1 MISSOURI GAMING COMMISSION MEETING

2 Central Office

3 3417 Knipp Drive

4 Post Office Box 1847

5 Jefferson City, Missouri 65102

14 July 26, 2006

20 BEFORE: Noel J. Shull, Chairman

Floyd O. Bartch, Commissioner

21 Darryl T. Jones, Commissioner

Samuel J. Hais, Commissioner

22 Gene McNary, Executive Director

Michael Bushmann, General Counsel

23 Clarence Greeno, Gaming Enforcement Manager

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

3 COURT REPORTER:

4 ASHLEY C. HIGH

MIDWEST LITIGATION SERVICES

5 711 North 11th Street

St. Louis, MO 63101

6 (314) 644-2191

7 ALSO PRESENT:

8 ANGELA FRANKS, Missouri Gaming Commission

10 EXHIBITS

11 No exhibits marked.

1 TRANSCRIPT OF PROCEEDINGS

2 MR. CHAIRMAN: Call roll.

3 MS. ANGELA FRANKS: Chairman Shull?

4 MR. CHAIRMAN: Present.

5 MS. FRANKS: Commissioner Bartch?

6 MR. BARTCH: Present.

7 MS. FRANKS: Commissioner Jones?

8 MR. JONES: Present.

9 MS. FRANKS: Commissioner Hais?

10 MR. HAIS: Present.

11 MR. CHAIRMAIN: The first thing we're going to

12 consider are the disciplinary actions, so Mr. McNary.

13 MR. GENE McNARY: Mr. Chairman, General Counsel Mike

14 Bushmann will make the presentations.

15 MR. MIKE BUSHMANN: Good morning, Mr. Chairman.

16 MR. CHAIRMAN: Good morning.

17 MR. BUSHMANN: Good morning, Commissioners.

18 COMMISSIONERS: Good morning.

19 MR. BUSHMANN: The first case for you this morning

20 is The Missouri Gaming Company d/b/a Argosy Riverside Casino,

21 Case No. DC-06-179.

22 This is a revoked software case where the casino was

23 required to replace certain main game software in slot

24 machines prior to November 30, 2005, because under certain

25 circumstances the pay table would not show on display.

1 On April 26th -- or excuse me, April 21, 2006 a

2 Commission slot machine specialist discovered that the casino

3 had failed to replace that software in one of the slot

4 machines prior to the deadline for removal. So for this

5 violation the staff is recommending a fine in the amount of

6 $5,000.

7 MR. CHAIRMAIN: Had they had other violations that

8 are similar?

9 MR. BUSHMANN: I don't remember that there were any

10 significant violations from this company in this type of

11 violation.

12 MR. JONES: Could you ascertain the impact on the

13 revenues for patrons or to the Commission that this would

14 have had?

15 MR. BUSHMANN: I don't think there were any revenue

16 implications. The implications here are the integrity of the

17 game because it was not performing in a manner as it should,

18 but it wasn't affecting the payout. It was just not

19 displaying a pay table.

20 MR. HAIS: When you said no other significant

21 violations, did you mean of this nature or --

22 MR. BUSHMANN: Of this nature.

23 MR. HAIS: (Continuing) -- or generally?

24 MR. BUSHMANN: Of this nature.

25 MR. BARTCH: Make a motion for approval of

1 DC-06-179.

2 MR. HAIS: Second.

3 MR. CHAIRMAN: Any other questions? Call the roll.

4 MS. FRANKS: Chairman Shull?

5 MR. CHAIRMAN: Approve.

6 MS. FRANKS: Commissioner Bartch?

7 MR. BARTCH: Approve.

8 MS. FRANKS: Commissioner Jones?

9 MR. JONES: Approve.

10 MS. FRANKS: Commissioner Hais?

11 MR. HAIS: Approve.

12 MS. FRANKS: By your vote you've adopted

13 disciplinary complaint DC-06-179.

14 MR. BUSHMANN: Next case President Riverboat

15 Casino-Missouri, Inc., DC-06-180. This is another revoked

16 software case, where the software was required to be replaced

17 immediately because in certain circumstances the slot machine

18 would not award wins correctly.

19 The Commission notified the casino on May 4, 2006,

20 that immediate replacement was required, but discovered that

21 one slot machine had remained with the revoked software in

22 place for five days after the notification occurred. So for

23 this violation the staff is recommending a fine in the amount

24 of $5,000.

25 MR. CHAIRMAN: Any questions?

1 MR. HAIS: I guess the same question as before, is

2 this the first?

3 MR. BUSHMANN: It wouldn't be the first, but since

4 it was a single slot machine and it was a period of five days,

5 that's why the staff was recommending a fine in the lower

6 range of the range of fines for this type of violation.

7 MR. HAIS: Was there a response from the company as

8 to any reason why it happened or justification?

9 MR. BUSHMANN: Not that I'm aware of, although that

10 may occur in the hearing process.

11 MR. BARTCH: Recommend approval of DC-06-180.

12 MR. CHAIRMAN: Second. Any further discussion?

13 Call the roll.

14 MS. FRANKS: Chairman Shull?

15 MR. CHAIRMAN: Approve.

16 MS. FRANKS: Commissioner Bartch?

17 MR. BARTCH: Approve.

18 MS. FRANKS: Commissioner Jones?

19 MR. JONES: Approve.

20 MS. FRANKS: Commissioner Hais?

21 MR. HAIS: Approve.

22 MS. FRANKS: By your vote you've adopted

23 disciplinary complaint DC-06-180.

24 MR. BUSHMANN: The last case I have for you is

25 Ameristar, Kansas City, DC-06-181. This case involves the

1 Commission's List of Disassociated Persons that have

2 voluntarily banned themselves from Missouri casinos.

3 The Commission is constantly updating and changing

4 the information on this List and the casinos are required to

5 update any changed information at least every seven days.

6 Ameristar employees downloaded the new information

7 from the List twice in March, but they failed to update the

8 casino’s database to reflect the new married name of one woman

9 who was on the List.

10 When that woman appeared at the casino on March

11 30, 2006 and attempted to enter the casino illegally, casino

12 employees allowed her to enter because their computer database

13 had not been updated properly to reflect that new married

14 name.

15 A casino cashier identified her at the cashier's

16 cage when she tried to cash a check, so she wasn't able to

17 gamble, but Ameristar employees did violate Commission rules

18 by failing to properly update the List and her name on the

19 list and allowing her to the illegally enter the casino. So

20 for this violation the Commission staff is recommending a

21 $5,000 fine.

22 MR. HAIS: Would your recommendation be any

23 different if she had gambled?

24 MR. BUSHMANN: It might have been. Usually the

25 staff looks at casino fines as a systemic breakdown in process

1 and in this case there was a breakdown in process, but there

2 were mitigating factors in that the casino cashier did catch

3 that person before she was able to proceed further and gamble.

4 So in that case there was a breakdown in process, but it did

5 work at some point.

6 MR. CHAIRMAN: Any other questions?

7 MR. BARTCH: Recommend approval of DC-06-181.

8 MR. HAIS: Second.

9 MR. CHAIRMAN: Further discussion? Call the roll.

10 MS. FRANKS: Chairman Shull?

11 MR. CHAIRMAN: Approve.

12 MS. FRANKS: Commissioner Bartch?

13 MR. BARTCH: Approve.

14 MS. FRANKS: Commissioner Jones?

15 MR. JONES: Approve.

16 MS. FRANKS: Commissioner Hais?

17 MR. HAIS: Approve.

18 MS. FRANKS: By your vote you've adopted

19 disciplinary complaint DC-06-181.

20 MR. McNARY: Mr. Chairman, Item III on the agenda,

21 Consideration of Level I/Key Applicants, Sergeant Steve

22 Akridge will make a presentation.

23 SGT. AKRIDGE: Mr. Chairman and Commissioners,

24 Missouri State Highway Patrol Investigators from the St. Louis

25 Background Unit and the Gaming Commission's Financial

1 Investigator have conducted a background investigation on the

2 following Key/Level I and Business Entity Key Person

3 Applicants.

4 The investigation included, but was not limited to

5 criminal, financial and other character inquiries. The

6 following applicants are presented to the Commission for

7 licensure.

8 For a Key Person License, Daniel Lee, Chief

9 Executive Officer and Chairman of the Board for Pinnacle

10 Entertainment, Incorporated. For a Level I License, Ronald

11 Reigle, Corporate Compliance Officer and Director of Internal

12 Audit for Pinnacle Entertainment, Incorporated. And for a Key

13 Business Entity Key Person License, Pinnacle Entertainment

14 Incorporated. Thank you.

15 MR. McNARY: Mr. Chairman, the investigation found

16 that based on the financial and the background investigation

17 indicated no reason not to issue the license.

18 MR. CHAIRMAN: Thank you. Any questions?

19 MR. JONES: I have one. Prior to me making my

20 recommendation to approve this and this is just going out to

21 Pinnacle. There's been some rumors in St. Louis -- and this

22 is pertaining to the MWBE Program and there have been some

23 rumors circulating in St. Louis that your general contractor

24 has in some ways had their subcontractors hire their personnel

25 to work on some of the construction projects, which to me is a

1 violation of the spirit of the MWBE Program.

2 And I'd like to have some type of assurance -- and

3 we aren't receiving this monthly reports anymore and I'd like

4 to have some type of assurance that there -- that the reports

5 are correct, that the numbers -- the percentages that we're

6 trying to obtain from the City and the County are correct and

7 that the spirit of the program is being complied to.

8 And, like I said, there's a small thin line between

9 the rumors and reality and I need to have that assurance --

10 you know, moving forward.

11 And I'm not too sure if -- if you have talked to

12 your general contractors. In this case, it being McCarthy --

13 McCarthy Brothers and what they're doing with their

14 subcontractors, but like I said, that's the rumor I've been

15 hearing in St. Louis.

16 MR. McNARY: Commissioner Jones, Pinnacle's

17 representatives -- should I bring them forward, so that they

18 can state their position?

19 MR. JONES: Yeah.

20 MR. CHAIRMAN: Sure.

21 MR. JACK GODFREY: Good morning, Mr. Chairman, members of

22 the Commission. My name is Jack Godfrey, General Counsel for

23 Pinnacle Entertainment. To my left is Wade Hundley, who is

24 President. Harry Maupins to my far left who is our Compliance

25 Coordinator for MWBE and Jerry Riffel, our counsel.

1 Mr. Jones, this is the first that we've heard of

2 this rumor. We can assure you that we make every effort to

3 meet not only the spirit but the letter of the requirements.

4 We've hired Mr. Maupins, whose been doing an

5 excellent job and we've been providing reports to the

6 Commission.

7 So we will certainly look into this question that

8 you have and we can assure you that we will attempt to meet

9 the spirit and the letter of the law with the respect to these

10 hiring practices and we will check with our general

11 contractor. I'm not aware that there is a problem. Maybe

12 Mr. Maupins could address this.

13 MR. MAUPINS: I'm not aware of any because we meet

14 every week with McCarthy, with our consultants and Pinnacle to

15 discuss these issues.

16 This is the first time that this has ever come to my

17 attention, so I don't know anything about that. We do send a

18 monthly report.

19 MR. McNARY: The report was just filed,

20 Commissioner.

21 MR. JONES: Okay. Again, like I said, this is a

22 rumor, but I want to have some assurance that this is not

23 happening. You know, and should go as far as, also, the

24 personnel that are on the job site. If it belongs to a

25 subcontractor those personnel -- that personnel should be with

1 that subcontractor as opposed to being part of McCarthy's

2 personnel, so --

3 MR. GODFREY: We'll certainly look into that,

4 Commissioner, and we'd be happy to provide a report either to

5 your staff or to the Commission at the next meeting.

6 MR. JONES: A detailed report, please.

7 MR. GODFREY: Okay. Absolutely.

8 MR. McNARY: Any other questions?

9 MR. SHULL: Thank you. Any other comments,

10 questions?

11 MR. JONES: Move for approval of Resolution No.

12 06-041.

13 MR. HAIS: Second.

14 MR. CHAIRMAN: Further discussion? Call the roll.

15 MS. FRANKS: Chairman Shull?

16 MR. CHAIRMAN: Approve.

17 MS. FRANKS: Commissioner Bartch?

18 MR. BARTCH: Approve.

19 MS. FRANKS: Commissioner Jones?

20 MR. JONES: Approve.

21 MS. FRANKS: Commissioner Hais?

22 MR. HAIS: Approve.

23 MS. FRANKS: By your vote you've adopted Resolution

24 No. 06-041.

25 MR. McNARY: Mr. Chairman, Item IV on the agenda is

1 Consideration of Rulemaking and Clarence Greeno will make the

2 presentation.

3 MR. CLARENCE GREENO: Mr. Chairman, Commissioners, good

4 morning.

5 MR. CHAIRMAN: Good morning.

6 MR. GREENO: Behind Tab E you will find four

7 proposed amendments to Chapter 7 of Title 11, Division 45 of

8 the Code of State Regulations.

9 The first of which is a proposed amendment to 11 CSR

10 45-7.030 relating to required surveillance equipment for

11 casino properties.

12 The proposed changes to this rule will require

13 casinos to migrate to an all color environment on their gaming

14 floors and to replace their present analog recording equipment

15 with digital video recording systems.

16 The proposal allows a five year phase-in; that is,

17 the casino properties will not be required to have completed

18 the changeover to digital until July 1, 2011.

19 The purpose of the proposed amendments is twofold.

20 One, to migrate to digital recording equipment which will

21 improve the quality of surveillance recordings for use in

22 criminal and administrative proceedings; and two, to establish

23 uniform and reasonable standards for digital surveillance

24 equipment applicable to all licensees as opposed to each of

25 the properties establishing their own individual standards.

1 The second purpose is particularly important because

2 analog recording equipment presently required by this

3 regulation is no longer available for purchase by the

4 licensees and several of the licensees have already begun

5 migrating to digital technology. I would be happy to

6 entertain any questions relative to this proposed rule.

7 MR. HAIS: I was wondering what the thinking was

8 behind by the five year phase-in.

9 MR. GREENO: Primarily it's the cost and to allow

10 the casinos five budget cycles to appropriate the monies for

11 compliance with the regulations.

12 And also behind Tab E you will find a proposed

13 amendment to 11 CSR 45-7.040 relating to areas of required

14 surveillance at casino properties.

15 The revisions to this rule are designed to better

16 define those areas where surveillance is required.

17 Specifically, for roulette coverage the equipment -- or the

18 requirement that the table and wheel be capable on a split

19 screen is being revised to require only that the table and

20 wheel be recorded in a manner that permits the viewer to

21 observe game outcome and payout.

22 It accomplishes the same thing, but removes a

23 requirement licensees can no longer meet because of changes in

24 technology.

25 The proposed revision also more specifically

1 delineates exactly what must be covered in the soft count

2 rooms and casino cages and adds a requirement for coverage of

3 each slot machine offering a payout in excess of $250,000.

4 Again, I would be happy to answer any questions you might have

5 concerning this proposed rule or revision.

6 MR. CHAIRMAN: And when would this be effective?

7 MR. GREENO: This would be effective upon the date

8 of the rule.

9 MR. CHAIRMAN: No questions. Go ahead.

10 MR. GREENO: The next proposed amendment is to 11

11 CSR 45-7.080 relating to the storage and retrieval of video

12 surveillance recordings.

13 Presently, the rule requires all recordings to be

14 retained for at least fourteen days. The proposed amendment

15 requires recordings from cameras covering the turnstiles and

16 areas within cashier cages, main banks and count rooms be

17 maintained for at least thirty days, while all other be

18 retained for at least fourteen days.

19 The rule is also being amended to accommodate the

20 digital recording systems, which can retain the recordings on

21 their hard drives rather than having to be removed from the

22 recording devices to be viewed as is presently the case with

23 analog recording devices. Are there any questions to this

24 proposed rule?

25 The final proposal is an amendment to 11 CSR

1 45-7.120 relating to surveillance system plans. A requirement

2 that the licensee maintain and keep a current copy of their

3 surveillance plans within a surveillance department with

4 access to or a copy thereof being available to the Commission

5 upon request is being added to the rule.

6 Previously the rule required that a surveillance

7 system plan be prepared prior to the opening and that the plan

8 be updated when gaming devices were moved on the gaming floor,

9 but there was no real requirement that the surveillance be

10 kept currently updated and available to the Commission upon

11 request. Are there any questions to this proposal?

12 MR. CHAIRMAN: I see none. Thank you very much.

13 MR. BARTCH: Recommend approval of 11 CSR 45-7.030,

14 7.040, 7.080 and 7.120.

15 MR. HAIS: Second.

16 MR. CHAIRMAN: Further discussion? Call the roll.

17 MS. FRANKS: Chairman Shull?

18 MR. CHAIRMAN: Approve.

19 MS. FRANKS: Commissioner Bartch?

20 MR. BARTCH: Approve.

21 MS. FRANKS: Commissioner Jones?

22 MR. JONES: Approve.

23 MS. FRANKS: Commissioner Hais?

24 MR. HAIS: Approve.

25 MS. FRANKS: By your vote you've adopted proposed

1 rulemaking 11 CSR 45-7.030, 11 CSR 45-7.040, 11 CSR 45-7.080

2 and 11 CSR 45-7.120.

3 MR. McNARY: Mr. Chairman, final orders of

4 rulemaking, Item F. I'd like to recall Mike Bushmann.

5 MR. BUSHMANN: All the rules under Tab F are final

6 orders of rulemaking that were approved by this Commission

7 several months ago. There were no comments at the public

8 comment period, so these are before you for final approval.

9 The first, second and the fourth rules are all

10 related and involve the requirements for licensees to update

11 changes to their application information.

12 The primary changes are in 10.020, where the rule is

13 being amended to allow casinos, suppliers and key persons

14 thirty days to submit changes to their application

15 information, instead of the prior ten-day requirement.

16 This change is being made because information from

17 these licensees is often from out-of-state and they're being

18 accumulated from different locations and from different people

19 and so it's sometimes hard to make that ten-day requirement.

20 Individual Level II employees who are usually situated in

21 Missouri still have to comply with the ten-day rule.

22 Rules 3.010 and 4.260 are being amended to delete

23 similar, but different requirements so that only one rule will

24 govern compliance on this issue.

25 In Rule 8.060 the requirement for casinos to submit

1 paper copies of SEC filings is being deleted. These filings

2 are now available online and it makes no sense to collect and

3 store paper copies at great expense to the casinos and the

4 Commission when an electronic copy is easily obtained. So the

5 staff is recommending that all four of those amendments be

6 approved.

7 MR. CHAIRMAN: Is there any questions? Do we have a

8 motion?

9 MR. BARTCH: Recommend approval of 11 CSR 45-3.010,

10 11 CSR 45-4.260, 11 CSR 45-8.060 and 11 CSR 45-10.020.

11 MR. JONES: Second.

12 MR. CHAIRMAN: Any further discussion? Call the

13 roll.

14 MS. FRANKS: Chairman Shull?

15 MR. CHAIRMAN: Approve.

16 MS. FRANKS: Commissioner Bartch?

17 MR. BARTCH: Approve.

18 MS. FRANKS: Commissioner Jones?

19 MR. JONES: Approve.

20 MS. FRANKS: Commissioner Hais?

21 MR. HAIS: Approve.

22 MS. FRANKS: By your vote you've adopted final

23 orders of rulemaking 11 CSR 45-3.010, 11 CSR 45-4.260, 11 CSR

24 45-8.060 and 11 CSR 45-10.020.

25 MR. CHAIRMAN: Thank you.

1 MR. McNARY: Mr. Chairman, the last item on the

2 agenda we believe is a moot question and should be deleted.

3 Although, if the Commissioners have any questions Assistant

4 Attorney General Rackers is here and could answer

5 questions.

6 The licensee, subject to discipline her license, has

7 already expired. There's really nothing -- there's no

8 application to renew. So there's really nothing before the

9 Commission to act on.

10 MR. HAIS: I have a question, Mr. McNary. Do you

11 know the deadline -- if there is one for the application, to

12 renew, do you know or is there somebody who might have that

13 information when that deadline is? Has it passed?

14 MR. McNARY: I think it's passed.

15 MR. BUSHMANN: I think it has passed. The license

16 expired and the licensee did not renew. So there is no

17 license right now.

18 MR. HAIS: I note, for the record, there's a

19 stipulations agreement/settlement agreement and voluntary

20 dismissal that we were provided among other things, a waiver,

21 in Paragraph 10, if I could refer you to that, please.

22 That binds the parties in respect of claim for

23 attorney fees and it's -- it indicates in this last sentence

24 that it's severable and survives in perpetuity.

25 In your opinion, as counsel, Mr. Bushmann, if I may

1 address you, is it -- does that have any repercussion that we

2 ought to address?

3 MR. BUSHMANN: With regard to that particular --

4 MR. HAIS: A potential repercussion?

5 MR. BUSHMANN: (Continuing) -- paragraph, if that

6 affects her license? The settlement agreement would not go

7 into effect unless it was approved by this Commission. So it

8 is in no effect right now.

9 My recommendation to remove from consideration today

10 is based on case law that seems to indicate that when a

11 hearing has not been held yet, the Commission does not have

12 jurisdiction, in fact, if the license expires.

13 We would retain jurisdiction if the hearing had been

14 held, but since there was no hearing yet in this case my

15 opinion was that the Commission lacked jurisdiction to act.

16 MR. HAIS: Well now, since the deadline has passed

17 and she's barred from applying for a renewal, does that --

18 MR. BUSHMANN: She may reapply for a new license and

19 at that point any information that would be contained in this

20 case could be evaluated by the Commission in determining her

21 future suitability.

22 MR. HAIS: And that prompts the further question

23 that, are there not to be a determination made prospectively?

24 MR. BUSHMANN: Usually there is. In this case, the

25 negotiation period went through an extended period of time and

1 in the interim we just failed to catch that her license had

2 expired.

3 MR. HAIS: Is there a procedure that you have used

4 in the past to depose parties that might be no longer

5 available in the event, say, that she does reapply at some

6 future time when these people aren't around anymore?

7 MR. BUSHMANN: Normally, we do not have such a

8 process.

9 MR. HAIS: Okay.

10 MR. CHAIRMAN: Anything further?

11 MR. McNARY: That's completes the agenda.

12 MR. HAIS: Mr. Chairman, I move that we go into

13 closed session and consider certain matters and I would move

14 to receive, discuss and consider the follow matters: Legal

15 Actions, Cause of Action and Litigation under 610.021(1)

16 Revised Statutes of Missouri and Investigatory, Proprietary

17 and Application Records, Information and Summation under

18 Section 610.021(14) and 313.847.1 RSMo.

19 MR. CHAIRMAN: Is there a second?

20 MR. JONES: Second.

21 MR. CHAIRMAN: Discussion? Call the roll.

22 MS. FRANKS: Chairman Shull?

23 MR. CHAIRMAN: Approve.

24 MS. FRANKS: Commissioner Bartch?

25 MR. BARTCH: Approve.

1 MS. FRANKS: Commissioner Jones?

2 MR. JONES: Approve.

3 MS. FRANKS: Commissioner Hais?

4 MR. HAIS: Approve.

5 (WHEREIN MEETING WENT INTO CLOSED SESSION.)

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

3 STATE OF MISSOURI )

4 ) SS

5 COUNTY OF ST. LOUIS )

7 I, Ashley C. High, a Shorthand Reporter and Notary

8 Public within and for the State of Missouri, do hereby certify

9 that I was personally present at the proceedings in the

10 above-entitled cause at the time and place set forth in the

11 caption sheet thereof; thereafter reduced to typewriting under

12 my direction.

________________________

15 Ashley C. High

Notary Public within and

16 for St. Louis County, MO

18 My commission expires October 20, 2007