Missouri Gaming Commission	April 11, 2003
Minutes

CHAIRMAN ROBERT SMITH: I guess we had better go ahead and call the roll.

MS. ANGIE FRANKS: Chairman Smith?

CHAIRMAN SMITH: Present.

MS. FRANKS: Commissioner Bartch?

COMMISSIONER FLOYD BARTCH: Present.

MS. FRANKS: Commissioner Hinrichs?

COMMISSIONER JUDY HINRICHS: Present.

CHAIRMAN SMITH: Ok, I guess the first item of business is relicensing of Spin for Cash Wide Area Progressive Joint Venture.

EXECUTIVE DIRECTOR KEVIN MULLALLY: Mr. Chairman, Commissioners, both of these relicensure issues are just extending them until our April 29^th, ok, I’m sorry. The first one, we’re just going to go ahead and relicense because there are apparently no issues. Lt. Wilhoit is here to make a presentation.

CHAIRMAN SMITH: Ok, well let’s have it. Let’s just do them one at a time.

EXECUTIVE DIRECTOR MULLALLY: Ok.

LT. RICK WILHOIT: Mr. Chairman and Commissioners, the background investigation, to include criminal history checks and tax reviews of the following supplier and its respective key persons has been conducted in conjunction with its relicensing. As a result of the investigation, the following supplier has been found suitable for relicensing by the Commission: Spin for Cash Wide Area Progressive Joint Venture.

CHAIRMAN SMITH: And when does their license expire?

EXECUTIVE DIRECTOR MULLALLY: Angie’s looking it up. April 28, 2003.

CHAIRMAN SMITH: So, we need to do this now because we won’t meet until the 29^th, is that why we’re taking this up?

EXECUTIVE DIRECTOR MULLALLY: Yes, yes.

CHAIRMAN SMITH: And this will be a one-year extension?

EXECUTIVE DIRECTOR MULLALLY: That’s correct. It’s actually, each license is a new licensing period so it’s a one-year license. They would have to reapply for a new license next year.

CHAIRMAN SMITH: I understand the procedure, but it’s for one year.

EXECUTIVE DIRECTOR MULLALLY: Yes.

CHAIRMAN SMITH: And, they haven’t found anything wrong with them?

LT. WILHOIT: No, sir.

CHAIRMAN SMITH: No problems?

LT. WILHOIT: No, sir.

CHAIRMAN SMITH: We’re having trouble hearing you, that’s why I’m asking. Are there any questions from the Commission?

COMMISSIONER BARTCH: No, I’ll make a motion for approval of 03-025.

CHAIRMAN SMITH: Is there a second?

COMMISSIONER HINRICHS: I’ll second that.

CHAIRMAN SMITH: Ok, well then, call the roll.

MS. FRANKS: Chairman Smith?

CHAIRMAN SMITH: In favor.

MS. FRANKS: Commissioner Bartch?

COMMISSIONER BARTCH: In favor.

MS. FRANKS: Commissioner Hinrichs?

COMMISSIONER HINRICHS: In favor.

MS. FRANKS: By your vote you have adopted Resolution No. 03-025.

CHAIRMAN SMITH: Allright, the next item is the consideration of the Aztar renewal.

EXECUTIVE DIRECTOR MULLALLY: Yes, and this is just a temporary renewal extension, so that you can hear a full presentation from the company and the city and any interested parties on April 29^th at your meeting here in Jefferson City.

CHAIRMAN SMITH: Ok, at that time we’ll determine about the renewal.

EXECUTIVE DIRECTOR MULLALLY: At that time the investigators will have their renewal investigation report.

CHAIRMAN SMITH: This, again, is a problem where somebody’s license would expire before that date.

COMMISSIONER BARTCH: When do they expire, on the 28^th also?

EXECUTIVE DIRECTOR MULLALLY: The 26^th.

COMMISSIONER HINRICHS: The 26^th. A lot sooner.

COMMISSIONER BARTCH: Ok, I recommend approval of Resolution 03-026.

COMMISSIONER HINRICHS: And I’ll second that.

CHAIRMAN SMITH: It has been moved and seconded that we grant approval of this extension to the 29^th when we can have the full presentation on it. Call the roll.

MS. FRANKS: Chairman Smith?

CHAIRMAN SMITH: In favor.

MS. FRANKS: Commissioner Bartch?

COMMISSIONER BARTCH: In favor.

MS. FRANKS: Commissioner Hinrichs?

COMMISSIONER HINRICHS: In favor.

MS. FRANKS: By your vote you have adopted Resolution No. 03-026.

EXECUTIVE DIRECTOR MULLALLY: Mr. Chairman, the last item on the agenda, you’ve all received a copy of a letter from Donna More who represents Sigma Game, Inc. as well as a settlement proposal. They have requested a private settlement conference with the Commission and Assistant Attorney General Bradley, who has not arrived yet, but it is the advice of counsel and staff that we continue past practices and have these matters communicated through the lawyers.

CHAIRMAN SMITH: I thought the first request for the information of the Commission, that’s why they requested to be put on now, was they requested a special conference with me and I didn’t think it was appropriate for the Chairman to meet separately on a settlement conference so I told Kevin not to agree to that and then the question now is whether, as I understood it, they want a separate settlement conference with the Commission on the proposal that has been presented.

EXECUTIVE DIRECTOR MULLALLY: That is my understanding.

CHAIRMAN SMITH: Is that correct Ms. More?

MS. DONNA MORE: Mr. Chairman, we’ve submitted the proposal so if you want to take it up in open session, that’s fine with us. I’m not sure procedurally how you do that, if you do it in open or closed session.

CHAIRMAN SMITH: Well, I guess my question really at this point is, the question we have is whether this is something that the staff should pursue, and it seems to me that it’s a question of our attorney meeting with you all to see what, if anything, can be worked out. And I don’t see, I guess my feeling is that there is nothing to be gained by us trying to conduct a settlement conference with you directly. It’s a question of staff coming in with their recommendation and then we can make a decision.

COMMISSIONER BARTCH: Isn’t that what we would normally do, Kevin?

EXECUTIVE DIRECTOR MULLALLY: Yes sir.

COMMISSIONER BARTCH: Ok.

CHAIRMAN SMITH: That’s the normal procedure. If you can work out the details then we’ll take it up as a recommended settlement, if you can’t then we’ll take it up as a non-recommended settlement and still consider it. That’s kind of where we are at this point.

COMMISSIONER BARTCH: Couldn’t we take that up on the 29^th if the resolution gets to the staff and everything.

CHAIRMAN SMITH: I think we probably need to, don’t we? I think they have a hearing set before Judge Wilson on the 16^th on the issue of the discipline. Isn’t that correct?

EXECUTIVE DIRECTOR MULLALLY: I believe it’s the 14^th. It starts on Monday.

CHAIRMAN SMITH: Starts on Monday. So, then we could still, if the lawyers were to work out something that they could recommend, I’m sorry Mr. Bradley isn’t here but I guess it’s my feeling that is something that you all need to work out with the staff. If you can come up with a solution, fine. If not, it should be back on the agenda and we’ll make a decision on it.

EXECUTIVE DIRECTOR MULLALLY: Mr. Dallmeyer has arrived.

MS. MORE: Ok. Mr. Chairman, this is Donna More. I guess our only feeling was, if there was a chance to settle that it would be before the hearing as opposed to your next meeting being at the end of April, the hearing would be over.

CHAIRMAN SMITH: I thought the hearing was the 14^th of May.

MS. MORE: The 14^th of April. It starts this Monday.

EXECUTIVE DIRECTOR MULLALLY: It starts on Monday.

CHAIRMAN SMITH: Oh.

EXECUTIVE DIRECTOR MULLALLY: Yes.

MS. MORE: So, in terms of settling in our minds, the benefits, if you will, to both sides accrue before we do the hearing as opposed to after.

CHAIRMAN SMITH: Is there any reason then that we couldn’t just postpone the hearing until after we have this meeting on the 29^th?

EXECUTIVE DIRECTOR MULLALLY: No, we have the judge’s order pending. I think it’s in the interest of everybody to move forward with the hearing. I mean, frankly, the staff and the Attorney General have had time to review the settlement offer and I think Mike Bradley has arrived, Mike Dallmeyer is here. We’re prepared to discuss that. We do not believe it is in the Commission’s best interest to settle under these terms at this point, and if this is the settlement offer then we’re prepared to recommend that you just go ahead with the hearing.

CHAIRMAN SMITH: If we go ahead with the hearing, then we’re on the question of appeals and that sort of thing. I guess we could go ahead with the hearing then, but they won’t come back to us with this recommendation. I assume that it will be too soon on the 29^th?

EXECUTIVE DIRECTOR MULLALLY: Yes, it’s unlikely, although, have you had any discussions with Judge Wilson about how quickly he’s going to turn this around? Oh, it’s my understanding that Judge Wilson intends to have this decision ready by the 29^th.

CHAIRMAN SMITH: Well, I’m wondering then if he’ll have that decision ready by the 29^th and that will give us, give the attorneys a chance to see if they can work something out by that date. Then we would have the whole ball of wax before us on the 29^th, wouldn’t we?

EXECUTIVE DIRECTOR MULLALLY: Yes, certainly you’ll have the decision. Now, if the . . .

CHAIRMAN SMITH: Mike, do you see any problem with that or does that give you enough time? Mr. Bradley?

ASSISTANT ATTORNEY GENERAL MIKE BRADLEY: With what, just having a hearing?

CHAIRMAN SMITH: The question is that on the 29^th we would have the report of the hearing officer and also we would have a report from you as to your recommendations on the proposed settlement.

ASSISTANT ATTORNEY GENERAL BRADLEY: I don’t make recommendations on a proposed settlement. I go through the staff and just echo whatever the staff says.

CHAIRMAN SMITH: Allright then, would the staff then have recommendations for us?

EXECUTIVE DIRECTOR MULLALLY: I can give you a recommendation on the settlement today, and that’s to reject it.

CHAIRMAN SMITH: Well, take up the whole thing on the 29^th.

MS. MORE: Judge, I think that our settlement proposal is one that we are proposing today and I understand Mr. Mullally’s recommendation on it. I don’t know that we will be proposing it after we’ve had the hearing on it.

CHAIRMAN SMITH: Well, if that’s the case . . .

MS. MORE: In other words, when parties tend to settle, they settle because they potentially both have things at risk, and after the hearing at least some of the benefits to my client for settling is gone and the ALJ decision will be out there and I don’t know that settlement necessarily makes sense for Sigma at that point.

COMMISSIONER HINRICHS: I’m not sure I understand what we have at risk.

EXECUTIVE DIRECTOR MULLALLY: I’m not either.

CHAIRMAN SMITH: Well, I don’t, I guess she’s saying that they may not want to make the settlement after the hearing which, I don’t worry about that one way or the other. But, I think that is basically what she is saying, that the settlement offer may be withdrawn if we have the hearing. Is that what you’re telling us?

MS. MORE: Yes.

COMMISSIONER HINRICHS: And why does that put us at risk?

MS. MORE: Well, I think, Madam Commissioner, I outlined in the letter what risk I think both parties have and what information I think the Commission, what we’ve learned during the course of discovery, what information the Commission may have also learned, and I think that both parties always have something to risk when a case goes to a hearing.

CHAIRMAN SMITH: What’s the pleasure of the Commission? Do you want to go ahead and hear this now, with the recommendations of both sides, or do you want to put it off until the 29^th?

COMMISSIONER BARTCH: I think we need to follow the normal process.

COMMISSIONER HINRICHS: I agree.

CHAIRMAN SMITH: Ok, then what is the normal process?

COMMISSIONER BARTCH: I think the normal process is it goes to the attorneys and they make a recommendation to the board.

CHAIRMAN SMITH: When did this settlement proposal come to us?

MS. MORE: We had written the request, I think, about 10 or 12 days ago. We got a response back, I believe it was Monday afternoon, and Mike Bradley, correct me if I’m wrong, I think it was Monday afternoon and we submitted this on Wednesday.

CHAIRMAN SMITH: Wednesday of last week then.

EXECUTIVE DIRECTOR MULLALLY: No, Wednesday of this week.

MS. MORE: Right, we got a letter back from Mr. Bradley, I believe on Monday of this week, which is in response to a letter we had submitted about 7 to 10 days before that.

COMMISSIONER HINRICHS: This is dated April 9^th.

EXECUTIVE DIRECTOR MULLALLY: Yeah, we got it late Wednesday afternoon.

CHAIRMAN SMITH: Well, I really think we would be better off to wait until the 29^th to give us first a chance to study this settlement recommendation and also to give you a chance to see if there is any other chance for settlement on it. But if you think you’re, the only other question being whether the hearing could be put over until after that date. We have a situation where we have continual extensions, I guess starting at least a year ago that this has been going on. I don’t want us to keep extending it. It’s just a question of whether, Mr. Bradley, are you prepared to discuss the proposal now as far as explaining the details?

ASSISTANT ATTORNEY GENERAL BRADLEY: The settlement proposal?

CHAIRMAN SMITH: Yes.

ASSISTANT ATTORNEY GENERAL BRADLEY: I think you have copies of all of it.

CHAIRMAN SMITH: Yeah, we just got them, though.

ASSISTANT ATTORNEY GENERAL BRADLEY: Well, I just got them at the same time and I’ve read them, but when we do settlements I normally go through the staff and if you’d like to . . .

CHAIRMAN SMITH: You got it also Wednesday, Kevin?

EXECUTIVE DIRECTOR MULLALLY: Mike Bushmann is here. Yes, I also got it Wednesday afternoon.

CHAIRMAN SMITH: Mr. Bushmann, have you had a chance to review it?

GENERAL COUNSEL MIKE BUSHMANN: I have briefly, Mr. Chairman. From my review of this settlement agreement, it proposes that there be a compliance plan put in place. Sigma proposes to put in a compliance plan to try and prevent this sort of situation from happening again, and they’ve proposed that by the terms of that plan a compliance officer be appointed to notify the Commission in the case of any sort of communications between Aruze Corporation or Mr. Okada and any of the officers of Sigma. That’s my understanding of the plan.

MS. MORE: Mr. Chairman, if I might, if you want the, I guess I’ll say two things. One is, we’re ready to go to a hearing on Monday, so I don’t know that postponing the hearing will be all that beneficial to anyone. In terms of the brief description of the settlement offer, I can tell you that Sigma has offered to pay the $25,000 in the disciplinary complaint, it has offered not to expand its business in the State of Missouri, has put in a set of general compliance requirements to ensure that timely reporting occurs to the Commission.

COMMISSIONER HINRICHS: We’ve got that.

CHAIRMAN SMITH: We’ve read that. I don’t need, we’ve read that.

MS. MORE: Oh, ok.

CHAIRMAN SMITH: We’ve got it and have read it. I know I have and I’m sure the other Commissioners have. So, we understand generally what you’re talking about.

MS. MORE: Ok.

COMMISSIONER HINRICHS: The second page is . . .

CHAIRMAN SMITH: Maybe if you’re prepared to go with the hearing, maybe the best solution is to go ahead with the hearing Monday and then in the meantime I think maybe I would urge the staff to continue to talk to Sigma and see if they can come up with any satisfactory agreement by the 29^th, and we can put this back on the agenda on the 29^th. And one way or the other to report whether there is or isn’t any progress on a settlement agreement. Hello, Mr. Mullally, are you there?

EXECUTIVE DIRECTOR MULLALLY: Yes.

CHAIRMAN SMITH: Can that be done?

EXECUTIVE DIRECTOR MULLALLY: Can we . . .

CHAIRMAN SMITH: Put it on the agenda for the 29^th, report back on the settlement agreement.

EXECUTIVE DIRECTOR MULLALLY: We’re ready to report now . . .

CHAIRMAN SMITH: What I’m saying, I’d like to give you one last chance to talk to them, and I’d like to give Sigma one last chance before we act on it. And I’m talking about the 29^th which is just a couple of weeks from now.

EXECUTIVE DIRECTOR MULLALLY: As it stands today, the staff has rejected it. The settlement agreement isn’t that complicated. I don’t know that it would change, and Ms. More has indicated that they likely intend to withdraw it come Monday.

ASSISTANT ATTORNEY GENERAL BRADLEY: The only thing I could add that Ms. More and Mark Schroeder and I talked about yesterday is in the event that you did accept the settlement agreement today, the Missouri Gaming Commission has not had an interview with Mr. Manabe, who is the owner of Sigma Game, and we had a discussion that I believe and I’ve talked to the staff on it, at least Rick on it, that the Gaming Commission staff does need to talk to Mr. Manabe. So in the event there was a settlement we had made discussions about making Mr. Manabe available for an interview. But other than that, it’s all in front of you.

EXECUTIVE DIRECTOR MULLALLY: With regard to this particular settlement agreement, I can’t foresee any situation where our recommendation today would change on the 29^th.

COMMISSIONER HINRICHS: Pardon me, Kevin, following the list of the settlement provisions it says. “Sigma is prepared to consider other settlement alternatives”. Are there other alternatives that have been discussed or been offered or suggested?

EXECUTIVE DIRECTOR MULLALLY: Yes, and it’s one that has proven successful for other companies in the past. It was one that was offered to them back in August, one that we felt the company frankly just should have taken, and that is, if they refuse to refinance this loan, which apparently they refuse to do, if they refuse to refinance this loan and if they are unable to get Mr. Okada and Aruze and Adores and whoever else to cooperate with this investigation so that they are able to prove their suitability, if those things cannot be done, then they should withdraw and rectify those situations so that they can be able to prove their suitability and come back and refile. Another supplier, Aristocrat, was able to do that. They had some problems with a rogue element in their company that wouldn’t cooperate or had some problems. They withdrew. They rectified those problems and they came back. That offer was made to them in August. It still remains a very viable option for them.

CHAIRMAN SMITH: Well, I guess even if we were to reject this settlement offer today, that does not mean that if something else is proposed that we couldn’t consider it later. Is there any reason that couldn’t occur?

EXECUTIVE DIRECTOR MULLALLY: With another settlement offer?

CHAIRMAN SMITH: Yes.

EXECUTIVE DIRECTOR MULLALLY: Yes, sir.

CHAIRMAN SMITH: Well, what’s the pleasure of the Commission then as to whether to act on this settlement offer now? I know we’ve all received copies of it and I’ve been in the hospital but I was able to read it and go over it so I understand what they’re proposing. Do we have a motion in connection with the, I guess we should limit it just to this particular settlement offer and maybe we should go ahead and act on it, then. Do we have a motion?

COMMISSIONER HINRICHS: I would move that we would, I guess, reject the settlement offer as it has been submitted to us.

COMMISSIONER BARTCH: I’ll second it.

CHAIRMAN SMITH: Any further discussion? If not, call the roll.

MS. FRANKS: Chairman Smith?

CHAIRMAN SMITH: In favor.

MS. FRANKS: Commissioner Bartch?

COMMISSIONER BARTCH: In favor.

MS. FRANKS: Commissioner Hinrichs?

COMMISSIONER HINRICHS: In favor.

CHAIRMAN SMITH: Then the settlement offer is rejected. The only other thing that I would do, I would still like to urge the staff and the Sigma attorneys to see if you can’t come up with some other solution. This one is obviously not satisfactory. I’m going to encourage you all at least to talk before the next meeting and then if some other solution comes up, we’ll be glad to look at it.

EXECUTIVE DIRECTOR MULLALLY: Ok.

CHAIRMAN SMITH: Is there any other business to be transacted?

EXECUTIVE DIRECTOR MULLALLY: No, sir.

CHAIRMAN SMITH: Ok. Then, do we have a motion to adjourn?

COMMISSIONER HINRICHS: So moved.

COMMISSIONER BARTCH: Second.

CHAIRMAN SMITH: Ok, call the roll.

MS. FRANKS: Chairman Smith?

CHAIRMAN SMITH: In favor.

MS. FRANKS: Commissioner Bartch?

COMMISSIONER BARTCH: In favor.

MS. FRANKS: Commissioner Hinrichs?

COMMISSIONER HINRICHS: In favor.

CHAIRMAN SMITH: Ok, the meeting will be adjourned, and we will see everybody on the 29^th.