Page 1
1
2
3 BEFORE THE MISSOURI GAMING COMMISSION
4 OF THE COUNTY OF ST. LOUIS
5 STATE OF MISSOURI
6
7
8
9
IN RE: Public Hearing
10
11
12 BE IT REMEMBERED that the above-entitled
13
matter came on for public hearing at Saint Louis
14 University, School of Allied Health, 2nd Floor,
15
Multi-Purpose Room, 3437 Caroline, St. Louis, Missouri,
16
on the 24th day of June, A.D., 2002, commencing at the
17
hour of 10:00 in the morning of that day, said hearing
18
having been called to order by the Chairman and the
19
board members of the Missouri Gaming Commission of the
20
City of Jefferson City, Missouri pursuant to the
21
issuance of due notice to all parties in interest, and
22
the following is the transcript of the record made of
23
all proceedings had during the course of said hearing.
24
25
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 2
1 A P P E A R A N C E S
2
3
4
Robert Smith - Vice-Chairman
5
Dr. Muriel W. Battle - Commission Member
6 J. Joe Adorjan -
Commission Member
7
Lynne R. Nikolaisen - Secretary
8
9 *
* *
10 I N D E X
11
12
SPEAKER:
Page:
13
THAD McCANSE 5
14
JUDGE McCORMICK WILSON 20
15
MIKE YOST 35
16
BOB THURSBY 42
17
HAROLD LUDWIG 48
18
GEORGE HAMILTON 52
19
LARRY SECKINGTON 63
20
RICK WILHOIT 67
21
MIKE BUSHMANN 69
22
KEVIN MULLALLY 72
23
STEVE JOHNSON 28, 72
24
MIKE BUSHMANN 77
25
JOSEPH KIZITO 79
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 3
1 A P P E A R A N C E S
2
3
SPEAKER: Page:
4
5
KEVIN MULLALLY 82, 87,
6
89, 93, 94, 104, 116, 119, 124, 128.
7
8
JIM OBERKIRSCH 85, 88,
9
89, 93, 111, 117, 120, 125.
10
11
MELISSA STEPHENS 97
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 4
1 CHAIRMAN SMITH:
Let's call the meeting to
2
order. The first order of
business is calling the
3
roll.
4 MS. ANGIE FRANKS:
Commissioner Smith?
5
CHAIRMAN SMITH: Present.
6 MS. FRANKS:
Commissioner Nikolaisen?
7 MS.
NIKOLAISEN: Present.
8 MS. FRANKS:
Commissioner Battle?
9 MS. BATTLE:
Present.
10 MS. FRANKS:
Commissioner Adorjan?
11 MR. ADORJAN:
Present.
12 MR. MULLALLY:
Mr. Chairman, the first
13
order of business is consideration of the minutes of
14
April 24, 2002. They're in Tab A
of your book.
15 CHAIRMAN SMITH:
Does anybody have any
16
corrections on the minutes?
17 Do we have a motion to approve them?
18 MS. NIKOLAISEN:
I move to approve.
19 MS. BATTLE:
I'll second.
20 CHAIRMAN SMITH:
So moved by Commissioner
21
Nikolaisen with a second by Ms. Battle.
22 Call the roll.
23 MS. FRANKS:
Commissioner Smith?
24 CHAIRMAN SMITH:
In favor.
25 MS. FRANKS:
Commissioner Nikolaisen?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 5
1 MS. NIKOLAISEN:
In favor.
2 MS. FRANKS:
Commissioner Battle?
3 MS. BATTLE:
In favor.
4 MS.
FRANKS: Commissioner Adorjan?
5 MR. ADORJAN:
In favor.
6 MS. FRANKS:
By your vote, you've adopted
7
the minutes of the April 24, 2002 meeting.
8 CHAIRMAN
SMITH: Is there anything special
9
you want to do with the agenda today, or can we just go
10
ahead?
11 MR. KEVIN MULLALLY:
Mr. Chairman, I think we
12
can stay pretty much in order today.
No surprises.
13 The first item for formal business is
14
Consideration of Hearing Officer Recommendations.
15
Hearing Officer Thad McCanse has the first two cases
16
under Tabs B and C.
17
CHAIRMAN SMITH: Good morning.
18 MR. THAD McCANSE:
Mr. Chairman. Thank you.
19
Good morning to you, sir, members of the Commission.
20 The first one involved a man who pleaded
21
guilty to a felony and received a suspended imposition
22
of sentence. It was -- on the
face of it, it shouldn't
23
be a very difficult problem to handle except that
24
Mr. Bradley, as a matter of courtesy, decided to put
25
his case on first. At the end of
his case, the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 6
1
attorney for the Petitioner didn't put on any evidence.
2
As a result, I couldn't tell from the file, to be sure,
3
whether the man was currently working -- I think he was
4
-- whether he was applying for a license by
5
transferring from one casino to another, or whether
6
they were asking that the license be revoked because at
7
different places in the arguments in the file, both of
8
those issues were stated. So I
had to write kind of a
9
-- I wouldn't say wishy-washy but ambivalent
10
recommendation saying that, if he has a license, it
11
ought to be revoked, and if he's applying for a
12
license, it ought to be denied.
13 In any event,
since he did plead guilty to
14
a felony, he's not entitled to work for a casino under
15
the statute and under the rule.
So I gave that
16
explanation to explain why I wrote the order -- report
17 and order up in
this fashion. If you have any
18
questions, I'd be glad to respond to them.
19 CHAIRMAN SMITH:
It's just another one of
20
these arguments over the suspended imposition of
21
sentence and its effect --
22 MR. McCANSE:
Yes.
23 CHAIRMAN SMITH:
-- which we've been
24
through a number of times. It
doesn't seem right, but
25
we have to go by what the rules are.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 7
1 MR. McCANSE:
That's right. I think, in
2
one of our rules, we say the suspended imposition of
3
sentence doesn't make any difference, if there's a
4
plea, why, that disqualifies you.
5 So if there are any questions, I'll try to
6
field them. I must admit that
the record is a little
7
bit scanty on that first one except that he did plead
8
guilty to a felony and we also established, by
9
admission, that although Charles Smith is a common
10
name, his attorney agreed that that is the person who
11
was involved.
12 CHAIRMAN SMITH:
I noticed you did do
13
that. I'm still offended, but
that's all right.
14 MR. McCANSE:
I shouldn't say a common
15
name, sir. It's a
frequently-used name.
16 CHAIRMAN SMITH:
Since that's my second
17
name, it bothered me a little bit.
18 Do we have any questions? If not, do we
19
have a motion?
20 MR. ADORJAN:
I'll move.
21 MS. BATTLE:
I'll second.
22 CHAIRMAN SMITH:
Moved and seconded that
23
we approve Resolution No. 02-043 of Charles E. Smith,
24
which will either suspend or revoke his license, if he
25
has it, or if he hasn't gotten it, he's denied.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 8
1 Call the roll.
2 MS. FRANKS:
Commissioner Smith?
3 CHAIRMAN SMITH:
In favor.
4 MS. FRANKS:
Commissioner Nikolaisen?
5 MS. NIKOLAISEN:
In favor.
6 MS. FRANKS:
Commissioner Battle?
7 MS. BATTLE:
In favor.
8 MS. FRANKS:
Commissioner Adorjan?
9 MR. ADORJAN:
In favor.
10 MS. FRANKS:
By your vote, you've adopted
11
Resolution No. 02-043.
12 MR. McCANSE:
The next case involves a man
13
named Melvin Jacobs who works for a casino and who did
14
testify.
15 The first problem is pretty much
16
procedural. In the Order of the
Notice of Discipline,
17
they referred to a violation of one of the rules except
18
that they referred to the rules saying that if you've
19
been convicted of a crime, then your license may be
20
revoked or denied. He was
charged with violating a
21
city ordinance, the City of Creve Coeur, with
22
assaulting a nine-year-old child.
A violation of a
23
city ordinance is not a crime, and so the charge
24
against him was based on the wrong rule. There is a
25
rule that would have been appropriate, but not the one
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 9
1
that was cited in the Order.
However, the statute
2
about violating a local law was cited, more or less in
3
passing, in the Order for Discipline.
It was not cited
4
as a basis for the charge, but it was mentioned.
5 His attorney did not make an issue of that
6
point, and instead, she tried the case on, again, the
7
suspended imposition of sentence and argued vehemently
8
that there was nothing before the Commission at the
9
time the action was taken to discipline him.
10 He testified, and the evidence was, that
11
he was swimming in a pool in the apartment complex
12
where he lived. He swims laps
for fitness. After he
13
had started swimming, a couple of young children came
14
in, one of them a nine-year-old girl, with no adults
15
present, and they started asking him questions, which
16
he didn't answer, and, finally, they -- one of them
17
jumped in front of him. And he
testified that, as he
18
was following through with his swimming stroke, he hit
19
her in the forehead, or pushed her in the forehead.
20
After that, why, there was some more horseplay, let's
21
say, on the part of the kids.
They squirted water guns
22
at him, hung onto the life preserver, and hit him as
23
he came toward the end, and he tried to ignore them,
24
for the most part.
25 He got out of the pool and decided to try
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 10
1
and bring to somebody's attention that they had
2
unsupervised children there. So,
apparently, he threw
3
their towels in the pool so that they would have to
4
take wet towels when they went home.
A woman,
5
apparently a child's mother, came out and accused him
6
of hitting her child. After
that, the police came and
7
arrested him and took him down.
He talked to the
8
juvenile officer, and was released.
He was charged
9
then with violating a city ordinance of Creve Coeur.
10
The ordinance was never put into evidence, so I had to
11
speculate somewhat as to just what was done.
12 The attorney for Mr. Jacobs made what is
13
called an Alford plea, which allows a person to plead
14
guilty while protesting their innocence. However, the
15
cases have held that an Alford plea amounts to a plea
16
of guilty, and before a judge can accept an Alford
17
plea, he has to find that there are enough facts to
18
prove guilt; otherwise, he can reject it.
19 CHAIRMAN SMITH:
Is this the same as a
20
nolo contendere plea?
21 MR. McCANSE:
In a sense; although, a nolo
22
contendere, you don't say anything.
An Alford plea
23
says I didn't do this but I want to plead guilty
24
because if you find me guilty, I'll go to the electric
25
chair; if you don't, I'll only get 30 years. The U.S.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 11
1
Supreme Court, in a divided opinion said, yeah, you can
2
do that, it wasn't really coercion.
So it's been used,
3 I think, by various
attorneys several times since. But
4
whether it was appropriate or not in this case, I don't
5
know.
6 It bothered me because, under the facts
7
that he recited, it was a purely accidental affair
8
which was brought on more by the child than by the
9
Petitioner. There is no evidence
other than the
10
Petitioner's account of it and a Highway Patrolman.
11 The Petitioner testified that no member of
12
the family was present when he was -- appeared in City
13
Court. And he was given --
again, the record is a
14
little foggy, but it was either two-year's probation or
15
one-year's probation and court costs, and he satisfied
16
all of the requirements.
17 Again, there was a problem here. He said
18
that he had to report this as part of a continuing duty
19
to keep his application current.
I had an older
20
application in another case, and it only requires you
21
to report a crime. This was not
a crime. So in
22
effect, he didn't have to report it, but he did,
23
there's the charge, and on the face of it, assaulting a
24
nine-year-old girl doesn't look very good.
25 The proposed discipline was a two-year
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 12
1
suspension. He's single and had
been let go when his
2
former employer was downsized, and he had been working
3
at the casino for two or three years.
He testified
4
that there's no assurance that he would be able to get
5
the job back at the end of two years and that it would
6
be difficult for him to find another job in the
7
meantime. I have no reason to doubt
that testimony.
8
In fact, I think, under the current climate, I think
9
that's very good.
10 So considering the aspects of the case, I
11
thought that two years was too much but that, on the
12
face of it, pleading guilty, even in City Court, of
13
assaulting a nine-year-old child, even accidentally, is
14
not something that brings much credit to the Gaming
15
Commission, industry as a whole, or to the individual.
16
So I decided pretty much on my own and, I will admit,
17
pretty much arbitrarily, that while two years is too
18
much, that 90 days would be a significant enough
19
sentence to satisfy the Commission and still give the
20
fellow a chance to continue his livelihood.
21 If you have any questions -- I wrote a
22
book on this because it was a troubling matter. I'm
23
sorry that you had to wade through it.
24 Also, there's some typos, and I blame my
25
secretary, which is me.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
13
1 CHAIRMAN SMITH:
I just have a question.
2
Why do we have to discipline him at all? Isn't this
3
totally discretionary?
4 MR. McCANSE:
It would be. Why did he
5 take an Alford
plea, is what bothered me. Were I his
6
attorney, under the facts as related -- oh, by the way,
7
he made a statement to the police, but that was not in
8
evidence either. So there's just
a lot of things I
9
didn't know in the back of my mind.
10 MR. ADORJAN:
Did anybody question his
11
attorney at the time? I mean,
I'm sure he didn't
12
conjure up an Alford plea on his own.
13 MR. McCANSE:
His attorney is the same one
14
that represented him before the Commission.
15 MR. ADORJAN:
I've had one instance where
16
I was with a corporation where we had an Alford plea,
17
so I'm a little sympathetic to that because it is the
18
issue of how do you win your case when a nine-year-old
19
and a mother alleges something?
It's a loser. An
20
Alford plea seems like a reasonable course of action
21
for that lawyer to take.
22 MR. McCANSE:
It would be a real problem.
23
On the other hand, why, you kind of wonder, if there's
24
-- I shouldn't get off into the speculation world, but
25
you kind of wonder why she felt there would be a good
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 14
1
shot at getting him convicted.
He made a good
2
appearance as a witness at the hearing.
3 CHAIRMAN SMITH:
It looks like, basically,
4
he did the right things. He
reported something that
5
was a questionable violation.
6 MR. McCANSE:
He cooperated all the way
7
through.
8 CHAIRMAN SMITH:
There was no evidence to
9
the contrary as to his facts as they're stated, I
10
gather. I can see the only
question would be why he
11
entered the plea.
12 MR. McCANSE:
Yeah. And the -- on the
13
face of it, an Alford plea is a plea of guilty. And so
14
he has pleaded guilty to violating a local law but not
15
a crime.
16 And I admit that 90 days may be harsh. I
17
was trying to compromise and do something that the
18
Commission could live with. So I
-- I can appreciate
19
your point of view. I didn't
know you had had that
20
experience.
21 MS. BATTLE:
Was it posted that at a
22
certain age children had to be accompanied by an adult?
23
Was that posted at the pool?
24 MR. McCANSE:
There was no evidence as to
25
that. There was no adult
there. This went on -- he
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 15
1
swam several laps afterwards.
There was quite a bit of
2
harassment by the kids toward him.
Again, there was no
3
evidence put on by anybody else.
It's just the Highway
4
Patrolman and the Petitioner.
5 CHAIRMAN SMITH:
I guess my reaction is
6
that if you take his evidence on its face, he didn't do
7
anything wrong, and, I guess, I can see where he was
8
down at the level with, I assume, a city police court,
9
that he might want to take the easy way out by paying a
10
fine and getting out of it. I
wonder even if he should
11
be disciplined at all.
12 MR. McCANSE:
I don't know. I don't have
13
any strong feelings except that, on the face of it, as
14
I say, a plea to an assault on a nine-year-old just
15
doesn't sound good.
16 MS. NIKOLAISEN:
I have a question in
17
general, because I'm just not sure.
I understand your
18
quandary and probably our quandary as well. I think we
19
have to address this as it is first and -- first
20
question this as to see whether we agree with a 90-day.
21
Is it something within our powers of suggestion that we
22
could go with either a lessor discipline or no
23
discipline?
24 CHAIRMAN SMITH:
Yes. That makes sense.
25 MR. McCANSE:
I would say yes. You all
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 16
1
would know better, but I believe that the -- the
2
Commission can do what it feels should be done. It can
3
either accept, amend, or reject the recommendation of
4
any hearing officer.
5 MS. NIKOLAISEN:
Just myself,
6 understanding what
Joe said, I'm having trouble with
7
any discipline.
8 MR. ADORJAN:
That's where I come down.
9 MS. NIKOLAISEN:
Yeah.
10 MS. BATTLE:
Who labeled it assault on a
11
nine-year-old girl?
12 MR. McCANSE:
The summons from the City
13
Court. Assault of a
nine-year-old girl by pushing her
14
in the pool. And I cited a
misdemeanor statute, which
15
may be different than the ordinance, in the book I
16
wrote, which is any offensive touching could be
17
considered an assault, and they use that where minors
18
are involved.
19 Frankly, I have no quarrel with whatever
20
you want to do. I felt that two
years was way too
21
much.
22 CHAIRMAN SMITH:
I think we all agree
23
you're right on that. You can
even have an assault
24
without any physical touching.
25 MR. McCANSE:
Threatening or menacing.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 17
1 And I can sympathize with the guy. I
2
think maybe he was a little bit -- less immature, as I
3
say, in responding to the kids.
He's a single man, and
4
he hasn't had the experience of what children can be
5
like that some of us do.
6 MR. ADORJAN:
That makes me sympathetic on
7
two counts.
8 CHAIRMAN SMITH:
There's some legal
9
questions in this one certainly.
What's your pleasure?
10
We either have a choice, I guess, of affirming the
11
Hearing Officer's decision, or modifying it, or
12
rejecting it and returning that there should be no
13
discipline.
14 MR.
McCANSE: One other point,
15
Mr. Chairman. It bothered me
quite a bit that the
16
initial charge was based on the wrong rule.
17 CHAIRMAN SMITH:
True.
18 MR. McCANSE:
You could say that that
19
might even be jurisdictional. I
know in criminal
20
cases, if you charge somebody under one statute --
21 CHAIRMAN SMITH:
The lawyer didn't think
22
to file a motion on that, though?
23 MR. McCANSE:
They filed a Motion to
24
Dismiss, but it was on the Alford plea and the
25
suspended imposition.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 18
1 So I've been rejected before, so I don't
2
have a problem with that.
3 MR. ADORJAN:
I'll move to reject your
4 recommendation.
5 MS. NIKOLAISEN:
I'll second.
6 CHAIRMAN SMITH:
I'll move that the
7
determination has been changed from a 90-day suspension
8
to a no-discipline.
9 Kevin,
do you have any comments on this?
10
Does this create any problems?
11 MR. MULLALLY:
Yeah. The way I read the
12
opinion -- I don't know that you necessarily need to
13
reject the opinion because I think your finding could
14
be consistent with his findings in that he thought that
15
the discipline should have been reduced. I think you
16
can just change the ultimate judgment.
So that you
17
could accept the Hearing Officer's opinion as amended
18
to reflect a reprimand or no-discipline. So that way
19
you don't have to rewrite your own opinion. If you
20
reject it, somebody has to put pen to paper.
21 MS. BATTLE:
I was thinking all along
22
about a reprimand. We don't want
to go on record as if
23
its okay to push kids around.
24 CHAIRMAN SMITH:
That's a possibility. Do
25
we want to reword the motion at this point? I guess,
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 19
1
basically, what Kevin is saying is we should affirm the
2
findings by the Hearing Officer but modify the penalty
3
to a no-discipline.
4 MR. ADORJAN:
I want to make this a
5
modification with the final order being a reprimand to
6
the individual.
7 CHAIRMAN SMITH:
Is there a second to that
8
motion?
9 MS. BATTLE:
I'll second that.
10 CHAIRMAN SMITH:
The other motion, did it
11
have a second? The previous
motion, did you second it?
12 MS. NIKOLAISEN:
Yes.
13 CHAIRMAN SMITH:
Would you mind
14
withdrawing your second?
15 MS. NIKOLAISEN:
I'll withdraw my second.
16 CHAIRMAN SMITH:
I assume that if Joe made
17
a new motion, he'll withdraw his earlier one?
18 MR. ADORJAN:
Yes.
19 MS. BATTLE:
I'll second that.
20 CHAIRMAN SMITH:
Any further discussion?
21
If not, call the roll.
22 MS. FRANKS:
Commissioner Smith?
23 CHAIRMAN SMITH:
In favor.
24 MS.
FRANKS: Commissioner Nikolaisen?
25 MS. NIKOLAISEN:
In favor.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 20
1 MS. FRANKS:
Commissioner Battle?
2 MS. BATTLE:
In favor.
3 MS. FRANKS:
Commissioner Adorjan?
4 MR. ADORJAN:
In favor.
5 By your vote, you've adopted Resolution
6
No. 02-044, as amended.
7 MR. MULLALLY:
Thank you, Mr. McCanse.
8 The next three cases were handled by Judge
9
McCormick Wilson.
10 CHAIRMAN SMITH:
Good morning, Your Honor.
11 JUDGE McCORMICK WILSON: Good morning, your
12
Commissionership, I guess. You
know, this is the day
13
for hard questions, and that's why you get them big
14 bucks.
15 My first case is Washington --
16 CHAIRMAN SMITH:
We better correct that to
17
say we get a $100 a meeting. I
don't know where the
18
big bucks are.
19 JUDGE
WILSON: This has a clinker in it
20
right on the front. March 14,
'02, Director Mullally
21
-- no. I'm sorry. February 11, by certified mail,
22
that he was to be penalized by a loss of 24 hours of
23 employment. The Petitioner testified that he didn't
24
get the letter, but that he was notified by his employer
25
after the 30 days was up. And
then on March 14, which
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 21
1
was something like 16 days later, he sent a letter
2
requesting a hearing. Now, the
letter was not -- the
3
request for the hearing did not come within 30 days of
4
the certified letter to him. And
we have a problem
5
that we have to -- somebody has to address. Is this 30
6
days something in the nature of a statute of
7
limitations which can be waived if it's not raised, or
8
is it something more in a jurisdictional nature that if
9
you do not request it within the 30 days, there's
10
nothing here? I cannot make that
decision for you. If
11 you find that it is
jurisdictional and that he failed
12
to file within the 30 days, then you can issue a
13
summary order dismissing his appeal from the
14
Commission's Preliminary Order.
If you feel that it is
15
something else or that there is something that I
16
overlooked that could extend the 30 days, if he didn't
17
get it or if it was sent to the wrong place, or
18
something like that, if that -- if that is the fact,
19
then we can go on to what should happen next.
20 CHAIRMAN SMITH:
Well, how can we
21
determine that on the facts that we have before us?
22 JUDGE WILSON:
The facts that I have
23
before you are that he did not request it within 30
24
days of the date of Mr. Mullally's letter. That's a
25
fact.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 22
1 CHAIRMAN SMITH:
The question is, is there
2
any facts concerning why he didn't file it?
3 JUDGE WILSON:
Not in the file.
4 MS.
NIKOLAISEN: Just a quick question.
5
Kevin, when we send those letters certified, is a
6
return receipt requested?
7 MR. MULLALLY:
Yes, that's correct.
8 MS. NIKOLAISEN:
And did we get a receipt
9
back on that letter?
10 MR. MULLALLY:
In this case, was there a
11
return receipt?
12 JUDGE WILSON:
I don't have a record of
13
it.
14
MS. FRANKS: I assume so. I don't have
15
the file.
16 MR. MULLALLY:
Yeah. We don't have the
17
file with us at this time, so --
18 MS. NIKOLAISEN:
I'm just wondering if
19
that's something we could -- I'm just thinking out loud
20
-- put off to check that.
Because if there's a receipt
21
that came back, I think it's a done deal. I mean, am I
22
wrong?
23 CHAIRMAN
SMITH: It seems to me that's a
24
good idea, plus it seems to me the Administrative
25
Hearing Officer -- it should be remanded to him to make
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 23
1
a determination.
2 MR. MULLALLY:
What was the date of the
3
actual notice? Was it after the
30 days?
4 JUDGE WILSON:
Yes, sir.
5 MR. MULLALLY:
Yeah.
6 JUDGE WILSON:
Let me get back to the --
7
the Director's letter, sent certified mail, return
8
receipt requested, was dated February 13, '02. The
9
Petitioner's return letter was dated March 14, which
10
is, clearly, more than 30 days after.
And he said, "I
11
have not officially been served with the disciplinary
12
action; however, I was provided a copy of the
13
disciplinary action by my employer on March 11, '02."
14
Now, March 11, '02 was the 30th day, and March 14,
15
which would have been the 34th day -- and I'm not sure
16
about the arithmetic -- was after the 30 days, and it
17
was not received in the Commission office until the
18
19th, which was well after the 30 days.
19 CHAIRMAN SMITH:
Where would we be, if,
20
say, it's jurisdictional and the appeal is too late?
21
Has there been some discipline imposed?
22 JUDGE WILSON:
No. There's a
23
recommendation of 24 hours.
24 CHAIRMAN SMITH:
I notice that's in your
25
finding. I'm wondering, if he's
too late on the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 24
1
appeal, what's happened up to now.
Do you know, Kevin?
2 JUDGE WILSON:
As far as I know, he's
3
still working.
4 MR. MULLALLY:
My understanding is that
5
it's our practice that even if they request a hearing
6
after the 30-day period, it's always been granted. So
7
we waived the requirement. If
they came in prior to
8
the discipline actually being imposed, we've always
9
given them an opportunity for a hearing.
10 CHAIRMAN SMITH:
If that's the practice,
11
then maybe we should assume that we go ahead with this
12
hearing.
13 JUDGE WILSON:
I have absolutely no
14
objection to that. I'm not
emotionally involved in the
15
30 days. It's just that I
thought it should be raised
16
somewhere.
17 CHAIRMAN SMITH:
What he was charged with
18
was, basically, going to sleep in the coin room with
19
the door open.
20 JUDGE WILSON:
He was in the Hard Drop
21
Shop, which was, according to the testimony, about
22
30 feet from the Hard Count Room.
And the team that
23
was bringing the money down -- one of them had a key,
24
and the other one didn't, and the one that didn't have
25
a key thought he was coming back right away, and he
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 25
1
propped the door open. Now, Mr.
Washington, who was
2
the supervisor, was over here in this other room with
3
the door closed. He said he had
worked 24 hours
4
straight, and there was no contradiction to that, that
5
he sat down to take his uniform off and went to sleep.
6
When the officer found the door open and went into the
7
shop, he found him -- the officer said he was asleep.
8 And Mr. Washington, the Petitioner here,
9
is a salaried employee. He
doesn't have a time clock.
10
He doesn't clock in and he doesn't clock out. When
11
he's there, he's working. When
he's gone, he's not
12
working. If he had been home in
bed asleep, he would
13
not have been subject to discipline in this case. But
14
it kind of leaves a bad taste if your supervisor is
15
asleep in the shop room with the door propped open.
16
There was over a $1 million worth of goodies in there.
17 CHAIRMAN SMITH:
Any other questions of
18
Judge Wilson?
19 Do we have any sort of motion either to
20
approve the finding of the Hearing Officer or modifying
21
it?
22 MR. ADORJAN:
I guess my reaction is if,
23
in fact, we had it as a policy to allow someone to be
24
delinquent 30 days -- I don't know what the other time
25
limit should be. This was late
by a couple of days.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 26
1
My reaction would be we should go ahead and let him
2
have his hearing.
3 CHAIRMAN SMITH:
Why don't we have a
4
motion first on that issue, have a motion that -- to
5
make a determination that the appeal is valid and
6
satisfies the rules.
7 MS. NIKOLAISEN:
So moved.
8 MS. BATTLE:
Second.
9 CHAIRMAN SMITH:
Call the roll.
10 MS. FRANKS:
Commissioner Smith?
11 CHAIRMAN SMITH:
In favor.
12 MS. FRANKS:
Commissioner Nikolaisen?
13 MS. NIKOLAISEN:
In favor.
14 MS.
FRANKS: Commissioner Battle?
15 MS. BATTLE:
In favor.
16 MS. FRANKS:
Commissioner Adorjan?
17 MR. ADORJAN:
In favor.
18 CHAIRMAN SMITH:
Since we have accepted
19
the appeal, what do we want to do with the finding?
20 MS. NIKOLAISEN:
I move for approval of
21
Resolution No. 02-045.
22 CHAIRMAN SMITH:
Is there a second?
23 MS. BATTLE:
Second.
24 CHAIRMAN SMITH:
Second.
25 Call the roll.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 27
1 MS. FRANKS:
Commissioner Smith?
2 CHAIRMAN SMITH:
In favor.
3 MS. FRANKS:
Commissioner Nikolaisen?
4 MS. NIKOLAISEN:
In favor.
5 MS. FRANKS:
Commissioner Battle?
6 MS. BATTLE:
In favor.
7 MS. FRANKS:
Commissioner Adorjan?
8 MR. ADORJAN:
In favor.
9
MS. FRANKS: By your
vote, you've adopted Resolution
10
No. 02-045.
11 CHAIRMAN SMITH:
It's kind of an
12
interesting question. If he had
been on an hourly
13
basis and had gone to sleep, he probably would have
14
been home free.
15 JUDGE WILSON:
I don't know that it would
16
-- I don't know that he should have been working 24
17
hours.
18 MS. BATTLE:
That's what I think. That's
19
what occurred to me.
20 JUDGE WILSON:
And if he was, why didn't
21
he wear his uniform home and -- go to sleep in the
22
cafeteria or something? He won't
do it again, I don't
23
think.
24 CHAIRMAN SMITH:
The next item is --
25 MR. ADORJAN:
Let me ask one more
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 28
1
question. Do we have any
policies with regard to
2
procedural -- I don't know how best to describe this.
3
An individual working in a supervisory position for 24
4 hours straight strikes
me as an undue risk to security
5
and fiduciary responsibility of gaming operations. I
6
wonder, do we have a rule about that, or do we have any
7
policies?
8 MR. MULLALLY:
Steve Johnson, Deputy
9
Director for Enforcement.
10 MR. STEVE JOHNSON:
We do not have a rule, sir.
11 MR. ADORJAN:
It would seem to me that
12
maybe that's something we should consider.
13 MR. JOHNSON:
We're constantly watching
14
staffing levels. Usually this is
a function of
15
staffing levels, when folks are worked these kinds of
16
hours and under these conditions. We're constantly
17
watching that. In fact, we have
two issues on the
18
table now that we're looking into, with reductions in
19
staffs that results in folks putting in more time than
20
they need to. I would suspect
that within the next 30
21
to 60 days we'll be able to report on those issues.
22 MR. ADORJAN:
Having run a security
23
company, we had internal policies with regard to how
24
many hours an individual could work.
Having screeners
25
at airports, the FAA has standards with regard to the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 29
1
number of hours people can work because they do tend to
2
get a little lax at the gates after 12 or 14 hours of
3
work. So I'm thinking maybe we
should have more of a
4
policy.
5 MR.
JOHNSON: We can certainly do it.
6 CHAIRMAN SMITH:
That's a good suggestion.
7
We can look into it. It will be
interesting to find
8
out whether the casinos themselves have such rules.
9 Proceed to the next one.
10 JUDGE WILSON:
All right. This is Mr.
11
Shires. I believe that we have
finally gotten to one
12
that is not so complex.
13 He filed an application for a Level II
14
occupational license. They said,
have you ever been
15
arrested, pleaded guilty, convicted, all of those
16
words, and he left it blank. And
the record check
17
later on found out that in 1987, he had been arrested
18
in Columbia, Missouri for a DWI and that about six
19
months before he filled out this application, he had
20
pleaded guilty to a bad check charge down in the
21
Boothill. His explanation was he
thought that the
22
"have you ever been arrested" only applied to the last
23
10 years, and I recommend you reject that explanation,
24
and the other was that he didn't think he had got
25
arrested down in New Madrid for the bad check. He went
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 30
1
to the judge -- or the clerk, and the clerk sent him
2
over to the sheriff, and the sheriff served him a
3
warrant and fingerprinted him and escorted him back to
4
the judge, and he pleaded guilty, and that was that.
5 Now, I -- there are a number of
6
technicalities about whether this is an arrest. They
7
come up all the time. But I
think six months before,
8
knowing that he had been sent to the sheriff's office
9
and fingerprinted and taken before the judge, not sent
10
to the judge but taken before the judge, I think he
11
should have realized that, whether this was an arrest
12
or not, he should have mentioned it in his application.
13
My recommendation is that he be revoked.
14 CHAIRMAN SMITH:
That's a little
15
suspicious he left that blank, too.
What's your
16
pleasure? Any questions?
17 Do we have a motion on this one?
18 MS. NIKOLAISEN:
I move for approval of
19
Resolution No. 02-046.
20 CHAIRMAN SMITH:
Is there a second?
21 MS. BATTLE:
I second.
22 CHAIRMAN SMITH:
Call the roll.
23 MS. FRANKS:
Commissioner Smith?
24 CHAIRMAN SMITH:
In favor.
25 MS. FRANKS:
Commissioner Nikolaisen?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 31
1 MS. NIKOLAISEN:
In favor.
2 MS. FRANKS:
Commissioner Battle?
3 MS. BATTLE:
In favor.
4 MS. FRANKS:
Commissioner Adorjan?
5 MR. ADORJAN:
In favor.
6 MS. FRANKS:
By your vote, you've adopted
7
Resolution No. 02-046.
8 JUDGE WILSON:
We have another one that's
9
not so easy, the Henderson case, 02-047.
10 Ms. Henderson was a Guest Safety Officer
11
in the Hard Count Room. Her job
was to let the proper
12
people into the place where the goodies were and when
13
they came out, to use the magnetic detecting device to
14
make sure they were not taking any of the cookies out
15
of the cookie jar. That was her
job.
16 Another team is the Bill Validator Drop
17
Team. Now, you can play these
machines by sticking
18
American currency into the slot, and the bill validator
19
says, yes, you may have credit for this money. The
20
Bill Validator Drop Team carries the dollars or the
21
coins, whatever they may be, from the machine to the
22
Soft Count Room. A man -- I
assume it was a man --
23
they didn't say -- on the Hard Drop Team came down to
24 where Ms. Henderson was and
said, "Somebody is stealing
25
on this -- on my team. They're
taking money as we go
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 32
1
along. They're stealing money on
our shift."
2 Now, the book says, as I understand it,
3
that she should have reported that to her supervisor or
4
-- and reported it to the police, that the -- the
5
Highway Patrol, to the law enforcement people. Instead
6
of that, she went with the Hard Drop Team member to the
7
Hard Drop Team's supervisor and told that supervisor
8
what was going on on the Hard Drop Team work. The
9
supervisor immediately notified the -- law enforcement,
10
law enforcement investigated it immediately, and it
11
resulted in an arrest for a felony misfeasance. They
12
caught the guy that was taking the money.
13 I -- the recommendation was that she be
14
denied 30-days employment. My
recommendation was that
15
that be reduced from 30 to 15 days.
And the reason
16
that I thought that she should receive some discipline
17
is that she should not try to make up the rules as she
18
goes along. She shouldn't decide
that notifying this
19
fellow's supervisor was the right way to handle it.
20
She should -- suppose that person had been a part of
21
the scam? Suppose he had been on
the team? Then what
22
she did would not have protected the security of the
23
casino. I think that it would
have been better for her
24
to send him to his superior and for her to go to law
25
enforcement. She's not -- I
don't think she should be
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 33
1
penalized by 30 days, but I do think that she should
2
be, what I consider, severely punished for making up
3
the rules and not going by what she was instructed to
4
do.
5 CHAIRMAN SMITH:
I wonder why, in this
6
particular kind of case, the casino itself might not be
7
subject to discipline if they haven't enforced their
8
own rules.
9 JUDGE WILSON:
I don't know. There was
10
one other thing that I've neglected to mention. The
11
officer -- the Highway Patrol Officer testified that
12
she was the Guest Safety Officer in charge of the Bill
13
Validator Drop Team. Now this,
apparently, was not
14
so. So she had -- if she had
been, then maybe the
15
supervisor that she did report to would have been her
16
supervisor and that all she did was fail to notify law
17
enforcement.
18 MS. BATTLE:
Will you tell me again what
19
her title was? Guest --
20 JUDGE WILSON:
Guest Safety Officer.
21 MS. BATTLE:
You know, when you first said
22
it, it sounded almost as if she were the guest. But
23
she's in charge of the safety of guests.
24 JUDGE WILSON:
I don't know why it's
25
called Guest Safety Officer. The
security is so
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 34
1
redundant. This one watches that
one, and that one
2
watches that one, and you go right on up the line. But
3
her job was to stand by the door and see that only the
4
proper people got into the place where the tokens or
5
money were, and when they came out that they didn't
6
bring any in their pocket.
7 CHAIRMAN SMITH:
Was there any evidence
8
about her knowledge of such a rule --
9 JUDGE WILSON:
No.
10 CHAIRMAN SMITH:
-- one way or the other?
11 JUDGE WILSON:
No.
12 CHAIRMAN SMITH:
You're left with that
13
quandary.
14 Any other questions? What's your
15
pleasure?
16 MS. NIKOLAISEN:
I move for approval.
17 MR. ADORJAN:
I second.
18 CHAIRMAN SMITH:
The movement was
19
seconded. I move that we approve
the recommendation
20
and finding of the Hearing Officer's recommendation.
21 Call the roll.
22 MS. FRANKS:
Commissioner Smith?
23 CHAIRMAN SMITH:
In favor.
24 MS. FRANKS:
Commissioner Nikolaisen?
25 MS. NIKOLAISEN:
In favor.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 35
1 MS. FRANKS:
Commissioner Battle?
2 MS. BATTLE:
In favor.
3 MS. FRANKS:
Commissioner Adorjan?
4 MR. ADORJAN:
In favor.
5 MS. FRANKS:
By your vote, you've adopted
6 Resolution No.
02-047.
7 JUDGE WILSON:
Thank you. That's all I
8
have this morning.
9 MR. MULLALLY:
Thank you, Judge.
10 The next two items on the agenda will be
11
presented by Hearing Officer Mike Yost.
12 MR. MIKE YOST:
Good morning.
13 CHAIRMAN SMITH:
Good morning.
14 MR. YOST: If
it pleases the Commission,
15
probably the easiest way would be to outline the facts
16
of these next two resolutions and then deal with each
17
one specifically. The facts are
the same for both of
18
them. Then we can talk about the
proposed discipline
19
on each one separately, if you wish.
If that's okay
20
with you.
21 CHAIRMAN SMITH:
That's fine. Go ahead
22
and proceed.
23 MR. YOST:
The facts of both Kevin
24 Mitchell, Resolution
No. 02-048, and Sue Mallen,
25
Resolution No. 02-049, came out of the same event on
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
36
1
March 19, 2001. There was a
dispute between
2
Harrah's North Kansas City Casino and a customer who
3
had -- who he had believed won a payout on a slot
4
machine. It was determined that
a malfunction caused
5
the payout, and, therefore, the company denied him his
6
jackpot, which understandably upset the customer who
7
thought he had won a sum of money.
A dispute arose
8
and, essentially, some employees had to be called into
9
the situation to mediate the dispute, so to speak.
10 Mr. Mitchell is a slot technician for the
11
company, and he was called in, and Ms. Mallen is the
12
slot supervisor, and she was also called in.
13
Basically, Ms. Mallen dealt with the individual as far
14
as she thought she could, and then her supervisor, the
15
slot manager named Ella Bradford, was also called in,
16 and Ms. Bradford kind of took control of the situation
17
from there and Ms. Mallen went and did other things in
18
her job, and Mr. Mitchell did the same.
19 The patron had to be escorted from the
20
gaming floor. And then he went
to the Gaming
21
Commission office and made a complaint as to him not
22
receiving the payout. This is
what triggered our
23
involvement in the situation because the internal
24
controls set forth by the Commission, minimum controls,
25
require that if an electronic gaming device supervisor
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 37
1
determines that a patron dispute is not mutually
2
resolved, they're required to report this dispute to
3
both the company surveillance department so that the
4
video surveillance can start -- can keep a copy and
5
start taping the situation so there is some
6
documentation of it. And the
Gaming Commission agents
7
on the boat are also required to be notified.
8 When the patron came to the Highway Patrol
9
office after he was escorted off the floor, the Highway
10
Patrol became involved. They had
not received any
11
notice of the situation as they were required under the
12
minimum internal controls. And
then the agent,
13
Sergeant Baker with Highway Patrol, went to the
14
surveillance office to get a copy of the videotape,
15
and he determined at that point in time that the
16
surveillance department was also not notified of the
17
situation.
18 In a nutshell, clearly a violation of the
19
Commission's internal controls occurred. The question
20
really I was charged with determining was whether these
21
two individual persons should be disciplined for that
22
violation, and it was my opinion that neither of those
23
-- those two particular persons should have been
24
disciplined.
25 And I'll deal with Mr. Mitchell's
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 38
1
situation first. He was a slot
technician who was,
2
basically, just a bystander, if you will, at the
3
situation for a period of time and then left. I have
4
some question -- and I don't believe the internal
5
controls even puts a duty on Mr. Mitchell to report the
6
situation because he's not the slot supervisor, and he
7
would not be in a position to know whether the
8
situation had been mutually resolved or not. Even if
9
he had, in this particular situation he certainly
10
wasn't in a position to know that neither the
11
surveillance or the company had been -- or the
12
Commission had been notified.
And the strongest
13
evidence for me was the agent who worked the scene for
14
the Commission essentially said, "Listen, I don't think
15
-- I would not have expected this person, under these
16
circumstances, to have reported the incident either."
17
Sergeant Baker is on that boat everyday. He sees how
18
these jobs and rules interact much better than I could.
19
And that testimony was very compelling in my mind for
20
both Mr. Mitchell's and Ms. Mallen's situation. So I
21 am recommending that
Mr. Mitchell, first of all, should
22
not be disciplined as a result of this.
23 CHAIRMAN SMITH:
Questions?
24 It doesn't look like he has any duty
25
anyway to report it.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 39
1 MR. YOST:
Like I wrote in my opinion, I
2
think -- I'm not sitting here saying that he couldn't
3
have had a duty, under certain circumstances. I would
4
even probably go so far as to say if a guy is escorted
5
off the security floor, you could at least make the
6 argument he probably
knew the situation was not
7
mutually resolved. But I think
you have to at least
8
have, at least, some knowledge that the people above
9
you are not doing their jobs, and, therefore, you --
10
then maybe you're required to take some action.
11
Because I think, as a whole, all licensees are required
12
to make sure that the regulations are being followed,
13
and if you have actual knowledge that they're not being
14
followed, I think you certainly could be disciplined
15
for that. I don't think that
fits under these facts.
16
There's no evidence Mr. Mitchell had any knowledge. In
17
fact, he didn't know when Sergeant Baker approached him
18
and asked him if he knew these things hadn't been
19
reported, and he did not.
20 CHAIRMAN SMITH:
I am surprised this was
21
even filed. It seems to me that
he's so far out of the
22
chain of command and chain of notification.
23 MR. YOST:
Sergeant Baker was surprised it
24
was filed, too.
25 MS. NIKOLAISEN:
I move for approval of
Concannon & Jaeger
St. Louis, Missouri (314)
421-1000
Page 40
1
Resolution No. 02-048.
2 CHAIRMAN SMITH:
Do I have a second?
3 MR.
ADORJAN: Second.
4 CHAIRMAN SMITH:
Call the roll.
5 MS. FRANKS:
Commissioner Smith?
6 CHAIRMAN SMITH:
In favor.
7 MS. FRANKS:
Commissioner Nikolaisen?
8 MS. NIKOLAISEN:
In favor.
9 MS. FRANKS:
Commissioner Battle?
10 MS. BATTLE:
In favor.
11 MS. FRANKS:
Commissioner Adorjan?
12
MR. ADORJAN: In favor.
13 MS. FRANKS:
By your vote, you've adopted
14
Resolution No. 02-048.
15 MR. YOST:
Ms. Mallen's situation is a
16
little bit different, although my recommendation is the
17
same. Clearly, she does have a
duty to -- or she would
18
have a duty to report. She was
the slot supervisor at
19
the scene. However, the fact
that her direct
20
supervisor, the slot manager, interjected herself into
21
the situation and took control of it and made Ms.
22
Mallen go on to other duties -- again, I think it was a
23
reasonable action on the part of Ms. Mallen to assume
24
that her supervisor had performed the duty the way it
25
was supposed to be performed.
She didn't have any
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 41
1
knowledge that it hadn't been done; therefore, I'm
2
recommending that she not be disciplined either.
3 MS. NIKOLAISEN:
I move for approval of
4
Resolution No. 02-049.
5 MS.
BATTLE: I'll second.
6 CHAIRMAN SMITH:
My comment is, again, I'm
7
wondering if we shouldn't exercise a little better
8
discretion on the administrative end.
Cases like that,
9
it seems to me, are wasting everybody's time.
10 Call the roll.
11 MS. FRANKS:
Commissioner Smith?
12 CHAIRMAN SMITH:
In favor.
13 MS. FRANKS:
Commissioner Nikolaisen?
14 MS. NIKOLAISEN:
In favor.
15 MS. FRANKS:
Commissioner Battle?
16 MS. BATTLE:
In favor.
17 MS. FRANKS:
Commissioner Adorjan?
18 MR.
ADORJAN: In favor.
19 MS. FRANKS:
By your vote, you've adopted
20
Resolution No. 02-049.
21 MR. MULLALLY:
Mr. Chairman, before we get
22
to the next item on the agenda, I neglected in my
23
opening comments, this is the second month in a row
24
that we've been hosted by Saint Louis University. I
25
just want to mention on the record -- I doubt anyone
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 42
1
representing the University is here, other than one of
2
our Commissioners, but they are extraordinarily easy to
3 deal with and an
excellent host, and I would like to
4
acknowledge that.
5 CHAIRMAN SMITH:
It's a very good hearing
6
room, too. The facilities are
very nice.
7 MR. MULLALLY: Yes.
8 The next item on the agenda is the
9
Consideration of Relicensure of Certain Class A
10
Licensees. We have here today
Mark Twain Casino. I
11
believe Bob Thursby, the General Manager, is here, along
12
with Larry Seckington, and I also saw Mr. Grace.
13 MR. BOB THURSBY:
Good morning. We previously
14
submitted documentation in response to your request to
15
the following areas at the time, of suitability and
16
licensure, our employment policies and procedures, and
17
our community performance. I
would ask that be entered
18
into the record.
19 CHAIRMAN SMITH:
It will be part of the
20
record.
21 MR. THURSBY:
I wanted to give you a
22
little summary of what our plans are for the future,
23
for the 2002-2003 licensing period.
One of the most
24
important phases in the planning process is the
25
evaluation of our past performance.
We review our last
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 43
1
year's results and evaluate them to determine what we
2
did well and, more importantly, our shortcomings. We
3
will, naturally, try to do more in the areas where we
4
were proficient and re-address our shortcomings.
5 As noted in our presentation, we are about
6
10 percent below our projected revenues for the first
7
eight months of operation.
Without any experience to
8
guide our projections, we're generally happy with those
9
results. Over the next 12 months
we're projecting we
10
will make up most of that shortfall.
Capital
11
expenditures will range in the $125,000 area for the
12
next 12 months similar to our first 12-month budget.
13 CHAIRMAN SMITH:
What type of capital
14
improvements are you talking about?
15 MR. THURSBY:
Kitchen equipment,
16
replacement of things like hard count equipment. We
17
did have to add some jet-sort equipment. Maybe another
18
vehicle, that sort of thing.
19 The management company has hired two
20
different consultants to assess our compliance with all
21
human resource-related laws and regulations and all
22
OSHA and work-safety regulations. We're developing an
23
expanded training program for all employees, which will
24
include continued training for regulatory compliance,
25
the disassociated person's program, underage gaming,
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 44
1 and alcohol
awareness. This program will also
include
2
ongoing training in customer service skills and job
3
specific skills. All of these
training programs will
4
be implemented during the upcoming licensing period.
5
We will continue to seek minority and women-owned
6
businesses to provide products and services to our
7
casino. We will renew our
efforts in the area of
8
minority hiring and training.
We're also going to
9
continue to be involved in the community through
10
charitable donations and our employee volunteer
11
efforts. Grace Entertainment has
recently made changes
12
to the 401(K) program that will significantly benefit
13
all of our employees in the coming years.
14 I believe Mark Twain Casino has developed
15
a sound working relationship with the City of LaGrange,
16
and we'll make every effort to see that that
17
relationship continues to grow.
If I could answer any
18
questions that you might have --
19 CHAIRMAN SMITH:
So the city/county
20
relations still don't seem to be the best. Is there
21
anything you all can do to encourage the improvement of
22
that?
23 MR. THURSBY:
Well, this afternoon,
24
Mr. Grace and Mr. Schmitter, and Larry Seckington, our
25
attorney, will be traveling to LaGrange and meeting
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 45
1
with the City Council and Mayor Ludwig, who is here
2 with us today. Possibly we can resolve some of those
3
differences at that time.
4 CHAIRMAN SMITH:
It's like the problems
5
with the prosecuting attorney have disappeared, but the
6
problems with the sheriff's office and county still
7
seem to be festering.
8 The other question I had -- I noticed
9
somewhere in the report that there's some factory
10
closing in LaGrange. I wonder
what effect that may
11
have on your operations.
12 MR. THURSBY:
There is a foundry in
13
LaGrange. At one time, it
employed approximately 300
14
people. I believe a large number
of them have been
15
laid off. They are seeking a
buyer at this point. I
16
don't know that they have made much progress. Mayor
17
Harold Ludwig is with us today.
Possibly he can answer
18
that for you.
19 CHAIRMAN
SMITH: I'm curious. From your
20
point of view, from your financial situation, is that a
21
major factor or not?
22 MR. THURSBY:
Not to our revenue and to
23
our financial standing as a casino.
It certainly has a
24
large impact on the community.
We are concerned about
25
that.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 46
1 CHAIRMAN SMITH:
The other question I
2
had -- I noticed on your minority hiring you seem to
3
have done a good job of -- I don't know what the
4
relation is to sex, but you were having problems with
5
racial minorities. I don't know
what efforts you're
6
making to try and improve that.
7 MR. THURSBY:
We're at about, I believe it
8
is seven percent minorities, and Lewis County is 4.1
9
percent minority. One of the
problems we have is
10
there's no public transportation from the largest
11
metropolitan areas of, of course, Quincy, Illinois.
12
There's no public transportation to bring people to our
13
location. With an entry-level
position, that becomes a
14
problem.
15 CHAIRMAN SMITH:
I would think there would
16
be minority possibilities in the town the size of
17
Quincy. I was wondering if
you've given consideration
18
to providing transportation to acquire minority workers
19
there.
20 MR. THURSBY:
We can certainly take a look
21
at the economic implications.
22 CHAIRMAN SMITH:
Any other questions?
23 MR. ADORJAN:
I was more concerned -- I'm
24
on the same subject you were on.
The thing that caught
25
my eye was the cost to the casino, which is the high
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 47
1
turnover. I know you've done a
good job of getting it
2 down to about the 50
percent range. That was exactly
3
the same thought I had, not so much from the
4
minority-hiring point of view but reducing your own
5
costs by providing some transportation out of Quincy
6
because of the cost of training, cost of re-hiring.
7 MR. THURSBY:
There may be an offset there
8
in our costs.
9 MR. ADORJAN:
That's what I'm saying.
10 CHAIRMAN SMITH:
Any other questions?
11 MS. BATTLE:
I have one.
12 In the exit interview that you probably
13
have with the people that are leaving, do they cite
14
transportation as the reason they're leaving?
15 MR. THURSBY:
No. The transportation is
16
more of a problem -- it's just attracting them in the
17
first place. Generally, it's
weekend hours, that kind
18
of thing, is the reason people would leave us.
19 CHAIRMAN SMITH:
Any other questions?
20 Is there anyone else from your casino that
21
is going to appear and testify?
22 MR. THURSBY:
No, sir. Just the people
23
from the City of LaGrange are here.
24 CHAIRMAN SMITH:
All right. Fine. We'll
25
hear from them next. Is Mayor
Ludwig going to speak?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 48
1 MR. MULLALLY:
Yes, I believe the Mayor is
2
here.
3 MAYOR HAROLD LUDWIG: I thank you for the
4
opportunity to come before you.
I won't make a long
5
speech.
6 LaGrange is very happy to be in the
7
situation that we're in. We're
able to do things that
8
we never even imagined that we could do. As far as --
9
I heard you mention there was still a problem with the
10
county, and I am very sorry to hear that because we
11
have not been made aware of that.
12 CHAIRMAN SMITH:
Well, I based it on the
13
fact that you've complained that you've written letters
14
and I have not received responses and that sort of
15
thing.
16 MAYOR LUDWIG:
Very true.
17 CHAIRMAN
SMITH: It sounds to me like
18
there's still a problem there.
19 MAYOR LUDWIG:
Well, I will not tell you
20
it's not. I would say, if
there's a problem, it's on
21
the county's end of it. We have
-- I'm sure that
22
you're aware we donated a car.
When we told them that
23
we would give them a vehicle with all of the equipment
24
in it, after we had contacted them and told them that,
25
the car sat there for at least a week-and-a-half before
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 49
1
they ever came and picked it up.
We even got a hold of
2
them to find out if they did want it. They finally told
3
us yes, and they did come pick it up.
No letter
4
stating their gratitude or anything.
5 I'm also aware -- I'm sure you're aware
6
that we gave $25,000 to the county.
We never have, to
7
this date -- they received it in December. To this
8
date, we've never gotten a letter acknowledging that
9
they received it.
10 CHAIRMAN SMITH:
Was there some discussion
11
about the amount? How did you
arrive at $25,000?
12 MAYOR LUDWIG:
It was just a figure we
13
came up with at the time, stating that we would like
14
for them to give us a quarterly report of the cases
15
that came out of the casino, and then we would consider
16
further donations to them. To
this date, we haven't
17
even gotten a letter stating that they got the $25,000,
18
other than the cancelled check we got back. No report
19
of any cases or how the money was spent for the time
20
that they were supposed to send it.
21 I will say Mark Twain has been very good
22
to the City of LaGrange. They
are not only generating
23
money for the city, for us to do things, we have added
24
things -- I won't go into a -- big detail.
25 CHAIRMAN SMITH:
We have received a report
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 50
1
on that, yes.
2 MAYOR LUDWIG:
Yes, I think Kevin got a
3
report. Hopefully, you've got a
copy of it.
4 CHAIRMAN SMITH:
Yes, we did.
5 MAYOR LUDWIG:
We had started an
6
investment fund because we know there are capital
7
improvements that have to be made, and that is on the
8
agenda. Mark Twain has donated
to various charities in
9
the city. So I don't, as Mayor,
have anything bad to
10
say about them. They've been the
best thing that's
11
happened to LaGrange in years.
12 As far as the foundry -- I was talking to
13
a gentleman yesterday -- it is up for sale. There are
14
two or three places that are interested in buying it.
15
And it would have an impact on the city if it closes.
16
Right now there's 170 people working there. I think
17
they said there's, like, a $5 million payroll in that
18
170 people, so it would have an
impact on LaGrange.
19
However, as far as revenue, it doesn't generate that
20
much revenue for the city.
21 I'll be glad to answer any questions that
22
anybody would have.
23 CHAIRMAN
SMITH: It just seems to me
24
that -- certainly you've done a good job with the money
25
that you've received from Mark Twain so far. I'm
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 51
1
impressed with your projects. At
some point it's going
2
to be generating sufficient money, it seems to me, that
3
it might benefit both the county and city, you'll have
4
enough that perhaps you folks could get together to
5
arrive at some reasonable way to provide additional
6
money to the county.
7 MAYOR LUDWIG:
I'm sure we will. It has
8
never been a case where we haven't thought about that.
9 The only problem I think, myself, or any
10
of the other councilmen or anybody else has, is the
11
fact -- we're not wanting to get patted on the back for
12
this, but we would like to at least be let known that
13
they did receive what we sent them rather than just
14
hearing it through the grapevine.
15 CHAIRMAN SMITH:
Thank you, Mayor. Are
16
there any other questions? I
thank you, sir.
17 Is there anyone else to be appearing on
18
behalf of the casino?
19 MR. THURSBY:
No, sir.
20
CHAIRMAN SMITH: Kevin, do you want to
21
report for the administration?
22 MR. MULLALLY:
Mr. Chairman, this is the
23
point of the process where we provide the opportunity
24
for members of the public to offer any comments
25
regarding the relicensing application.
We have not
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 52
1 been contacted by anyone
asking to appear.
2 If not, then Sergeant George Hamilton will
3
present the investigative report for the staff.
4 SERGEANT GEORGE HAMILTON: Good morning.
5 CHAIRMAN SMITH:
Good morning.
6 MS. NIKOLAISEN:
Good morning.
7 SERGEANT HAMILTON:
Mr. Chairman and
8
Commissioners, an investigation was conducted by the
9
Jefferson City background team on the Mark Twain
10
Casino, L.L.C.
11 CHAIRMAN SMITH:
Why don't you introduce
12
the other members of your team, by the way, first.
13 SERGEANT HAMILTON:
I was going to do that
14
later on, but I'll do it now.
15 This is Ms. Irene Crawford. She is the
16
Regional Director of the Department of Natural
17
Resources, Northeast Regional Office, and Brenda
18
Bethel, an environmental engineer.
19 An investigation was conducted by the
20
Jefferson City background team on the Mark Twain
21
Casino, L.L.C. (hereinafter to be known as the Company)
22
for the purpose of relicensing their Class A riverboat
23
gaming license.
24 On January 30, 1995, the Company was
25
formed for the purpose of conducting gaming operations
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 53
1
in the State of Missouri. The
members of the Company
2
are Sauvage Gas Company and Cardinal Gaming, L.L.C.,
3
each of which owns 50 percent.
4 On November 8, 1999, the Company entered
5
into a management agreement with Grace Entertainment,
6
Incorporated, which is currently licensed as a business
7
entity key person.
8 On July 25, 2001, the Missouri Gaming
9
Commission, in accordance with Resolution No. 01-058,
10
granted the Company a Class A riverboat gaming license.
11 Credit and
criminal background checks were
12
conducted on the Company's Key and Level I personnel,
13
along with a financial analysis of the Company. No
14
discrepancies or concerns were discovered.
15
The City of LaGrange and
Lewis County
16
officials were contacted regarding concerns with the
17
casino operation and the provisions of Section 313.004,
18
RSMo., which relate to certain prohibited financial,
19 contractual, and
employment relationships between
20
officials, their family members, and the Company. No
21
concerns were discovered that would affect the casino's
22
suitability for licensure.
23
ABS Consulting,
Incorporated conducted the
24
superstructure, life-safety systems, and multi-barge
25
platform annual survey of the Mark Twain Casino on
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 54
1
June 6, 2002. No concerns were
discovered that
2
would affect the casino's suitability for licensure.
3 The Missouri Department of Natural
4
Resources was contacted in regards to concerns with the
5
casino operation. They expressed
environmental
6
concerns with the City of LaGrange's wastewater
7
treatment facility.
8
I'm going to
introduce Ms. Crawford. She
9
is here today to present a presentation on that matter.
10 MS. IRENE CRAWFORD:
Mr. Chairman and
11
Commissioners, good morning.
12 I am the
Regional Director for the
13
Northeast Region of the Department of Natural
14
Resources. With me today is
Brenda Bethel, an
15
environmental engineer in the Northeast Region.
16 Thank you for the opportunity to provide
17
information to you on the wastewater treatment facility
18
in LaGrange. As I am sure you
are aware, the Mark
19
Twain Casino is located in LaGrange.
I am here today
20
to brief you on our concerns with the wastewater
21
treatment facility in the City of LaGrange.
22 The LaGrange wastewater treatment facility
23
is over 30 years old. This
facility has exceeded the
24
life expectancy of this type of facility. Our office
25
has responsibility for enforcing the Clean Water Law of
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
55
1
Missouri. The department's
compliance sampling indicates
2
that the LaGrange treatment plant has been operating in
3
either non-compliance or slightly within the effluent
4
limits since the casino began operations.
5 In 2000, our office required the City of
6
LaGrange to perform an engineering study to evaluate
7
the additional wastewater flow anticipated by the
8
casino operations. In its report
dated January 2,
9
2001, the engineering firm hired by the City of
10
LaGrange stated that the wastewater treatment plant
11
would not be adequate with the additional flow from a
12
casino. Our office had hoped
that the City of LaGrange
13
wastewater facility needs would be addressed. Although
14
the casino began operating in July 2001, subsequent
15
actions to address this situation have not been
16
performed.
17 Our office is primarily responsible for
18
investigation of various environmental laws.
19
Violations can lead to enforcement actions such as
20
sewer extension bans, which can limit or halt
21
additional development and penalties.
However, we try
22
to assist and encourage facilities and citizens to
23
address compliance issues voluntarily and in a timely
24
manner to protect the environment more effectively and
25
to maintain compliance with the Clean Water Law.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 56
1 New
wastewater facilities take time to
2
plan, finance, and construct. We
are requesting that
3
the issues with the wastewater of the City of LaGrange
4
be addressed according to the following schedule: that
5 they immediately
begin to review alternatives and
6
select viable options for wastewater treatment
7
facility; by July 1,2003, they submit a
8
construction permit application with plans and
9
specifications, that will evaluate that within our
10
180-day review period and issue a determination in
11
January of 2004; and that they plan for completion of
12
construction of a new wastewater plant by June 30,
13
2005.
14 CHAIRMAN SMITH:
What year was it that
15
you're suggesting the plan be prepared?
This year or
16
next?
17 MS. CRAWFORD:
That they start and look at
18
alternatives now and that by next July 1st they submit
19
a construction permit application.
20 As you can see from the schedule, even
21
expedited projects would take a significant amount of
22
time to begin operating. A
schedule of compliance
23
would ensure that compliance would be achieved, and
24
enforcement actions by our agency would be limited.
25 I appreciate the opportunity to address
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 57
1
the Commission on this issue.
Thank you for your time
2
and interest. If you have any
questions, we certainly
3
would be willing to try to answer those.
4 CHAIRMAN SMITH:
One question I have --
5
have you notified the City of your concerns in writing
6
and given anything to them formerly?
7 MS.
CRAWFORD: Actually, the inspection
8
report that requested they prepare the engineering
9
report was directed to them. We
have subsequently
10
sampled several times. We met
with the City Council in
11
February 2001. Recently, we met
with the Mayor and
12
casino representatives, and we are going to the City
13
Council meeting, I believe, in a couple of weeks.
14 MS. NIKOLAISEN:
How often do you test the
15
water, and what would happen if, during a subsequent
16
test, that it failed? What
actions would be taken or
17
could be taken?
18 MS. CRAWFORD:
We can start -- you know,
19 when we find a
violation, we start enforcement action.
20
We can refer that to the enforcement section at
21
Jefferson City. They could
actually develop a
22
settlement agreement and require certain steps be
23 taken. There are normally penalties associated with
24
those violations. We can go that
route. We were just
25
hopeful that perhaps -- you know, we would much prefer
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 58
1
that people voluntarily comply with the law and they do
2
it in a more timely manner.
3 MS. NIKOLAISEN:
You're receiving
4
cooperation so far?
5 MS. CRAWFORD:
It's somewhat slow, but
6
yes, we are, I believe, obtaining cooperation
7
currently.
8 CHAIRMAN SMITH:
What kind of money are
9
you thinking about to make the improvements?
10 MS. CRAWFORD:
It depends on the
11
alternative they select. But a
mechanical plan -- it
12
would be, like, from one-and-a-half to two-and-a-half
13
million dollars.
14 MS. NIKOLAISEN:
Is their compliance a bit
15
slow because perhaps they don't agree, or don't feel
16
they have the resources?
17 MS. CRAWFORD:
I really can't speak for
18
the City. I would assume -- I'm
not sure that they
19
have really focused on this issue as much as perhaps --
20
you know, the City of LaGrange is very lucky to
21
actually have money, unlike many of the cities in our
22
region. They actually have some
money now to address
23
this. And, you know, I think
they have been focusing
24
on, perhaps, other needs.
25 CHAIRMAN SMITH:
Any other questions? Do
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 59
1
you have anyone else?
2 SERGEANT HAMILTON:
No, sir.
3 Let me say one other thing. No
4
discrepancies or concerns were found in the background
5
investigation to be of such a nature that would
6
preclude Mark Twain Casino, L.L.C. from relicensure.
7 CHAIRMAN SMITH:
I'm impressed at the
8
number of arrests. There's only
been 30 arrests in
9
that area. It sounds like crime
is not a problem.
10 MS. BATTLE:
It's really interesting.
11
Some of the concerns prior to the casino opening, you
12
seem to have dealt with those pretty well.
13 CHAIRMAN SMITH:
Thank you very much. Any
14
other personnel you want to present on this issue?
15 MR. MULLALLY:
No, Mr. Chairman.
16 At this point, the staff recommends that
17
Mark Twain Casino, L.L.C. be relicensed pursuant to
18
Resolution No. 02-050.
19 I will
say that we will continue to
20
monitor this wastewater treatment issue very, very
21
closely, and should we have any findings that the
22
visiting public is in any way putting their health at
23
risk, we would move immediately to take some kind of
24
action, depending on the facts, as appropriate.
25 CHAIRMAN SMITH:
Before we -- I'd like to
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 60
1
hear from the Mayor on this particular issue. It
2
wasn't mentioned when he was here.
I was wondering if
3
he would respond.
4 MAYOR LUDWIG:
Do you want me to come up
5
there?
6 CHAIRMAN SMITH:
Yes, please.
7 MAYOR LUDWIG:
I will be glad to respond
8
to that. I am well aware of the
situation. When they
9
did the feasibility study, when the casino was getting
10
ready to come in, Klinger & Associates was our
11
engineer. They told us that we
would be very close to
12
non-compliance. I'm sure that
all of you are aware of
13
a problem that we have in LaGrange.
I will not mention
14
any names or anything, but through some of the
15
investigations and that, it's been brought forward. I
16
am dealing with a new council, and this is the first
17
council that I have ever dealt with, since '93, that I
18
cannot convince them we have a problem.
I don't know
19
what the answer is, other than some strong words from
20
the Commission.
21 CHAIRMAN SMITH:
Maybe you should tell
22
them if it isn't solved and becomes a health hazard the
23
casino might be closed down.
24 MAYOR LUDWIG:
I have told them that.
25
There's a couple of them that think it ought to be put
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 61
1
up to a vote before the people.
I asked them what
2
would happen -- I said, "DNR is telling us this has
3
to be done. We don't have a
choice." I said, "You put
4
it up for a vote before the people, the people are
5
going to vote it down." We
came up with a plan that it
6
will not cost the citizens anything, just due to the
7
revenue from the casino. A lot
of small towns has to
8
raise their sewer rates anywhere from $30 to $40 a
9
month when they go to talking about spending this kind
10
of money. I just -- I said,
"What's going to happen if
11
they turn it down but DNR says we have to do it?
12
It's going to cost us $10,000 a day." I don't get a
13
reaction. So I'm very much aware
of it, have been for
14
quite some time.
15 Now, the only thing I can do is try to get
16
across to this council we have to do something, or we
17
lose the casino, or we pay a bunch of fines.
18 MS. NIKOLAISEN:
What have they said in
19
regard to the letter that was sent as to what must be
20
done over the given time frame?
21 MAYOR
LUDWIG: We -- this is really the
22
first time that a time frame has been brought up. We
23
have a council meeting tonight.
I have to be back in
24
LaGrange. And the people from
Mark Twain are going to
25
be there, and they are going to discuss this with the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 62
1
council tonight. We have another
meeting the 8th of
2
July, and DNR is going to be there.
So I'm trying to
3
get this brought to a head where we can get started. I
4
don't want to see it wait until July of next year. I
5
think we need to move now, but it's just we've got to
6
get them convinced this has to be done, and so far I
7
haven't been able to do it on my own.
8 CHAIRMAN SMITH:
I hope you will convey
9
the concern that the Commission has concerning the
10
future effect on the casino's operation.
11 MAYOR LUDWIG:
I definitely will. And I
12
believe that it would really do good if the Commission
13
would do it and -- send a letter to the City stating
14
their concern about this and what could possibly
15
happen.
16 MR. MULLALLY:
I think we can go one
17
better than that. I think you
can expect staff
18
representation at that City Council meeting in July.
19 MAYOR LUDWIG:
Okay.
20 MR. MULLALLY:
Are we having somebody this
21
afternoon? The July 8th meeting,
we will have
22 representation there as well.
23 MAYOR LUDWIG:
I would appreciate that.
24 CHAIRMAN SMITH:
Thank you.
25 I'd also like to hear again from the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 63
1
casino representative and ask him to make sure to let
2
us know what the situation is.
You didn't mention that
3 before. I'm curious as to what you were doing about
4
it.
5 MR. THURSBY:
The situation with the --
6 CHAIRMAN SMITH:
The wastewater.
7 MR. THURSBY:
I'm not familiar with the
8
legal agreement when the casino was opened. Perhaps
9
Mr. Seckington can better address that.
10 MR. LARRY SECKINGTON: Mr. Chairman,
11
Commissioners, Larry Seckington with Mark Twain Casino.
12 We were notified approximately a week ago
13
by Mr. Hamilton of the investigation.
The first thing
14
I did was contact Ms. Crawford and had a meeting with
15
her in Macon, along with the Mayor and wastewater
16
treatment facility personnel. So
that we just became
17
aware of what was going on at that point in time. We
18
are going to go to the meeting tonight.
There is no
19
agreement, as far as I can tell, between our casino and
20
the City concerning the wastewater treatment. I do
21
know they have contracts with other entities receiving
22
waste from other entities for processing, and we're
23 going to look into that
situation also because there's
24
a possible element that we can eliminate to keep
25
ourselves in compliance. We will
work with DNR and
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 64
1
with the City Council to make sure this matter gets
2
resolved.
3 Ms. Crawford was a very nice, calm lady
4
this morning, but she does have a very large club that
5
she can hold over the City's head in terms of
6
accountability and fines -- potential fines and that
7
kind of thing, and she indicated at the meeting she was
8 not afraid to use
that club. So I expect that she will
9
get some results.
10 CHAIRMAN SMITH:
It affects the casino's
11
operation.
12 MR. SECKINGTON:
Yes. That's why we're
13
going to go to the meeting tonight, to express our deep
14
concern to the council that they need to take action,
15
and they need to take it now.
16 CHAIRMAN SMITH:
Any other questions?
17 Thank you
very much.
18 MR. SECKINGTON:
Thank you.
19 CHAIRMAN SMITH:
What's your
20
recommendation, we should go ahead with relicensure
21
despite the concerns about the wastewater?
22 MR. MULLALLY:
Yes, Mr. Chairman. I don't
23
think it's anything, at this point, that affects the
24
suitability of the casino.
Certainly, we have no
25
indication from DNR, from the most recent tests, that
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 65
1
the public safety is in danger at this point.
2
CHAIRMAN SMITH: If it does become a
3
danger in the future, what steps can we take to remedy
4
it?
5 MR. MULLALLY:
Well, I think we have to
6
evaluate the facts as we receive them.
Ultimately, if
7
the water being provided to the casino poses a public
8
health risk to the patrons, we would seek to stop
9
patrons from entering.
10 MR. ADORJAN:
Isn't it the DNR's
11
responsibility for enforcement and to insure the safety
12
of those individuals? Obviously,
we're concerned also
13
with their safety. I'm not
trying to escape that. My
14
reaction would be, if there's any threat of that, there
15
ought to be enforcement action against the City, it
16
ought to be levied.
17 MR. MULLALLY:
Yes. I'm not intimately
18
familiar with DNR's enforcement powers.
I'm sure
19
they are reasonably extensive, if it gets into issues
20
of public health.
21 MR. ADORJAN:
This is a public health
22
issue not just for the casino but for the entire
23
community --
24
MR. MULLALLY: That's correct.
25 MR. ADORJAN:
-- so my reaction would be
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 66
1
we should maybe go on record with regard to our
2
concerns as well.
3 MR. MULLALLY:
Again, just for the record,
4
so this doesn't get expanded beyond what -- what the
5
facts will support, there is no evidence at this point
6
that there is any public health risk.
7 CHAIRMAN SMITH:
We understand that.
8
We're concerned that in the years -- in the future
9
there may be, from what we've heard.
10 MR. MULLALLY:
Yes.
11 CHAIRMAN SMITH:
We need to be on top of
12
it.
13 MR. MULLALLY:
As are we.
14 MR. ADORJAN:
I think the concern is
15
exactly that, which is, even if you start now, if I
16
understood the testimony, they're talking about 2005
17
before you can have a solution.
So you need to start
18
now.
19
CHAIRMAN SMITH: We have the resolution in
20
front of us for the renewal of a license. Do we have a
21
motion on that?
22 MR. ADORJAN:
I will move Resolution No.
23
02-050 be adopted.
24 MS. NIKOLAISEN:
I second.
25 CHAIRMAN SMITH:
Any further discussion?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
67
1
If not, call the roll.
2 MS. FRANKS:
Commissioner Smith?
3 CHAIRMAN SMITH:
In favor.
4 MS. FRANKS:
Commissioner Nikolaisen?
5 MS. NIKOLAISEN:
In favor.
6 MS. FRANKS:
Commissioner Battle?
7 MS. BATTLE:
In favor.
8 MS. FRANKS:
Commissioner Adorjan?
9 MR. ADORJAN:
In favor.
10 MS.
FRANKS: By your vote, you've adopted
11
Resolution No. 02-050.
12 MR. MULLALLY:
Mr. Chairman, the next item
13
on the agenda is Consideration of Licensure of Certain
14
Level I and Key Applicants.
Lieutenant Rick Wilhoit
15
will make the presentation.
16 LIEUTENANT RICK WILHOIT: Good morning,
17
Mr. Chairman, Commissioners.
18 The background teams conducted
19
investigations of seven Level I's that included, but
20
were not limited to, criminal, financial, and general
21
character inquiries.
22 The following individuals have been
23
investigated and found to be suitable for licensing by
24
the Commission: Lisa Anne
McMahan, MIS Supervisor of
25
Aztar Missouri Riverboat Gaming Company, L.L.C.; Andrew
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 68
1
Michael Goldstone, Operations Manager of IOC Kansas
2
City, Incorporated; Daniel Vincent Brinkman, Director
3
of Finance, President Riverboat Casino-Missouri, Inc.;
4
Richard Lee Huisinga, Casino Controller of the
5
President Riverboat Casino Missouri, Incorporated;
6
Robert Charles Johnson, Chief of Security, President
7
Riverboat Casino-Missouri, Incorporated; Stephen
8
Moyer, Financial Controller of President Riverboat
9
Casino-Missouri, Incorporated; and Raymond Louis
10
Wieczorek, Audit Manager of President Riverboat
11
Casino-Missouri, Incorporated.
12 CHAIRMAN SMITH:
I'm just curious. I
13
noticed Mr. Brinkman worked, at one time, for Davis
14
Gaming in Columbia. What kind of
operation is that?
15 LIEUTENANT WILHOIT:
Davis Gaming is the
16
predecessor for IOC Boonville.
17 CHAIRMAN SMITH:
I see. Any questions?
18 MR. ADORJAN:
Unusual turnover. Is that
19
an unusual level of turnover for officers at the
20
casino?
21 LIEUTENANT WILHOIT:
A lot of these have
22
been pending for up to a year or two.
23 MR. ADORJAN:
Okay.
24 CHAIRMAN SMITH:
Any further discussion or
25
questions? If not, do we have a
motion concerning
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 69
1
02-051?
2 MR.
ADORJAN: I move.
3 MS. NIKOLAISEN:
I second.
4 CHAIRMAN SMITH:
We approve the
5
relicensure of these license applications.
6 Call the roll.
7 MS.
FRANKS: Commissioner Smith?
8 CHAIRMAN SMITH:
In favor.
9 MS. FRANKS:
Commissioner Nikolaisen?
10 MS. NIKOLAISEN:
In favor.
11 MS. FRANKS:
Commissioner Battle?
12 MS. BATTLE:
In favor.
13 MS. FRANKS:
Commissioner Adorjan?
14 MR. ADORJAN:
In favor.
15 MS. FRANKS:
By your vote, you've adopted
16
Resolution No. 02-051.
17 MR. MULLALLY:
Mr. Chairman, the next item
18
on the agenda is the Consideration of Change in Control
19
of Certain Suppliers, and Mike Bushmann will make the
20
presentation for the staff.
21 MR. MIKE BUSHMANN:
Good morning, Mr. Chairman,
22
Commissioners.
23 Paul-Son Gaming Supplies, Inc. and the Bud
24
Jones Company are both licensed suppliers of gambling
25
equipment in Missouri. Their
respective parent
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 70
1
companies are Paul-Son Gaming Corporation and B&G,
2
which is a gaming supplier from France.
Resolution No.
3
02-052 proposes to grant approval for a plan of stock
4
exchange and purchase between these companies. After
5
the transaction occurs, B&G and Bud Jones will both be
6
wholly-owned subsidiaries of the Paul-Son parent
7
company, B&G shareholders will own the majority of the
8
Paul-Son parent, and the B&G management will assume
9
effective control of Paul-Son.
10 B&G was recently investigated by the
11
Commission in connection with its purchase of the Bud
12
Jones Company, and the investigators have found no
13 reason or concerns
that would prohibit this
14
transaction. The staff
recommends that the resolution
15
granting the change of control be approved.
16 CHAIRMAN SMITH:
Any questions? Do we
17
have a motion on this?
18 MS. BATTLE:
I move for approval of
19
Resolution No. 02-052.
20 CHAIRMAN SMITH:
Is there a second?
21 MS. NIKOLAISEN:
I second.
22 CHAIRMAN SMITH:
Call the roll.
23 MS. FRANKS:
Commissioner Smith?
24 CHAIRMAN SMITH:
In favor.
25 MS. FRANKS:
Commissioner Nikolaisen?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 71
1 MS. NIKOLAISEN:
In favor.
2 MS. FRANKS:
Commissioner Battle?
3 MS.
BATTLE: In favor.
4 MS. FRANKS:
Commissioner Adorjan?
5 MR. ADORJAN:
In favor.
6 MS. FRANKS:
By your vote, you've adopted
7
Resolution No. 02-052.
8 MR.
MULLALLY: Mr. Chairman, the next item
9
on the agenda is a Consideration of Amendment to Class
10
A License.
11 As I think you're aware, Ameristar St.
12
Charles is putting final touches on a $170 million
13
expansion to their facility which, in essence,
14
represents one brand new casino.
It's a somewhat
15
similar layout to what they have in Kansas City. We
16
expect that to be completed sometime in the middle of
17
July. This resolution would
grant the authority to the
18
Director to give them final opening authority.
19 Steve Johnson, our Deputy Director of
20
Enforcement, and his team, working with Captain
21
Bloomberg and the officers assigned from the Missouri
22
State Highway Patrol have been working diligently, many
23
long hours, to assure compliance with all regulations
24
to make sure that the facility meets our requirements.
25 Steve is available to give you a thumbnail
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 72
1
sketch of what we have been doing, and I am available
2
to answer any questions regarding the resolution.
3 CHAIRMAN SMITH:
Are there any questions
4
concerning the resolution? Are
there any comments you
5
want to make first, Steve?
6 MR. JOHNSON:
Very briefly.
7 CHAIRMAN SMITH:
All right. Go ahead.
8 MR. JOHNSON:
In terms of hours, we have
9
approximately 200-plus mid-level management hours that
10
we've already used in the evaluation of this project.
11
We've attended regular construction meetings with staff
12
from Ameristar throughout the construction phase.
13
These have narrowed in frequency from 30 now down to
14
two weeks. Todd Nelson, our slot
technician, has been
15
on the property for device evaluation and approval and
16
practically has lived there, I might add, for the last
17
60 days. We have attended
numerous conferences and
18
teleconferences ensuring compliance in this
19
construction process. In the old
facility, we've checked
20
the chips with a Kobertron device on 500-plus machines,
21
ticket-in, ticket-out devices, and we've coined and
22
ticket-tested these same devices.
This has required
23
the extensive use of overtime hours that Captain
24
Bloomberg and his people have made available to us
25
despite the staff shortages within the Patrol.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 73
1 On the new facility, when it's ready to
2
open, we have already chipped-tested
3
in excess of 2,500 devices, which, of
4
course, has again required numerous overtime
5
projects. We have Mr. Buschjost
there now with
6
employee processing. We're
looking at 300 to 500, if
7
not 800, applicants, depending on the success they
8
might enjoy in their hiring process.
9 The licensing phase and the investigatory
10
phase is ongoing as we speak.
11 We have, in the course of this,
12
encountered the normal expansion-related problems, one
13
of which is noteworthy, would be software problems.
14
With this many devices and the sophistication of the
15
new processes that are going in, it's conceivable, and
16
it has occurred, we've had software issues that have
17
developed, but they've been resolved in close
18
communication between the industry and our enforcement
19
people. It continues to go very
well, and I suspect
20
that, whatever their opening date is, that they'll be
21
able to meet that.
22 CHAIRMAN SMITH:
Any questions of either
23
Kevin or Mr. Johnson?
24 The only question I have, Kevin -- this is
25
a picky thing from a lawyer. The
provision under A
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 74
1
of your resolution says that you "should not commence
2
operation until the Director gives written
3
authorization for operations to begin." It concerns me
4
that there really are no standards there. It looks
5
like it gives you total discretion.
The last
6
resolution seems to say that you issue after compliance
7
of terms and conditions of the resolution. I think
8
maybe in the future they ought to -- perhaps the
9
wording might be better to say -- you're clarifying
10
exactly what the basis is for your approval or
11
disapproval.
12 MR. MULLALLY:
We'll ask the staff to take
13
a look at that, even though I like kind of being all
14
powerful.
15 CHAIRMAN SMITH:
I know you do. Our job
16
is to hold the reins on you.
17 Are there any other questions on this?
18 May we have a motion?
19 MS. NIKOLAISEN:
I move for approval of
20 Resolution No.
02-053.
21 MR. ADORJAN:
I second.
22 CHAIRMAN SMITH:
Call the roll.
23 MS. FRANKS:
Commissioner Smith?
24 CHAIRMAN SMITH:
In favor.
25 MS. FRANKS:
Commissioner Nikolaisen?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 75
1 MS. NIKOLAISEN: In favor.
2 MS. FRANKS:
Commissioner Battle?
3 MS. BATTLE:
In favor.
4 MS. FRANKS:
Commissioner Adorjan?
5 MR. ADORJAN:
In favor.
6 MS.
FRANKS: By your vote, you've adopted
7
Resolution No. 02-053.
8 MR. MULLALLY:
Mr. Chairman, the next two
9
items on the agenda involve Consideration of
10
Disciplinary Actions, and Mike Bushmann, our General
11
Counsel, will make the presentation for the staff.
12 MR. BUSHMANN:
There are two preliminary
13
orders this morning. As always,
they're not final and
14
only become final if the company fails to request a
15
hearing or if you approve the findings of the Hearing
16
Officer. The first case is
against Harrah's North Kansas
17
City, L.L.C. That's case No.
DC-02-175.
18 In March of
this year, a Commission agent
19
was assisting a Harrah's slot employee and noticed that
20
a slot machine was in service without an intact
21
evidence-tape seal on the machine's central processing
22
unit. When the Commission agent
investigated this
23
violation, he discovered that a Harrah's employee had
24
placed the slot machine in service on December 28,
25
2001, without having a Commission agent replace the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 76
1
seal. The seal is placed over
the circuit board and
2
the computer chips of the slot machine in order to
3
prevent tampering.
4 If the facts of this case sound familiar,
5
that's because in January of this year, you approved a
6
disciplinary order against Harrah's North Kansas City
7
for almost the exact same violations.
The fine in that
8
case was $10,000 per machine, for a total of $30,000.
9
Besides that disciplinary order, Harrah's has also been
10
issued nine other notices of violations for the same
11
type of violation over the last two years.
12 Because this type of violation seems to be
13
an ongoing problem with Harrah's, the staff recommends
14
that an increased fine of $15,000 be imposed.
15 CHAIRMAN SMITH:
Any questions?
16 This is per the Preliminary Order which
17
will go to the Hearing Commissioner, if there is an
18
appeal.
19
MS. NIKOLAISEN: I move for approval of
20
DC-02-175.
21 CHAIRMAN SMITH:
Second?
22 MS. BATTLE:
I second.
23 CHAIRMAN SMITH:
Call the roll.
24 MS.
FRANKS: Commissioner Smith?
25 CHAIRMAN SMITH:
In favor.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 77
1 MS. FRANKS:
Commissioner Nikolaisen?
2 MS. NIKOLAISEN:
In favor.
3 MS. FRANKS:
Commissioner Battle?
4 MS. BATTLE:
In favor.
5 MS. FRANKS:
Commissioner Adorjan?
6 MR. ADORJAN:
In favor.
7 MS. FRANKS:
By your vote, you've adopted
8
the Preliminary Order for Disciplinary Action
9
DC-02-175.
10 MR. BUSHMANN:
The next case is DC-02-176.
11
It's against Isle of Capri-Kansas City, Inc.
12 The facts of this case are quite simple.
13
A man and woman entered the Isle of Capri Casino
14
accompanied by their eight-year-old son. They obtained
15
player's cards at ticketing, and entered the main
16
entrance with their son right beside them in full view
17
of the company's security and ticketing employees.
18
After a few minutes, another company employee notified
19
a Commission agent that the boy was on the boat and was
20
watching his parents play the slot machine. The
21
Commission agent promptly removed them from the gaming
22
floor and released them.
23 The staff recommends that a fine be
24
imposed against the Isle of Capri-Kansas City in the
25
amount of $50,000.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 78
1 CHAIRMAN SMITH:
That's the most flagrant
2
minor case that I've heard.
3 MS. BATTLE:
I think so, too.
4 CHAIRMAN SMITH:
Go ahead.
5 MS. NIKOLAISEN:
I move for the adoption
6
of DC-02-176.
7 MS. BATTLE:
I second.
8 CHAIRMAN SMITH:
I move for the approval
9
for the Issue of Preliminary Order.
10 Call the roll.
11 MS. FRANKS:
Commissioner Smith?
12 CHAIRMAN SMITH:
In favor.
13 MS.
FRANKS: Commissioner Nikolaisen?
14 MS. NIKOLAISEN:
In favor.
15 MS. FRANKS:
Commissioner Battle?
16 MS. BATTLE:
In favor.
17 MS. FRANKS:
Commissioner Adorjan?
18 MR. ADORJAN:
In favor.
19 MS. FRANKS:
By your vote, you've adopted
20
the Preliminary Order for Disciplinary Action
21
DC-02-176.
22 MR. MULLALLY: Thanks, Mike.
23 Before we get to the next agenda item,
24
Mr. Chairman, I would like to introduce a member of the
25
staff. As you know, Ron Pleus
left the Commission as
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 79
1
Bingo Supervisor a few weeks back.
We went through a
2
process of a reorganization within the bingo unit.
3 Jane Bax has been a very
dedicated, loyal, very
4
knowledgable employee in the bingo unit since its
5
inception. She has been elevated
to the title of Bingo
6
Supervisor. She's here
today. I'd like Jane to stand
7
up and congratulate her on her promotion. It's very
8
well deserved.
9 MS. NIKOLAISEN:
Congratulations.
10 CHAIRMAN SMITH:
Yes, congratulations.
11
We'll be hearing from you, I suspect.
12 MS. BAX:
Some day.
13 MR. MULLALLY:
The next item is
14
Consideration of Settlement Agreement involving a bingo
15
licensee. And Joseph Kizito, our
staff attorney, will
16
make the presentation to the staff.
17 CHAIRMAN SMITH:
Good morning, Joseph.
18 MR. JOSEPH KIZITO:
Good morning, Mr. Chairman.
19
Good morning, Commissioners.
20
Before you is
Resolution No. 02-008-B. It
21
relates to a settlement agreement between Taney County
22
VFW Post 5168 and the Missouri Gaming Commission.
23 The facts leading to this agreement arose
24
out of an inspection that was conducted of the premises
25
of Taney County VFW on February 16, 2001 by agents of
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 80
1
the Commission. During that
inspection, the Commission
2
agents found 16 illegal gaming devices in the premises
3
of the Post.
4 The Commission's initial recommendation of
5
the discipline sought to be imposed in this case was the
6
revocation of the Post's bingo license.
In subsequent
7
negotiations to settle, a compromise was reached
8
resulting in this agreement with the following terms:
9
That the Post agrees to forfeit the machines and the
10
money contained in the machines; suspension of its
11
bingo license for six months, that is, one week out of
12
every month; and that the dates of the suspension will
13
be determined by the Commission; and, further, that the
14
Post pay a fine of $3,000 from funds other than bingo;
15
and that the Post be placed on probation for two years
16 with two
conditions: That they obey all laws,
and that
17
there are no further repeats.
Those are the terms for
18
consideration.
19 CHAIRMAN SMITH:
I know we have come to an
20
agreement on the thing. I guess
we need to decide
21
whether its something we can approve.
We need more
22
about the facts on it. Could you
explain that in any
23
further detail, as to exactly what they did? I noticed
24
there were six video machines on the premises. Was
25
there anything else?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 81
1
MR. KIZITO: Yes, Mr. Chairman.
2
Generally, from time to time, we conduct either an
3
announced or unannounced inspection of the premises of
4
various bingo licensees. On this
occasion, the
5
inspection was unannounced. And
shortly after the
6
agents arrived at the premises, in plain view they
7
saw six machines against the wall in the bingo hall.
8
They seized the machines, and disciplinary action
9
proceeded.
10 CHAIRMAN SMITH:
Any other questions?
11 MS. NIKOLAISEN:
I move for the adoption
12
of Resolution No. 02-008-B.
13 CHAIRMAN SMITH:
Second?
14
MR. ADORJAN: Second.
15 CHAIRMAN SMITH:
Seconded motion.
16 Angie, call the roll.
17 MS. FRANKS:
Commissioner Smith?
18 CHAIRMAN SMITH:
In favor.
19 MS. FRANKS:
Commissioner Nikolaisen?
20 MS. NIKOLAISEN:
In favor.
21 MS. FRANKS:
Commissioner Battle?
22 MS. BATTLE:
In favor.
23 MS.
FRANKS: Commissioner Adorjan?
24 MR. ADORJAN:
In favor.
25 MS. FRANKS:
By your vote, you've adopted
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 82
1
Resolution No. 02-008-B.
2 MR. MULLALLY:
Mr. Chairman, the next item
3
on the agenda is a presentation by the staff on the St.
4
Louis Market Analysis. Joining
me will be Deputy
5
Director Steve Johnson, Deputy Director of
6
Enforcement, our financial analyst, Jim Oberkirsch, and
7
our problem gambling program's administrator, Melissa
8
Stephens.
9 Mr. Chairman and Commissioners, our goal
10
today is to really present to you a snapshot of the St.
11
Louis market as it currently exists and present to you
12
a plan whereby the Commission can go forward and
13
evaluate whether or not it's wise, at this point in
14
time, to consider future expansion of that market
15
through additional casinos.
16 Einstein said that everything should be
17
made as simple as possible but not one bit simpler.
18
This was the goal for this presentation. I'm sure that
19
the evaluations upon the conclusion will vary, but it's
20
certainly our -- one of our goals was to take a great
21
deal of information and consolidate it down to an
22
understandable format.
23 We're going to depart a little bit from
24
what we have traditionally done.
One of the things
25 that has not been
done in past considerations for
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 83
1
expansion have been to talk extensively about the
2
negative consequences of expansion.
Part of the
3
rationale for that was because it was a fairly clear
4
mandate from the voters, when riverboat gambling was
5
adopted by 63 percent in 1992, followed by some legal
6
action in the Supreme Court, that was followed by two
7
actions by the state legislature whereby they -- by
8
two-thirds majority, using an emergency clause, they
9
enabled the gambling statute. So
there was a pretty
10
clear mandate, both from the people and the
11
legislature, that this was an activity they wanted to
12
see put in motion. I think most
of the initial
13
licensing situations had full support of the local
14
communities and implemented a statute that had broad
15
support.
16 However, we're now at a stage where we
17
have covered virtually most parts of the state that
18
have gambling available to them because they're located
19
near the Missouri or Mississippi rivers, and I think
20
it's now appropriate to have a little more thorough
21
discussion about the negative consequences of adding
22
additional capacity.
23 We will also talk about the benefits of
24
expansion, then talk to you about some identified
25
options. We certainly aren't
claiming that we have
Concannon & Jaeger
St. Louis, Missouri (314)
421-1000
Page 84
1
identified all of the options, but after the staff
2
review, these are those that we see at this point,
3
that can be discussed during the public hearing process
4
that inevitably will follow.
5 Finally, a staff recommendation and
6
recommending procedures for how to go forward.
7 The
negative consequences of expansion
8
involve a decrease in tax revenue for existing
9
home-dock municipalities.
Anytime that you introduce
10
new capacity into the gaming market, at least part of
11
that -- the new dollars coming into that facility have
12
got to come from somewhere.
Certainly, some of them
13
will come from Illinois. Some of
them will be new
14
gaming visits, not necessarily new gaming customers,
15
but certainly new gaming visits, and some of them,
16
inevitably, will come from existing casinos, which will
17
cost not only the casino operator some money but the
18
existing home-dock communities as well.
19 Potential negative impact to the local
20
community, we'll discuss that in a little more detail,
21
negative impact to local businesses and effects on
22
problem gambling, and, finally -- and there's a
23
question mark by this one -- and Steve Johnson will
24
discuss this in some detail, as to whether or not
25
there's an increase in criminal activity. We included it
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 85
1
under the heading of Negative Consequences of Expansion
2
because it's something that is often cited by opponents
3
of gambling expansion. I'm not
necessarily giving
4
credence to that argument, but certainly I think it's a
5
point worthy of discussion.
6 CHAIRMAN SMITH:
Our experience has been
7
there has not been an increase in criminal activity
8
because of the boats.
9 MR. MULLALLY:
Yes, I believe that's true.
10 If you can excuse me just a second. We
11
had to alter the background of the slides because of
12
the room, and we missed one. Jim
Oberkirsch can
13
address this topic for us.
14 MR. JIM OBERKIRSCH:
We took a shot at
15
estimating the loss in gaming taxes and admission fees
16
to the municipalities which currently have a boat in
17
the St. Louis market. That would
be on the Missouri
18
side of the St. Louis market.
19 As Kevin mentioned, a new casino would
20
generate revenue from two sources; diversion from
21
existing casinos would reduce the tax base for those
22
municipalities, and a new market, or tapping into
23
latent demand.
24 Anyway, you
can see -- this first column
25
represents the estimated tax base for St. Louis City,
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 86
1
Maryland Heights, and St. Charles.
We've kind of
2
bracketed what their loss would be.
This would assume
3
a boat in the suburban south.
And you can see that we
4
estimate the City of St. Louis would lose between $1.3
5
and $1.6 million; Maryland Heights, $2.1 to $2.6
6
million; and St. Charles, $.9 million to $1.1 million.
7
And on a percentage basis, you can see that it's in the
8
double-digit range. This is,
obviously, a real
9
concern. These cities, I'm
certain, are probably
10
budgeted to their entire tax revenue base. We
11
definitely want to highlight this concern for you.
12 MR. MULLALLY:
And I should point out that
13
we lost the -- you'll notice, by the City of St. Louis,
14
there's an asterisk. When I
clarified the background,
15
we lost the meaning of that. The
purpose of the
16
asterisk is to show that if expansion is achieved in
17
the City of St. Louis, obviously, they would not see a
18
revenue reduction.
19 CHAIRMAN SMITH:
You're talking about the
20
expansion of the present location, or are you talking
21
about something else?
22 MR. MULLALLY:
Well, the -- I don't know
23
whether I'm radioactive or whether it's --
24 MR. ADORJAN:
Why don't you move your
25
laptop.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 87
1 CHAIRMAN SMITH:
The world is wonderful
2
when it works.
3 MR. MULLALLY:
An expansion in the City of
4
St. Louis would include a location other than the
5
Admiral. Now, that certainly
could be a proposal by
6
the President Casinos or some other development. I
7
think the Mayor of St. Louis outlined some of those
8
issues last month.
9 MR. ADORJAN:
Could I ask one question?
10
At the beginning of the presentation, you said that
11
this was a St. Louis market evaluation.
Have we
12
defined yet what the St. Louis market is? Your sample
13
is of urban south. Does that go
to Kimmswick? Does
14
that go beyond Kimmswick?
15
MR. OBERKIRSCH: We're defining the
16
greater St. Louis market as what Rand McNally defines
17
as the St. Louis metropolitan area, which
18
includes St. Louis County and five surrounding counties
19
on the Missouri side, and three counties on the
20
Illinois side.
21 MR. ADORJAN:
All right.
22 CHAIRMAN SMITH:
What are the five on the
23
Missouri side?
24 MR. OBERKIRSCH:
The five on the Missouri
25
side would be Lincoln County to the north, Warren
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 88
1 County to the west, Franklin
County to the southwest,
2
and Jefferson County to the south.
And Illinois would
3
be Monroe County to the south, St. Clair County, and
4
Madison County. I believe Jersey
County, now that I
5
think about it.
6 CHAIRMAN SMITH:
In addition to St.
7
Charles and St. Louis County?
8 MR. OBERKIRSCH:
Right. It's quite handy
9
because not only does Rand McNally define this
10
metropolitan area, but they provide statistics for the
11
different counties in this metropolitan area.
12 MR. MULLALLY:
For the purposes of the
13
analysis, that's the area that we used because that's
14
where we have existing data. I
think, for the purposes
15
of going forward with considering whether or not to
16
expand, you could throw St. Genevieve into that.
17
There's a proposal for a new casino down there. So for
18
going-forward purposes, I think you could look towards
19
St. Genevieve as something that we need to deal with,
20
but there's no data, so it's not really relevant to
21
talk about it in terms of the current status of the
22
market.
23 MR. OBERKIRSCH:
St. Genevieve County
24
borders Jefferson County to the immediate south, so
25
it's right there.
Concannon & Jaeger St.
Louis, Missouri (314) 421-1000
Page 89
1 MR. MULLALLY:
Yeah.
2 The potential negative impact on the local
3 community would include
traffic. I think you're going
4
to see this with almost any major large commercial
5
development. What we've seen
from past experience is
6
that you don't have spurts of traffic involved with
7
casino development. It's not
like a baseball stadium
8
or football stadium where you have 40 to 80,000 people
9
coming and going at the same time.
It's a
10
gradual-traffic issue but is certainly something we
11
need to be careful and take a look at, and the local
12
community needs to be comfortable with prior to
13
bringing a project to the Commission.
14 Noise pollution is something that's often
15
cited. In our past experience,
we have not had a lot
16
of complaints or issues involving noise pollution. The
17
exterior casino is not a particularly noisy
18
environment, despite what's going on inside.
19 Light pollution is something that you have
20
to be concerned about. I don't
think you can plop one
21
of those developments down just anywhere. For
22
instance, highly densely-populated residential areas,
23
other, you know, areas where you might have a lot of
24
green space, or parks, or things of that nature, where
25
you may not want to clog up that atmosphere with the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 90
1
presence of a casino.
2 And there are potential environmental
3
consequences that need to be evaluated.
I think we saw
4
a good example of that with the issues involving the
5
renewal of the LaGrange casino.
All of these are
6
things that wouldn't necessarily prohibit a casino but
7
need to be evaluated as to where you place it.
8 There's also some negative impacts for
9
local businesses. What we've
seen in the past is there
10
is a tremendous increase in competition for
11
entertainment spending, primarily food and beverage.
12
Our experience has shown us that, generally, the strong
13
survive. We have not seen, in
our experience, a lot of
14
good, high quality, well-operated restaurants go out of
15 business as a result
of casinos, but the marginal
16
players sometimes suffer.
Oftentimes they're replaced
17
by other, better-performing restaurants. So it isn't
18
necessarily that you see a decline in the number of
19
total restaurants in the region or the area immediately
20
around the casino, but some of the weaker-on-the-vine
21
fall by the wayside only to be replaced by newer
22
operations.
23 The biggest
factor that we hear about,
24
particularly from restaurants, is the increase in
25
competition for workers. Casinos
generally have more
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 91
1
benefits than most service-industry employers. They
2
generally -- as a general rule, they will offer a
3
401(K), a -- medical, and sometimes dental and other
4
benefits that typically aren't offered to
5
service-industry employees, and I think some of the
6
other industries feel the pinch from that. Also, the
7
cost of labor, not only through benefits but also
8
wages, is sometimes increased. I
think you can put
9
this in the category of both a negative impact of
10
expansion and a positive impact of expansion, depending
11
on what your perspective is. If
you're the small
12
business owner that now has to pay $2.00 an hour more
13
for certain employees, plus offer a benefit package
14
that you hadn't previously had to do to attract quality
15
workers, you probably think this is a horrible thing.
16
If you're the guy that has health insurance for the
17
first time in his life, you're probably thinking it's
18
pretty good.
19 MS. NIKOLAISEN:
Kevin, one question, I
20
guess, to a point. One of the
things on local
21
businesses and especially restaurants.
When the
22
casinos use their food as a loss-leader, this is St.
23
Louis, people are price sensitive, quality does not
24
lead, price leads. You give a
steak for whatever,
25
$6.00, and the guy out there can't give it for that due
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 92
1
to his costs, it makes a difference; hence, that
2
quality. It's just an
issue. So that's a point.
3 The other one is a question because it may
4
be addressed somewhere later. We
talk about impact on
5
the local community and business, but isn't there also
6
an impact, relative to the community and the state, in
7
the transfer of tax dollars?
Take sales taxes,
8 potentially, from other entertainment venues;
9
restaurants, movie theaters, whatever else is out
10
there. And we're just moving it
to the state via the
11
casino, and we're not generating increased taxes.
12 MR. MULLALLY:
The issue there is the Big
13
Kahuna tax that's on the gaming.
When I go to a movie
14
theater, I pay sales tax on my $7.00 ticket, or
15
whatever it costs, and my popcorn.
When I go to a
16 casino -- you pay sales tax
on the retail items that
17
you buy, but there's also a 20 percent gross tax that
18
other businesses don't pay. So I
think there's your
19
differential in tax base. Yeah,
with your normal
20
underlying sales taxes, there is some shift. It's not
21
what we know -- from the Leven Study and from the
22
observations Jim has made, there's not entirely 100
23
percent transfer. There is some
new money coming into
24
these operations. There are
people that are doing this
25
in addition to the other entertainment things that they
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 93
1
do.
2 MS. NIKOLAISEN:
Is that quantifiable at
3
all within a range? I know
that's not an exact science
4
and -- I do understand that.
5 MR.
MULLALLY: Yeah. Jim took a look at
6
it with the available sales-tax data pursuant to your
7
request. I won't put words in
his mouth. I'll let Jim
8
talk about it.
9 MR.
OBERKIRSCH: We'll certainly provide
10
the data that we acquired on sales tax.
We didn't see
11
any real strong correlations with regard to boat
12
openings and a drop in sales tax, but we definitely
13
saw, in the latter section of the time period, the
14
recession that came to the area.
Why don't I provide
15
you with those graphs, and you can see if you can see
16
anything in them.
17 MS. NIKOLAISEN:
Okay. Thanks.
18 MR. MULLALLY:
I think you also make a
19
very important point about loss-leaders. That's one of
20
the reasons why we have this issue identified. It's
21
something that we really need to carefully analyze as
22
part of the expansion process because, to date, with
23
the competitiveness of -- even though the St. Louis
24
market has been reasonably competitive, we haven't
25
really seen a lot of that.
You're in this media
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 94
1
market. You don't see a lot of
$6.00 22-ounce T-bones
2
advertised.
3 MS. NIKOLAISEN:
It has declined from the
4
beginning. It would probably
start up if somebody else
5
came in again.
6 MR. MULLALLY:
Yeah. I think that's one
7
of the things we have to weigh.
8 MS. BATTLE:
Kevin, I know sometimes -- I
9
was talking to a teacher in Boonville over the weekend,
10
and what -- you know, they're very positive there about
11
what it has done to the community.
Of course, people
12
are moving there, and, you know, schools are larger,
13
schools are improved. They see
it so much from the
14
plus side. And some of the restaurants,
as you said,
15
the good ones, continue to thrive but -- they have more
16
-- they have more business. So
it's kind of hard to
17
kind of focus in on exactly what we're talking about.
18 MR. MULLALLY:
Sure. I think that also is
19
a very important point.
20 One of the things that I've noticed over
21
the years, and I've been here almost since the
22
beginning, is that, when you put the first casino in a
23
community, whenever we've gone through that licensing
24
process, almost no one -- there are very few -- we've
25
had very little testimony in opposition to the first
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 95
1
one because the economic benefits -- when you do the
2
cost benefit analysis -- and Melissa is going to talk a
3
little bit about problem gambling.
That is one of the
4
things you're going to have whenever you introduce new
5
gambling into a community. It's
something that the
6
community needs to accept as a consequence of its
7
actions. But we very rarely
heard very vocal testimony
8
against the first casino going in.
9 Certainly, in LaGrange, we heard nothing
10
but support.
11 In Boonville, I don't think we heard -- if
12
we had any detractors, it was very small.
13 The same thing the first time we went into
14
Kansas City as well as the first time we went into St.
15
Louis. There was some in St.
Louis, but it was very
16
small.
17 What we're talking about now is -- almost
18
everybody -- everybody in St. Louis, I think Jim will
19
tell you, has access to gambling.
Melissa will tell
20
you that. Everybody in St. Louis
who wants to gamble
21
can gamble. So what we're
talking about now is whether
22
we're going to add more capacity, make it a little more
23
convenient, and do something to the competitive market
24
that may adjust things like $6.00 T-bones and
25
promotional costs and enticements, and those types of
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 96
1
things. Those are the things
that you have to weigh.
2
It all depends on where you go and how you go there,
3
and that's why we're identifying a lot of these issues.
4 MS. NIKOLAISEN:
And each market is
5
different. St. Louis and Kansas
City do not see the
6
school dollars benefit that out-state Missouri does.
7 MR. MULLALLY:
That's correct.
8
Out-of-state Missouri sees the school dollar benefits
9
of the St. Louis and Kansas City gambling for the most
10
part.
11 I think all of you are aware, for those in
12
the audience that aren't, when the legislature wrote
13
Senate Bill 380 in 1995 that recalculated the state
14
distribution of education dollars, frankly, I was in
15
fear of a court order that was going to order huge tax
16
increases. But they needed some
way to raise up the
17
financing levels of some of the poorer rural school
18
districts without crippling some of the wealthier urban
19
districts. What they did is they
held them harmless.
20
They said, "Okay, you're not going to receive any less
21
than you're receiving right now but you're going to be,
22
basically, frozen." So that
was when the gambling
23
money was also moved over to the foundation formula.
24
So almost all of that money has gone to places other
25
than the urban areas that tend to have more, the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 97
1
wealthier school districts.
2 At this point, I'm going to ask Melissa to
3
address some of the issues related to problem gambling
4
as they relate to expansion.
5 MS. MELISSA STEPHENS: I've been given the
6
somewhat unenviable task of reporting on the projected
7
social effects of problem gambling with an increase of
8
expansion. And I say "unenviable"
because, unlike my
9
colleague, Jim, the facts are a lot more tenuous and
10
ambiguous in the field of problem gambling.
11 There have been a number of attempts to
12
quantify these social costs by some very noteworthy
13
individuals and agencies, including the Government
14
Accounting Office, the National Gambling Impact Study
15
Commission, the National Opinion Research Center, and
16
the National Research Council, as well as a number of
17
universities and other research specialists. However,
18
these researchers have generally noted that there is a
19
great difficulty in measuring the social effects of
20 problem gambling
relative to an expansion in gambling.
21
The reason for this, they note, some of the more
22
noteworthy ones include the limited amount of quality
23
data that is currently available regarding the social
24
effects of gambling, the complexity of determining a
25
cause-and-effect relationship between gambling and
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 98
1
individual social problems with regard to ruling out
2
all of the potential variables that may also be
3
involved in the analysis, and because it is difficult,
4
again, to isolate gambling from other factors that may
5
be a contributing factor to an increase in these social
6
problems.
7 So with that in mind, the National Opinion
8
Research Center, or the NORC, that is based at the
9
University of Chicago, has reported a 1998 annual
10
estimate of the economic costs related to problem and
11
pathological gambling of $5 billion in its report to
12
the National Gambling Impact Study Commission. It did
13
counter that this is a comparison to the 1995 estimated
14
costs for drug abuse of $110 billion and, for alcohol
15
abuse, of $166.5 billion. Again,
this research is in
16
its infancy. And they did note
that these are based on
17
a limited number of tangible social costs and
18
therefore, these must be taken as a minimum.
19 Based on this analysis, the NORC further
20
estimated that the average annual cost per gambler, per
21
pathological gambler, per year would be $1,200 and per
22
problem gambler to be $715.
23 Now, the distinction here, just to kind of
24
recap for those that may not be as familiar with the
25
distinctions between pathological and problem
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 99
1 gambling --
pathological gamblers are those that meet
2
the diagnostic criteria set forth by the American
3
Psychiatric Association. They
refer to problem
4
gamblers as those that have problems from their
5 gambling, either
social, vocational, financial, or
6
types of problems with their gambling behavior, but
7
they do not meet the threshold to diagnose them as a
8
pathological gambler.
9 The National Research Council has recorded
10
prevalence rates for lifetime, an individual that
11
experiences or has been diagnosed as a pathological
12
gambler or meets the criteria at some point during
13
their life, to be 1.5 percent for adults for
14
pathological gambling and 3.9 percent for problem
15
gambling. Within the past year,
prevalence rates
16
dropped to 0.9 percent for pathological gambling and 2
17
percent for problem gambling.
18 As you are probably aware, pathological
19
gambling is a progressive disease.
Last week, in
20
Kansas City, I had the opportunity to see a very good
21
practical depiction of this continuum that we refer to
22
as the disease of pathological gambling, that was
23
presented by Dr. Ladouceur. It
is -- up here you can
24
see -- the blue now is actually low-risk gamblers, or
25
those that are non-gamblers.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
100
1 The green area here are those that
2
represent moderate risk. Yellow
is high risk. And red
3
is pathological gamblers. He
called it problem
4
gamblers. What he was referring
to here were to the
5
pathological gamblers or those that are right at the
6 threshold.
7 This is the key.
On the next slide it's
8
actually what you'd see it appear like in the general
9
population. Again, these are the
non-gamblers, or
10
those that gamble responsibly.
11 What he noted is that we want to focus our
12
efforts on these dark green and yellow because these
13
are the individuals where outreach and education can
14
make an impact. Red are those that
are already at the
15
threshold or are definitely pathological gamblers and
16
need to experience treatment, or they've had a problem
17
with pathological gambling that they are currently in
18
recovery for.
19 So based on this, what we do know is that
20
the predisposition of individuals within the community
21
to develop a problem with pathological gambling is
22
innate. It is something that is
not influenced by the
23
increase in opportunity of gambling in the area because
24
this is something that is part of their makeup, their
25
chemical and biological makeup.
However, the increased
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
101
1
availability of gambling opportunities, whether legal
2
or illegal, allows them greater access to feed this
3 potential
addiction, and therefore, they can move
4
through the stages of the disease more quickly.
5 So although an additional casino in the
6
St. Louis area will not increase the number of people
7
that may be susceptible to developing this disease, it
8
could increase the number of people that we see that
9
are currently exhibiting the symptoms of the disease
10
and that are currently needing assistance and treatment
11
for that.
12 So what we can do, being aware of this, if
13
we do move forward with expansion -- or if it is your
14
decision to move forward with expansion -- you can
15
minimize these social costs by engaging in an
16
aggressive community education outreach effort in the
17
area, and my recommendation would be that these efforts
18
should begin prior to the construction of the project,
19
they should increase and intensify immediately
20
surrounding the opening of the project, both before and
21
afterwards, and of course, they should continue to
22
some degree after the project is opened, and, also, we
23
would need to optimize the available treatment
24
resources available in the community.
25 MR. MULLALLY:
Thanks, Melissa.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
102
1 MS. NIKOLAISEN:
I'd like to make a
2
comment on that. I think this
Commission -- Missouri
3
Gaming Commission and the staff does a phenomenal job
4
on this type of thing. And we
are very concerned about
5
it. And would just like to say
thank you and
6
congratulations because I know we have received
7
national recognition for it as well; although, one
8
thing I would like to add, it's -- I think it adds to
9
it. You guys have heard this
before. It's how I
10
think. The problem of overweight
and obesity costs
11
more than everything you have listed in here combined.
12
Now the government is talking about putting a sales tax
13
on fast foods, or snack foods, or something to get us
14
not to do that. Being the person
that I am, it's like,
15
"When are they going to stay out of our lives and make
16
us personally responsible for our behavior?" But
17
before somebody jumps on these figures, overweight
18
outdoes alcoholism, drug addiction, and gambling. It
19 is significantly
greater. So it's just a point.
20 MR. MULLALLY:
Thanks.
21 And, you're right, Melissa does a
22
phenomenal job. We're very lucky
to have her.
23 I should, again, note -- I think we've
24
said this in other forums -- we are one of the very
25
few, if not the only Gaming Commission in the United
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 103
1
States that has somebody who full-time, everyday, is
2
an advocate for problem gamblers.
And she really,
3
really does us credit.
4 We just got
back a couple of weeks ago
5
from the annual meeting of the National Council on
6
Problem Gambling, and everybody is jealous of Missouri.
7
And it makes me, and should make you, very proud.
8
MS. NIKOLAISEN: We don't only talk the
9
talk, we walk the talk. So I
think that's great.
10 MR. MULLALLY:
Another important issue
11
that's frequently mentioned, frequently associated with
12
the expansion of casinos is the issue of whether it
13
results in an increase in criminal activity. We're
14
lucky to have a great deal of resources to be able to
15
examine that issue here, not the least of which is our
16
Deputy Director, Steve Johnson, who has more than 30
17
years of police experience and, I think, is about as
18
good as an authority on this subject as we could find.
19 MR. JOHNSON:
When we're talking about an
20
increase in criminal activity, Chairman Smith is right
21
on point. There's been very
little correlation between
22
casinos and an increase in criminal activity or crime
23
activity in an area surrounding a casino, at least
24
documented. As a matter of fact,
when you have an
25
influx of people, when you increase numbers of people,
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 104
1
you're going to detect more crime.
People are involved
2
in criminal activity, certain portion of them are, and
3
we're going to detect them. When
you put them in an
4
environment where police officers see their
5
identification and them on a daily basis, in a variety
6
of circumstances, whether it be jackpot verifications,
7
ID issues at the gates, false ID issues, etcetera --
8
when you put policemen in proximity to people, then
9
you're going to detect problems.
It's usually warrants
10
or issues that have nothing to do with the casino, yet
11
are reported in the casino context, which would lead
12
you to believe there may be some increase of some crime
13
element associated with it.
14 As a matter of fact, the FBI just released
15
their UCR index. If I heard
correctly on the radio.
16
And if my verification is correct this morning just
17
prior to this meeting, there has been a 2 percent
18
increase in crime activity -- index activity, reported
19
activity this last year. For the
first time in several
20
years, the homicide rate went up 3 percent. Certainly
21
we don't have that to deal with.
But that's an
22
economic issue, a social-economic issue, at best, and
23 certainly not related
to casinos.
24 Experience has shown that criminal
25
activity in and around property is minor in nature. I
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 105
1
don't -- Kevin, I don't know if you have the slide.
2 Here we go.
This is a quote from David
3
Giacopassi. He is a professor at
the University of
4
Memphis. It really goes to the
point. "Despite an
5
impressive number of studies that conclude that, when
6
the increase in visitor population is taken into
7
account, casinos have only a weak or a non-existent
8
relationship to increases in the crime rate, the view
9
persists that casinos cause crime." He cites a number
10
of studies, Albanese, Curran and Scarpitti, Miller,
11
and Schwartz, the National Gambling Impact Study
12
Commission in '99. Certainly
Professor Giacopassi did
13
a Nichols Study in 2000. What I
can report to you is
14
there has not been a documented relationship of any
15
dramatic increase in criminal activity in and around
16
casinos as a result of their proximity to any given
17
neighborhood in this country.
18 Once again, it's unknown how much criminal
19
activity is generated away from the casino as a result
20
of gambling, but that is a guess at best. It's very
21
difficult to tie that to the casino itself primarily
22
because, as Melissa has pointed out, there are a variety
23
of reporting formats that various jurisdictions use.
24 I would conclude my remarks by saying what
25
Giacopassi has said in a letter to Captain Bloomberg
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
106
1
recently is, "What we have concluded" -- and I'm
2
quoting -- "was that crimes in the casinos in Missouri
3
were only a small percentage of the crime in casinos
4
and casino property in Atlantic City," where he made
5
his comparison. Even in Atlantic
City, it was very
6
difficult to make the reach from the casino to the
7
crime rate.
8 The bottom
line is this is virtually a
9
non-issue for us in considering this expansion of
10
business. I'd be happy to
entertain any questions you
11
might have.
12 CHAIRMAN SMITH:
Are there any questions
13
on this issue? Thank you.
14 MR. MULLALLY:
Continuing with the
15
framework of our cost benefit analysis.
16 Some of the benefits of expansion that we
17
have identified would be the obvious increase in tax
18
revenue, capital investment, the jobs, and economic
19
expansion created by additional casinos, an increase in
20
product quality, pricing, and convenience that is
21
generally associated with competition, and the
22
preemption of potential expansion in neighboring
23
jurisdictions. In other words,
if we don't do this,
24
somebody else might.
25 MS.
NIKOLAISEN: Kevin, just along those
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
107
1
lines, have we heard of anything?
Is there anything
2
out there other than rumor?
3 MR. MULLALLY:
Rumors in this industry are
4
a dime a dozen. Sometimes, if
you don't hear one, by
5
noon people decide they should create one. You hear
6
things all the time. If you
recall, the last issue in
7
Illinois -- or several of the last legislative issues
8
happened very, very quickly. The
Illinois legislature
9
has shown time and time again that they can react very
10
quickly. When they went to
dockside, for instance, and
11
approved the new casino in the Chicago metropolitan
12
area, there was very little coverage that we received.
13
But that happened very, very quickly without a lot of
14
advanced notice. It wasn't like
they were going to
15
say, "We're going to do this over two or three years."
16
It happened within a matter of weeks.
17 Before I turn this over to Jim to talk a
18
little bit more about the market, I'd like to clarify
19
something. This will be a little
redundant for the
20
Commission because you wrote it in your annual report
21
over the last several years, but I think it is the most
22
concise and easiest way for us to talk about our
23
expansion philosophy.
24 The Commission has been hesitant to
25
license a facility that would create an oversaturated
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
108
1
market because of the negative impact it would have on
2
local government budgets that are formulated based on
3
expected gaming revenues. In
addition, oversaturated
4
markets in high-gaming taxed states like Missouri have
5
a strong tendency to result in undesirable business
6
practices, lax regulatory compliance, and
7
cost-cutting measures that negatively affect the
8
overall quality of the gaming facilities.
9
Furthermore, it would result in displacement and
10
unemployment among casino workers, thus harming
11
Missouri families. Therefore,
the Commission strives
12
to avoid oversaturation of the market.
13 I think, in our presentation on the
14
negative aspects, those are all issues that we tried to
15
hit on. If you're going to talk
about expansion, what
16
you want to avoid is opening one up that would
17
ultimately result in the closing of another. That
18
really does not benefit the State of Missouri, it
19
causes a lot of confusion in the marketplace, and
20
certainly is not helpful to the people that work in
21
this industry and have to deal with that type of
22
displacement.
23 CHAIRMAN SMITH:
Somewhere, if I remember,
24
isn't it part of our charge at some point to take into
25
consideration the need for economic development in the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
109
1
areas of the state who, maybe, do not have that sort of
2
activity now?
3 MR. MULLALLY:
Yes, I think that's clearly
4
implicit in the statute. It's
reflected in the new
5
mission statement that we developed.
Certainly after
6
you named me Director last year, we reviewed all of our
7
policies and our internal mission, and our mission
8
statement now says that it's our charge to try to
9
maximize the economic potential of gaming while
10
minimizing its social consequences.
I think this
11
presentation hinges on all of those issues. But, yes,
12
I think you're exactly right, that that is very
13
implicit in the statute. The
whole purpose of the
14
Gaming Act was to try to spur additional economic
15
development along the riverfronts.
16 However, we have noted -- and this
17
statement has not been just in this last -- it was
18
expanded slightly in this last annual report, but we
19
have repeated this for several years, so this should be
20
nothing new to those who have followed us very closely.
21
"However, should a facility become substandard, fall
22
into disrepair, or otherwise become non-competitive,
23
the Commission would be forced to consider new projects
24
of better quality that meet the high standards it sets
25
for its licensees. Operators of
substandard facilities
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
110
1
should not expect protection from the Commission. To
2
the contrary, if a licensee allows his property to
3
deteriorate and become inferior, it should expect the
4
Commission to examine new projects that are more
5
operationally sound."
6 I think the philosophy we have tried to
7
expose here is that, just because you get your initial
8
license, you have to evolve with the marketplace.
9 One of the other areas we've reported on
10
fairly heavily in the Annual Report is something that
11
most of the Missouri licensees have been very good at,
12
is reinvesting their success in the State of Missouri.
13
This statute was not designed, nor do I think this
14
Commission wants to allow Missouri operations to be
15
cash cows for development projects in other
16
jurisdictions. Certainly we know
that they have a
17
fiduciary responsibility to their shareholders and they
18
need to maximize corporate value; however, we want them
19
to spend their fair share of that in Missouri. To
20
their credit, for the most part, the licensees have
21
been very good about it, and that was reported in the
22
Annual Report.
23 With that, I will turn it over to Jim to
24
talk, in a little more detail, about how we see the
25
market as it exists today.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 111
1 MR. OBERKIRSCH:
Right. As Melissa
2
mentioned, I have all the slides on the benefits of
3
expansion. That doesn't make me
the staff advocate for
4
expansion. It just means most of
the benefits are
5
financial in nature with regard to an increase in
6
competition or new tax dollars, things of that nature.
7 But this is a look at the market, at what
8
I would call an elevation of 30,000 feet. You can see
9
the counties I mentioned earlier hovering around St.
10
Louis County in the red, in the middle.
And I have a
11
10-mile concentric circle around the existing casinos
12
in the market. Just for data
purposes, St. Louis
13
county has about a million residents, and it falls off
14
quickly to St. Charles, which has about 285,000
15
residents. So quite a contrast.
16 You can see, just using a snapshot
17
analysis, that the southern section of the St. Louis
18
County area is currently untapped with regard to the
19
10-mile radius.
20 CHAIRMAN SMITH:
How far south does the
21
10-mile radius go with reference to the cities? Does
22
it cover Kimmswick? Does it go
that far?
23 MR. OBERKIRSCH:
No. You can see Arnold
24
right here, which is not in a concentric circle.
25
Kimmswick would be about six, seven miles south of
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
112
1
Arnold. You can see St.
Genevieve just south of
2
Jefferson County. Quickly, you
can see that the
3
casinos are going to try to tap this red area. The
4
southern section and the southwest section of St. Louis
5
County is currently untapped.
Ferguson County, which
6
is about a 220,000 population county, is entirely
7
untapped, whereas some of the other darker counties are
8
tapped to some extent. So that's
just a quick look at
9
the market at a high level.
10 The next slide shows the market at what I
11
would call a hundred feet. We do
have a nice color
12
copy. Don't tell anybody, but I
printed you some
13
copies so you can get a little more use out of this
14
next map.
15 What this map shows is annual frequency
16
per gamer plotted by zip code.
There's the majority of
17
the positions in the St. Louis market centered around
18
the Harrah's property and the Ameristar property in St.
19
Charles and Maryland Heights.
And the area right
20
around that -- or the zip codes right around that area
21
are red showing frequency in the 20 to 21-annual visit
22
level. It stays fairly dark
orange out west following
23
Highway 70.
24 A couple of anomalies you'll see is the --
25
the city is rather -- is a rather light shade in the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
113
1
nine -- more than nine frequency level.
You would
2
think that would be higher with a casino in downtown
3
St. Louis. That's a bit of an
anomaly.
4 And another anomaly is Illinois. It falls
5
off short. This light yellow is
just one-to-three
6
visits to the Missouri casinos in an annual time frame.
7
And that really doesn't have -- really doesn't fit the
8
drive-time correlation because there are zip codes
9
which are just a couple of minutes apart. And it falls
10
off precipitously once you cross the bridge. So we're
11
very conservative with regard to how much of Illinois
12
we think we could tap, even with the new casino
13
immediately adjacent.
14 CHAIRMAN SMITH: Does the yellow area on
15
the Illinois side mean just the percentage of people
16
that go to Missouri casinos?
17 MR. OBERKIRSCH:
Yes, just Missouri
18
casinos. One to three visits to
casinos. Very low.
19 MS. NIKOLAISEN:
Is some of this -- I'm
20
just thinking out loud. Does it
look at age? If you
21
look at where the growth of some of our communities
22
are, it's where the youth seems to be.
I'm just -- I'm
23
just -- a simple observation that just kind of came to
24
me and said heavier usage tends to be younger, lighter
25
usage -- I don't know.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
114
1 MR. OBERKIRSCH:
Anecdotally, we think the
2
casinos are highly visited by the senior population.
3 MS.
NIKOLAISEN: That's what I thought.
4 MR. OBERKIRSCH:
That's something we could
5
take a look at. The real
correlation is between drive
6
time.
7 I have a graph that's a little confusing
8
for the general public, but it correlates drive time
9
and frequency, and the computer draws a correlation.
10
There's a very strong correlation from a numbers
11
standpoint.
12 CHAIRMAN
SMITH: This is based on the
13
casinos as of what date?
14 MR. OBERKIRSCH:
This was 2001 data. And
15
I'm glad you mentioned that,
because it's based on
16
data gathered by the casinos right out of their
17
player-tracking systems.
18 CHAIRMAN SMITH:
Is it at the end of the
19
year, or the beginning?
20 MR. OBERKIRSCH:
It's a full year. It's
21
an annual look.
22 CHAIRMAN SMITH:
It looks like the end of
23
2001.
24 MR. OBERKIRSCH:
2001.
25 CHAIRMAN SMITH:
Okay.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
115
1 MR. OBERKIRSCH:
Okay. Moving along.
2 I want to touch on the northern tier. If
3
you would -- this top circle represents a 10-mile
4
radius around the Alton Belle.
If you would take that
5
off, you would see that there is a sliver of St. Louis
6
County that would become untapped, and certainly it's
7
untapped by a Missouri casino. I
think it's worth
8
consideration in the future, but due to the major
9
expansion in St. Charles and possibly if the Mayor
10
proceeds with a better facility in downtown St. Louis,
11 we'd want to see what
the market looks like after those
12
two things are up and running, if, in fact, they would
13
take place. I don't know if you
have anything to add
14
on the northern tier, Kevin. But
we want to take a
15
go-slow approach with regard to the northern tier.
16 MR. MULLALLY:
Yeah, I think that
17
philosophy has served us reasonably well in the past.
18
You have what is, essentially, a brand new casino in
19
St. Charles. It's a $170 million
plus what they put
20
into it before the expansion.
What that is going to do
21
to the marketplace we really don't know. We expect
22
their tentacles will extend a great deal further than
23
they are now. In other words,
they will draw customers
24
from a much further distance than they are now. We
25
don't know what that's going to do to the northern tier
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
116
1
market. And then you have the
wild card of what's
2
going to go on in downtown St. Louis in the wake of the
3
Mayor's comments after the last meeting.
4 So at this point, that whole market area
5
up there is really a big wait-and-see, I think.
6 MR. OBERKIRSCH:
Big wait-and-see, but
7
there's definitely some potential there, so we'll keep
8
an eye on it.
9 The next slide kind of touches on market
10
growth. I'm going to have to
tell you what the numbers
11
look like. The trailing 12-month
revenue for the St.
12
Louis market was $669 million through June of 2000.
13
That was the last time we looked at expansion. It's
14
been two years. I can't believe
the time has gone by
15 that quickly. But through June of 2002, the gaming
16
revenue was $782 million, which is about a 17 percent
17
increase, or $114 million. Now,
we tried to make the
18
case two years ago that there was capacity for an
19
additional boat. I just think
this chart here shows
20
we're on firmer ground this time around.
21 MS. NIKOLAISEN:
Question. And I see it,
22
and I believe it's growing every month when you send us
23
those stats. What is your
feeling on the maintenance
24
of some level of growth within this range, given the
25
decline in patron volume?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
117
1 MR. OBERKIRSCH:
I meant to add that. The
2
second half of this year and into next year, I think
3
we're seeing slower growth. In
other words, it's
4
hitting an artificial ceiling, and patron decline is
5
still somewhat evident.
6 CHAIRMAN SMITH:
Do you think it will be a
7
concern at some point, this continued drop in patron
8
activity?
9 MR. OBERKIRSCH:
Right. To date, they
10
have offset it with an increase in win per patron. But
11
they might change their marketing strategy and try to
12
draw more people in after they cannot drive growth via
13
win-per-patron. So it's still a
wait-and-see. But
14
it's definitely slower growth in -- I think in the
15
second half of the year.
Certainly not what we've seen
16
over the last two years.
17 MS. NIKOLAISEN:
Are we still seeing what,
18
would be my guess, would be double digits or more
19
high-single?
20 MR. OBERKIRSCH:
Mid-single.
21 MS. NIKOLAISEN:
Mid-single?
22 MR. OBERKIRSCH:
And that leads me to the
23
first benefit that Kevin outlined, which is an increase
24
in tax revenue. This is the one
that's most talked
25
about, whether that's appropriate or not.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
118
1 Based on a preliminary analysis, which
2
again, assumes the same methodology, an increase in
3
frequency due to a decrease in drive time, we feel a
4
suburban south casino would generate between $63 million
5
and $78 million in what we call incremental gaming revenue,
6
which is new gaming revenue.
That leads to about $12.6
7
to $15.6 million in incremental gaming taxes for both --
8
that's at the 20 percent rate for the state and local
9 communities, and
incremental admission fees of between
10
$5.4 million and $6.6 million for both the state and the
11
local governments.
12 CHAIRMAN SMITH:
Is that based upon adding
13
one casino in the south part of the market?
14 MR. OBERKIRSCH:
That's our initial
15
assumption. As opposed to
running all the potential
16
options, we just bracketed -- we focused in one area
17
and kind of bracketed it to give you a bit of a range.
18 Keep in mind the market -- the Missouri
19
market is currently generating $1.2 billion in gaming
20
revenues, so $63 million to $78 million, compared to
21 that, isn't a whole
lot. It's currently generating
22
$338 million in gaming taxes and admission fees.
23
Obviously, with the state budget problems, every little
24
bit helps.
25 The second benefit to expansion is capital
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
119
1
investment. We anticipate, based
on the last go-round,
2
in the applications we're looking at during the last
3
expansion analysis, that we're going to see hard-cost
4
investment, which is just your bricks and mortar, of
5
between $125 million and more.
We have investment
6
exceeding $300 million in Missouri to date, so we don't
7
want to put a ceiling on what could come in.
8 MR. MULLALLY:
That was a heavily-debated
9
bullet point, as to whether we should put -- there was
10
several votes for $125 million to $1 billion. So if
11
anybody out there wants to spend $1 billion in the
12
State of Missouri, stand up. We
settled for leaving it
13
open-ended.
14 MR.
OBERKIRSCH: Secondly -- of course,
15
that's going to generate construction jobs for
16
Missourians. You've heard all
this; construction
17
contracts for Missouri, contractors, increase in local
18 property taxes by virtue of
valuations, and then in a
19
lot of cases you see development agreements with the
20
local home dock communities, which come in the form of
21
riverside developments or historical-society donations,
22
things of that nature. But,
definitely, a real benefit
23
on the capital investment ticket.
24 Here's a look at some other prominent
25
developments in the St. Louis area.
This is just to
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
120
1
give you a feel of the magnitude of these casino
2
developments. They really rank
up there with some of
3
the other well-mentioned developments like the new ball
4
stadium or the Edward Jones Dome.
It's probably going
5
to be significantly higher even than Union Station or
6
Savvis Center.
7 Sometimes you hear someone make a claim,
8
with regard to a major retailer coming into an area,
9
but, typically, their investment is more in the $7.5
10
million range. So they're definitely
spending a
11
considerable amount of money.
12 Of course, on a more permanent basis, you
13
have jobs and economic expansion.
A new casino is
14
going to bring about 1,200 to 1,500 permanent jobs,
15
generating a direct payroll of $26 million to $34 million.
16
You know, at these levels, that kind of puts the increase
17
in tax revenue in perspective.
It's a lot more that's
18
going to be generated in the payroll area. We tried to
19
bring that out in the last expansion go-around also.
20 Direct payroll with benefits jumps to $32
21
million to $40 million. These
are well-benefited types of
22 jobs. Of course,
vendor contracts. And the
hard-to-explain
23
multiplier effect on the regional economy -- and this
24
is just a -- business on business, as the smaller
25
companies get a piece of the pie.
Concannon & Jaeger St.
Louis, Missouri (314) 421-1000
Page
121
1 Something that we didn't touch on too much
2
two years ago was the increase in product quality,
3
pricing, and convenience that comes with competition.
4
I think, with regard to the product quality,
5
competition is going to increase your food --
6 CHAIRMAN SMITH:
Excuse me. Before you
7
leave this last point again, isn't there also a
8
consideration in that during construction, you'll have
9
a substantial further increase in employment?
10 MR. OBERKIRSCH:
Right. I might have
11
mentioned that, construction jobs for Missourians.
12
It's kind of a summary bullet point, but yes,
13
definitely, that is in the capital-investment slide.
14 CHAIRMAN SMITH:
You don't have that
15
quantitated?
16 MR. OBERKIRSCH:
No. It varies. It would
17
depend on the amount of the capital investment. Since
18
we didn't bracket that, I didn't try and bracket that.
19
When we do the application, if we proceed to the
20
application-specific analysis, we'll have a number for
21
construction jobs. I see your
point now.
22 Back to product quality, I think
23
primarily, in the area of food and beverage, customer
24
service. And really one we're
seeing now is with
25
regard to the one the Lotto creates.
These casinos
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
122
1
know they have to have the latest with regard to slot
2
product to compete. That's
solely driven by
3
competition.
4 An increase
in competition would also
5
improve pricing, whether it be in the area of
6
promotions and coupons, slot payoff percentage, and, to
7
a lessor extent I think, table rules.
I'm going to
8
talk a little more about that bullet in a second. But
9
just to touch on the obvious, a reduction in drive
10
time. You'll notice, with regard
to this benefit, it's
11
solely for the gamers themselves.
This wouldn't
12 benefit non-gamers like an
increase in tax revenue
13
would. So you have to consider
that.
14 But on this next slide we kind of show
15
what -- what pricings look like in the area, promotions
16 over the last six
years or so. And the general trend
17
is higher. And I think that what
you're seeing there
18
-- let me turn to my notes. As
the market matures,
19
there's more competition for that last, you know, few
20
dollars of gaming revenue.
They're really leaning on
21
marketing programs to try to capture that. And,
22
obviously, new competition would likely accelerate this
23
situation.
24 Second is the
area of slot hold
25
percentages. These markets here
are one-boat markets,
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
123
1
are no immediate competition, and these three bars here
2
are markets with substantial competition. You can see,
3
generally, the slot hold percentage, which the hold for
4
the casino is higher, over seven cents on the dollar
5
compared to six cents on the dollar.
That's a fairly
6
large percentage increase. You
know, I don't know if
7
this is entirely the result of a lack of competition.
8 CHAIRMAN SMITH:
Why is Caruthersville so
9
high?
10 MR. OBERKIRSCH:
We think it's
11
primarily --
12 CHAIRMAN SMITH:
A lack of competition?
13 MR. OBERKIRSCH:
-- a lack of competition.
14 Anyway -- and that brings us to the final
15
benefit. As Kevin talked a
little bit about this, I
16
would make an additional comment.
With the new tax
17
rate in Illinois, I doubt there's going to be a lot of
18
companies clamoring to invest there.
I believe this
19
was brought up during the last go-round as a potential
20
benefit. And obviously, this
untapped market here can
21 be tapped from Illinois.
It would be a defensive
22
maneuver to put a casino in this area.
23 Let's think, Kevin.
Is that -- that's
24
about it.
25 MR. MULLALLY:
Thanks, Jim. Any questions
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
124
1
regarding the financial aspects?
2 MS. NIKOLAISEN:
Just a general comment on
3
my part, again, related to what I said before, too. I
4
hope the State and the community and everybody realizes
5
that markets like Kansas City and St. Louis, if we are
6
hurt significantly, the State is hurt even more. If we
7
expand and attract business and do things, the State
8
ultimately benefits as well. I
mean, we are the deep
9
pockets for the State. I just
think that needs to be
10
said. Sometimes people get
caught up in their own
11
little world. But if this market
is hurt, for example,
12
if we lost a baseball team, oh, is the State going to
13
be hurting. I don't think that's
going to happen.
14
Just to realize how important St. Louis is and Kansas
15
City is to the State.
16 MR. MULLALLY:
Absolutely.
17 CHAIRMAN SMITH:
I had a question, also,
18
Jim. There are two other areas
that kind of concern
19
me. Maybe we ought to look at
the calculations and
20
assumptions. Right now we're
confronted with the fact
21
that the President is in bankruptcy.
We assume it will
22
continue and -- something may happen there. But maybe
23
we ought to take into consideration what would happen
24
if the President closed; second, what would happen to
25
our figures if a substantial expansion was made of the
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
125
1
President that would make it comparable to some of the
2
others.
3 MR. OBERKIRSCH:
It would definitely
4
affect my figures. It would
definitely give us cause
5
to take a pause and re-look at the situation. There's
6
no question about it.
7 CHAIRMAN SMITH:
I think those are things
8
that are on the rise.
9 One or the other is apt to happen.
10 MR. OBERKIRSCH:
Right. This definitely
11
assumes that -- the preliminary analysis assumes that
12
everything continues, more or less, status quo.
13 CHAIRMAN SMITH:
Stays the same?
14 MR. OBERKIRSCH:
Exactly.
15 CHAIRMAN SMITH:
I'd like to start taking
16
a look at that, too.
17 MR. OBERKIRSCH:
Right. It's just a
18
function of running a detailed analysis on every single
19
option that could happen. But if
you were to identify
20 specific options you'd like -- we really have some neat
21
software which allows you to put in two addresses, and
22
it calculates the drive times.
So we can really put a
23
fine point on that.
24 CHAIRMAN SMITH:
It's pretty steady, but
25
it looks like, to me, in certain aspects -- at one
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
126
1
point you said, when we had the old location for the
2
President, that the location in south St. Louis would
3
effect the revenues of the President.
Again, I assume
4
now that your figures would show this might be
5
different.
6 MR. OBERKIRSCH:
Right. Actually, the
7
diversion from the President would be similar. It's
8
just that they're starting from such a much higher
9
baseline. Two years ago they
were doing it in the
10
upper $50, $60 million range in AGR to where, if you
11
take a big chunk of that -- my contention was it likely
12
would put them out of business.
Now they're starting
13
from the $80-plus million range.
So you take the same
14
chunk out of that and it doesn't necessarily put them
15
out of business. What I failed
to do was forecast the
16
big jump in revenue by virtue of the move and the --
17 CHAIRMAN SMITH:
I guess one other
18
consideration is what a new facility in St. Charles
19
will do when it opens, and whether you factored that in
20
at this point.
21 MR.
OBERKIRSCH: Well, we have considered
22
that. Basically, that's going --
as opposed to tapping
23
some of these untapped markets, it's going to do a lot
24
of shifting with regard to current market share, we
25 believe, and some incremental
growth. But by virtue of
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
127
1
expanding the St. Charles casino, it doesn't make it
2
anymore convenient for gamers in Jefferson County to
3
visit, to get there, you know.
So -- and that's the
4
big correlation with regard to a market study.
5 But we're going to keep a close eye on
6
that. If we get to the point
where we're analyzing
7
specific applications, it will definitely be handy to
8
have a month or two of knew Ameristar data in our
9
pockets to do that.
10 CHAIRMAN SMITH:
Doesn't that plan to open
11
in July?
12 MR. OBERKIRSCH:
I do not know their
13
opening date.
14 MR. MULLALLY:
Mid-July. Any other date?
15 MR. TROY STREMMING:
Probably. Probably late
16
July, early August.
17 MR. MULLALLY:
We're rapidly approaching,
18
if we haven't, the point in time we're going to be
19 provided a date or
we're going to give them a date,
20
like November or something. I
think we'll resolve that
21
within the next few days.
22 CHAIRMAN SMITH:
Are there any other
23
questions at this point?
24 MR. MULLALLY:
In addition to providing
25
you with an overview of how we currently see the market
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 128
1
as it exists today, we thought it would be important to
2
provide the Commission and the public with what we have
3
identified as the available options as we move forward.
4
I'm not suggesting that these are the only options, but
5
these are the ones that, as a staff, we have identified
6
as viable options to date.
7 First, you could do nothing. You could
8 allow the current
market to continue on with the
9
existing operations. Some of the
advantages or issues
10
related to this option would be that it preserves the
11
status quo, which makes many people feel more
12 comfortable, it
allows the market to be addressed
13
through the expansion of existing facilities. We've
14
seen a great deal of expansion of facilities in the St.
15
Louis market. That's one way to
address expansion. It
16
doesn't get to all areas of the market, but it does
17
help the existing properties reach further as they make
18
their facilities more attractive.
And I'm being a
19
little presumptive here, but I think it would satisfy
20
the views of opponents of new casino locations.
21 The second option would be to, if the
22
opportunity presents itself, select a quality
23
development in downtown St. Louis as a priority for
24
investigation. As you recall,
the Mayor of St. Louis
25
appeared before us last month and offered these
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 129
1
words -- and I won't read them to you, but, clearly,
2
the Mayor expressed a desire to have a first-class
3
high-quality casino destination in downtown St. Louis
4
as part of the many other tourism attractions the City
5
of St. Louis makes available.
6 And so, pursuant to his remarks, the
7
opportunity may present itself for another development,
8
and it may be by the operators of the President, it
9
could be a new developer, it could be a joint venture
10
of several developers, but certainly that is something
11
that we could look for.
12 So the advantage to this is it fulfills
13
some of the goals, I think, of city leadership, it
14
provides the city with a significant new tourist
15
attraction, which if you combine it with the existing
16
convention center, the Edward D. Jones Dome, and, if
17
they are successful in their efforts to build a new
18
baseball stadium, or if they retain the existing one,
19
along with Lacledes Landing, the Arch, and all of the
20
other great, great things the City of St. Louis offers,
21
I think, by anybody's standards, that would be a very
22
good economic engine to help drive that with the
23
benefit of the 20 percent gaming tax that is associated
24
with casinos. It would also help
to recapture some
25
market share -- the unfair market-share loss. When I
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 130
1
say "unfair," I mean in the context of what Jim calls
2
fair share in that we attract the same percentage of
3
the market as the Missouri population represents.
4
We're currently losing market share to Illinois on that
5
basis, on a population basis.
6 We suspect that a quality -- a development
7
of the quality that you see in St. Charles, with the
8
new development and Maryland Heights, and Kansas City,
9
we'd recapture some of those lost dollars.
10 Another option would be to select a
11
quality development in the suburban south of the St.
12
Louis metropolitan market. When
I say "suburban
13
south," I use that large, very encompassing term of
14
those five counties described by Jim.
It would
15
represent a significant source of new revenue, would
16
provide a new revenue source to new local jurisdiction.
17
There's no jurisdiction that I'm aware of that would be
18
in that marketplace that it currently is getting gaming
19
revenue. So now you have a new
local jurisdiction that
20 would be able to have
all of the benefits that we've
21
seen in Maryland Heights and St. Charles, and north
22
Kansas City, and Riverside and those types of
23
communities, Boonville. One of
the detractions of this
24
is it may diminish the possibility of a large
25
development in downtown St. Louis.
We don't know that.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 131
1
It's something we would have our eye on when evaluating
2
those types of proposals.
3 And, finally, to select quality projects
4
in both downtown St. Louis and the suburban south.
5
Some of the issues associated with this is it may be
6
mutually exclusive. We're not
aware of any proposals
7
currently on the table to do both of those things, and,
8
secondly, it runs somewhat counter to the Commission's
9
traditional go-slow approach to market expansion. We
10
tend to like to introduce new capacity gradually. This
11
would be a fairly substantial injection of new
12
capacity. I'm not saying that it
couldn't be done, but
13
it's certainly an important aspect that would go into
14
any analysis.
15 The staff's recommendation is based on our
16
preliminary analysis of the benefits and negative
17
consequences of expansion, the
staff recommends moving
18
forward on the next phase of the expansion process.
19
This phase would involve a review of the existing
20
applications in the greater St. Louis metropolitan area
21
as well as a review of any new applications that may be
22
filed as a result of this announcement.
23 We have several recommended procedures
24
that -- we would like your opinion.
Over the next 90
25
days, the staff would like your approval to begin
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
132
1
reviewing existing and newly-submitted applications.
2
It will meet with any interested parties to discuss the
3
details of the review process.
In addition, beginning
4
with the September 2002 meeting, the Commission would
5
begin public hearings to receive testimony from
6
applicants and other interested parties, and, finally,
7
the staff would begin the process of hiring a
8
consultant with extensive experience in real estate
9
matters to advise the Commission on issues relating to
10
site development.
11 Einstein also said "The definition of
12
stupid is doing the same thing over and over again and
13
expecting a different result."
I think we learned our
14
lesson from the Jefferson County issue.
This is valued
15
expertise that we can put to very good use in
16
evaluating site-related issues so that we don't get
17 involved in those
types of problems.
18 Having said that, and having acknowledged
19
our own deficiency there, I would make a call out to
20
the local communities that we will not have a situation
21 like we had last time where,
after the 18-month process
22
where we had meeting after meeting after meeting, and
23
public hearing after public hearing, after the
24
selection is made, you hear a public outcry. So cities
25
beware. If you have something to
say, say it during
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
133
1
this process because you will likely not get a public
2
forum afterwards.
3 And having said that, Mr. Chairman, that
4
concludes my presentation.
5 CHAIRMAN SMITH:
One other question of
6
you, and that's the question of timing.
Do you think
7
there is -- it's great we want to do these things. Is
8
this the right timing from the point of view -- is
9
there a buyer out there interested?
I know Illinois
10
has put a damper on what's happening over there. Is
11
there interest elsewhere?
12 MR. MULLALLY:
I think time will tell. I
13
think that's something we would have to evaluate going
14 forward. Obviously, the option of doing nothing is
15
still up there. So just by
listening to what people
16
have to say, seeing what potential applications are out
17
there, we would be able to have a better answer of
18
that. I think, at some point in
time, there needs to
19
be some signal from the legislature that, if there are
20
to be any gaming tax increases, that they will be at a
21
responsible level. And I think if
you -- if there is a
22
foreshadowing of massive tax increases, you're not
23
going to see any interest in additional capital in the
24
State of Missouri. So I think
that's something that
25
will play into all of this now.
We simply don't have
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
134
1
enough information at this point.
2 CHAIRMAN
SMITH: Any other questions?
3 MS. NIKOLAISEN:
I just want to make sure
4
that the public understands, too, when we talk about
5
downtown St. Louis, we know we have an existing casino
6 there. We are not precluding anybody existing or
7
anybody new from coming up with a dynamic idea or
8
project. It's just that, I
think, as the Mayor has
9
said, and as we have said, based on capital investment
10
in other casinos and making something of a destination
11
spot, we are looking for a diamond.
12 MR. MULLALLY:
You know, I've talked about
13
this in other forums, but I think it is appropriate to
14
go over it again here. The way
this process works --
15
it's up to the local community to do their deal and get
16
an agreement worked out and decide what they want.
17
It's explicit in the statute that that's their
18
responsibility. It's not up to
the Gaming Commission
19
to go out and solicit or have anything to do with these
20
business deals. I think we just
need to be cognizant,
21
in light of the Mayor's statement to the Commission
22
last month, that these are issues out there, and we
23
need to be aware of them. But
certainly it's up to the
24
local jurisdictions to do their economic development
25
planning, it's up to this Commission to pass on how
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
135
1
this fits into the overall economic picture and best
2
interest of the State.
3 MS. NIKOLAISEN:
I'm just personally
4
speaking. I'm looking for that
diamond from those
5
communities and the companies, in their partnership
6
deal, what's presented. I'm not
speaking for anybody
7
other than me. But I'd like to
see a diamond.
8 MS. BATTLE:
Yeah. It appears to me that
9
you've mentioned, at the very beginning, about making
10
things simple. It seems to me
that this plan is
11
looking forward, not necessarily moving forward at this
12
time.
13 MR. MULLALLY:
That's correct. If I can
14
draw an analogy, we're asking the Commission to fire
15
the starting pistol and see who comes out of the gate,
16
whereas my horseman friend, Deputy Director Johnson
17
says, we're -- I don't even know what you call that
18
horn, but it makes the horses go into the corral.
19
We'll see who shows up.
20 CHAIRMAN SMITH:
I think we can also
21
choose to be particular now. We
have done a good job
22
in developing the market. As
Lynn said, I think we can
23
be a little more particular with something that is
24
outstanding. As I gathered, even
without your
25
resolution, the options are still open, we may decide
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
136
1
this is not the right time and what was presented isn't
2
worth it and do nothing, or we can consider downtown by
3
itself, or downtown and the south, too, if it happens.
4 MR. MULLALLY:
Yes. All we're asking for
5
is the beginning of a deliberate analysis and public
6
input.
7 CHAIRMAN SMITH:
In other words, that's
8
going to create work for your staff.
9 MR. MULLALLY:
Yes. It will have us tied
10
down for some time.
11 CHAIRMAN SMITH:
Any other questions?
12
We have before us a
resolution which
13
basically proposes that we start evaluating any
14
applications or present applications, the staff do
15
that, to make a future recommendation to the
16
Commission. What's your feeling
about it?
17 MS. NIKOLAISEN:
I'd like to move for
18
approval of Resolution No. 02-054.
19 MR. ADORJAN:
I second that.
20 CHAIRMAN SMITH:
Any other discussion? If
21
not, let's call the roll.
22 MS. FRANKS:
Commissioner Smith?
23 CHAIRMAN SMITH:
In favor.
24 MS. FRANKS:
Commissioner Nikolaisen?
25 MS.
NIKOLAISEN: In favor.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
137
1 MS. FRANKS:
Commissioner Battle?
2 MS.
BATTLE: In favor.
3 MS. FRANKS:
Commissioner Adorjan?
4 MR. ADORJAN:
In favor.
5 MS. FRANKS:
By your vote, you've adopted
6
Resolution No. 02-054.
7 CHAIRMAN SMITH:
While that's happening,
8
I'd like to see Jim, maybe, look at what I mentioned
9
about no President and expanding downtown, and how St.
10
Charles may effect us.
11 MR. MULLALLY:
Sure. We are readily
12
available to respond to any requests for data and other
13
perspectives that you'd like to see on the market. Jim
14
is very good at developing these different scenarios.
15
I think he just needs direction.
He'll be able to
16
respond very quickly.
17 Mr. Chairman, the final item on the agenda
18
involves a rule change. We're
still tinkering with
19
some language. There's nothing
really substantive
20
there. There's nothing pressing
involved with this
21
particular rule change. It's
something that's been
22
antiquated for some time. We
would request it be
23
tabled until next month.
24 CHAIRMAN SMITH:
I guess the only other
25
thing we have is a closed meeting.
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 138
1 I might state, at the outset -- and I
2
assume, Kevin, this is correct -- there's nothing
3
further coming out of that closed meeting?
4 MR. MULLALLY:
That's correct.
5 CHAIRMAN SMITH:
We'll adjourn this
6
meeting if we have a motion here to go into executive
7
connection.
8 MR. ADORJAN:
I move to close the meeting
9
to receive, discuss and consider the following matters:
10
legal actions, cause of action and litigation under
11
610.021(1), RSMo, personnel matters under 610.021(3)and
12
(4), RSMo, investigatory records, information, and
13
summaries under 610.021(14), proprietary records,
14
information, and summaries under 610.021(14) and
15
313.847.1, RSMo, closed minutes or other closed records
16
under 610.021(14) and 313.847.1, RSMo.
17 MS. NIKOLAISEN:
Second.
18 CHAIRMAN SMITH:
Call the roll.
19 MS. FRANKS:
Commissioner Smith?
20 CHAIRMAN SMITH:
In favor.
21 MS.
FRANKS: Commissioner Nikolaisen?
22 MS. NIKOLAISEN:
In favor.
23 MS. FRANKS:
Commissioner Battle?
24 MS. BATTLE:
In favor.
25 MS. FRANKS:
Commissioner Adorjan?
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page
139
1 MR. ADORJAN:
In favor.
2 CHAIRMAN SMITH:
We stand adjourned, but
3
there will be a slight delay before the meeting takes
4
place.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Concannon & Jaeger St. Louis, Missouri (314) 421-1000
Page 140
1
STATE OF MISSOURI )
2
COUNTY OF ST. LOUIS )
3
4 I, Candace A. Quick, a Certified Court
5
Reporter and Notary Public for the State of Missouri, do
6 certify that I was present at Saint Louis University,
7
School of Allied Health, 2nd Floor, Multi-Purpose Room,
8
3437 Caroline, St. Louis, Missouri, on the 24th day of
9
June, A.D., 2002; that thereafter, a hearing was held,
10
commencing at 10:00 a.m. of that day, that all
11
proceedings which then transpired were contemporaneously
12
reduced to shorthand by me, and later transcribed into
13
typewriting, and that the foregoing 139 pages are a true
14
and accurate transcript of the record of proceedings
15
made by me at that time.
16 IN WITNESS WHEREOF, I have hereunto set my
17
hand and Seal this 16th day of July, A.D., 2002.
18 MY COMMISSION EXPIRES MARCH 6TH, 2006.
19
20
21 ___________________________
22 CANDACE A. QUICK, CCR, CSR
23 Notary Public, within and for
24 the State of Missouri
25
Concannon & Jaeger St. Louis, Missouri (314) 421-1000