects,
13 including monies going to the Kansas City
Zoo, our city
14 market, revamped fire equipment and a major
portion of a
15 very ambitious street lighting
program.
16 I would like to compliment Ameristar for its
17 participation in a strategic plan to
increase the MBE, WBE
18 vendors used by the casino. They've acted very responsibly
19 in the past couple of years in working with
the Port
20 Authority on the strategic plan. I've included in your
21 packet our consultant's report on the MBE,
WBE program.
22 Finally, I've included a
brochure on the
23 current riverfront development which
includes both map and
24 aerial photos. Very briefly, the year 2001 has been a very
25 significant year for the Kansas City
riverfront. We have
0060
1
completed a major clean-up of what used to be a demolition
2
debris landfill on the city's riverfront development site.
3 We have completed a planning process for
4
making Brookley Riverfront Park much more user-friendly. We
5
have secured federal funding for a new park to be
6
constructed under the auspices of the Corps of Engineers.
7
They call it a wetlands habitat.
We at the Port Authority
8
call it a park.
9 We also have under construction and have
10 broken ground on a $4 million pedestrian
bridge connecting
11 the city market area to the wharf area
along our riverfront.
12 We expect completion of that next
year. We also expect
13 completion of a significant increase in
riverfront trails
14 leading from Brookley Riverfront Park
through our city
15 market and eventually down into the west
bottoms area along
16 the Kansas River.
17 We expect the year 2002 to be
an even more
18 significant year, hopefully hosting in the
revamped parks
19 some major festivals and events. And also completing the
20 projects currently under construction,
which include the
21 wetlands habitat, pedestrian bridge and the
trail system.
22 One more comment, and that's
with regard to
23 administration of our problem gaming
fund. We are working
24 with the Commission to better utilize those
monies and work
25 jointly with the Commission on some
research projects. In
0061
1
the past year the Port Authority has completed a major ad
2
campaign. In addition, it funds
Tri-County Mental Health
3
Center for treatment of problem gaming.
4 We are currently evaluating those programs.
5 We
hope in the next year to turn the administration of our
6
problem gaming fund over to a local foundation better
7
equipped to both administer and evaluate the proper use of
8
those funds.
9 Again, on behalf of Mayor Barnes, the Port
10 Authority, we thank you, we urge your
favorable
11 consideration, and again invite you on your
next hearing in
12 Kansas City to take a few extra minutes and
tour our
13 riverfront area.
14 Be more than happy to answer
any questions the
15 Commission might have.
16 VICE CHAIRMAN SMITH: Do either Commissioners
17 have any questions?
18 COMMISSIONER ADORJAN: I have none.
19 VICE CHAIRMAN SMITH: Thank you very much.
20 MR. BURKE: Thank you.
21 VICE CHAIRMAN SMITH: Who's the next person?
22 MR. MULLALLY: Mr. Chairman, I'd also like to
23 thank Mike and the City of Kansas City and
the Port
24 Authority, in particular, for their
leadership in the area
25 of probl-- as far as local governments go
in the area of
0062
1
problem gambling. They have been
an exemplary
2
representative in this area contributing a great deal of
3
money and really trying to find innovative ways to help
4
problem gamblers.
5 And I'm hoping that Mike will get with our
6
general counsel, Mike Bushmann.
We're in the final --
7
approaching the final stages of entering into a
8
collaborative agreement with them to fund research,
9
independent research to study the voluntary exclusion
10 program and the effect that it's having on
problem gamblers
11 and how it can be improved.
12 And I think that that
research project could,
13 in fact, be one of the most, if not the
most exciting,
14 research projects in the world that's
currently being
15 funded.
So we're anxious to get it finalized and get it
16 announced, but very excited about it.
17 The next person to testify
will be on behalf
18 of City of St. Charles, Lyn Porterfield,
the city
19 administrator.
20 VICE CHAIRMAN SMITH:
Good morning.
21 MR. PORTERFIELD: Good morning. My name is
22 Lyn Porterfield. I was introduced as being city
23 administration for St. Charles. I am back in the job after
24 being city attorney for --
25 VICE CHAIRMAN SMITH: That must be a
0063
1
promotion.
2 MR. PORTERFIELD:
I tell you, I had all the
3
pleasure I could stand in that job of city attorney -- or
4
city administrator.
5
The first thing I'd
like to do is to apologize
6 on
behalf of the mayor. She was not able
to be here and she
7
wanted to send her regrets, so she asked me to attend on her
8
behalf.
9 I know that several members of the Commission
10 have been familiar with the problem that we
have had in
11 St. Charles and with the former company
that was running the
12 casino.
The problem occurred because the city does not own
13 the property that the casino was on and,
therefore, had no
14 agreement with the casino.
15 Whenever they came in, they
had grand plans
16 for the development of the area and did not
follow through
17 on it.
That led to frustrations on behalf of the city, it
18 led to frustrations on behalf of the
Commission. The
19 Commission and the city both worked
together trying to
20 remedy the problem, but had not been able
to do so with the
21 former company.
22 Since the new company has
taken over, I have
23 nothing but good comments for them. The management of the
24 company is outstanding. They're very open, they're very
25 dedicated to what they are doing in the
City of St. Charles
0064
1
and they're finally moving the project forward.
2 I think that has to do with a change in
3
corporate attitude rather than a change in management --
4
local management attitude, because local management has
5
always wanted to move the project forward.
6 As I understand it, the biggest
eyesore that
7
still remained, which was the framework of the building
8
which had been left just as open girders, will be enclosed
9 by
the end of this year, within the next few weeks. And
10 then the rest of the development will be
occurring within
11 the next few months.
12 That is a tremendous relief
to the city.
13 We're looking forward to it. We appreciate the efforts of
14 the current corporation. They have several hundred workers
15 out there working on the project now and we
are convinced
16 they will complete it and do an excellent
job. They have
17 fast-tracked the project.
18 In summary, the city would
like to recommend
19 to the Commission that the license be
renewed so that we --
20 the company can continue with the project
and get it
21 completed.
22 If you have any questions,
I'll be happy to
23 answer them.
24 VICE CHAIRMAN SMITH: Do either of the
25 Commissioners have any questions?
0065
1 COMMISSIONER ADORJAN: I have none.
2 VICE CHAIRMAN SMITH: Thank you very much for
3
appearing. And this is certainly
good news.
4
MR. PORTERFIELD: Yes.
5 VICE CHAIRMAN SMITH: As you're aware, we've
6
been working on this together for a long time. It looks
7
like it's finally working out.
8 MR. PORTERFIELD:
Yes. Thank you.
9 MR. MULLALLY:
Mr. Chairman, this would be the
10 appropriate time to ask if there are any
members of the
11 public that would like to offer any
commentary on the
12 relicensure application for Ameristar
Kansas City or
13 Ameristar St. Charles.
14 VICE CHAIRMAN SMITH: Is there anybody present
15 here that wants to speak on this?
16 MR. MULLALLY: If the dog comes back in, I'm
17 going to look for Candid Camera, I
think.
18 VICE CHAIRMAN SMITH:
I don't think we have a
19 translator that could help solve that
problem.
20 MR. MULLALLY: Lynne and Joe, just to give you
21 an idea of what you're missing, if you
heard the earlier
22 disturbance, a canine that I think whose
picture is under
23 the definition of Heinz 57 in the
dictionary came wandering
24 into the meeting unexpectedly.
25 COMMISSIONER NIKOLAISEN: Did you give him a
0066
1
chance to speak?
2
VICE CHAIRMAN
SMITH: No, we really didn't.
3 COMMISSIONER ADORJAN: I'm assuming he's gone
4
now.
5 MR. MULLALLY:
Yes.
6 Mr. Chairman, the next presentation would be
7
the investigative report with regard to both properties.
8
And Sergeant Jeff Smith is here to make the presentation.
9 SERGEANT SMITH:
Mr. Chairman, good morning,
10 Commissioners.
11 A relicensing background
investigation of
12 Ameristar Casino Kansas City and Ameristar
Casino
13 St. Charles was conducted by --
14 VICE CHAIRMAN SMITH: I'm sorry.
You're going
15 to probably have to speak up a little
louder.
16 SERGEANT SMITH: Okay.
Excuse me.
17 A relicensing background
investigation of
18 Ameristar Casino Kansas City and Ameristar
Casino
19 St. Charles was conducted by investigators
of the Missouri
20 Gaming Commission.
21 Ameristar Casino Kansas City
and Ameristar
22 Casino St. Charles are currently wholly
owned subsidiaries
23 of Ameristar Casino, Inc., a publicly
traded Nevada
24 corporation. Ameristar Casino Kansas City and Ameristar
25 Casino St. Charles were incorporated in the
state of
0067
1
Missouri on October 10th, 2000 for the purpose of acquiring,
2
owning and operating riverboat gambling operations in Kansas
3
City and St. Charles, Missouri.
4 Ameristar Casino, Inc. is an established,
5
multi-jurisdictional gaming enterprise that currently owns
6
and operates six properties in four gaming jurisdictions:
7
Iowa, Mississippi, Missouri, and Nevada. A check with state
8
gaming authorities in those jurisdictions revealed no
9
significant issues or concerns.
10 Credit and criminal
background checks were
11 conducted on Ameristar St. Charles and
Ameristar Kansas City
12 Key and Level I personnel. No discrepancies or concerns
13 were noted. The criminal background checks included, but
14 were not limited to, checks with federal,
state, county and
15 municipal law enforcement agencies where
the individuals had
16 lived, worked and frequented.
17 The city administrator, city
prosecutor, as
18 well as the police and fire departments of
Kansas City and
19 St. Charles were contacted reference any
concerns regarding
20 the operations of Ameristar Casino St.
Charles and Ameristar
21 Casino Kansas City. All indicated they had no negative
22 information and praised Ameristar personnel
for cooperation
23 in performance of their duties.
24 Ameristar Casino Kansas City
and Ameristar
25 Casino St. Charles have been issued docking
permits by the
0068
1
Department of the Army Corps of Engineers with no negative
2
comments received. The Missouri
Department of Natural
3
Resources was contacted concerning wastewater handling
4
facilities of Ameristar Casino Kansas City and Ameristar
5
Casino St. Charles and found them to be adequate.
6 The investigation conducted did not produce
7
any information that would preclude Ameristar Casino Kansas
8
City and Ameristar Casino St. Charles from relicensing by
9
the Missouri Gaming Commission.
10 MR. MULLALLY: Any questions?
11 VICE CHAIRMAN SMITH: Does that conclude your
12 report on both of the St. Charles and
Kansas City
13 facilities?
14 SERGEANT SMITH:
Yes, sir.
15 VICE CHAIRMAN SMITH: Do either of the
16 Commissioners have any questions? We all have copies of his
17 reports.
I assume you do. Joe and Lynne,
do you have
18 copies of the reports that were submitted
by the Commission?
19 COMMISSIONER NIKOLAISEN: Yes.
20 MR. MULLALLY: Yes.
21 COMMISSIONER NIKOLAISEN: And I have no
22 questions.
23 VICE CHAIRMAN SMITH: I had just one question.
24 I notice on the underage and
valid
25 identification it showed only 96 of
those. And I believe in
0069
1
the Kansas City area -- I was surprised that there wouldn't
2 be
more underage problems than just that.
Do you know how
3
that's compared with the other facilities?
4 SERGEANT SMITH:
Which page are you speaking
5
of, sir?
6 VICE CHAIRMAN SMITH: That's page 7, I
7
believe, in the Kansas City report.
It's on the back-up
8
information -- confidential information.
9 MR. MULLALLY:
Underage arrests.
10 VICE CHAIRMAN SMITH: It sounds good. I guess
11 coming from a college town I'm surprised
there aren't more
12 attempts involving underage
individuals.
13 SERGEANT SMITH: And, again, those statistics
14 were received from the Highway Patrol
officers that are
15 assigned to that facility, so I probably
wouldn't be able
16 to --
17 MR. MULLALLY:
Mr. Chairman, if I could, that
18 is the number of people who have been
arrested.
19 VICE CHAIRMAN SMITH: I see.
20 MR. MULLALLY: So those are people who have
21 actually found their way onto the casino
floor or have been
22 identified at the gate.
23 Under the old law -- that's
actually a fairly
24 dramatic increase. Under the old law, we could only arrest
25 an underage patron if they showed a fake
I.D. If they
0070
1
simply attempted to get in on their own, they could not be
2
arrested or you also had to find the fake I.D. on them. And
3 if
they failed to produce it or you were unable to find it,
4
they could not be arrested.
5 And in October -- on August
28th of 2000, the
6
legislature provided us with a new law that now allows us to
7
arrest those people. The number
of people actually checked
8
and carded is substantially higher.
These are just simply
9
the people that have --
10 VICE CHAIRMAN SMITH: That answers my
11 question.
12 Do either of the
Commissioners have any
13 questions concerning the report?
14 COMMISSIONER NIKOLAISEN: None.
15 VICE CHAIRMAN SMITH: If not, thank you very
16 much, Sergeant.
17 SERGEANT SMITH: You're welcome.
18 MR. MULLALLY: Mr. Chairman and Commissioners,
19 based on the investigative report and the
staff
20 investigation, the staff recommends that
the licenses for
21 Ameristar Kansas City and Ameristar St.
Charles be renewed,
22 and the appropriate resolutions are
contained in your book.
23 VICE CHAIRMAN SMITH: I think we'll have to
24 adopt all the reports in total, both of
them, and have
25 separate resolutions.
0071
1 The one on Kansas City first is 01-081. Is
2
there a motion for approval?
3 COMMISSIONER NIKOLAISEN: So moved.
4 COMMISSIONER ADORJAN: Second.
5 VICE CHAIRMAN SMITH: It's been moved by
6
Commissioner Nikolaisen that Resolution No. 01-081 be
7
adopted, seconded by Commissioner Adorjan.
8
Is there any other
comment?
9 If not, would you please call the role?
10 MS. FRANKS: Commissioner Smith?
11 VICE CHAIRMAN SMITH: In favor.
12 MS. FRANKS: Commissioner Nikolaisen?
13 COMMISSIONER NIKOLAISEN: In favor.
14 MS. FRANKS: Commissioner Adorjan?
15 COMMISSIONER ADORJAN: In favor.
16 MS. FRANKS: By your vote, you've adopted
17 Resolution No. 01-081.
18 VICE CHAIRMAN SMITH: And the other resolution
19 is involving the casino in St. Charles,
which is Resolution
20 01-075.
Is there a motion for the adoption of that
21 resolution?
22 COMMISSIONER NIKOLAISEN: So moved.
23 COMMISSIONER ADORJAN: Second.
24 VICE CHAIRMAN SMITH: Moved by --
25 COMMISSIONER ADORJAN: Bob, I still can't
0072
1
quite hear the Chairman.
2 VICE CHAIRMAN SMITH: Is this better, Joe?
3 COMMISSIONER ADORJAN: Good.
4 VICE CHAIRMAN SMITH: I almost have to eat it
5 to
-- we're talking about Resolution 01-075.
It has been
6
moved by Commissioner Nikolaisen, seconded by Commissioner
7
Adorjan.
8 Is there any other discussion?
9 If not, call the role on this resolution.
10 MS. FRANKS: Commissioner Smith?
11 VICE CHAIRMAN SMITH: In favor.
12 MS. FRANKS: Commissioner Nikolaisen?
13 COMMISSIONER NIKOLAISEN: In favor.
14 MS. FRANKS: Commissioner Adorjan?
15 VICE CHAIRMAN SMITH: We didn't hear your
16 vote, Joe.
Did you note no?
17 COMMISSIONER ADORJAN: Hello?
18 MR. MULLALLY: Yes.
19 COMMISSIONER ADORJAN: Could you understand in
20 favor?
21 VICE CHAIRMAN SMITH: No, we couldn't.
22 COMMISSIONER ADORJAN:
Oh, in favor.
23 MS. FRANKS: By your vote, you've adopted
24 Resolution No. 01-075.
25 VICE CHAIRMAN SMITH: You gave them a heart
0073
1
attack.
2 I wonder if we might just on the schedule go
3
ahead with the relicensures of the other suppliers and then
4
maybe take a recess.
5 MR. MULLALLY:
Okay. Next item on the agenda
6 is
consideration of relicensure of several suppliers. And
7
Lieutenant Rick Wilhoit will make the presentation for this.
8 LIEUTENANT WILHOIT: Good morning,
9
Mr. Chairman, Commissioners.
10 Background investigations, to
include criminal
11 history checks and tax reviews of the
following suppliers
12 and their respective key persons have been
conducted in
13 conjunction with the relicensing.
14 As a result of the
investigations, the
15 following suppliers have been found
suitable for relicensing
16 by the Commission: Bally Gaming, Missouri, Incorporated;
17 Acres Gaming, Incorporated, Osborne Coinage
Company; and
18 United State Playing Card Company.
19 VICE CHAIRMAN SMITH: Do we have any comments
20 about any of these that your investigation showed?
21 LIEUTENANT WILHOIT: Routine.
22 VICE CHAIRMAN SMITH: No problems arose in
23 connection with any of these?
24 LIEUTENANT WILHOIT: No, sir.
25 VICE CHAIRMAN SMITH: Do we have -- any of the
0074
1
Commissioners have any questions?
2 COMMISSIONER NIKOLAISEN: None.
3 COMMISSIONER ADORJAN: None.
4 VICE CHAIRMAN SMITH: Do we have -- I guess
5
the first resolution is for the Bally Gaming in Missouri.
6 Do
we have a motion to adopt Resolution No. 01-076?
7 COMMISSIONER NIKOLAISEN: So moved.
8 COMMISSIONER ADORJAN: Second.
9 VICE CHAIRMAN SMITH: Moved and seconded
10 the adoption of 01-076 for Bally Gaming
Commission for the
11 licensure.
All in favor -- call the role.
12 MS. FRANKS: Commissioner Smith?
13 VICE CHAIRMAN SMITH: In favor.
14 MS. FRANKS: Commissioner Nikolaisen.
15 COMMISSIONER NIKOLAISEN: In favor.
16 MS. FRANKS: Commissioner Adorjan?
17 COMMISSIONER ADORJAN: In favor.
18 MS. FRANKS: By
your vote, you've adopted
19 Resolution No. 01-076.
20 COMMISSIONER ADORJAN: Did you hear that?
21 VICE CHAIRMAN SMITH: Yes.
I think the
22 speakers are working better now.
23 Next one is the -- renewal for Acres Gaming,
24 Incorporated, Resolution 01-077. Is there a motion to adopt
25 that resolution?
0075
1 COMMISSIONER NIKOLAISEN: So moved.
2 COMMISSIONER ADORJAN: Second.
3 VICE CHAIRMAN SMITH: Moved and seconded by
4
the same Commissioners. Call
role, please.
5 MS. FRANKS:
Commissioner Smith?
6 VICE CHAIRMAN SMITH: In favor.
7 MS. FRANKS:
Commissioner Nikolaisen?
8 COMMISSIONER NIKOLAISEN: In favor.
9 MS. FRANKS:
Commissioner Adorjan?
10 VICE CHAIRMAN SMITH: Joe, all we got is a
11 ring from you.
12 MR. MULLALLY: Joe, we didn't get your vote.
13 COMMISSIONER ADORJAN: In favor.
14 MS. FRANKS: By your vote, you've adopted
15 Resolution No. 01-077.
16 VICE CHAIRMAN SMITH: The next one is the
17 resolution in connection with Osborne
Coinage Company,
18 Resolution 01-078. Is there a motion to approve that
19 resolution?
20 COMMISSIONER NIKOLAISEN: So moved.
21 COMMISSIONER ADORJAN: Second.
22 VICE CHAIRMAN SMITH:
Moved and seconded that
23 Resolution 01-078 be approved. Call the role.
24 MS. FRANKS: Commissioner Smith?
25 VICE CHAIRMAN SMITH: In favor.
0076
1 MS. FRANKS:
Commissioner Nikolaisen?
2 COMMISSIONER NIKOLAISEN: In favor.
3 MS. FRANKS:
Commissioner Adorjan?
4 COMMISSIONER ADORJAN: In favor.
5 MS. FRANKS:
By your vote, you've adopted
6
Resolution No. 01-078.
7 VICE CHAIRMAN SMITH: The next resolution is
8
United States Playing Card Company, Resolution No. 01-079.
9 Do
we have a motion to approve that resolution?
10 COMMISSIONER NIKOLAISEN: So moved.
11 COMMISSIONER ADORJAN: Second.
12 VICE CHAIRMAN SMITH: Moved and seconded.
13 adoption of Resolution 01-079. Call the role, please.
14 MS. FRANKS: Commissioner Smith?
15 VICE CHAIRMAN SMITH: In favor.
16 MS. FRANKS: Commissioner Nikolaisen?
17 COMMISSIONER NIKOLAISEN: In favor.
18 MS. FRANKS: Commissioner Adorjan?
19 COMMISSIONER ADORJAN: In favor.
20 MS. FRANKS: By your vote, you've adopted
21 Resolution No. 01-079.
22 VICE CHAIRMAN SMITH: The information -- all
23 of these relicensure people have been
checked out before.
24 We have one new one, as I see it, it's the
Atlantic City
25 Coin and Slot Service Company, which is a
new investigation.
0077
1
And you have no problems with this new company; is that
2
correct?
3 LIEUTENANT WILHOIT: No, Mr. Smith. There
4
were no concerns that were -- that were detected in the
5
investigation.
6 VICE CHAIRMAN SMITH: All right. Any other
7
questions?
8 If not, do we have a motion to adopt 01-080?
9 MR. MULLALLY:
We do have a short presentation
10 on that company.
11 VICE CHAIRMAN SMITH: Oh, do we?
12 MR. MULLALLY: Sergeant Gary Baker is here,
13 because that is a new company so we have --
14 VICE CHAIRMAN SMITH: We have a detailed
15 report of your investigation.
16 SERGEANT BAKER: Mr. Chairman, Commissioners,
17 investigators of the Missouri Gaming
Commission conducted a
18 background investigation of Atlantic City
Coin and Slot
19 Service Company, Incorporated for a
suppliers license.
20 The investigation included
criminal, character
21 and financial inquiries into its background
and the
22 following key persons: Maxie Mac E. Seelig, CEO and
23 chairman of the board; Jeffrey P. Seelig,
corporate finance
24 manager; Jerald C. Seelig, general manager;
Jason S. Seelig,
25 sales and marketing manager; Thomas
McCormick, general
0078
1
counsel.
2 The financial background of the company
3
included, but was not limited to, the inspection of
4
corporate tax returns, the source and application of funds,
5
cash flow analysis and bad debt write-offs and the review of
6
all corporate litigation.
7 The financial background of the key persons
8
included, but was not limited to, the examination of
9
individual tax returns, bank and brokerage statements, all
10 source of income, including non-taxable
income, and
11 employment agreements.
12 The character -- criminal and
character
13 background checks included, but were not
limited to, checks
14 with federal, state, county and municipal
law enforcement
15 agencies where the individuals have lived,
worked and
16 frequented.
17 The findings of the
investigation, including
18 the financial review, disclosed no
discrepancies or concerns
19 that would preclude licensing Atlantic City
Coin and Slot
20 Service Company, Incorporated as a supplier
in the state of
21 Missouri.
22 VICE CHAIRMAN SMITH: I just have one question
23 in connection with the taxes. In the state of Missouri I
24 notice they were deficient in one quarter
and made that up
25 later.
Did you have any indication of any prior problems
0079
1
along that line?
2 SERGEANT BAKER:
No, sir, we didn't. And
3
those have been -- they were paid up -- are current as of
4
today.
5 VICE CHAIRMAN SMITH: Any questions by the
6
Commissioners?
7 COMMISSIONER ADORJAN: None.
8 COMMISSIONER NIKOLAISEN: None.
9 VICE CHAIRMAN SMITH: Do we have a motion to
10 approve Resolution No. 01-080 on Atlantic City
Coin and Slot
11 Company?
12 COMMISSIONER NIKOLAISEN: So moved.
13 COMMISSIONER ADORJAN: Second.
14 VICE CHAIRMAN SMITH: Moved by Commissioner
15 Nikolaisen, seconded by Commissioner Adorjan. Call role.
16 MS. FRANKS: Commissioner Smith?
17 VICE CHAIRMAN SMITH: In favor.
18 MS. FRANKS: Commissioner Nikolaisen?
19 COMMISSIONER NIKOLAISEN: In favor.
20 MS. FRANKS: Commissioner Adorjan?
21 COMMISSIONER ADORJAN: In favor.
22 MS. FRANKS: By your vote, you've adopted
23 Resolution 01-080.
24 VICE CHAIRMAN SMITH: I wonder if it might not
25 be appropriate to go ahead and take a
five-minute recess now
0080
1
before we go into the hearings.
Is this an appropriate
2
time?
3 MR. MULLALLY:
Sure, Mr. Chairman. And I
4
think we can wrap up the remainder of this in about
5 20
minutes.
6 VICE CHAIRMAN SMITH: Take a five-minute
7
break. And that applies to the
Commissioners on the phone
8
too.
9 (A RECESS WAS TAKEN.)
10 VICE CHAIRMAN SMITH: I guess we're ready to
11 proceed on the Ameristar Casinos
preliminary order for
12 disciplinary action.
13 MR. MULLALLY: Lynne said we'll lose our
14 quorum at 10 till. We should beat that easily.
15 VICE CHAIRMAN SMITH: I'll see we beat that.
16 Go ahead with the report on
the
17 disciplinary -- are you going to do that or
--
18 MR. MULLALLY: Mike Bushmann will make the
19 report.
20 MR. BUSHMANN: Morning, Commissioners.
21 You have before you three
preliminary orders
22 for disciplinary action. If you approve a disciplinary
23 order, the company has the right to request
a hearing in
24 front of a hearing officer. The preliminary order becomes
25 final if you approve the findings of the
hearing officer or
0081
1 if
the company fails to request a hearing.
2 The first preliminary order under Tab H is
3
Case No. DC-01-062 against Ameristar Casino St. Charles,
4
Incorporated. The basis of this
case is that during a
5
Caribbean Stud table game, a defective deck of cards that
6
contained two extra cards was introduced into the game.
7 For approximately six hours while that deck
8
was being used, five dealers and four supervisors were
9
either dealing, observing or supervising play at that table.
10 However, none of those company employees
detected and
11 removed the defective deck of cards from
the game during
12 this period of time, even though the deck
was manually
13 checked and the automatic shuffler machine
indicated that
14 there was a card miscount when the deck was
inserted.
15 By failing to promptly detect
and remove the
16 defective deck, the company and its
employees violated
17 Commission regulations. Their failure improperly affected
18 the game and its payouts and constitutes
conducting an
19 unauthorized table game without Commission
approval.
20 For these violations, the staff recommends
21 that a fine be imposed against Ameristar
Casino St. Charles,
22 Inc. in the amount of $25,000.
23 VICE CHAIRMAN SMITH: Just had a couple
24 questions.
One, was the defect on the part of the
25 manufacturer or this occurred during
shuffling or something?
0082
1 MR. BUSHMANN:
It's my assumption that they
2
received that deck in that defective form.
3 VICE CHAIRMAN SMITH: And there is a way they
4
can determine that with a new deck; is that correct?
5 MR. BUSHMANN:
Yes, sir, that's correct.
6 VICE CHAIRMAN SMITH: And was it
7
self-reported?
8 MR. BUSHMANN:
Eventually a patron noticed the
9
defect and notified the dealer who eventually notified their
10 supervisor who notified the
Commission.
11 VICE CHAIRMAN SMITH: Do the other
12 Commissioners have any questions?
13 COMMISSIONER NIKOLAISEN: None.
14 COMMISSIONER ADORJAN: None.
15 VICE CHAIRMAN SMITH: All right.
Then we --
16 as it was pointed out, this is just a
preliminary order
17 that's subject to an appeal or hearing if
such an appeal
18 occurs.
19 Do we have a motion to adopt
DC-01-062; is
20 that correct?
21 MR. BUSHMANN: Yes, sir.
22 COMMISSIONER NIKOLAISEN: So moved.
23 COMMISSIONER ADORJAN: Second.
24 VICE CHAIRMAN SMITH: Moved by Commissioner
25 Nikolaisen, seconded by Commissioner
Adorjan. Call role.
0083
1 MS. FRANKS:
Commissioner Smith?
2 VICE CHAIRMAN SMITH: In favor.
3 MS. FRANKS: Commissioner Nikolaisen?
4 VICE CHAIRMAN SMITH: Commissioner Nikolaisen?
5 COMMISSIONER NIKOLAISEN: In favor.
6 MS. FRANKS:
Commissioner Adorjan?
7 COMMISSIONER ADORJAN: In favor.
8 MS. FRANKS:
By your vote, you've adopted the
9
preliminary order for disciplinary action DC-01-062.
10 MR. BUSHMANN: The next preliminary order
11 under Tab I is Case No. DC-01-063, which is
against Harrah's
12 Maryland Heights, LLC.
13 The facts of this case are
rather complicated
14 and relate to the custody and control of
sensitive keys.
15 Sensitive keys were signed out of the main
bank by a
16 security supervisor who signed the key log
indicating
17 removal of the keys.
18 One of these keys was
subsequently passed
19 through the hands of several security
officers, but there
20 was no written record that some of the officers
had ever
21 possessed that key. That sensitive key was reported missing
22 several hours later.
23 While the key was still
missing, the
24 supervisor who had originally signed the
keys out signed the
25 key log again indicating that the keys were
being returned,
0084
1
including the one that was still missing. In fact, those
2
keys were still in the hands of security officers on the
3
gaming floor.
4 It was a common practice at the casino for
5
security supervisors at shift change to sign the key log
6
falsely indicating that they had returned sensitive keys
7
that were actually still in use by other security officers.
8 The actions of the company's employees
9
constitute failure to follow proper procedures for logging
10 sensitive keys in and out of the main bank
and transferring
11 custody of keys at shift change, which
violate Commission
12 regulations and the company's own internal
control
13 standards.
14 For these violations, the
staff recommends
15 that a fine be imposed on Harrah's Maryland
Heights, LLC in
16 the amount of $25,000.
17 VICE CHAIRMAN SMITH: Was this one
18 self-reported or --
19 MR. BUSHMANN: I believe a Commission agent
20 found out about this from -- incidentally
from another
21 employee.
22 VICE CHAIRMAN SMITH: Any questions from the
23 other Commissioners?
24 COMMISSIONER ADORJAN:
None.
25 VICE CHAIRMAN SMITH: If not, do we have a
0085
1
motion to adopt the preliminary order for DC-01-063?
2 COMMISSIONER NIKOLAISEN: So moved.
3 COMMISSIONER ADORJAN: Second.
4 VICE CHAIRMAN SMITH: Moved and seconded by
5
Commissioner Nikolaisen and Commissioner Adorjan. Call the
6
role, please.
7 MS. FRANKS:
Commissioner Smith?
8 VICE CHAIRMAN SMITH: In favor.
9 MS. FRANKS:
Commissioner Nikolaisen?
10 COMMISSIONER NIKOLAISEN: In favor.
11 MS. FRANKS: Commissioner Adorjan?
12 COMMISSIONER ADORJAN: In favor.
13 MS. FRANKS: By your
vote, you've adopted the
14 preliminary order for disciplinary action
DC-01-063.
15 MR. BUSHMANN: The final order before you is
16 under Tab J, and that's DC-01-064, which is
also against
17 Harrah's Maryland Heights, LLC.
18 The facts of this case are
that one or more
19 Harrah's employees used a magnetic tape
with the incorrect
20 density to save computer data regarding
electronic gaming
21 devices at the casino for the month of
November in 2000 and
22 February through April of 2001.
23 Because that employee used
the wrong type of
24 magnetic tape, some data for those
electronic gaming devices
25 was irretrievably lost. A Commission auditor later
0086
1
requested copies of this data, but the company was unable to
2
comply with the request because the data was gone.
3 The company is required by Commission
4
regulations to store various types of information relating
5 to
electronic gaming devices in a machine readable format
6
for one year in a secure area and must certify that the
7
information's complete and unaltered.
By failing to
8
properly store the computer data, the company failed to
9
comply with this regulation.
10 For this violation, the staff
recommends that
11 Harrah's Maryland Heights, LLC be fined in
the amount of
12 $75,000.
13 VICE CHAIRMAN SMITH: One question. Is this a
14 videotape taping that's going on?
15 MR. BUSHMANN: No, sir.
It's a back-up of
16 computer data.
17 VICE CHAIRMAN SMITH: A back-up of computer
18 data.
19 Any questions by the
Commissioners?
20 COMMISSIONER NIKOLAISEN:
None.
21 VICE CHAIRMAN SMITH: If not, do we have a
22 motion to approve DC-01-064?
23 COMMISSIONER NIKOLAISEN: So moved.
24 COMMISSIONER ADORJAN: Second.
25 VICE CHAIRMAN SMITH:
Moved by Commissioner
0087
1
Nikolaisen, seconded by Commissioner Adorjan. Call role.
2 MS. FRANKS:
Commissioner Smith?
3 VICE CHAIRMAN SMITH: In favor.
4 MS.
FRANKS: Commissioner Nikolaisen?
5 COMMISSIONER NIKOLAISEN: In favor.
6 MS. FRANKS:
Commissioner Adorjan?
7 COMMISSIONER ADORJAN: In favor.
8 MS. FRANKS:
By your vote, you've adopted
9
preliminary order for disciplinary action DC-01-064.
10 MR. MULLALLY: Thank you.
11 Mr. Chairman, the next item
on the agenda is
12 the approval of change in control for IGT
and Anchor Gaming
13 and Mike Bushmann will make the
presentation. I also have
14 Jim Oberkirsch here if you have any
questions.
15 MR. BUSHMANN: Resolution No. 01-082 under
16 Tab K of your book proposes to grant
approval for the merger
17 of the parent companies of two Missouri
suppliers, IGT and
18 Anchor Coin, Inc.
19 After the merger occurs, both
companies will
20 continue to exist, but the parent Anchor
Gaming will be a
21 wholly-owned subsidiary of the parent International
Game
22 Technology.
23 There are no problems with
the suitability of
24 any of these companies, as a relicensing
investigation was
25 completed in May of this year. Under the terms of this
0088
1
resolution, the resolution will not become effective until
2
the Gaming Commission has received notification that the
3
Federal Trade Commission will not block the merger from
4
occurring.
5 And I think Jim Oberkirsch has a few further
6
comments about the financial aspects of the merger.
7 MR. OBERKIRSCH:
Good morning. As Mike just
8
described, IGT will be the surviving public company and
9
Anchor's common stock will be exchanged for IGT's common
10 stock valued at about a billion
dollars.
11 Both companies are more than
financially
12 suitable on a stand-alone basis and the
combined company
13 should even be stronger. S&P feels they're a candidate for
14 an investment grade upgrade in their credit
rating and they
15 both exhibit extremely strong financial
ratios. That's all
16 I have.
17 VICE CHAIRMAN SMITH: You have no reservations
18 about them?
19 MR. OBERKIRSCH: None.
20 VICE CHAIRMAN SMITH: Do the Commissioners
21 have any questions?
22 COMMISSIONER NIKOLAISEN: No.
23 COMMISSIONER ADORJAN: None.
24 VICE CHAIRMAN SMITH: Do we have a motion to
25 approve Resolution 01-082 concerning licensing of Anchor
0089
1
Gaming?
2 COMMISSIONER NIKOLAISEN: So moved.
3 VICE CHAIRMAN SMITH: Moved. Seconded?
4 COMMISSIONER ADORJAN: Seconded.
5 VICE CHAIRMAN SMITH: Call role.
6 MS. FRANKS:
Commissioner Smith?
7 VICE CHAIRMAN SMITH: In favor.
8 MS. FRANKS:
Commissioner Nikolaisen?
9 COMMISSIONER NIKOLAISEN: In favor.
10 MS. FRANKS: Commissioner Adorjan?
11 COMMISSIONER ADORJAN: In favor.
12 MS. FRANKS: By your vote, you've adopted
13 Resolution No. 01-082.
14 MR. MULLALLY: Next item on the agenda is a
15 consideration of licensure of certain level
one and key
16 applicants, and Lieutenant Rick Wilhoit
will make the
17 presentation for the staff.
18 LIEUTENANT WILHOIT: Mr. Chairman,
19 Commissioners, the background teams
conducted an
20 investigation of a key person that
included, but was not
21 limited to, criminal, financial and general
character
22 inquiries.
23 The following individual has
been investigated
24 and found to be suitable for licensing by
the Commission:
25 Thomas J. Carr, the regional vice-president
of operations of
0090
1
Isle of Capri Casinos, Incorporated.
2 VICE CHAIRMAN SMITH: Any of the Commissioners
3
have any questions concerning this relicensure?
4 COMMISSIONER ADORJAN: None.
5 COMMISSIONER NIKOLAISEN: None.
6 VICE CHAIRMAN SMITH: Do we have a motion to
7
approve 01-083?
8 COMMISSIONER NIKOLAISEN: So moved.
9 COMMISSIONER ADORJAN: Second.
10 VICE CHAIRMAN SMITH: Moved and seconded that
11 we adopt Resolution No. 01-083 concerning
license
12 application. Call the role, please.
13 MS. FRANKS:
Commissioner Smith?
14 VICE CHAIRMAN SMITH: In favor.
15 MS. FRANKS: Commissioner Nikolaisen?
16 COMMISSIONER NIKOLAISEN: In favor.
17 MS. FRANKS: Commissioner Adorjan?
18 COMMISSIONER ADORJAN: In favor.
19 MS. FRANKS: By your vote, you've adopted
20 Resolution No. 01-083.
21 MR. MULLALLY: Mr. Chairman, I think if --
22 with your permission, the next two agenda
items can be done
23 with just two votes. We have a series of rules, but they
24 are relatively mundane or they're just
proposed rules. And
25 I think with your permission, if we could
just explain them
0091
1
all, I think we could combine them all into one vote.
2 VICE CHAIRMAN SMITH: And these are
3
preliminary rules that have to be published anyway.
4
Correct?
5 MR. MULLALLY:
That's correct. It's simply
6
getting them into the public comment phase. And, again,
7
they are not particularly controversial, in our minds.
8 Mike Bushmann will explain rules under Tab M,
9
and on your agenda they're enumerated.
He will explain
10 Rules 1 through 6 and 9 through 11, and I
will take No. 7
11 and 8.
And then if you could let us explain them, and then
12 I think we can combine all those rules into
one vote.
13 VICE CHAIRMAN SMITH: Just for the information
14 of the public here, these number of
resolutions, this is a
15 preliminary reading and we'll have another
opportunity to
16 look at this later. You can proceed.
17 MR. BUSHMANN: Commissioners, the first five
18 rules under Tab M all relate to the same
subject. These
19 five amendments all concern business entity
key persons,
20 which are business organizations that own
significant
21 amounts of stock in gaming applicants or
licensees.
22 A typical example of a
business entity key
23 person is a parent corporation that owns a
licensed
24 riverboat casino company in this
state. Recently the staff
25 came to the conclusion that the regulations
were somewhat
0092
1
vague about the nature of a business entity key person
2
license. And the purpose of
these amendments is to clarify
3
the status of business entity key persons as occupational
4
licensees.
5 A business entity that met the definition of a
6
key person would still need to follow the same requirements
7 as
individual key persons except for the fingerprint,
8
photograph and badge requirements.
9 These amendments would make it clear that all
10 key persons will be treated in a similar
manner whether
11 they're business organizations or
individuals, and we
12 recommend that these five rule amendments
be approved.
13 The No. 6 on your list
relates to bingo games.
14 This is a new rule that would prohibit
riverboat casino
15 companies from offering bingo games on
their premises. This
16 was brought about in response to concerns
by charitable
17 organizations that they would compete
heavily with the
18 charitable organizations in offering bingo
games.
19 VICE CHAIRMAN SMITH: I thought we already
20 prohibited that.
21 MR. BUSHMANN: I don't believe so, sir.
22 MR. MULLALLY: By policy, but not by rule.
23 VICE CHAIRMAN SMITH: Not by rule. Okay. Any
24 other rules to be covered before we vote?
25 MR. MULLALLY: We've got a few more to do and
0093
1
then I've got -- go ahead and do 8 -- 9 through 11.
2 MR. BUSHMANN:
Number 9 relates to financial
3
reporting by the casinos. It was
proposed by the staff that
4 we
include a quarterly report in addition to the monthly and
5
annual reports.
6 And actually this is more of a redesign of the
7
report format as requested by the financial department of
8
our agency. It would not
increase the reporting
9
requirements. It would just
change them and reformat them
10 and it would be more concise and improve
our reporting
11 requirements.
12 Rule 12.090, which is No. 10 on your list, is
13 proposed to be amended to allow a casino's
food and beverage
14 director to consume alcoholic beverages in
non-gaming areas
15 for business purposes.
16 It was the conclusion of the
staff that
17 consumption of alcohol was a part of the
job function for
18 that position and that it would be
counterproductive to
19 prohibit it.
20 In addition, the staff had
previously provided
21 guidance to the casinos concerning
consumption of alcohol by
22 beverage servers. Those past interpretations have been
23 included in this amendment to make it clear
that beverage
24 servers may not taste test alcoholic
beverages on the casino
25 premises.
0094
1 Number 11 on your list is the imposition of
2
hearing costs. A few months ago
there was discussion among
3
the Commissioners about the problem of applicants and
4
licensees who request a hearing and then fail to attend,
5
because the Commission incurs significant costs for these
6
hearings.
7 This rule amendment is proposed in an attempt
8 to
remedy this problem by allowing the Commission to assess
9
hearing costs of up to $50 against persons who fail to
10 attend the hearing that they requested
without good cause.
11 This will not entirely cover the cost of
the hearing, but
12 hopefully, it may reduce the number of
defaults.
13 MR. MULLALLY: Mr. Chairman, the Nos. 11 and 8
14 on your list deal with two safety
inspection standards,
15 rules and Patricia Churchill drafted these
and had intended
16 to be here to present them. She is in Jefferson City
17 attending a budget hearing on behalf of the
Commission.
18 Although the rule is somewhat
lengthy, it's
19 fairly simple in its design. Currently only the American
20 Bureau of Shipping is qualified under
Commission rules to
21 conduct safety inspections on the riverboat
casinos.
22 And although we have had an
excellent,
23 excellent working relationship with the
American Bureau of
24 Shipping and we hold them in high regard,
we do believe that
25 there are other people out there that are
qualified to
0095
1
conduct these inspections and that the state would benefit
2 by
having some competition for these services.
3 Although the American Bureau of Shipping has
4 an
excellent reputation and some fine people to do the work,
5 I
don't think they have a corner on the market on this and I
6
think it -- by having them the only ones available to
7
conduct these inspections, it may squelch innovation and
8
better practices.
9 And from the casino's perspective, they have
10 been asking for this for quite some time
and I think there
11 is some price concerns that they have. So we have worked
12 with the industry and with safety experts
for many, many
13 months on this rule. This has been a long time in coming
14 and we're simply asking for your permission
to get this out
15 in the public domain for comment.
16 VICE CHAIRMAN SMITH: Does that conclude the
17 presentation of all of those?
18 MR. MULLALLY:
Yes.
19 VICE CHAIRMAN SMITH: I wonder, can we just
20 adopt a resolution for preliminary approval
for the
21 resolutions that you've covered and then
you can fill in the
22 blanks for us?
23 MR. MULLALLY: Well, I
think we could just do
24 it with a motion that the rules contained
under agenda
25 Item M be adopted. I think that would be sufficient.
0096
1 VICE CHAIRMAN SMITH: Do we have such a
2
motion?
3 COMMISSIONER NIKOLAISEN: So moved.
4 COMMISSIONER ADORJAN: Second.
5 VICE CHAIRMAN SMITH: Moved and seconded that
6
the items covered under Tab M be -- receive approval for the
7
preliminary approval. Call
role.
8 MS. FRANKS:
Commissioner Smith?
9 VICE CHAIRMAN SMITH: In favor.
10 MS. FRANKS: Commissioner Nikolaisen?
11 COMMISSIONER NIKOLAISEN: In favor.
12 MS. FRANKS:
Commissioner Adorjan?
13 COMMISSIONER ADORJAN: In favor.
14 MS. FRANKS: By your vote, you've adopted the
15 proposed rule and amendments under Tab
M.
16 MR. MULLALLY: Mr. Chairman, the final item on
17 the agenda is the consent agenda. As you may recall from
18 our bylaws, these are items that can be
adopted by one
19 single vote. And Corporal David Booker will make a
20 presentation regarding all these agenda
items for the staff
21 and then a motion to adopt all the consent
agenda items
22 would be appropriate.
23 VICE CHAIRMAN SMITH: Bingo items, is that
24 what we're --
25 CORPORAL BOOKER: Yes, sir.
0097
1 Members of the Commission, today I'm
2
presenting several companies for relicensure as suppliers or
3
manufacturers of bingo products in the state of Missouri.
4 You may notice some of the companies mentioned
5
hold dual licenses. The primary
difference in relicensing a
6
manufacturer and a supplier is a bond requirement which is
7
incumbent upon a supplier as they are responsible for paying
8
the taxes on items sold.
9 The
relicensure of manufacturers includes, but
10 is not limited to, the following checks of
the company:
11 Federal and state tax checks, customer and
product lists,
12 the corporation's organization structure
and gaming license
13 checks.
14 The following checks were
conducted on key
15 persons of the company: NCIC/Mules checks, credit checks,
16 and an IRS tax check.
17 Our investigation has not
disclosed any
18 information that would preclude the
following companies from
19 being relicensed as bingo manufacturers by
the Missouri
20 Gaming Commission: American Games, Incorporated; Arrow
21 International, Incorporated; Bingo Brain,
Incorporated;
22 Douglas Press, Incorporated; GameTech
International,
23 Incorporated; International Gamco,
Incorporated; Universal
24 Manufacturing Company; Video King Gaming
Systems,
25 Incorporated; and Western Bingo Supplies,
Incorporated.
0098
1 The relicensure of suppliers includes, but is
2
not limited to, the following checks of the company: The
3
bond requirement, federal and state tax checks, customer and
4
product lists, corporate organizational charts and gaming
5
license checks.
6 The
following checks were conducted on their
7
key persons: NCIC/Mules, credit
checks and IRS tax checks.
8 Our investigation has not disclosed any
9
information that would preclude the following companies from
10 being relicensed as bingo suppliers by the
Missouri Gaming
11 Commission: All American Bingo, Incorporated; Bingo Brain,
12 Incorporated; MMG, Incorporated, doing
business as Bingo
13 Supply Center; GameTech International,
Incorporated; and
14 Games Galore.
15 VICE CHAIRMAN SMITH: Are all of these found
16 under Tab O?
17 MR. MULLALLY: That's -- no. I believe
18 they're all under Tab N.
19 VICE CHAIRMAN SMITH: N.
20 MR. MULLALLY: N and O.
I'm sorry.
21 VICE CHAIRMAN SMITH: They're not in the same
22 order you gave them in my book, but it
sounds like you
23 covered everything I had. Are there any questions from the
24 Commissioners?
25 COMMISSIONER ADORJAN:
None.
0099
1 COMMISSIONER NIKOLAISEN: None.
2 VICE CHAIRMAN SMITH: Can we approve these the
3
same way?
4 MR. MULLALLY:
Yeah. Adopt all the agenda
5
items on the consent agenda.
6 COMMISSIONER NIKOLAISEN: So moved for the
7
adoption for the consent agenda.
8 VICE CHAIRMAN SMITH: I couldn't hear you.
9 MR. MULLALLY:
Move the adoption of the
10 consent agenda.
11 VICE CHAIRMAN SMITH: We have a motion. Do we
12 have a second?
13 COMMISSIONER ADORJAN: Second.
14 VICE CHAIRMAN SMITH: Call role.
15 MS. FRANKS: Commissioner Smith?
16 VICE CHAIRMAN SMITH: In
favor.
17 MS. FRANKS: Commissioner Nikolaisen?
18 COMMISSIONER NIKOLAISEN: In favor.
19 MS. FRANKS: Commissioner Adorjan?
20 COMMISSIONER ADORJAN: In favor.
21 MS. FRANKS: By your vote, you've adopted the
22 consent agenda.
23 MR. MULLALLY: Mr. Chairman, I just have one
24 more item.
It's been called to my attention that the
25 Commission Resolution 01-083 that you just
adopted regarding
0100
1
the suitability of Thomas J. Carr has an effective date of
2
2/6/02. And we need to amend
that to 2/6/01.
3 VICE CHAIRMAN SMITH: Sounds like a good idea.
4 Do
we have a motion to amend the resolution to change the
5
date?
6 COMMISSIONER ADORJAN: I move it.
7 VICE CHAIRMAN SMITH: Is there a second?
8 COMMISSIONER NIKOLAISEN: Second.
9 MR. MULLALLY:
Voice vote.
10 VICE CHAIRMAN SMITH: All in favor, say aye.
11 RESPONSE: Aye.
12 VICE CHAIRMAN SMITH: Opposed?
13 Carried.
14 Anything else?
15 MR. MULLALLY:
That is all the staff has for
16 you, Mr. Chairman. Thank you.
17 VICE CHAIRMAN SMITH: The only other thing on
18 the agenda was a closed session. And do any of the
19 Commissioners feel like that we need a
closed session at
20 this time?
If so, we can exclude everybody and I guess
21 we'll meet in this room. What's your feeling?
22 COMMISSIONER ADORJAN: I don't see a need
23 unless you have something, Bob, or unless
Lynne has
24 something.
25 VICE CHAIRMAN SMITH: I'm sorry.
I can't hear
0101
1
you.
2 COMMISSIONER ADORJAN: I have no requirement
3
for a closed session unless Lynne or yourself or the
4
director has anything.
5 COMMISSIONER NIKOLAISEN: I have nothing.
6 VICE CHAIRMAN SMITH: Lynne has nothing.
7 Do you have anything that you think we can't
8
put off until the next meeting?
9 MR. MULLALLY:
No, sir, Mr. Chairman. Nothing
10 at this time.
11 VICE CHAIRMAN SMITH: I just thought I'd tell
12 you what the situation is here. They've got me set up here
13 at a head table with a lighted angel by my
side, so it feels
14 pretty lonely up here.
15 COMMISSIONER ADORJAN: We'll try to solve that
16 next time.
17 VICE CHAIRMAN SMITH: Thanks.
18 I think if there's nothing
else, I guess
19 motion to adjourn is called for. Do we have such a motion?
20 COMMISSIONER ADORJAN: I'll move it.
21 VICE CHAIRMAN SMITH: Is there a second?
22 COMMISSIONER NIKOLAISEN: Second.
23 VICE CHAIRMAN SMITH: All in favor, say aye.
24 RESPONSE: Aye.
25 VICE CHAIRMAN SMITH: And wish everybody at
0102
1
the holiday season a happy time if I miss you and good luck
2
with your ill relatives.
3 (HEARING ADJOURNED.)
4
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8
9
10
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12
13
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24 C E R T I F I C A T E
25 STATE OF MISSOURI )
) ss.
0103
1
COUNTY OF COLE )
2
I, Tracy L. Thorpe Cave, Certified
Shorthand Reporter,
3
with the firm of Associated Court Reporters, Inc., and
Notary Public within and for the State of
Missouri, do
4 hereby certify that I was personally present at the
proceedings had in the above-entitled
cause at the time and
5
place set forth in the caption sheet thereof; that I then
and there took down in Stenotype the
proceedings had; and
6 that
the foregoing is a full, true and correct transcript of
such Stenotype notes so made at such time
and place.
7
Given at my office in the City of
Jefferson, County
8 of
Cole, State of Missouri, this 31st day of December, 2001.
9
10
_____________________________________
TRACY L. THORPE CAVE
11 Notary Public, State of
Missouri
(Commissioned in Boone
County.)
12
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48