Minutes : 02/21/2007

1 A G E N D A (con't)

2 VIII. Caruthersville Update

3 IX. Closed Session

4 X. Adjournment

1 P R O C E E D I N G S

2 CHAIRMAN SHULL: Good morning. If I could have

3 your attention and everyone take a seat, we'll be able to

4 start the meeting.

5 The first issue today is, the Commissioners and I

6 would like to pay tribute. Mr. Robert Wolfson, Sr., passed

7 away on February the 2nd. Robert Wolfson was the first

8 chairman of the Missouri Gaming Commission and was

9 appointed in 1993 by Governor Mel Carnahan and served until

10 December of 1998. During his tenure, Mr. Wolfson approved

11 the expansion and sale of several casinos in the St. Louis

12 area and was instrumental in the development of the

13 newly-formed Commission.

14 In addition to his service to the state,

15 Robert Wolfson was a World War II Veteran and a Board

16 member of the St. Louis Jewish Federation and Barnes-Jewish

17 Hospital Foundation. We wish today to honor his memory

18 with a moment of silence.

19 (Moment of silence taken.)

20 CHAIRMAN SHULL: Thank you.

21 The first issue will be a review of the minutes

22 from November the 29th, 2006.

23 There is one spelling error. It's on Page 57, I

24 believe, regarding Mr. Neilsen. His name was spelled

25 incorrectly. And, also, Page 49 was blank in my packet.

1 Is that --

2 MS. FRANKS: Yeah. I don't know why.

3 CHAIRMAN SHULL: Do we have Page 49?

4 COMMISSIONER HAIS: We can approve the minutes

5 to the extent that we have them and reserve approval for

6 the remainder.

7 MS. FRANKS: I think it's just a page break.

8 CHAIRMAN SHULL: Is there a motion to approve?

9 COMMISSIONER HAIS: I so move to -- motion to

10 approve the minutes of the last meeting, dated

11 November 29th.

12 COMMISSIONER JONES: I second.

13 CHAIRMAN SHULL: Is there any further

14 discussions?

15 COMMISSIONER HAIS: With the spelling

16 correction, of course, that you mentioned.

17 COMMISSIONER JONES: Right.

18 CHAIRMAN SHULL: Call the roll.

19 MS. FRANKS: Chairman Shull?

20 CHAIRMAN SHULL: Approved.

21 MS. FRANKS: Commissioner Jones?

22 COMMISSIONER JONES: Approved.

23 MS. FRANKS: Commissioner Hais?

24 COMMISSIONER HAIS: Approved.

25 MS. FRANKS: Commissioner Plunkett?

1 COMMISSIONER PLUNKETT: Approved.

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

3 minutes of the November 29th, 2006, meeting as amended.

4 CHAIRMAN SHULL: The next issue is the

5 January 17th, 2007, minutes.

6 COMMISSIONER HAIS: Very well. Chairman, I

7 would move to approve the January 17th, 2007, minutes.

8 COMMISSIONER PLUNKETT: I'll second that.

9 CHAIRMAN SHULL: Is there any further

10 discussion?

11 (No response.)

12 CHAIRMAN SHULL: Call the roll.

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: Commissioner Plunkett?

20 COMMISSIONER PLUNKETT: Approved.

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

22 minutes of the January 17th, 2007, meeting.

23 CHAIRMAN SHULL: The next issue is

24 consideration of relicensure.

25 Mr. McNary, do you want to proceed?

1 DIRECTOR McNARY: Mr. Chairman, first, let me

2 congratulate Commissioner Hais and Commissioner Plunkett on

3 being reappointed by the Governor. Glad to have you on

4 board -- continuing on board.

5 Item III, consideration of relicensure of the

6 Class A licensees at Harrah's Maryland Heights. There will

7 be a presentation by the Applicant, Arnold Block, who's the

8 General Manager.

9 MR. BLOCK: Good morning, Mr. Chairman,

10 Commission Board, Mr. McNary, Mr. Stottlemyre,

11 Commission staff.

12 We're here to present our performance and

13 accomplishments over the last two years since our last

14 relicensing and to talk a little bit about our capital

15 plans for 2007 and beyond.

16 What you have in front of you is a hard copy of a

17 PowerPoint presentation for our oral presentation and then

18 some information in the back.

19 I want to start off by talking about our combined

20 2005/2006 casino revenue and admissions.

21 For the last two years, we have shown total

22 gaming revenue of 623 million, 302 million in 2005 and

23 321 million in 2006, against our planned revenue of

24 293 million and 318 million in 2005 and 2006.

25 Our total patron admissions were 19 million 300

1 in both years, both -- for the two years, both planned and

2 what we accomplished.

3 The next page, we list our capital investment.

4 Our total prior year investment was 469 million dollars.

5 Since January of 2005, we have a list of our total capital

6 investment broken down by project, and then behind this

7 page, we have color copies of what those represent.

8 The first item is a land acquisition of

9 5.4 million. This was needed to accomplish our retail

10 development, which is the first page behind the summary,

11 showing a 309,000 square foot retail space that we are

12 going to break ground on starting May 1st.

13 We have slot machine upgrades of 2.9 million over

14 the last two years, a Mardi Gras casino master plan that we

15 have spent 2 -- 2.7 million to date, a new poker room,

16 1.3 million. We have buffet enhancements of 700,000. We

17 have worked on our back of the house for our employees, as

18 well. We show here an employee dining room remodeled for

19 400,000, a rotunda remodeled for 600,000, and other various

20 capital for 3 million.

21 In addition to that, in 2007, we have a planned

22 buffet enhancement of 17 million, which we'll be starting

23 in April, and then the retail development that I mentioned,

24 25 million invested by Harrah's, along with our land and

25 partner contribution of 100 million. This is a project

1 that will start May 1st and will take about 18 months to

2 complete.

3 In addition to that, in the Mardi Gras casino, we

4 have 11 million invested in 2007 for a high limit area.

5 The first phase of that opened this past Friday. We have a

6 rapid roulette and a casino bar reconfiguration, and we

7 have a new on-casino floor deli -- a sit-down deli,

8 made-fresh-to-order food, and a seating area for about

9 25 to 30 people, which will be opening later this year, as

10 well.

11 In terms of our 2006 employee demographics, we

12 have a slide that shows state of residence. 89 percent of

13 our employees live in the state of Missouri, 11 percent in

14 Illinois. 51 percent of our population are female,

15 49 percent male. We have 250 employees and a supervisor

16 above position. 21 percent of those are minority. The

17 51 percent female represent 1,013 and 991 males. Our

18 executive staff is broken down into eight male, four

19 female, and one minority.

20 Our employment as of December 31st, 2006, we had

21 2,004 employees; 1,584 full time, 180 part time, 209 on

22 call, and 31 leave of absence. In 2005, our payroll

23 expense was over 60 million; 2006, a little over

24 61 million.

25 In terms of our Equal Opportunity Employment,

1 St. Louis City demographics show 44 percent Caucasian,

2 51 percent African-American; St. Louis County, 73 percent

3 Caucasian, 21 percent African-American. Harrah's staffing

4 mix as of December 31st was 60 percent Caucasian,

5 33 percent African-American, clearly in the middle of the

6 demographics of both city and the county. Harrah's has

7 1,194 white, 670 black, 104 Asian, 25 Hispanic, and

8 11 American-Indian.

9 Our positions are broken down by casino floor,

10 926; food and beverage, 496; hotel, 152; administrative,

11 158; and 272, other.

12 In terms of our minority contractors, for regular

13 non-gaming purchases, we utilize a competitive bidding

14 process to ensure that we obtain the best services and

15 products with the best possible price. The vendors that

16 participate in this process are selected based on a

17 St. Louis Minority Business Council, end users knowledge,

18 past history, business card file, and reputation from other

19 Harrah's properties. We make every effort to include

20 minority vendors in the bidding process. Their bids, like

21 all other companies, are attached to the back of the

22 requisition as documentation and may not contain

23 discriminating information to indicate that they are the

24 minority.

25 In 2006, of the funds with discretionary

1 spending, 7 percent of our spend was with minority vendors,

2 and we wanted to note in 2004, diversity spending was only

3 2 percent.

4 We're continually working to raise our minority

5 spending within the community. In December of 2005, Harrah's

6 St. Louis teamed with St. Louis Minority Business Council

7 to host a Casino Buyer/Supplier Forum. The purpose of this

8 forum was to bring the casino industry and minority

9 suppliers together to establish a business relationship.

10 On a monthly basis, we attend the

11 Minority Business Council meetings to build relations and

12 to identify new perspective minority vendors. This purpose

13 is being shepparded in part by Fred Keeton, our corporate

14 vice president of external affairs. One of his many

15 responsibilities is to serve as the chairman of the

16 American Gaming Association's National Diversity Task

17 Force. Through his dedication and leadership, he has

18 helped our casino continually grow our diversity spend.

19 In terms of responsible gaming, our code of

20 commitment is clear. We want everyone who gambles at our

21 casinos to be there for the right reasons, simply to have

22 fun. We carry out our code of commitment and to respond to

23 the Commission's Disassociated Persons Program, we have

24 instituted a corporate-wide Responsible Gaming Program.

25 All new employees receive two hours of training.

1 We utilize 22 Responsible Gaming Ambassadors, who are

2 specially-trained supervisors, and they offer assistance to

3 customers with whom we may be concerned. Their mission is

4 to address the concerns of our employees regarding guests

5 who may not be gambling responsibility and to offer those

6 guests alternatives for assistance.

7 I should note, in 2006, there were over 50 guest

8 interventions conducted by the Responsible Gaming

9 Ambassadors.

10 We also display 1-888-BETS-OFF and Guides to

11 Responsible Gaming brochures in several locations

12 throughout the casino to help our patrons identify

13 potential gaming issues and promote responsible gaming by

14 helping patrons establish personal guidelines for gambling.

15 Throughout 2006, Gary Loveman, our CEO, aired a

16 Responsible Gaming message across the country in all forms

17 of media, as well as being prominently aired nationally on

18 ESPN during the World Series of Poker broadcasts. The

19 following pages are collateral material regarding that

20 initiative.

21 As far as underage gaming, we have trained all of

22 our employees to identify false IDs. We strengthened that

23 training utilizing MGC agents this past year. Utilizing

24 the MGC agents training, we have created our own training

25 class and certification. Employees are recertified on a

1 quarterly basis. We have that on Page 30 and 31. We have

2 signage with strong messages advising underaged patrons of

3 the repercussions of illegal entry. We note that on

4 Page 32.

5 Black lights, flashlights, and magnifying glasses

6 have been issued to security and Total Rewards employees to

7 better see and evaluate potentially altered IDs.

8 We have implemented an $100 bounty on all

9 underaged patrons that attempt to enter in the casino or

10 the VooDoo Lounge. Since implementing, we have paid out

11 more than 10,000 in bounty money to employees.

12 Total Rewards has implemented a checklist when

13 reviewing a potentially underage patron. This checklist is

14 utilized when a patron appears to be under 30 or their

15 presented ID indicates that they are under 30. When

16 completed, this checklist must be reviewed by a supervisor,

17 guest safety officer, or MGC trooper prior to issuing a new

18 Total Rewards card and/or a reprint. This is noted on

19 Page 33.

20 In terms of our control of intoxicated patrons,

21 it was a big issue for us this past year. All employees

22 who are responsible for serving alcohol are required to

23 take a test, a CARE, an industry-wide standardized training

24 course. We have contracted with Maryland Heights Police

25 Department to provide two off-duty officers on Friday and

1 Saturday nights, as well as busy holidays, to provide a

2 visible deterrent to inappropriate guest behavior and

3 assist with guest evictions.

4 By 8 p.m., Total Rewards representatives set up a

5 gauntlet in front of the Island Casino. This gauntlet

6 serves as a mechanism to force patrons to walk

7 approximately 10 yards to enter the casino. During this

8 walk, all patrons are assessed by Total Rewards

9 representatives and security to evaluate if they are

10 intoxicated. All guests are required to exit out of the

11 Island side of VooDoo so they must walk through this

12 gauntlet to enter the casino.

13 In an effort to deter entry into the

14 Island Casino for the sole purpose of drinking, at

15 midnight, all drinks purchased at the I-BAR increase at

16 least $1.

17 All employees are vigilantly watched -- watching

18 guests to identify intoxicated patrons for the purpose of

19 either discontinuing alcohol service and/or eviction.

20 Going on to Community Partnership. We've

21 provided over 1.3 million in donations and sponsorship to

22 almost over 100 local organizations or businesses in the

23 years 2005 and 2006.

24 In the calendar years 2005 and 2006,

25 approximately 7,200 hours were donated to various

1 organizations, a few of which are listed below: Leukemia

2 and Lymphoma, St. Vincent's Home, Food Outreach, Habitat

3 for Humanity, International Institute, National Kidney

4 Foundation.

5 The next page shows as at a Thanksgiving dinner

6 at the International Institute, donating the food and

7 volunteers to serve the residents in that area Thanksgiving

8 dinner.

9 Next is a National Kidney Foundation Chili

10 Cook-Off, where we raised money. Then on Page 38, we show

11 an outdoor that was erected on Highway 40/64 and

12 Kingshighway by our volunteers of the year. The Leukemia

13 and Lymphoma Society saluted our Man and Woman of the Year

14 with an outdoor board, which prominently displayed the St.

15 Louis market.

16 Page 39 shows that we were the recipient of the

17 St. Louis Region Business Award. It was presented to me at

18 a ERGC meeting about two months ago. Last year, the

19 Maryland Heights Chamber of Commerce presented Bill Keene,

20 the regional president, the Business Leader of the Year

21 award.

22 That completes our oral part of the presentation.

23 Do you want me to answer questions?

24 CHAIRMAN SHULL: Are there any questions at the

25 present time?

1 COMMISSIONER JONES: As I read the report, you

2 know, I'm kind of bewildered at the number of vendors that

3 you have, and you probably knew that I may ask about the

4 minority and women contractors that you have.

5 I'm looking at the reading material that you

6 have. You have 308 vendors, 85 Missouri-based vendors, but

7 only six minority and women vendors out of the 308, and

8 you're located inside -- or, you know, within the St. Louis

9 metropolitan area. I think the last time we were meeting,

10 we had the St. Jo group here, and it seems like they had

11 more vendors than Harrah's. Now, I can understand that

12 they're in an area where you don't have the access to

13 St. Louis Minority Business Council and Urban Leagues and

14 those types of organizations to assist.

15 But to have six vendors? Now, the Minority

16 Business Council, if I'm not mistaken, they've been in

17 existence for at least ten years, and you've had property

18 there for at least ten years, and you've only been able to

19 spend like 7 percent. I just have an issue with those

20 numbers, a big issue.

21 MR. BLOCK: Understood.

22 We've increased from 2 to 7 in the last two

23 years. The number of vendors can be increased. We have

24 initiatives in place to try to improve that this year. Our

25 spend has increased substantially from 2 to 7. It is a

1 priority for us that we plan to emphasize this coming year.

2 COMMISSIONER JONES: You have a plan?

3 MR. BLOCK: We do. We have -- we review this

4 with purchasing. We have -- our executive committee now

5 reviews this plan more diligently on a monthly basis than

6 we have in the past, to make sure that the spend is

7 appropriate and that we're making every effort to introduce

8 new minority vendors into our purchases.

9 COMMISSIONER JONES: You know, forgive me.

10 That just sounds like a lot of talk. I mean, a plan is,

11 hey, we're going to meet with the Urban League president

12 and, hopefully, they'll get on board. The plan is, we will

13 meet with MOCAN (ph.) and, hopefully, get them on board.

14 The plan is, we've already set up meetings with minority or

15 women on advertising and PR firms, to get them in place so

16 we can advertise these contracts that are being lit. That

17 sounds like a plan.

18 But what you're saying right now, it sounds, you

19 know, like a lot of talk. Everybody's always saying, Well,

20 hey, we're going to do this, but I need to see something in

21 writing or see something where I can just hold your feet to

22 the fire.

23 MR. BLOCK: Sure. And we can provide that to

24 you. We -- we put a lot of confidence in the

25 Minority Business Council this past year. And, quite

1 frankly, we just didn't get the numbers out of that Council

2 that we expected that we would, so we have to implement

3 something new, and that's the reason for taking a different

4 approach.

5 COMMISSIONER HAIS: Mr. Chairman, just one

6 housekeeping matter. And, Mr. McNary, you, I'm sure, will

7 recall, as will the Commissioners, that I mentioned at a

8 previous meeting in respect to some other matter relating

9 to Harrah's, that Mr. Block and I were high school

10 classmates. And I mention that, as obscure as it may

11 sound, I haven't been personally acquainted with anyone,

12 heretofore, any rendition of these matters.

13 So I just wanted to -- Mr. Block, if, at your

14 option -- how long has it been since we've seen each other?

15 40 years, 40-plus years?

16 MR. BLOCK: Probably. We're showing our age.

17 COMMISSIONER HAIS: I'm sorry.

18 MR. BLOCK: We're showing our age.

19 COMMISSIONER HAIS: Well, I am, anyway.

20 But at your option, if Harrah's wishes me to

21 refuse myself from voting on this relicensure, I will

22 consider doing so.

23 MR. BLOCK: We don't have any desire to do

24 that.

25 COMMISSIONER HAIS: All right. That's all,

1 Mr. Chairman.

2 CHAIRMAN SHULL: Thank you.

3 There are no other questions at this time, but we

4 would like to call the City of Maryland Heights in.

5 MR. MOELLER: Good morning, Mr. Chairman,

6 Members of the Gaming Commission.

7 COMMISSIONERS: Good morning.

8 MR. MOELLER: My name is Mike Moeller, and I'm

9 the mayor of the City of Maryland Heights. I appreciate

10 the opportunity to address you and to communicate the

11 city's support for relicensing of Harrah's Casino.

12 For the record, I would like to state the

13 following: The city established minimum development

14 standards as part of our approval of the original zoning

15 for Riverport Casino Center. Harrah's has complied with

16 all requirements established by that ordinance and the

17 Developer's Agreement entered into at that time.

18 Harrah's Casino is an outstanding corporate

19 citizen. The corporation continues to be an active

20 community leader in collaborating with a very successful

21 Convention and Visitor's Bureau and in supporting numerous

22 other community activities.

23 While the city has done no independent analysis

24 regarding the economic impact of gaming on our community,

25 we do feel that local vendors have benefited from their

1 business with the casino. We have no evidence that local

2 businesses were harmed in any way by the casino operation.

3 The number of businesses licensed in the city has steadily

4 increased over the last five years.

5 Police Chief Tom O'Connor, addressing the

6 possible impact the gaming operation has had on crime in

7 our community, states that there has been no significant

8 increase in crime because of gaming in Maryland Heights.

9 And to quote, the police department, on average, is called

10 about twice a day to handle incidents that are considered

11 beyond the scope of the uniformed security staff and the

12 agents assigned to the Missouri Gaming Commission.

13 Overall, the number of calls for service is well within the

14 range we would anticipate from this many people, and the

15 number of crimes reported compared to the number of

16 visitors makes this one of the safest locations in the

17 state, end of quote.

18 Additionally, the Maryland Heights Police

19 Department maintains a substation within the casino

20 development, from which a sector car serves this complex,

21 as well as the adjacent Riverport Business Park and

22 surrounding non-urban area. It is the policy of the

23 City Council to allocate the gambling taxes in accordance

24 with a formula that requires these funds to be allocated as

25 follows: 25 percent toward the construction of regional

1 infrastructure; 50 percent to other capital improvement

2 projects, which have primarily been improvements to the

3 existing road and bridge system, as well as the

4 construction of the new government center to replace the

5 warehouse we converted into city hall 21 years ago --

6 COMMISSIONER HAIS: Is that different from

7 regional infrastructure?

8 MR. MOELLER: Yes.

9 COMMISSIONER HAIS: How is that different?

10 MR. MOELLER: This is more roads and

11 improvements with the city. The regional stuff, as I'll

12 explain later, is like the Earth City and Maryland Heights

13 Expressway extension and Dorsett, 270. But in all, about

14 70 percent of that money is spent for infrastructure

15 improvements.

16 -- 20 percent to general operations, which

17 includes expanded police services, residential trash

18 service, and general management services required to

19 administer these additional funds and capital projects; and

20 5 percent to a reserve fund. A more detailed report on the

21 use of these funds was presented to the Gaming Commission

22 and was published in your most recent annual report.

23 We continue to work with Harrah's to finalize a

24 plan for additional significant development adjacent to the

25 casino. We anticipate that this area will be a focus of

1 announcement in the next few months. The city is also

2 working with Harrah's and the land owners of land south of

3 the casino to finalize an amendment to the city's

4 comprehensive plan and zoning regulation that will result

5 in the development of up to 2,000 acres over the next

6 20 years. In fact, we anticipate the construction of

7 2 million square feet of commercial development in the next

8 two years.

9 While the city has not entered into any revenue

10 sharing agreements, we have designated a significant

11 portion of our gaming revenue to extend the construction of

12 Maryland Heights Expressway, a major highway project that

13 has regional significance. We spent 38 million dollars on

14 the first phase that opened in 2003.

15 The counsel has budgeted 6.5 million dollars in

16 the 2007 budget for the construction of one-mile extension

17 of the Maryland Heights Expressway south of

18 Missouri Route 364. We are working closely with

19 neighboring communities, St. Louis County, and our state

20 legislators to urge MoDOT to complete the final phase of

21 Missouri Route 141 that would eventually link to the

22 Maryland Heights Expressway.

23 When completed, this new highway will be the last

24 piece of an outer belt that would link Interstate 370 on

25 the north to Interstate 55 on the south. We are also using