Colorado Bingo-Raffle Advisory Board Meeting Minutes

Date: January 7, 2007
Members present: Mr. Gincig (Chairman), Mr. Kuzina (Vice-Chair), Mr. Pizzutti, Ms. Eddy, Mr. Gomes.
Members absent: Mr. Touissant, Mr. Esses

Called to Order at 10:10 AM

The Pledge of Allegiance was conducted.

Minutes of the previous meeting were approved unanimously.

The chairman discussed the agenda.

There was discussion on the finalized rules. According to the chairman, some charities have complained about what was finalized versus what they thought was going to be finalized, specifically the number of faces in the bingo aid machines. He said it’s costing approximately $150 to $200 per occasion to not be able to use 54 faces on electronic bingo aid devices.

Mr. John Amen, representing Quality Bingo Supply, said that some of the groups went to 54 faces in anticipation of a change in the rules. He claimed that revenue for 54 faces is $12 higher than for 36 faces. Mr. Amen said it was easy to get $100 transactions with 54 faces. He said that the rule should be re-considered. He said that the rental fee might not change based on the number of faces sold.

Mr. Pizzutti said he’s between a rock and hard place. He came into bingo when it was only a charitable game. 36 faces were set as a limit to essentially imitate the number of faces that a player playing paper faces could play. “36 faces are enough”. It takes away from what bingo is all about. A small organization playing in its own hall does not have the money to go to electronic devices.

Mr. Amen said he agreed with Mr. Pizzutti on the original reason for setting the limit at 36 faces. He described what happens in Houston, TX. He said that the number of cards played was not a function of the skill of the player but a function of the speed at which the caller called the balls. He said that there are many options for players who don’t want to play the electronic devices.

The chairman said that one can look at the numbers on revenue provided by the Secretary of State’s office. He said that revenue is down significantly. If the organizations could make $100 more per week, that’s $5,000 more per year in profit. Some groups experimented with 54 faces prior to the rules becoming final and made more money and some groups didn’t do it and didn’t get hurt. From the hall owner’s point of view, it doesn’t help.

Mr. Marc Rosen said that rent has gone up and other expenses have gone up and he asked why the change was made back to 36 faces.

Mike Shea said that the objection during the rules hearing was based on the historical aspect of how many faces a player could play. Mr. Shea said that after hearing arguments, the Secretary of State decided to stay with the number of faces allowed under current rules.

Mr. Shea said that the board could request more rule-making on that rule. He said that rule-making on a single rule was fairly onerous and time-consuming. He said that the office should receive a letter from the board requesting rule-making.

The Chairman asked for a motion and a vote on the question. There was no motion from the board. Ms. Eddy asked whether the vote could be conducted at the end of the meeting.

Mr. Shea introduced Jacque Ponder. He discussed the sunset report that is currently being conducted and introduced Bob Holden from the Department of Regulatory Agencies.

Mr. Shea discussed emergency rule-making and how it does not apply to bingo-rules because bingo rules do not come under the heading of health, welfare or safety of Colorado’s citizens.

Mr. Shea distributed revenue charts through the third quarter of 2006 showing the decline of bingo over the past ten years. Mr. Shea talked about the analysis of the top 100 licensees who conduct bingo and compared the third quarter 2006 figures with the third quarter 2005 figures and said that except in a few cases, all of the licensees showed a decline in revenues in 2006.

Mr. Shea said that any request for rules would go up to the new Secretary of State who took office the morning before.

The chairman moved the discussion to the question of how to increase participation in bingo. He asked how they could advertise bingo in a generic way. He said that bingo is competing with the “hill”, and they see how well the lottery and the casinos do with advertising. He said that advertising is the key to get people to the bingo occasions. Television advertising costs less than other types of advertising.

He said that the Secretary of State could increase quarterly fees to cover the cost of advertising.

The Chairman asked Mr. Kyle about his discussions with legislators to sponsor legislation regarding generic advertising.

Mr. Kuzina asked whether the Chairman had seen any impact from the advertising.

The chairman played a 30 second commercial that had been developed by his hall and discussed how to structure the spots. He said it cost them $1,500 for three weeks of spots. He asked for comment from the board members.

Mr. Amen referred to the division of wildlife and its advertising pool. He said he sees the DOW commercials on television all of the time. He said that he thought bingo had a greater justification for advertising than DOW.

Mr. Pizzutti said he disagreed with Mr. Amen. He said that everyone in the state would be charged but the advertising would only help those in commercial halls in the Denver metro area. He is against the idea that everyone in the state has to pay.

There was a general discussion on the pros and cons of advertising.

The chairman said that the board did not need to vote.

The chairman moved to random number generators. He asked where the Secretary of State’s office is in approving any random number generator.

Mr. Kuzina said that his company had sent a letter in the fall of 2006 requesting approval and said that so far they had not heard back.

Mr. Shea said that the Secretary of State had requested some additional information as a result of that letter, specifically, “How do you generate the seed number”.

Mr. Kuzina said that they had responded to that request.

Mr. Shea said he expected a more detailed response than what was received. He also said that in addition to the seed number, he needed a response that would guarantee that the same number, e.g. B1, was not generated more than once during a game. He said that the office had no problem evaluating the request so long as the questions were answered.

Rudy Johnson said that he had been requesting information from other states regarding their use of random number generators in a bingo environment. He said that casinos use random number generators but that casinos were different from bingo games.

Mr. Kuzina admitted that there were no states presently using random number generators in bingo. Colorado will be the first one to use random number generators in a charitable bingo environment.

Mr. Johnson said that he would like to have some validation from another regulator rather than just the company requesting approval. Mr. Johnson said he would trust a report from Gaming Laboratories International (GLI).

Mr. Johnson said, in response to Mr. Kuzina’s comments, that to his knowledge Indian casinos would not allow random number generators.

Mr. Shea said that the CD from GLI that Mr. Kuzina referenced had not been sent to the Secretary of State’s office with the letter that Mr. Kuzina said his company had sent in.

Mr. Amen asked what was the attraction with random number generators. The chairman said that hall expenses are reduced because the mechanical devices such as blowers, master boards, etc. are expensive to repair and replace. Random number generators eliminate a lot of the equipment required in a hall.

There was discussion concerning the process of applying for approval for a random number generator.

Mr. Kuzina said that in a discussion with Secretary of State Coffman, the Secretary indicated an interest in moving the regulation of bingo out of the Secretary of State’s office. He said that The Secretary said that he would not initiate legislation in 2007 to accomplish the move.

Mr. Shea commented that the 1992 and 1997 Sunset Review reports both recommended that the regulation of bingo should be removed from the Secretary of State’s office.

Ms. Eddy asked about the process for electronic filing.

Mr. Shea discussed the process of developing a requirements document that will be turned into coding by the IT staff. He pointed out that the program may be moot if 2008 legislation removes the regulatory function from the office.

Mr. Kuzina asked about licensees being able to conduct bingo after January 1 if they had not received their license yet from the office.

Mr. Shea explained that based on an attorney general opinion, any existing licensee could continue to conduct bingo operations after the first of the next year, if they had submitted their renewal application to the Secretary of State prior to December 31. Any new license application that was received in the office late in the year would have to wait until the license was issued before it could start operating bingo. Due to the snow storms, if it looked to the office that the application was postmarked prior to December 31, the renewal applicant could continue to conduct bingo. Any application that was obviously sent in after January 1, would not have the ability to conduct bingo until the license is issued.

Mr. Rosen asked about how a licensee could distribute its progressive jackpot and could it determine whether it will hold the $15,000 until the next session or whether it must give it out the night it reaches $15,000.

Mr. Shea explained that the rules were clear on the question. It’s up to the licensee how it will do it but the group must post the rules prior to the first game in the progression.

Meeting was adjourned at 11:30 AM