NEW MEXICO GAMING CONTROL BOARD
One-Day Regular Board Meeting
October 17, 2006
MINUTES
The Board of Directors of the New Mexico Gaming Control Board (Board) conducted a one-day Regular Board meeting at Gaming Control Board Headquarters, 4900 Alameda Blvd. NE. Chair Carla Martinez called the meeting to order at approximately 9:10 a.m., on Tuesday October 17, 2006. Due notice was published in accordance with the Gaming Control Act and the New Mexico Gaming Control Board Open Meetings Resolution and Chair Carla Martinez declared a quorum. Present were: Commissioner Eddie Fowler, Commissioner David Norvell, Commissioner Don Dutton, Chair Carla Martinez and Commissioner Carolyn Monroe. Executive Director John Monforte and General Counsel Frank Baca were also in attendance.
· Approval of Agenda
Chair Carla Martinez presented the agenda for approval. Mr. Monforte noted that a few items would be taken out of order in the Closed Session:
B1 Licensing: (g) Sparton Technology there should be three asterisks for investigation pending.
Issuance of findings of suitability on key and affiliated persons:
(1) New Applications: (b) Tennie Shumate – tabled and (g) Joe Holcomb – tabled;
(2) Renewal Applications: (d) Richard Pulis – tabled.
A motion was made to approve the agenda as amended: D. Norvell. Second: C. Monroe. Vote: 5-0. A roll call vote was taken and all voted to approve the amended agenda: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
1 Closed Executive Session. Chair Carla Martinez entertained a motion to go into closed executive session until 1:30 p.m., for the purpose of discussing tribal matters, licensing matters, issuance of finding of suitability on key and affiliated persons, pending administrative and enforcement matters, pending and threatened litigation, limited personnel matters as enumerated in detail on the agenda. (Closed pursuant to section 10-15-1(H), NMSA 1978): D. Dutton. Second: D. Norvell. Vote: 5-0. A roll call vote was taken and all voted to go into closed executive session: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
2 On Tuesday October 17, 2006 at approximately 1:35 p.m., a motion was made to go back into open session: C. Monroe. Second: D. Dutton. Vote: 5-0. A roll call vote was taken and all voted in favor of the motion: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe. Chair Carla Martinez certified the only matters that were discussed in closed executive session tribal matters, licensing matters, issuance of finding of suitability on key and affiliated persons, pending administrative and enforcement matters, pending and threatened litigation, limited personnel matters as enumerated in detail on the agenda.
3 Approval of Minutes. Chair Carla Martinez presented the following minutes for approval:
1. Working Session, September 13, 2006
2. One Day Regular Board Meeting, September 19, 2006
Commissioner Norvell moved to approve the minutes of the one day regular board meeting. Second: D. Dutton. Commissioner Dutton moved to approve the minutes for the working session for September 13, 1006. Second: D. Norvell. Vote: 5-0. A roll call vote was taken and all voted to approve the minutes: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
4 Board Chair Announcements. Chair Carla Martinez announced that the scheduled Board Meetings are the second Tuesday of each month. If a two day meeting is required, the Board will reconvene the next following morning.
· The next regular Board meetings are November 14, 2006 and December 12, 2006.
· Chair announced that she was recently married and her new last name would be Martinez.
· State Gaming Representative, Morris Chavez was appointed as the new Superintendent of Insurance. Today will be his board meeting.
5 Pending Administrative and Enforcement Actions
· Approval of Settlement Agreement for My Way Holdings d/b/a Sunland Park; Cause No. 06-06-SA. There were no representatives from My Way Holdings, LLC. There were no questions or comments from the Board. Commissioner Monroe moved to accept the settlement agreement. Second: D. Norvell. Vote: 5-0. A roll call vote was taken and all voted to approve the motion: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
6 Licensing
· Renewals of Gaming Licenses for 2006:
Mr. Monforte noted that this information was presented to the Board in closed executive session. Mr. Monforte read into the record the following Renewals of Gaming Licenses for 2006:
Renewals of Gaming Licenses for 2006
a. American Legion Post #90 (Los Alamos)
b. B.P.O. Elks #1440 (Gallup)
c. FamJam, LLC (Albuquerque)
d. Fraternal Order of Eagles #4038 (Las Cruces)
e. Fraternal Order of Eagles #4101 (Alamogordo)
f. Fraternal Order of Police #3 (Santa Fe)
g. Sparton Technology (Albuquerque)
h. Veterans of Foreign Wars Post #7686 (Alamogordo)
Commissioner Norvell moved approval of all the renewals as read with the exception of Fraternal Order of Eagles #4101 in Alamogordo with the condition being that they comply fully with the paragraph I of the Decision and Order dated July 21, 2004. Second: D. Dutton. Vote: 5-0. A roll call vote was taken and all voted to approve the motion: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
Miscellaneous Matters
· Request for Waiver of Manufacturer’s License; Glory, USA . There were no representatives from Glory, USA. There were no questions from the Board. Commissioner Dutton moved to grant a temporary waiver to Glory, USA until their manufacturer’s license is issued to them with the provision that Glory, USA submit a manufacturer’s application for licensing to the agency within 30 days of the Board’s Decision and Order. Second: D. Norvell. Vote: 5-0. A roll call vote was taken and all voted to approve the motion: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
· Request for Waiver of Manufacturer’s License; Cummins Ellison. There were no representatives from Cummins Ellison. There were no questions from the Board. Commissioner Dutton moved to deny the request of Cummins Ellison as not being timely their request for waiver of manufacturer’s license. Second: D. Norvell. Vote: 5-0. A roll call vote was taken and all voted to approve the motion: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe. Commissioner Dutton further moved to grant a temporary waiver of manufacturer’s license to Cummins Ellison until a manufacturer’s license is issued to them with the provision that they submit an application for licensing within 30 days of the Board’s Decision and Order. Second: D. Norvell. Vote: 5-0. A roll call vote was taken and all voted to approve the motion: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
7 Issuance of Findings of Suitability on Key and Affiliated Persons. Mr. Monforte noted that during the closed executive session, the staff presented the results of the background investigations on the findings of suitability for key and affiliated persons. Mr. Monforte read aloud the following list of new key person applications:
New Applications
Donna Padilla – Assistant Gaming Accountant - American Legion Post #25 (Clovis, NM)
David Miller – Assistant Gaming Manager – American Legion Post #72 (Albuquerque, NM)
Michael Orphey – Gaming Manager – B.P.O. Elks #1440 (Gallup, NM)
David Hessler – Gaming Accountant – Fraternal Order of Eagles #3526 (Logan, NM)
Debbie Baca – Assistant Gaming Manager – Fraternal Order of Eagles #4017 (Socorro, NM)
Danny Griego – Post Commander – Veterans of Foreign Wars #1793 (Raton, NM)
Darrell Angel – Commander – Veterans of Foreign Wars #10124 (Las Cruces, NM)
Renewal Key Persons
Jerry France – Assistant Gaming Manager – Fraternal Order of Eagles #3187 (Roswell, NM)
Roger Weisser – Gaming Manager – Fraternal Order of Eagles #4038 (Las Cruces, NM)
Darryl Gerber – Assistant Gaming Manager - Loyal Order of Moose #2081 (Las Cruces, NM)
Terri Donahue – Plant Controller – Sparton Technology, Inc. (Albuquerque, NM)
Jerry Dunlap – Gaming Accountant – Veterans of Foreign Wars #10124 (Las Cruces, NM)
Commissioner Fowler moved to approve the findings for suitability as read with one exception that there be a condition placed on Donna Padilla that she only has the duties of verification of daily gaming forms: Second: C. Monroe. Vote: 5-0. A roll call vote was taken and all voted in favor of the motion: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
Key Person Change of Title
Leland Lehman – Gaming Accountant - American Legion Post #90 (Los Alamos, NM)
William Ferriegel – Assistant Gaming Accountant – B.P.O. Elks #1897 (Alamogordo, NM)
Commissioner Fowler moved to approve the key personnel changes with the exception that there be a condition placed on William Ferriegel that he only has the duties of verification of daily gaming forms: Second: C. Monroe. Vote: 5-0. A roll call vote was taken and all voted in favor of the motion: E. Fowler, D. Norvell, D. Dutton, C. Martinez and C. Monroe.
8 Policy and Rulemaking Matters.
· Rules Hearing for 15.1 NMAC to be held on November 9, 2006.
General Counsel, Frank Baca commented that the formal rule making hearing is scheduled for November 9, 2006 here in our offices at 9:00 a.m. The proposed rules are posted on our web site. A complete copy of proposed rules will be mailed by the end of the week. There will be an informal discussion for the non-profit licensees concerning the internal controls on October 31st at 1:30 pm here in our offices and on October 24th at 8:30 a.m. at the Elks Club in Las Cruces. A letter will be going out on that as well. The Bingo and Raffle policy meeting will be held in Las Cruces on October 24th at 11:00 a.m. at the Elks Club.
· Policy for Gaming Machine Modification Planning & Implementation Procedures.
Deputy Director Greg Saunders commented on the gaming machine modification planning and implementation procedures also known as the ten-day planning policy noting that this policy went into effect on the October 16, 2006.
· Update on Central Monitoring System/Progressives
Deputy Director Greg Saunders presented the update on the central monitoring system. He introduced Scott Stewart, from Scientific Games.
Greg Saunders: Scientific Games is on site here today, they have technical staff working on the data base and getting us set for doing our first migration of the system that will happen at SunRay Park starting next Monday. We expect it to take two to three days to have all of the old machines from the old system fully migrated onto the new system. This process has been going on in Delaware for some time, we recognize the process as they’ve done it there, they’ve worked out most of the technical bugs, we look forward to a clean migration and I don’t think we will have too many problems. The caveat to that is the progressives, the progressives that are on line, we’re going to leave on the old system while we work out technical issues of moving them on to the new system, moving the funds over to the new system or letting them clear themselves out by a win. Those will still be in existence in that manner. We’ll look at the same thing at the other facilities as we go along.
The other item that we’re going to be working on next week will be Post 49 from the non-profit side, we’ll have a meeting, right after this meeting, with the Post and with the distributors and talk about migrating and putting those machines on what we call the dial up side, the dial is what we’ve been waiting for to fully implement the non-profit piece of the new central monitoring system. So, we’re looking forward to two very large successes next week from there we will look forward and put together a planning document to do the other racetrack facilities and as quickly as possible to do the rest of the non-profits. I aim toward the fiscal year in July to retire in the old system completely.
Chair Carla Martinez: Are there any questions from the Board.
Commissioner Dutton: Scott, does Delaware have progressives at their casinos there?
Scott Stewart: Yes, they certainly do, they have the exact same plan as New Mexico. They have their progressives running on the legacy system. It’s preferable to have them changed over after a big win. The transfer of funds can be a little tricky; they’re going to leave theirs on the old system until they have a win, or until such time, I believe they said 12 months or a substantial win, they’re going to give it a little time to make the process a little smoother.
Commissioner Dutton: So, the experience we’re having in New Mexico is pretty much what Delaware is experiencing also.
Scott Stewart: Absolutely.
Chair Carla Martinez: The question I do have is Delaware saying 12 months or until they get a big win, but we’re looking to be off the legacy system by the end of the fiscal year so we’re not looking at 12 months.
Greg Saunders: We would certainly hope not to have to keep the old system around that long, obviously there’re some issues with doing that, however we have to work out the technical details on these progressives, how do we deal with the funds, how do we do a good transition to make the progressives work on the new system, either as a funds transfer or technologically make it happen. We will work those out within that time frame, we don’t have the luxury that Delaware has. Delaware is a State run operation, they don’t have the budget constraints and some of the manpower constraints that we have.
Chair Carla Martinez: What do you mean State run? They actually own the machines?
Greg Saunders: All the machines are given go the State under contract from the manufactures directly, the State operates the casino.
Chair Carla Martinez: How many machines are we talking about that are on progressives?
Greg Saunders: That would be a Donovan question.
Donovan Lieurance: 36
Greg Saunders: How many different progressive banks?
Commissioner Dutton: Will the new system be able to accommodate inter-track progressives? Right now we’re talking about intra-track (within the same facility) can all five of our tracks on this system have progressives?
Scott Steward: The system has the capability to do that. There are other options available outside of Scientific Games.
Greg Saunders: We’re looking at that as an option, certainly. We’re also looking at the third party progressive policy that we’re trying to implement which would allow the tracks as much flexibility as possible with progressive going to a third party to have that hosted. Right now we’re just working out the details of how we would regulate that.
Chair Carla Martinez: Are there any other questions from the Board. Are there any questions from the public.
Mr. Bruce Rimbo: Will the new system handle progressives with the S-plus that we have in Ruidoso.
Greg Saunders: It’s S-2000’s right Donovan? Have you looked at the S-plus?
Greg Saunders: Donovan’s comments was about S-plus platforms, which is an IGT platform, gaming platform, slot machine type, whether that type of machine will be able to run a progressive on the new AEGIS system from SGI. The question is a definite maybe, I guess.
Donovan Lieurance: I would recommend against it.
Greg Saunders: Because of the version of SAS that the machine would be able to run. The issue is that IGT has not supported that platform for quite a long time, it’s an older platform so that’s probably where we’ll see the problem.
Mr. Bruce Rimbo: What happens to the machines in Ruidoso.
Greg Saunders: The machines at Ruidoso can run fine without progressives.
Donovan Lieurance: What we’ll do is we’ll leave those progressives in place just as we’re doing with SunRay and let them run on the AEGIS system until we retire the AEGIS system. Hopefully that gives the venues the opportunity to purchase additional machines or new platforms or we have the third party progressive policy in place which will allow them to institute different progressives on either older platforms or on newer platforms outside of the AEGIS system.
Chair Carla Martinez: Potentially with the third party policy they could keep the old machines, these S-plus machines and they would just be functioning through another provider.
Donovan Lieurance: yes
Greg Saunders: That assumes that any other manufacturer will be able to communicate with those S-plus’s in that capacity.
Donovan Lieurance: That will be dependent on the manufacturer of the third party progressive control whether they support that platform or not.
Mr. Bruce Rimbo: We already have the third party system up there through Mikhon controller.
Greg Saunders: What we would do is just allow you whatever option you go out to choose as a manufacturer of choice to make that happen. It is older equipment I’m not sure anyone would be able to support it.
Mr. Bruce Rimbo: I can’t urge the Board enough to as quickly as we can to this third party, would be the best thing for all the tracks including Zia Park. I had conversations with Greg and Donovan about Zia Park which we still have only one going and I’m told that we could put them in but it’s another $10,000 I understand in the MCD’s although I understand you have a new one out but it hasn’t been fully tested at least through your labs it’s the way I understand it. It’s rather muddled, if it were on a third party then we’d know what we were doing and I think you would know what you’re doing to and I think it still needs all the State statutes and requirements that are necessary, I can’ urge you enough to move as quickly as you can.
Scott Stewart: The patent issues referred to is the terrinal patent which is owned by IGT and a consortium of manufacturers and it only allows most third parties if you’re not a member of the patent pool to run one progressive game per server. If you have additional progressive games you have to add additional servers. There’s a fee that you can pay but the fee is rather exorbitant right now, it’s a lot more cost effective to have an additional server than it is to pay the patent fees.
Greg Saunders: Those servers can be the minimal configuration. We talking about a $3,000 server.
Donovan Lieurance: $3,500 to $5,000 server.
Chair Carla Martinez: This is outside of SGI?
Scott Stewart: Yes, it’s outside of us. Anyone can have the rights if they’re willing to pay the patent fees and the recurring charges.
Commissioner Dutton: One of the things that I would simply say is that because of the older machines, you guys are going to have to look at your business plan and see how you can bring that in. We’ve got 8 months that we’ll be operating the two systems and we are working on the third party policy, but what I’m hearing from the technological side and I may be hearing incorrectly, is that there may not be a server provider so I think you really need to take a look at your business plans and keep in mind that there may be a roadblock at the end of 8 months because are intention is not to continue the old system past the end of June and I don’t think that’s news to anybody or it shouldn’t be.
Byron Campbell- SunRay Park – Just a question to Scientific Games, is there any, do you have any idea what that patent cost is, if we elected to go that route?
Scott Stewart: I don’t have it in front of me, there’s a one time fee of $40,000 per racetrack and then there’s a recurring fee per machine per year and I want to say it’s about $1500 per machine per year, it’s very costly so the cost of separate servers is much easier.
Chair Carla Martinez: What we’re talking about is really more the intra-progressives currently, because I know in Ruidoso there was a conversation where Scott Steward attended and we were talking about the priorities of the roll outs and that was to the inter-progressives, is that correct. (Interstate I should say).
Scott Stewart: It’s the same for inside the track, the terrinal package applies to all progressives being run no matter if it’s internal progressive or a multi-site progressive.
Donovan Lieurance: Right now we don’t have, Scott will give an update about where we would be about getting and being able to implement an intertrack progressive.
Scott Stewart: Track to track. The system support has not been fully tested that’s about where we’re at with it. We’ve not really had a request for and we don’t put a lot of effort into it until we start getting more and more request. I know they request it here we focus mainly on the intra (inside the track) and we move to the external multi track progressive as soon as we get the roll out finished and get the progressives expanded.
Commissioner Dutton: IGT operates like the nickel bucks in the State of Las Vegas there are many casinos in truck stops that are tied into that. When we talk about a third party provider is that what we mean that we might go to someone (the tracks) might go to someone like IGT, nickel bucks to provide a progressive that may tie into them or just for the state of New Mexico.
Greg Saunders: And that’s actually more defined in a statutory question, Frank and I have had some discussions as to whether we could allow a multistate progressive. We see it’s very clear that you can a track to track whether you could get outside the State lines that’s different. So it would be going to a third party manufacturer saying and basically the race tracks are saying I would like to go progressive using your system. What is it and how does it work and bringing that back to the Board and we would approve it or not approve it. The only thing that would be a problem would be whether that manufacturer wanted to become a manufacturer licensee of the State of New Mexico. Our intent here is give the widest possible offering to the tracks; we don’t want to be a hindrance to their progressive.
Commissioner Dutton: That should be something that the track licensees explore and then come to us and talk with our IT people as they are exploring that.
Greg Saunders: We see it really for the IT standpoint, we will make sure that it doesn’t interfere with the central monitoring system and then we will see how the audit process works, that’s all we’ll look at.
Mr. Bruce Rimbo: But we really can’t explore it until you tell us we can do outside of the system. We can find out information or facts or whatever, but it won’t do us a whole lot of good until we realize it can be done outside of the system. If I’m not mistaken of what I’m hearing about this patent that you’re talking about, if we had our own third party provider, Mikhon or whoever it might be this patent issue is a different issue, is that not correct. Isn’t this tied because of the system.
Scott Stewart: No, it depends who’s a member of the patent pool. I don’t know all the members.
Mr. Bruce Rimbo: With the third party provider that was part of the patent pool then you could have more than one, which my guess is Mikhon or a bunch of those are probably a part of it.
Scott Stewart: I know IGT is the main holder of the patent and there are a couple more manufacturers.
Mr. Bruce Rimbo: If we went to a third party then we don’t have this $40,000 issue, we don’t have the extra server’s issue.
Scott Stewart: It depends on who the provider is, not all providers are member of the patent.
Chair Carla Martinez: It sounds like to me what we need to do outside of what Sci games is doing is for the Board to look at this policy on third party progressives and again see if we can do something there with the caveat that depending on the age of the equipment, even there, there may be some roadblocks because they may not support it.
Mr. Bruce Rimbo: I understand we go out and we can’t find anybody then that’s our issue, I understand that but at least the new system isn’t stopping us from doing it. The new system is yours and we want to be in there but you know what equipment we already have and if it doesn’t work and we can’t find something else then that’s our problem, either get new machines or not have them but right now in my opinion the tip ball is in your court right now, not mine.
Commissioner Dutton: Mr. Rimbo, I would urge you to explore from your end while we’re working at our end also so that we can come together in a timely fashion.
Mr. Byron Campbell: It would be helpful if maybe you could help us get more information on this patent issue. Who are members of this patent, I would like to explore that issue a little further.
Greg Saunders: I can try to do that through IGT and Sci Games.
Chair Carla Martinez: Any other questions from the public
Commissioner Dutton: Frank, how far away are we from having a policy on the third party?
Frank Baca: I don’t think it’s a long ways away.
Commissioner Dutton: Is that something that we don’t have to reinvent the wheel on, that we can look at other jurisdictions.
Frank Baca: Yes.
Frank Baca: So we’re looking at least 30 days to at least be able to present to the Board what our opinion is.
9 Public Comments.
· Jon Panlener: His name and resume have been submitted for the Responsible Gaming Council.
· Robert Thompson – American Legion Post 49. With this counsel on problem gambling coming up and the changes I don’t know what authority you’re going to have and how it is going to effect what we’re responsible to do for problem gambling in the non-profits?
· Commissioner Dutton: Tommy, all I can tell you at this time is follow what you’re doing because the Council has to get put together first. We have to come up with an agenda, there’s some studies that are going to be done, some policy decisions that are going to go through DOH (Department of Health) but for the time being as far as New Mexico Gaming Control Board is concerned I think we’ve given a blanket authorization to continue the responsible gaming policies and products that you’ve got in place.
10 Adjournment. There being no other business to come before the Board, Chair Carla Martinez entertained a motion to adjourn. E. Fowler. Second: D. Norvell.
/s/Carla C. Martinez, Esq., CPA Date Approved: 11-14-06
Chair