(Draft - not yet approved by Board)

Date:  February 20, 2013
Location: Secretary of State’s Office, Blue Spruce Conference Room, 1700 Broadway, Denver, CO
Members Present: Dan Gincig, Beau Williams, Tom Bednark, Austin Gomes
Members Absent: Vera Craven

Secretary of State Officials Present: Mike Hardin, Greg Lestikow, Shannon Bee, Brian Gryth, Lisa Marty, Darleen Herrera

Meeting was called to order at 10:05 A.M. 

The Pledge of Allegiance was conducted.

A motion was made by Tom Bednark to approve the September 12, 2012, meeting minutes as presented.  The motion was seconded by Dan Gincig and approved by unanimous vote of the Board.

 

Potential Board Members

Dan Gincig discussed the new and potential new board members.

Mr. Gincig reported that Rick Johnson has been appointed by the legislature and will take office on July 1, 2013. The Secretary of State has not yet received the appointment letter Three more potential candidates are waiting on house approval:

• Perry Jultak - present at meeting - licensee
• Doni Glassburn - landlord
• Hank Gavin - Elk member

These individuals are waiting on the process of being approved.  With these members in place, the Board will still be in need of two more members.

Current board members who will be leaving include Austin (leaving today) and Tom Bednark who will complete his term on 7-1-13.

 

Secretary of State Report

Suzanne Staiert, Deputy Secretary of State, recognized Austin Gomes for his 40 years of service to the bingo community.  The Deputy Secretary presented Mr. Gomes with a certificate and coin.

Shannon Bee was also recognized for her promotion to Bingo/Raffle Program Manager.

 

Financial Presentation

Shannon Bee and Greg Lestikow provided an overview of the financial report. 

• Gross revenue is up 1.2 million mainly due to an increase in raffles of $1,000,000
• Bingo revenue increased slightly from 2011 to 2012, but is still below 2010 levels
• Pulltab revenue has decreased but the profit margin is being maintained.
• The margins indicate raffles exceeding all other activity.  Overall net profit for all charitable gaming has remained consistent at 16-19%.

There was discussion between the board, the audience and staff about the reduction of progressive pulltabs.  Progressive pulltabs are thought to be more complicated/difficult than other activities.  Current bingo event games (bullets) have taken over progressive pulltab players (comments included from Rich Lemon (supplier), Perry Jultak (licensee) and Marc Walegur (licensee)).

The Secretary of State’s fee reduction for the 3rd and 4th quarter of 2012 has resulted in a savings of $300,000 to charities to put back into their organization.  Fee reductions are reviewed quarterly and may remain in place at least until the state's fiscal year end, which is 6/30.

 

Adopted Rules Changes

Greg Lestikow provided an overview on the approved rules changes and those not changed.  The Secretary of State’s office received comments from the board and bingo community with regard to potential rules changes.

Adopted Rules

• Clarify posting requirements for cash and merchandise prizes at bingo occasions, making it easier for licensees to offer merchandise bingo prizes.
  • Licensees can now offer alternative cash prize, allowing them to split prize in the case of multiple winners.
• Clarify that bingo-raffle proceeds may not be commingled with funds in other accounts.
  • This is one of the most common mistakes we see licensees make
  • Rule change should make infractions less likely
• New rule allows licensees to maintain a separate cash fund in a bar or clubroom. The cash fund may not exceed $2,000.
  • Our work in the field demonstrated that licensees that have their own clubroom needed these cash funds, but they were not allowed prior to this new rule
• Changes to promotions rules clarify that a licensee must allow promotion participants to be present at the promotional drawing without paying any applicable entry fees.
  • This should help decrease player complaints that they are being unfairly excluded from promotions
• New raffle rules allow licensees to establish a contract with a call fulfillment center in order to process raffle ticket orders, and outlines requirements for licensees that utilize these services.
  • This should provide licensees with more options for raising money through raffles.

 

Rules Not Adopted

Greg Lestikow also went over the rules that were not changed. 

Did not increase electronics from 36 to 54.  Discussion on this topic included the fact that in the past the Secretary of State’s office had a test done to see how many faces an individual could accurately play at one time, which was determined to be 36.

Dan Gincig commented that tests were done in his hall to determine if you were more likely to win if you played a machine or played paper.  According to Mr. Gincig, the test determined no notable difference.  Fifty percent won with paper and fifty percent won with machines.  There was discussion that with more faces on machines the probability of winning would change.  Future tests may need to be conducted.

• Perry stated older people are more willing to play machines as they are easier to operate
• Tom Bednark stated there is no harm to spend more to increase odds – especially since profits go to charities
• Lydia Lopez a player since 1988, stated those on fixed incomes cannot afford the machines.

Did not increase number of occasions or prize limit.  Feedback received by the Secretary of State’s office from small groups stated these changes would harm small groups.  Small groups would be affected by the larger groups that could afford more occasions and higher prize limits. In addition, these changes were recommended to accommodate pari-mutuel games, which are relatively new in the Colorado market. The Secretary of State is reluctant to make such significant changes for games whose effects on the community are still unknown.

 

Progressive Raffles

Mike Hardin testified on February 6, 2013 on a bill presented by Representative Jonathan Singer that would allow for progressive raffles. With raffle revenue increasing this is another way to improve revenue for licensees. 

 

Board Discussions

Lydia Lopez discussed groups allowing one individual to buy out a pulltab bucket.  Investigator Herrera stated there is no rule against it.  It is up to the licensee. Dan Gincig stated halls can place rules against this activity as well.

Beau Williams again addressed his concerns about charging fees on gross profit rather than net profit.  Veterans groups, such as his, sometimes make small profits and paying fees on the gross negatively affects many groups.  Dan Gincig reminded everyone that paying administrative fees funds the bingo section of the Secretary of State’s office, and that the calculation of these fees is set in statute.

Dan again mentioned the new potential members.  Greg Lestikow and Corky Kyle have both been in contact with the Legislative Director of the House regarding the process of the new members.  It is in process but moving slowly.

Dan Gincig is working with a legislator on a bill to deal with electronics and number of patterns allowed.  The bill is in the process of being written.  Mr. Gincig anticipates the bill passing but the Secretary of State’s office would not comment on the bill until they have a chance to review it.

 

Improving Bingo Revenue and Profits

The Secretary of State’s office has obtained the services of Runge Consulting to review and comment on improving bingo in Colorado.  Mr. Runge has conducted interviews with players, licenses, landlords, suppliers, as well as discussions with other states operating bingo.  With Mr. Runge’s marketing background he brings a great deal of experience to his study.  This is a positive step toward improving bingo revenue and interest in charitable gaming.  The Secretary of State’s office anticipates the report being completed by the next board meeting.

 

The next meeting of the Board will be April 17, 2013.