1
1 BEFORE THE MISSOURI GAMING COMMISSION
2 STATE OF MISSOURI
3
4
5
6 Meeting
7 January 17, 2007
8 3417 Knipp Drive
9 Jefferson City, Missouri
10
11
12
COMMISSIONERS PRESENT:
13
Noel Shull, Chairman
14 Samuel J. Hais, Commissioner
Darryl Jones, Commissioner
15 Larry W. Plunkett, Sr., Commissioner
16
17
18
19
20 REPORTED BY:
21 TRACY L. THORPE TAYLOR, CSR, CCR
MIDWEST LITIGATION SERVICES
22 3610 Buttonwood
Columbia, Missouri 65201
23 (573) 442-3600
(573) 636-7551
24
25
2
1 I N D E X
2 I. Call to Order
3
II. Consideration of Minutes
4 A. October 25, 2006
November 3, 2006
5
III. Ratification of Licensees - Dave Welch
6 C. Ameristar Casino Kansas City, Inc.
1. Resolution No. 07-001
7 D. Ameristar Casino St. Charles, Inc.
1. Resolution No. 07-002
8
IV. Consideration of Relicensure of Class A Licensees
9 E. HGI-St. Jo, Inc.
Presentation by Applicant - Jerry Riffel,
10 Sean Higgins, Craig Travers, A.J. Wiedmaier
Presentation by City of St. Joseph - Ken Shearin,
11 Bill Falkner
Public Comment
12 Investigative Summary - Sgt. Phil Morrison
Staff Recommendation
13 Resolution No. 07-003
14 F. HGI-Mark Twain, Inc.
Presentation by Applicant - Jerry Riffel, Sean
15 Higgins, Robert Thursby
Presentation by City of LaGrange - Steve
16 Griesbaum, Mark Campbell
Public Comment
17 Investigative Summary - Trooper Mike Arand
Staff Recommendation
18 Resolution No. 07-004
19 V. Consideration of Relicensure of Certain Suppliers -
Lt. Gary Moore
20 G. United States Playing Card Company
1. Resolution No. 07-005
21 H. George C. Matteson Company, Inc., d/b/a GEMACO
Playing Card Company
22 1. Resolution No. 07-006
I. Atronic Americas, LLC
23 1. Resolution No. 07-007
J. Mikohn Gaming d/b/a Progressive Gaming
24 International Corp.
1. Resolution No. 07-008
25
3
1 VI. Consideration of Licensure of Certain Supplier -
Lt. Gary Moore
2 K. Konami Gaming, Incorporated
1. Resolution No. 07-009
3
VII. Consideration of Level I/Key Applicants - Lt. Gary
4 Moore
L. Resolution No. 07-010
5
VIII. Consideration of Rules and Regulations - Dave Welch
6 N. Final Orders of Rulemaking
1. 11 CSR 45-12-080 - Hours of Operation
7 2. 11 CSR 45-30.280 - Net Receipts from Bingo and
Bank Account
8
IX. Presentation by City of Sugar Creek - Doug Stone
9
X. Closed Session
10
XI. Adjournment
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
4
1 CHAIRMAN SHULL: The first order, would you
2 please call the role.
3 MS. FRANKS: Chairman Shull?
4 CHAIRMAN SHULL: Present.
5 MS. FRANKS: Commissioner Jones?
6 COMMISSIONER JONES: Present.
7 MS. FRANKS: Commissioner Hais?
8 COMMISSIONER HAIS: Present.
9 MS. FRANKS: Commissioner Plunkett?
10 COMMISSIONER PLUNKETT: Present.
11 CHAIRMAN SHULL: We have the minutes of the
12 October 25th meeting. Are there any corrections, deletions,
13 changes that should be made?
14 COMMISSIONER PLUNKETT: No, sir.
15 CHAIRMAN SHULL: Could I have a motion to
16 approve?
17 COMMISSIONER HAIS: Motion to approve the
18 minutes.
19 COMMISSIONER PLUNKETT: Second.
20 CHAIRMAN SHULL: Is there any further
21 discussion on those?
22 Call the role.
23 MS. FRANKS: Chairman Shull?
24 CHAIRMAN SHULL: Approved.
25 MS. FRANKS: Commissioner Jones?
5
1 COMMISSIONER JONES: Approved.
2 MS. FRANKS: Commissioner Hais?
3 COMMISSIONER HAIS: Approved.
4 MS. FRANKS: Commissioner Plunkett?
5 COMMISSIONER PLUNKETT: Approved.
6 MS. FRANKS: By your vote, you've adopted the
7 minutes of the October 25th, 2006 meeting.
8 CHAIRMAN SHULL: Thank you.
9 The next issue is November 3rd, 2006 minutes.
10 Are there any corrections, deletions, change to those minutes?
11 If not, could I have a motion?
12 COMMISSIONER HAIS: Move to approve those
13 minutes also, Mr. Chairman.
14 COMMISSIONER PLUNKETT: Second.
15 CHAIRMAN SHULL: Are there any further
16 discussions regarding those?
17 If not, call the role.
18 MS. FRANKS: Chairman Shull?
19 CHAIRMAN SHULL: Approved.
20 MS. FRANKS: Commissioner Jones?
21 COMMISSIONER JONES: Approved.
22 MS. FRANKS: Commissioner Hais?
23 COMMISSIONER HAIS: Approved.
24 MS. FRANKS: Commissioner Plunkett?
25 COMMISSIONER PLUNKETT: Approved.
6
1 MS. FRANKS: By your vote, you've adopted the
2 minutes of the November 3rd, 2006 meeting.
3 CHAIRMAN SHULL: Mr. McNary, would you like to
4 go ahead and introduce the next --
5 MR. MCNARY: Yes, sir.
6 CHAIRMAN SHULL: -- order of business, please?
7 MR. MCNARY: Mr. Chairman, members of the
8 Commission, first I'd like to introduce our new general
9 counsel, Christopher Hinckley. Chris, will you please stand.
10 MR. HINCKLEY: Good morning.
11 MR. MCNARY: Mr. Hinckley is from the circuit
12 attorney's office, senior trial lawyer and litigator and
13 brings a new dimension to the Commission. So I wanted you to
14 meet him.
15 Next item, ratification of licenses, David
16 Welch will handle if he can make it to the podium.
17 MR. WELCH: Mr. Chairman, members of the
18 Commission, we have two licenses that would have expired on
19 the 21st and 22nd of December I believe are the exact dates.
20 Those were after our Commission meetings and they had not been
21 previously renewed.
22 Under 11 CSR 45-1.020, paragraph 4, the
23 Commission -- Commission chairman was allowed to extend those
24 licenses, but that extension has to be ratified by the full
25 Commission at the next regular meeting. These resolutions,
7
1 07-001 and 002 ratify those. And I would ask your adoption of
2 that ratification in a single vote ratifying both resolutions.
3 CHAIRMAN SHULL: Are there any questions
4 regarding the resolutions?
5 If not, why don't we just approve both of them
6 at once?
7 COMMISSIONER PLUNKETT: I'll make a motion to
8 approve Resolution 07-001 and 002.
9 COMMISSIONER HAIS: Second.
10 CHAIRMAN SHULL: Is there any further
11 discussion on the resolution?
12 If not , call the role.
13 MS. FRANKS: Chairman Shull?
14 CHAIRMAN SHULL: Approved.
15 MS. FRANKS: Commissioner Jones?
16 COMMISSIONER JONES: Approved.
17 MS. FRANKS: Commissioner Hais?
18 COMMISSIONER HAIS: Approved.
19 MS. FRANKS: By your vote, you've adopted
20 Resolution Nos. 07-001 and 07-002.
21 MR. MCNARY: Mr. Chairman, item four on the
22 agenda is consideration of relicensure of Class A licensees,
23 HGI- St. Jo, Inc. And the presentation will be made by the
24 applicant: Jerry Riffel; his general counsel, Sean Higgins;
25 Craig Travers, general manager; and A.J. Wiedmaier, compliance
8
1 officer will make a presentation.
2 CHAIRMAN SHULL: Thank you.
3 MR. RIFFEL: Thank you, Mr. McNary.
4 Mr. Chairman, members of the Commission, we
5 appreciate your time and consideration today. I'm Jerry
6 Riffel. I'm outside counsel for the Herbst Companies in
7 Missouri and we certainly appreciate your consideration.
8 I would like to introduce to you the Herbst
9 team. If the Herbst team would stand up, I would appreciate
10 it. There are a lot of us here today. We've got Ed Herbst,
11 president and CEO; Tim Herbst, vice president; and Troy
12 Herbst, secretary/treasurer.
13 And then we have Jerry, who's the founder of
14 our company that we're delighted to have with us. We have the
15 chief operating officer, Mark Sturbins; the two general
16 managers, Bob Thursby and Craig Travers; and our director of
17 compliance and internal audit in Missouri, A.J. Wiedmaier.
18 Where are you, A.J.?
19 MR. WIEDMAIER: Right here.
20 MR. RIFFEL: Thank you. I would now like to
21 present to you Sean Higgins. He's our national general
22 counsel and he will make the presentation. Sean.
23 MR. HIGGINS: Thank you. Chairman,
24 Commissioners, Executive McNary, I appreciate your time here
25 today. I've got some handouts for everyone, so I'm going to
9
1 hand those out to you. And I would beg your indulgence to
2 bear with me. As an attorney, I'm not always the best with
3 audiovisual equipment, but I will give an effort.
4 We have a two-part presentation. Obviously
5 the first one will be for HGI-St. Jo and at the end of this
6 presentation, I will introduce the individuals from St. Joseph
7 and Buchanan County who will make their comments at that time.
8 We just completed a second successful year of
9 operations at Terrible's St. Jo Frontier Casino. We increased
10 the revenues to both the county and the city over 25 percent
11 over our results from 2005. Obviously that is due, in part,
12 to our -- one, admissions being up over 10 percent year to
13 year based on our monthly averages as well as our adjusted
14 gross receipts increasing to approximately 28 million to over
15 35 1/2 million dollars year to year 2006 over 2005.
16 Additionally, in 2006, we spent approximately
17 $5.6 million on capital improvements on this property. The
18 Commissioners, in your packet, have the breakdown of that.
19 There's not a slide for it, but the breakdown is included
20 behind your sheet showing where those capital improvements
21 were spent.
22 And what I'd like to do is simply show you
23 some before and after slides showing where those capital
24 improvement dollars went, both on the exterior of the
25 facility, upgrading the exterior facade, the signage, the
10
1 visibility as well as the interior.
2 And here's a prior-to renovation interior.
3 There is a post-renovation interior. Again, prior. That
4 would be -- where did it go. Come on. There we go.
5 The -- in 2004 -- or '5, our first year of
6 operation we spent the vast majority of our capital
7 improvements on the casino floor itself including upgrading
8 and replacing the vast majority of casino games. And in 2006
9 the vast majority of the capital improvements went to
10 improving our physical and land-based facilities.
11 As you can see here, we upgraded the public
12 spaces as well as the restaurant facilities. We installed a
13 new buffet and sit-down restaurant, upgraded the facilities,
14 we expanded and added about 4,000 square feet to the
15 land-based facility for additional facilities and additional
16 seating in the restaurant area and a new bar facility as well.
17 And, again, this is the casino floor prior to upgrade and the
18 casino floor post-upgrade. Come on. And, finally, we added
19 additional exterior signs.
20 We hope the state of Missouri is getting used
21 to this -- the Mr. Terrible. I know when we first came here a
22 few years ago, the Commissioners all were a little concerned
23 about the name and the the image. And I hope the state of
24 Missouri has come to accept and approve that image.
25 In 2007, we anticipate additional
11
1 $1.85 million in capital expenditure. The majority of that
2 will be spent upgrading our surveillance equipment and
3 upgrading and adding additional gaming devices to the casino
4 floor.
5 Demographics: 93 percent of our employees
6 come from the state of Missouri, 7 percent from Kansas. We
7 have minority employees of 8 percent and females make up
8 59 percent of our work staff or work force.
9 We are one of the three largest employers in
10 St. Jo, Buchanan County. And we're very proud of it of that.
11 We think we offer high-paying jobs to the community there.
12 The employment -- unemployment for St. Jo actually dropped
13 significantly from 2005 to 2006 from 5.8 to 4.2 percent which
14 was obviously a significant drop year to year.
15 Minority contractors, we -- I'm going to back
16 up. In St. Jo, we have -- 8 percent of our vendors are
17 minorities. Obviously I just showed you our demographics from
18 our work staff. The company does employ, as its main building
19 contractor in the state of Nevada, a completely minority-owned
20 business. It does not do this here in Missouri, but as a
21 company, we do employ and are sensitive to the minority
22 contractors.
23 In the Commissioners' packet there is the
24 employee compensation slide that is not up here, which breaks
25 down compensation by job title and responsibility.
12
1 Obviously with regard to problem gambling,
2 members of our executives serve on the National Council for
3 Problem Gambling, the Nevada Council for Problem Gambling, the
4 Nevada Governor's Committee on Problem Gambling and we also
5 are contributors to the Problem Gambling Center. We also
6 cooperate and participate in the programs through the Missouri
7 Gaming Association on problem gambling and -- and send out
8 literature with regard to that.
9 There's some of our additional items that take
10 care of on -- at the property level with regard to our
11 training, our responsible gambling week and management
12 seminars.
13 Obviously with regard to underage gaming,
14 we're sensitive to that not only in Missouri but in all our
15 jurisdictions. And we check IDs for all persons obviously
16 entering the casino. In Missouri, unlike other jurisdictions,
17 you've got your -- the card to play is required, so that
18 certainly helps with that here.
19 The crime rate for St. Jo is there, both
20 violent and property crimes versus the national average. And
21 charitable contributions, again, these are just a few of the
22 names we gave larger charitable contributions. The
23 Commissioners have further backup to those contributions in
24 their packet. And I think we're one of the -- probably one of
25 the larger contributors to the United Way in St. Jo in the
13
1 area.
2 Additionally, we're very proud and happy that
3 our employees are involved in civic organizations and
4 charitable organizations. That's just a sampling of some of
5 the organizations various of our employees are involved with.
6 At this time, I would like to introduce Dan
7 Houseman, county commissioner from Buchanan County, Ken
8 Shearin, mayor of St. Joseph, Missouri, and Bill Falkner, who
9 is a city councilman from St. Jo, Missouri.
10 MAYOR SHEARIN: Good morning Chairman and
11 members of the Board. City of St. Jo, as you know, has always
12 been a town where the west officially started getting wild.
13 So when this name Terrible Casino came in, we've changed the
14 name to Terribly Appreciated. So I apologize for that.
15 I'm not going to bore you with 150 things that
16 they've done. I'm going to recap some of the uses that the
17 city applies with their money. For example, we -- the money
18 they have donated to the city or through that gate has
19 contributed to emergency information kits, American Disability
20 compliance efforts, regional food bank supply, marketing the
21 city to business interests all across the country, Chamber
22 economic development contract, community strategic plan, five
23 public festivals, playground equipment for kids --
24 under-privileged kids, three different charities, University
25 life science incubator, public safety media announcements,
14
1 Living History Park and Urban Trail Development, downtown
2 cleanup campaign, property maintenance demolition effort.
3 And so far since the capital improvements have
4 taken place, we have scheduled several meetings with them to
5 make sure they have to pay for breakfast and lunch. So what
6 I'm telling you guys is the contributions they make to the
7 city the short time I've been mayor, I've been overwhelmed by
8 their generosity.
9 And the main thing is, since they've done this
10 renovation and they've contributed to this remarkable change,
11 many more civic organizations are now using their facility to
12 hold meetings where they never did before. I appreciate your
13 time. Thank you.
14 CHAIRMAN SHULL: Thank you.
15 MR. HOUSEMAN: Commissioners, I'm Dan Houseman
16 representing the county of Buchanan County. I'm here to voice
17 my support and the county's support for Terrible's Casino.
18 We consider them to be a good corporate
19 citizen in our county. Whenever we need anything, they're
20 ready to step up to the table and cooperate with us. As you
21 can see from the previous slides, they're contributors to a
22 lot of charities in our community and we feel like they're a
23 valued citizen and we'd like to keep them there. Thank you.
24 CHAIRMAN SHULL: Thank you.
25 MR. HIGGINS: Chairman, Commissioners at this
15
1 time, I can answer questions with regard to the specific
2 property if you'd like or -- I don't know if you'd like to
3 wait until after both presentations. Certainly it's your
4 pleasure. And I also have Craig Travers, the general manager
5 from the St. Jo property, here to answer any questions you
6 might have of him specifically.
7 CHAIRMAN SHULL: Are there any questions that
8 anyone here would like to ask?
9 COMMISSIONER JONES: Do you want --
10 CHAIRMAN SHULL: Let's treat each of them
11 separately.
12 COMMISSIONER JONES: Yeah. Good morning. You
13 know, I have a couple of questions. A couple of slides that
14 we have in our book you're stating that you have 20
15 minority/female-owned contractors, but then in the information
16 that we received there's only 7. That's a difference of 13.
17 And on that same note, when you start looking
18 at the numbers, you're only looking at maybe possibly --
19 because the total capital expenditures is about $5.6 million
20 according to the slide, but if you look at the
21 minority/female-owned businesses that participated, you're
22 only looking at maybe possibly about $56,000. And I just have
23 a problem with that.
24 And also in that same -- in the same vein, you
25 state that Mr. Travers is actively pursuing minority- and
16
1 female-owned businesses. I know he's from the -- well, I'm
2 not going to say he started his career out of the St. Louis
3 area, but he's very familiar with the St. Louis and
4 metropolitan area for -- from, you know, his time on the
5 Casino Queen.
6 Now, I'm just trying to put all that together.
7 Now, if he's from that area and he's actively trying to pursue
8 and you only end up with seven companies at a cost of maybe
9 $56,000, it's just -- it's just not clicking for me.
10 MR. HIGGINS: Well, I can certainly -- I think
11 the mayor also would like to answer that.
12 MAYOR SHEARIN: We have a big problem in
13 St. Jo in that we got 2 1/2 percent minority. And we don't
14 know how that happened or why it happened, but, therefore,
15 with that kind of a population disproportionate, it is hard to
16 find enough qualified minority contractors, anything from
17 major buildings -- and we're having the problem with the city
18 doing exactly the same thing. We have to go outside of our
19 city to try to meet that quota, which we are doing.
20 And I understand that -- that is a very, very
21 low number by anybody's standard, but it's a reality. So,
22 therefore, it makes it difficult to try to meet these national
23 guidelines. I wish there was something we could do about it.
24 We can't make people move.
25 COMMISSIONER JONES: No, but as far as
17
1 contractors, you have -- 60 miles or away or less you have the
2 Kansas City proper and --
3 MAYOR SHEARIN: That adds a lot of cost to it
4 too, sir. I can't speak for these gentlemen, but the city is
5 looking at especially for CBDG efforts and we're having a
6 really hard time finding minority-operated business. If you
7 check the -- if you check the status of St. Jo and Buchanan
8 County, I think we'll agree with that.
9 So it's not a matter of we're not trying to.
10 It's just that adding to the budget for doing so, it's a
11 catch-22 which is the best way to go with that. And I
12 apologize for that, but it's nothing that I had any control
13 over.
14 MR. HIGGINS: Thank you, sir.
15 Commissioner Jones, I'm going to echo a lot of
16 what the mayor had to say. I didn't know he was going to walk
17 up here. But the fact of the matter is, we try to get people
18 from the metropolitan areas. Obviously with this boat in
19 St. Jo, 60 miles away you have Kansas City, but the fact of
20 the matter is if the minority contractor wants to come up,
21 he's going to add that travel time in his costs and it becomes
22 economically unfeasible, you end up paying a lot more for
23 identical services because there simply aren't those
24 contractors.
25 And when I say "contractors," I'm talking
18
1 about food vendors or, you know, linen supply people, you
2 know, or any variety of contractors not just construction
3 contractors, but --
4 COMMISSIONER JONES: Absolutely.
5 MR. HIGGINS: Obviously the 5.6 million we
6 spent was just in construction at the facility. But obviously
7 we spent millions more in paper products, in food products.
8 And the fact of the matter is those vendors simply in St. Jo
9 area on a minority basis don't exist.
10 And the fact of the matter is when we tried to
11 get people from Kansas City to come up, you end up having a
12 much higher cost for those products and services because
13 you're not in that major metropolitan area where you have
14 vendors who can fill those needs at a same or similar cost to
15 non-minority-owned businesses.
16 COMMISSIONER JONES: Well, it appears to me
17 that you have two properties -- and by the way, since you guys
18 have, you know, I -- and I really have a special place in my
19 heart for St. Jo because I started kind of my business career
20 in St. Jo and I love St. Jo, home of the Pony Express and
21 everything else. Love it.
22 But anyway, it seems like there should be some
23 type of negotiations. You have two properties. And if you're
24 able to I guess the negotiate with some of the contractors out
25 of the Kansas City area to supply linen or whatever else to
19
1 both properties, maybe it will -- it will help them with
2 theirs and not have that high cost, you know, passed on to --
3 to you guys. You know, economies of scale and stuff so --
4 MR. HIGGINS: And we certainly could attempt
5 that. Obviously the issue is, being in the northwest and
6 northeast side of the state, the metropolitan area where we
7 tried to draw contractors for LaGrange is the St. Louis
8 market. So that's where our efforts are there.
9 When we try to get minority contractors, we
10 really -- come out of LaGrange, out of the Mark Twain vessel,
11 it's really trying to come down from St. Louis, not across the
12 state from Kansas City. So, unfortunately, you end up with
13 two distinct markets, the northwest and northeast side of the
14 state here, you know, in very small almost rural areas.
15 I understand and I'm very well aware of
16 your -- of your issue. Like I said, we have attempted -- and
17 I think, you know, even in our second property we've -- we put
18 advertisements in the minority-owned business magazines in
19 St. Louis continuously and get no responses from anyone. You
20 know, we can't force people to come and work for us if they
21 simply don't want to do that. That's -- but we certainly are
22 making those efforts, we believe, in good faith.
23 CHAIRMAN SHULL: You did comment that you have
24 contracted with Bentarin (ph.) --
25 MR. HIGGINS: Yeah.
20
1 CHAIRMAN SHULL: -- from Las Vegas?
2 MR. HIGGINS: We just did a major renovation
3 at our Las Vegas property, a brand-new garage and brand-new
4 hotel. That was about a $28 million -- $24 million project
5 and they were the prime contractor. They were the prime
6 contractor on that contract and they're 100 percent
7 minority-owned business.
8 CHAIRMAN SHULL: And the 8 percent that you
9 were mentioning by volume of your expenditures, did that
10 include the Las Vegas property?
11 MR. HIGGINS: No, that did not. That included
12 this single property. I think it was just on -- the
13 5.6 million I thought it was a total of 8 point -- 8 percent
14 not by volume, by number. Not by volume, but number of
15 contractor. But, no, that did not include Las Vegas at all or
16 any of our properties there.
17 CHAIRMAN SHULL: Are there other questions or
18 comments?
19 COMMISSIONER JONES: You didn't answer one of
20 them, the difference between the 13 or the 7 contractors in