001

1 BEFORE THE MISSOURI GAMING COMMISSION

5 Telephonic Meeting

August 25, 2004

6 Missouri Gaming Commission

3417 Knipp

7 Jefferson City, Missouri

9 COMMISSION MEMBERS: Floyd O. Bartch, Chairman

Ralph Biele, Member

10 Jack E. Gant, Member

George Hartsfield, Member

11 Judith Sutter-Hinrichs, Member

17 REPORTED BY:

18 JENNIFER L. LEIBACH, RPR, CCR(T)

MIDWEST LITIGATION SERVICES

19 714 West High Street

JEFFERSON CITY, MISSOURI 65101

20 (573) 636-7551

0002

1 PROCEEDINGS

2 MR. KEVIN MULLALLY: Good morning, Mr. Chairman.

3 CHAIRMAN BARTCH: Hi, Kevin.

4 MR. MULLALLY: Do we have Kansas City on the

5 line?

6 MS. CHERYL NAPOLI: Yes, we're here.

7 MR. MULLALLY: Okay. Is anybody outside staff

8 present?

9 MS. NAPOLI: Yes, I'll have them identify

10 themselves.

11 MR. RICK ALM: Rick Alm from the Kansas City Star.

12 MR. MATTHEW BLOCK: Matthew Block, Ameristar Casino,

13 Kansas City.

14 MR. MULLALLY: And St. Louis on the line?

15 MS. DEBI GRUENBERG: Yes.

16 MR. MULLALLY: And anyone outside staff

17 present in that office?

18 MR. GREG SILVER: Greg Silver, Ameristar Casino.

19 MR. MULLALLY: Okay.

20 MS. KATHLEEN NORTHCUTT: Kathleen Northcutt, Gallop

21 Johnson Newman.

22 MR. RANDY ASHERBRANNER: Randy Asherbranner,

23 Riverboat Gaming Association.

24 MR. MULLALLY: All right. We have a variety

25 of media and other interested people in Jeff City, I won't

0003

1 identify all of them. Mr. Chairman, if you have any

2 instructions before we start into the meeting?

3 CHAIRMAN BARTCH: No, I don't think so. I

4 don't think I've heard from Ralph. Is Ralph --

5 COMMISSIONER BIELE: I'm here.

6 CHAIRMAN BARTCH: Ralph's there. I think

7 we've got everybody then. Are we ready, then, Kevin?

8 MR. MULLALLY: Yes.

9 CHAIRMAN BARTCH: If we'll call the roll and

10 call the meeting to order.

11 MS. ANGIE FRANKS: Chairman Bartch.

12 CHAIRMAN BARTCH: Present.

13 MS. FRANKS: Commissioner Hinrichs.

14 COMMISSIONER HINRICHS: Present.

15 MS. FRANKS: Commissioner Gant.

16 COMMISSIONER GANT: Present.

17 MS. FRANKS: Commissioner Hartsfield.

18 COMMISSIONER HARTSFIELD: Present.

19 MS. FRANKS: Commissioner Biele.

20 COMMISSIONER BIELE: Present.

21 CHAIRMAN BARTCH: Okay. Kevin.

22 MR. MULLALLY: Mr. Chairman, the first item on

23 the agenda is the consideration of the relicensure of

24 suppliers and Lieutenant Keith Johnson from the Missouri

25 State Highway Patrol is here to make the presentation.

0004

1 LT. KEITH JOHNSON: Good morning, Commissioners.

2 CHAIRMAN BARTCH: Good morning.

3 LT. JOHNSON: Background investigations, to

4 include criminal history checks and tax reviews of the

5 following suppliers and their respective key persons, have

6 been conducted. The following suppliers have been found

7 suitable for relicensing by the Commission: Midwest Game

8 Supply Company; Shuffle Master, Incorporated; WMS Gaming,

9 Incorporated. Thank you.

10 CHAIRMAN BARTCH: Kevin, do we need an

11 individual motion or can we do them all at once?

12 MR. MULLALLY: If someone would like to make a

13 motion for all three resolutions, you can do it in a single

14 vote.

15 COMMISSIONER HINRICHS: I'll move that we

16 approve Commission Resolution 04-042, Commission Resolution

17 04-043, and Commission Resolution 04-044.

18 COMMISSIONER GANT: I'll second the motion.

19 CHAIRMAN BARTCH: Is there any other

20 discussion? If not, let's call the vote.

21 MS. FRANKS: Chairman Bartch.

22 CHAIRMAN BARTCH: Approved.

23 MS. FRANKS: Commissioner Hinrichs.

24 COMMISSIONER HINRICHS: Approved.

25 MS. FRANKS: Commissioner Gant.

0005

1 COMMISSIONER GANT: Approved.

2 MS. FRANKS: Commissioner Hartsfield.

3 COMMISSIONER HARTSFIELD: Approved.

4 MS. FRANKS: Commissioner Biele.

5 COMMISSIONER BIELE: Approved.

6 MS. FRANKS: By your vote, you've adopted

7 Resolution Nos. 04-042, 04-043, and 04-044.

8 MR. MULLALLY: Mr. Chairman, the next item on

9 the agenda is the consideration of two proposed rules, and

10 Legal Counsel Keith Essmyer will make the presentation.

11 MR. KEITH ESSMYER: Good morning, Commissioners.

12 CHAIRMAN BARTCH: Good morning.

13 MR. ESSMYER: The first rule is a proposed

14 rule for waivers and variances. This is a practice that we

15 do now to grant waivers and variances on certain rules and

16 regulations. This rule makes it clear that if you violate

17 one of those variances that we give you, it's treated as you

18 violating an order of the Commission.

19 And the second rule is a rule amending the

20 rules on liquor control to allow tips for gaming employees

21 that serve liquor. This is being done so that it

22 matches the rules that Liquor Control has themselves. We'd

23 like to stay with and mirror as much as possible the rules

24 from Liquor Control, and they do allow tips, and we would

25 like to allow that as well under our rules.

0006

1 COMMISSIONER GANT: I think on that, it still

2 has prohibitions on tips, and yes, in other regulations,

3 right?

4 MR. ESSMYER: Excuse me.

5 COMMISSIONER GANT: Well, you're talking about

6 -- I'm talking about the tips on the one that -- the one I'm

7 reading is prohibition on tips and gifts are also deleted,

8 but are governed by regulations in other chapters; is that

9 correct?

10 MR. ESSMYER: Yes, sir.

11 COMMISSIONER GANT: Okay.

12 COMMISSIONER HINRICHS: Can we do these

13 together or do we do them separately?

14 MR. MULLALLY: Yes, you can do them together.

15 COMMISSIONER HARTSFIELD: I would move

16 approval, then, of Rule 11 CSR 45-1.100, 11 CSR 45-12.090.

17 COMMISSIONER GANT: I'll second the motion.

18 CHAIRMAN BARTCH: Any other discussions? If

19 not, please take roll.

20 MS. FRANKS: Chairman Bartch.

21 CHAIRMAN BARTCH: Approved.

22 MS. FRANKS: Commissioner Hinrichs.

23 COMMISSIONER HINRICHS: Approved.

24 MS. FRANKS: Commissioner Gant.

25 COMMISSIONER GANT: Approved.

0007

1 MS. FRANKS: Commissioner Hartsfield.

2 COMMISSIONER HARTSFIELD: Approved.

3 MS. FRANKS: Commissioner Biele.

4 COMMISSIONER BIELE: Approved.

5 MS. FRANKS: By your vote, you've adopted the

6 proposed rule and amendment 11 CSR 45-1.100 and 11 CSR

7 45-12.090.

8 MR. MULLALLY: Mr. Chairman, the next item

9 includes three final orders of rulemaking with regard to the

10 inventory of chips and tokens, firearms on the riverboat, and

11 an applicant's duty to disclose changes in information.

12 These are rules that you had adopted previously as proposed

13 rules. They have been subject to a public hearing and public

14 comment. No public comments were received, and so we are

15 presenting them to you as final orders of rulemaking.

16 COMMISSIONER HINRICHS: Can we do those all at

17 once?

18 MR. MULLALLY: Yes, you may.

19 COMMISSIONER HINRICHS: Okay. I'll do the

20 Rule 11 CSR 45-5.150, Rule 11 CSR 45-10.021.

21 MR. MULLALLY: 020.

22 COMMISSIONER HINRICHS: 020, pardon me, and

23 what's the last one?

24 COMMISSIONER GANT: 11 CSR 45-6.030.

25 COMMISSIONER HINRICHS: There it is, yeah.

0008

1 And I so move.

2 COMMISSIONER HARTSFIELD: Second.

3 COMMISSIONER GANT: I have a question on one

4 of them. This is Judge Gant. On the firearms situation on,

5 you know, they have to notify who can give authority, what's

6 the penalty if they don't do that?

7 MR. MULLALLY: It would be within the

8 Commission's discretion, like all of our other disciplinary

9 actions. So you would have the ability to suspend the

10 license; you would have the ability to -- either the license

11 of an individual or the company; you could fine the company;

12 or I guess in an extreme case, you could revoke the license,

13 if you felt that it went to their suitability.

14 COMMISSIONER GANT: Okay. We can still review

15 each case on its individual facts?

16 MR. MULLALLY: That's correct. You would

17 evaluate the facts and impose a penalty as you deem

18 appropriate within the confines of the law, which are

19 relatively broad.

20 COMMISSIONER GANT: Okay. Thank you.

21 CHAIRMAN BARTCH: Are there any other

22 questions? If not, would you please call the roll?

23 MS. FRANKS: Chairman Bartch.

24 CHAIRMAN BARTCH: Approved.

25 MS. FRANKS: Commissioner Hinrichs.

0009

1 COMMISSIONER HINRICHS: Approved.

2 MS. FRANKS: Commissioner Gant.

3 COMMISSIONER GANT: Approved.

4 MS. FRANKS: Commissioner Hartsfield.

5 COMMISSIONER HARTSFIELD: Approved.

6 MS. FRANKS: Commissioner Biele.

7 COMMISSIONER BIELE: Approved.

8 MS. FRANKS: By your vote, you have adopted

9 final orders of rulemaking 11 CSR 45-5.150, 11 CSR 45-6.030,

10 and 11 CSR 45-10.020.

11 MR. MULLALLY: Mr. Chairman, Commissioners,

12 the final item on the agenda for today is the consideration

13 of three disciplinary actions, and General Counsel Mike

14 Bushmann is here to make that presentation.

15 MR. MIKE BUSHMANN: Good morning, Commissioners.

16 CHAIRMAN BARTCH: Good morning, Mike.

17 MR. BUSHMANN: The first case I have for you

18 this morning is DC-04-152 against President Riverboat

19 Casino-Missouri, Inc. On February 13, 2003, a President

20 Casino employee submitted several marketing offers and

21 coupons to the Commission for approval. The request stated

22 that an ID number would be printed on the coupons during the

23 printing process. The Commission staff approved their

24 request on February 19th, and the coupons were mailed out the

25 next month.

0010

1 What Commission auditors discovered after an

2 audit of the casino records is that the President failed to

3 obtain approval for a coupon for $35 in free chips or tokens

4 before it was sent out to customers. Those coupons also

5 lacked the ID number that was required by Commission

6 regulations to help prevent fraud.

7 In addition, President employees did not void

8 some of the approved coupons properly when they were redeemed

9 by the customers. Commission regulations require that all

10 coupons be initialed or stamped void when they're redeemed.

11 So for these violations, the staff recommends that President

12 Casino be fined in the amount of $10,000.

13 I also went back and looked to see in the past

14 what we had done. I was only able to determine one coupon

15 case back in 1998 against Argosy. They had a promotion where

16 they ran two months past what the expiration of the promotion

17 was supposed to be, and that was a $5,000 fine.

18 CHAIRMAN BARTCH: Any discussion?

19 COMMISSIONER GANT: Is there some distinction,

20 then, between the $5,000 and $10,000 proposed fine there? I

21 mean, they both violated the spirit of the thing and actually

22 did it, so is there more or is it marked more because the

23 President has been lax in a number of other things?

24 MR. BUSHMANN: Well, it was the failure to get

25 approval on the coupon, plus there was also the voiding

0011

1 problem on the coupons coming back in.

2 COMMISSIONER GANT: So you had enough.

3 MR. BUSHMANN: More than just the approval.

4 COMMISSIONER GANT: Okay. Then I -- let me

5 get the number. I move that we adopt and approve a $10,000

6 fine in DC-04-152.

7 COMMISSIONER HINRICHS: Second.

8 CHAIRMAN BARTCH: Any other discussion? Call

9 the roll.

10 MS. FRANKS: Chairman Bartch.

11 CHAIRMAN BARTCH: Approve.

12 MS. FRANKS: Commissioner Hinrichs.

13 COMMISSIONER HINRICHS: Approved.

14 MS. FRANKS: Commissioner Gant.

15 COMMISSIONER GANT: Approve.

16 MS. FRANKS: Commissioner Hartsfield.

17 COMMISSIONER HARTSFIELD: Approve.

18 MS. FRANKS: Commissioner Biele.

19 COMMISSIONER BIELE: Approve.

20 MS. FRANKS: By your vote, you have adopted

21 the preliminary order for disciplinary action DC-04-152.

22 MR. BUSHMANN: The next one is DC-04-153

23 against Harrah's's North Kansas City, LLC. Commission

24 minimum internal control standards require that when casinos

25 want to conduct a giveaway promotion for marketing purposes,

0012

1 they first have to submit a certificate to the Commission at

2 least ten days prior to the promotion. This certificate

3 doesn't require approval, but it notifies the Commission

4 about the promotion and it contains a statement by the

5 casino's attorney that the promotion does not constitute

6 illegal gambling.

7 On May 1, 2004, Harrah's commenced a promotion

8 without submitting the certificate. The Commission wasn't

9 notified about the promotion until May 12th. There's been a

10 long history of problems with Harrah's North Kansas City

11 concerning these certificates. The marketing department

12 would frequently ask for permission to file these

13 certificates late, so the company was on notice that there

14 were problems associated with these certificates. And for

15 this reason, the staff recommends that Harrah's North Kansas

16 be fined in the amount of $15,000.

17 COMMISSIONER GANT: Okay. Mr. Chairman, I

18 move that we approve and adopt the fine of $15,000 in

19 DC-04-153.

20 COMMISSIONER BIELE: Second.

21 CHAIRMAN BARTCH: Motion seconded, any other

22 discussion? Call the roll.

23 MS. FRANKS: Chairman Bartch.

24 CHAIRMAN BARTCH: Approve.

25 MS. FRANKS: Commissioner Hinrichs.

0013

1 COMMISSIONER HINRICHS: Approve.

2 MS. FRANKS: Commissioner Gant.

3 COMMISSIONER GANT: Approve.

4 MS. FRANKS: Commissioner Hartsfield.

5 COMMISSIONER HARTSFIELD: Approved.

6 MS. FRANKS: Commissioner Biele.

7 COMMISSIONER BIELE: Approve.

8 MS. FRANKS: By your vote, you've adopted the

9 preliminary order for disciplinary action DC-04-153.

10 MR. BUSHMANN: The last case this morning is

11 DC-04-154, which is also against Harrah's North Kansas City,

12 and again, involves the marketing department for that casino.

13 In the early part of this year, the Director of Marketing and

14 the Manager of Database Marketing decided to expand Harrah's

15 database of potential customers. So they contacted two

16 companies in order to acquire new names. The two companies

17 provided Harrah's approximately 29,000 names of potential new

18 customers to add to the marketing database, and in April and

19 May, the casino mailed those persons marketing offers.

20 What the company failed to do, however, was to

21 cross-reference their new list of names with the Commission's

22 list of disassociated persons. This list contains the names

23 of persons who have excluded themselves from Missouri

24 casinos. Harrah's failed to remove those persons from their

25 new marketing list, and as a result, at least six

0014

1 disassociated persons received the marketing offers.

2 Harrah's own internal investigation discovered that as many

3 as 260 disassociated persons could have received the

4 mailings.

5 Commission regulations require that casinos

6 remove disassociated persons from all marketing mailing

7 lists. Since Harrah's's failed to do so, the staff

8 recommends that Harrah's be fined in the amount of $25,000.

9 COMMISSIONER GANT: Mr. Chairman, I have just

10 one comment. I agree with the fine in this case, and what's

11 disturbing about it is I hope we have a reputation of trying

12 to help the people who have that problem, so I hate to see

13 them be sent things when the casinos aren't checking it out

14 correctly.

15 I'm glad these people did report that they

16 received this or we might not ever have learned about it, but

17 I do think that casinos have to be very careful because these

18 people do have problems, and we don't want to increase their

19 problems by having them still influenced by any information.

20 So that's my comment and everybody else can do what they want

21 to do with it.

22 COMMISSIONER HARTSFIELD: I have a question.

23 Is there any value, if this is approved, to notify at least

24 the six who complained, if not the whole 250, of the action

25 taken?

0015

1 MR. MULLALLY: Melissa -- this is Kevin.

2 Melissa is not here. I think that might be --

3 MR. BUSHMANN: I don't know about the 260,

4 since we're not exactly for sure if they received that,

5 and I know Melissa has said in the past that notifying about

6 these things can sometimes cause recurrences or trigger

7 problems for them.

8 COMMISSIONER HARTSFIELD: If it was me, I

9 could see where they would be annoyed just being bothered.

10 COMMISSIONER HINRICHS: Leave it alone.

11 MR. BUSHMANN: I don't know about the six that

12 complained whether that would be a good idea.

13 MR. MULLALLY: Rick Alm is here, I'm sure he's

14 going to write about it, so they'll have some opportunity to

15 be notified.

16 COMMISSIONER GANT: Right, since it's up here,

17 too, at Harrah's, if Rick puts it in the paper. I find Rick's

18 articles very interesting and hopefully other people read

19 them, so that probably will be sufficient, but I do think we

20 need to send a message and that's why I think the $25,000 was

21 an appropriate fine.

22 MR. BIELE: Mr. Chairman, I also have a

23 comment or two on this. This program was started several

24 years ago, and in large part due to the vision of our now

25 Executive Director, this has been a highly successful

0016

1 program, not only here in Missouri but also several other

2 states have used this as a model to start their own program.

3 In order for this program to be successful,

4 you know, it needs three components. First component, as

5 we've talked about, is the individual that has the problem

6 that they must step forward and admit they have a problem,

7 and this would not be an easy thing to do. So I think if

8 they're willing to step forward, make this commitment, then I

9 think the Gaming Commission, the staff, and the gaming

10 company itself should do everything possible in order to

11 honor the commitment of these people.

12 Second component is the gaming company. They

13 should take extraordinary steps to make sure that none of

14 these persons who are on this list have access to the gaming

15 floor or that they are sent any of this material to try to

16 entice them, you know, back into the casino.

17 And the third component is the Gaming

18 Commission staff and the Gaming Commission itself. I think

19 it's up to us to make sure that we keep accurate records,

20 that we make sure that the person giving this statement has

21 given it voluntarily, knows exactly what they want to do, and

22 it's up to the staff to propose harsh penalties against the

23 company or against the individual if they try to get back on

24 to the gaming floor.

25 I see this as a very serious violation. If

0017

1 the gaming companies are truly, truly interested in coping

2 with the problem of gambling, then a violation such as this

3 is really, to me, is inexcusable. So I guess in the future,

4 I would recommend to the staff that much higher fines be

5 levied and steps be taken, possibly, against the individual's

6 license who was lax in making sure this didn't happen. Thank

7 you.

8 COMMISSIONER GANT: I agree.

9 COMMISSIONER HINRICHS: I agree.

10 CHAIRMAN BARTCH: And Ralph, I agree, too. I

11 think it's obvious that the company didn't make an effort,

12 that they either didn't care or because of failures of the company

13 that's been already talked about, and the $25,000 fine is

14 certainly justified in this case.

15 COMMISSIONER HARTSFIELD: I think if we

16 enforce this the way it should be, then the integrity of the

17 Commission is also upheld. And we're trying to help these

18 people, so I'll go along with the $25,000 this time, but I

19 agree with Ralph that if there are subsequent events like

20 this, then I'm not going to be very patient or tolerant or

21 understanding about it. So I move that we do fine Harrah's

22 $25,000 and adopt DC-04-154.

23 COMMISSIONER HINRICHS: Second.

24 CHAIRMAN BARTCH: Is there any other

25 discussion? Call the roll.

0018

1 MS. FRANKS: Chairman Bartch.

2 CHAIRMAN BARTCH: Approve.

3 MS. FRANKS: Commissioner Hinrichs.

4 COMMISSIONER HINRICHS: Approve.

5 MS. FRANKS: Commissioner Gant.

6 COMMISSIONER GANT: Approve.

7 MS. FRANKS: Commissioner Hartsfield.

8 COMMISSIONER HARTSFIELD: Approve.

9 MS. FRANKS: Commissioner Biele.

10 COMMISSIONER BIELE: Approve.

11 MS. FRANKS: By your vote, you've adopted

12 preliminary order for disciplinary action DC-04-154.

13 CHAIRMAN BARTCH: Kevin, whether it's

14 appropriate or not, Harrah's should go on notice.

15 COMMISSIONER HINRICHS: I think we ought to

16 double the fine every time it happens.

17 COMMISSIONER GANT: I agree. I agree with

18 Ralph, too, if there are individuals that are licensed, they

19 ought to have a suspension of license.

20 MR. MULLALLY: I think Commissioner Biele's

21 comments were very articulate, to the point, and I think that

22 Harrah's will get the message as will the other licensees.

23 If they don't --

24 COMMISSIONER BIELE: So be it.

25 MR. MULLALLY: So be it.

0019

1 CHAIRMAN BARTCH: I wouldn't want to go along

2 with doubling the fine right now because if they do it again

3 next week, I'm going to triple the fine. But I think we

4 ought to consider what happens each time and how soon it

5 happens and what happened and why it happened, but I do

6 definitely think we've got to send a strong message to them.