NEW MEXICO GAMING CONTROL BOARD
One-Day Regular Board Meeting
March 19, 2008
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. Chairman David Norvell called the meeting to order at approximately 9:05 a.m., on Wednesday, March 19, 2008. Due notice was published in accordance with the Gaming Control Act and the New Mexico Gaming Control Board Open Meetings Resolution and Chairman David Norvell declared a quorum. Present were: Commissioner Arnold Rael, Commissioner Don Dutton, Chairman David Norvell, Commissioner Demesia Padilla and Commissioner James Peterson. Executive Director John Monforte, Deputy Executive Director Greg Saunders and General Counsel Frank Baca were also in attendance.
· Approval of Agenda
Chairman Norvell presented the amended agenda for approval. Chairman Norvell entertained a motion to approve the amended agenda: A. Rael. Second: D. Dutton. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton D. Norvell, D. Padilla and J. Peterson.
1 Closed Executive Session. Chairman Norvell 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 and limited personnel matters as enumerated in detail on the agenda. (Closed pursuant to section 10-15-1(H), NMSA 1978): D. Padilla. Second: J. Peterson. Vote: 5-0. A roll call vote was taken and all voted to go into closed executive session: A. Rael, D. Dutton D. Norvell, D. Padilla and J. Peterson.
2 On Wednesday March 19, 2008 at approximately 1:40 p.m., a motion was made to go back into open session: D. Dutton. Second: D. Padilla. Vote: 5-0. A roll call vote was taken and all voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson. Chairman Norvell certified the only matters that were discussed in closed executive session were tribal matters, licensing matters, issuance of finding of suitability on key and affiliated persons, pending administrative and enforcement matters, pending and threatened litigation and limited personnel matters as enumerated in detail on the agenda.
3 Approval of Minutes. Chairman Norvell presented the Minutes of Working Session of February 27, 2008 and the One Day Regular Board Meeting Minutes of February 20, 2008 for approval: Commissioner Rael moved to approve the Board minutes as stated. Second: J. Peterson. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton D. Norvell, D. Padilla and J. Peterson.
4 Board Chairman Announcements.
· Swearing in of New Personnel:
· Board Meeting Schedule:
April 15, 2008 – Albuquerque, NM
May 20, 2008 – Albuquerque, NM
June 17, 2008 – Farmington, NM
5 Pending Administrative and Enforcement Actions
· Consideration of Settlement Agreement; Loyal Order of Moose #1718; Cause No. 07-026-EA and Lawrence Roybal; Cause No. 07-027-EA
There was no discussion from the Board or members of the audience regarding this issue. Commissioner Dutton moved to approve the settlement agreement in this case and a motion to dismiss. Second: J. Peterson. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson
6 Licensing
1. Renewals of Gaming Licenses for 2008
a American Legion Post #44 (Elephant Butte, NM)
b. B.P.O. Elks #413 (Silver City, NM)
c. B.P.O. Elks #1747 (Farmington, NM)
d. Konami Gaming (Las Vegas, NV)
e. NM Gaming (Albuquerque, NM)
f. Ruidoso Downs Racetrack & Casino (Ruidoso, NM)
g. Veterans of Foreign Wars #6917 (Organ, NM)
h. WMS Gaming (Chicago, IL)
i. Zia Park (Hobbs, NM)
Commissioner Rael read the renewals listed and moved to grant the renewals of the gaming licenses for 2008 with no conditions except for Zia Park. Second: D. Dutton. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson. Commissioner Rael moved to temporarily table Zia Park until the Board concludes some other business. Second: J. Peterson. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson.
2. Miscellaneous Matters
- Request for Waiver of Findings of Suitability for Institutional Investors
a. Request for Waiver of Findings of Suitability for Institutional Investors; Franklin Resources, Inc.
b. Request for Waiver of Findings of Suitability for Institutional Investors; Kayne Anderson Rudnick Investment Management, LLC.
c. Request for Waiver of Findings of Suitability for Institutional Investors; Oppenheimer Funds, Inc.
d. Request for Waiver of Findings of Suitability for Institutional Investor; Private Capital Management, L.P.
e. Request for Waiver of Findings of Suitability for Institutional Investors; T. Rowe Price Associates Inc.
f. Request for Waiver of Findings of Suitability for Institutional Investors; Transamerica Investment Management, LLC.
g. Request for Waiver of Findings of Suitability for Institutional Investors; William Blair & Company, LLC.
Commissioner Padilla moved to approve the request for waiver of findings of suitability for institutional investors as listed above with the exception of T. Rowe Price Associates, Inc. Second: J. Peterson. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson. Commissioner Padilla moved to table T. Rowe Price until a later date. Second. D. Dutton. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson.
7. Issuance of Findings of Suitability on Key and Affiliated Persons
1. New Application
a. Albert E. Lucero – Assistant Gaming Manager – American Legion Post #100 (Albuquerque, NM)
b. Jon P. Wade – Executive Vice President of Engineering – DigiDeal Corporation (Spokane, WA)
c. Carol L. Woods – Assistant Gaming Accountant – Loyal Order of Moose #2050 (Truth or Consequences, NM) with restrictions
d. John R. Bunn – Quartermaster – Veterans of Foreign Wars #6917 (Organ, NM)
e. John J. Louis – Quartermaster – Veterans of Foreign Wars #10124 (Las Cruces, NM) with restrictions
There was no one present to address any of these particular applications as read nor was there any discussion from the Board. Commissioner Padilla moved to approve the new applications for issuance of findings of suitability on key and affiliated persons as stated. Second: A. Rael. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson.
2. Renewal Key Persons
a. Clarence W. Grothe – Assistant Gaming Manager – B.P.O. Elks #1747 (Farmington, NM)
b. Ronald Golubski – Gaming Accountant – Loyal Order of Moose #2050 (Truth or Consequences, NM)
c. Patricia M. Postlewait – Assistant Gaming Manager – Veterans of Foreign Wars #6917 (Organ, NM)
There was no one present to address any of these renewal applications as read nor was there any discussion from the Board. Commissioner Padilla moved to approve the renewal key person applications for issuance of findings of suitability on key and affiliated persons as stated. Second: A. Rael. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson
8 Consideration of enforcement action; Fraternal Order of Eagles #2811, Bingo License #0146
Commissioner Dutton moved to file a complaint pursuant to the Bingo and Raffle Act against Bingo License #0146, Fraternal Order of Eagles #2811 and further to seize the two pull tab machines that are located on the premises there in Santa Fe. Second: A. Rael. Chairman Norvell asked if there was any one present to address this issue. Present for FOE #2811 were Alfonso Duran member of the Board of Trustees and Club Manager, Debra L. Kitchens. Chairman Norvell noted that they had the option of addressing the Board in closed session if they preferred or they could address the Board in open session. Mr. Duran requested to be heard in closed session. Commissioner Dutton moved to go into closed executive session to discuss the enforcement matters pertaining to Fraternal Order of Eagles #2811, Bingo License #0146. Second: A. Rael. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson. Chairman Norvell entertained a motion to go into open session. D. Padilla Second: D. Dutton. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton D. Norvell, D. Padilla and J. Peterson. Chairman Norvell certified the only matters that were discussed in closed executive session was the Fraternal Order of Eagles #2811 license and issues regarding that license. Commissioner Dutton noted there was a motion on the floor with regard to the filing of compliant and seizure of machines. Second: D. Padilla Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson.
9 Policy & Rulemaking Matters:
Rules Hearing scheduled for March 31, 2008 at 1:30 p.m. at the New Mexico Gaming Control Board’s Office re: 15.1.5 NMAC, 15.1.8 NMAC, 15.1.9 NMAC, 15.1.10 NMAC, 15.1.11 NMAC, 15.1.14 NMAC, 15.1.19 NMAC
General Counsel Frank Baca noted that there will be a rule making hearing on March 31, at 1:30 at the GCB offices.
Senior Staff Attorney Peggy Hardwick: The rules that we are having heard are the rules that pertain to unsuitable methods of operation and disciplinary action. The hearing officer will make recommendations on those rules, following up with the Board’s vote of approval on the recommendation and then the rules will be submitted for final publication.
10 Request for approval of Allocation Agreement between Ruidoso Downs Racetrack and Sunland Park: There was no one present to address this issue. Commissioner Rael moved that the allocation agreement be approved. Second: J. Peterson. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and J. Peterson.
11 Public Comments:
Dr. Guy Clark: Two months ago I made a complaint before the Gaming Control Board about subliminal programming in slot machines. A month later the Board had a meeting down South where Konami Gaming, Inc., one of the companies at which my complaint was directed, was given the opportunity to make a presentation before your Board and I thought it was highly irregular and somewhat disrespectful. I was not invited to attend that meeting to have the opportunity to respond so I’m making my response here. I did receive a faxed agenda the day before and noticed that that was on the agenda at any rate after that meeting and after you had been instructed by the Attorney General’s office to do an investigation into the complaint. New Mexico Coalition Against Gambling offered assistance. You submitted a report back to the Attorney General Consumer Protection Division and the Coalition feels that your report fell far short in the investigation of the complaint that was issued to the Attorney General’s Office.
In this letter we’re asking the Attorney General to pick up the ball and do a thorough examination. Let me just point out a couple of things I won’t take more than a few minutes. In the area of Konami, Inc. where my complaint talked about subliminal programming issues it seems like a good question I think the question was asked by a member of the Board about subliminal perception but the report doesn’t report that basically at all. The question would be is subliminal perception a valid tool that can be used to motivate people to change their behavior. From the report it doesn’t look like that was looked at all. I can’t see that this was considered. It was Konami’s assertion that this was not subliminal perception that it was just an innocent mistake that some computer programmer made. Was that actually addressed? There is at least one expert a professor of mathematics and computer programmer from Ontario, Canada that looked at it and said the chance of it being accidental would be one out of a hundred thousand but from the report I didn’t gain any information about whether the Board actually had an outside investigator look at the probability at this being a mistake. It doesn’t look like anyone had been invited to look at that. If it were an innocent mistake of programming a year ago in Ontario Canada where the government pulled slot machines off the floor of these casinos because of their deceptive programming why weren’t the people warned about this in New Mexico over that year. Why did it take my coming to the Board bringing it up and having them come down to try to explain themselves? The responsible thing for Konami would have been to warn the public about the potential for damage and to warn the government agencies, they didn’t do that and I think that’s highly irresponsible. I actually think it’s fairly irresponsible for this Board to have let them off the hook when they made those assertions. If I were to sum up the report, the report seems to me to say Konami says there wasn’t any problem, we buy that. Konami said that they were going to fix this thing but wasn’t any problem and it doesn’t matter that we didn’t warn people over the time that we knew at least one government agency felt it was a problem and removed slot machines from the floor of those casinos. The two other items in my complaint which weren’t addressed at all in your report are termed mapping and virtual unbalanced reels. It’s a little bit complicated but the outcome is one of the things that it accomplishes is that there are a lot of near misses, a lot more that would happen if it were just random 14 to 15 times more often than if it was just random which gives an improper perception to the gambler that they are more likely to win. Dr. Schull testifying before the Massachusetts legislature within the last month said that these sorts of things are to be compared to loaded dice and shaved cards. Now I don’t think this Board allows shaved cards, stacked decks or loaded dice but you are allowing slot machines, you may never have known about it until I submitted that information to you. I challenge you to consider the possibilities that slot machines made by most major manufacturers practice this form of deception. Professor Schull also has written a book recently which talks about the process of the casino industry programming the machines so that the gambler will gamble more rapidly, more games per minute and will be attached to the machines for a longer period of time. In her investigation which took place over about a year and a half living in Las Vegas, talking to industry people, many other of the gambling public, she heard the phrase a number of times “playing to extinction” that doesn’t mean playing to death, it means playing till all the funds are gone and that has the tendency to push people who have the tendency for addiction in that direction more forcefully and more rapidly and there are things that could be done, there are things that could be done about virtual unbalanced reels, programming could change that but if you don’t look at it, if you don’t think its important it’s not going to get done. Dr. Schull said there was a term called the zone and in the zone people tended to just play longer and play faster and there are that can be done to interrupt that to make it more fairer to make it so that people are less at risk. I’ve presented some of these things to the Compulsive Gambling Council, they don’t receive any direction they can just make recommendations, if this Board has no interest in looking at the programming then I doubt it’s going to get done but I just thought I ought to explain myself and since I didn’t get the opportunity to ask a few questions last time I thought I would take this opportunity and Mr. Chairman thank you for this opportunity.
Chairman Norvell: Thank you Dr. Clark for coming. Dr. Clark I would note that after you brought this to our attention as far as we know there are no Konami games on any State facility over which we have jurisdiction. Do you know differently?
Dr. Clark: I don’t know for sure, in the testimony it sounded like the racetrack industry said we don’t have those machines in our facilities and I’m not sure if they were saying those four games or whether they were saying we don’t have Konami.
Chairman Norvell: I think they were addressing the machines that you claim had subliminal messages.
Dr. Clark: My point is I don’t think you ought to take Konami at their word since there deceitful practices with the machines I think they have deceived the State of New Mexico over the past year. I don’t think you ought to take them at their word, I think you ought to investigate it and find out it there are. By the way on the Tribal lands I know you pass the buck to the Tribal. The New Mexico Indian Gaming ought to be doing this anyway but the Chairman of The New Mexico Indian Gaming Association a year ago was quoted in the Albuquerque Journal saying the State government had authority to investigate their operations right down to the machines, now that sounds like you guys have the authority to me.
Chairman Norvell: As a matter of fact from our gaming representatives, through her efforts they have provided software to cure the problems with regard to the subliminal messages that you have complained about and we’re following up on that to be sure it’s done.
Commissioner Dutton: Dr. Clark if I might address with regard to the racetracks and casinos at the racetracks, we have a central monitoring system that identifies every game that is at the racetrack casinos and we can assure you there are none of those four games that Konami mentioned at any of the racetracks in New Mexico. Is that right Mr. Saunders?
Greg Saunders: Yes, that is in fact true; none of the four were submitted for approval in the State of New Mexico on the racetrack side so those never appeared in New Mexico.
Dr. Clark: Are there Konami machines?
Greg Saunders: Yes, there are Konami machines in the State but none of those machines were ever submitted.
Byron Campbell- SunRay: I would like to add just a quick comment. I think it’s important that we understand we cannot hook up, turn on any machine from any manufacturers that is not approved by the Gaming Control Board. It will not work on our system.
12 Commissioner Norvell: That concludes the business on the agenda with the exception of one matter, Penn National, for which we are going to go into executive session. Commissioner Norvell entertained a motion to go into executive session. D. Dutton moved to go into executive session for the purpose of licensing issues concerning Penn National. Second: A. Rael. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton D. Norvell, D. Padilla and J. Peterson.
D. Padilla moved to go back into open session. Second: J. Peterson. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton D. Norvell, D. Padilla and J. Peterson. Chairman Norvell certified that the only matter discussed in closed executive session was the issue of gaming licensing machines for Penn National and finding of suitability issues.
Commissioner Rael made a motion to table Penn National gaming machine license fees and the renewal for the 2008 gaming license for Zia Park. Second: D. Padilla.
Discussion
Commissioner Peterson: I want to clarify you say the fee is tabled but what about the renewal?
Chairman: We’re going to do that separately. If we can resolve this somehow and probably call a special board meeting shortly. So the motion is only for tabling the licensing for the gaming machines.
Commissioner Dutton: What effect does tabling of the renewal of the license have with regard to the license? When does their license expire?
Chairman: We’re going to come back to that.
Commissioner Peterson: the license renewal is not the issue the fee wasn’t paid in the beginning and they’ve been operating them ought to be able to continue, what we still have a discussion about is the fee.
Chairman: the only reason we put them together and tabled was a global.
Commissioner Dutton: We’re going to come back to it today is what you’re saying?
Chairman: Right after this.
Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton D. Norvell, D. Padilla and J. Peterson.
Chairman: The issue that was tabled is only the licensing issues.
Billy Blackburn: The 2007 gaming license issues?
Chairman: and the Work Permit and Findings of Suitability. Now we need to go back to the issue under licensing Zia Park which was previously tabled and
the Chair would entertain a motion to approve that application for renewal. Commission Rael made a motion to renew the 2008 gaming license for Zia Park. Second: J. Peterson.
Discussion:
Frank Baca: I would just like to ask in the Decision and Order that we are going to be allowed to indicate that that is simply subject to the resolution of the other issue at some point and time not necessarily with the timeframe but still subject to the resolution of the gaming machine license issue.
Chairman: Sure, the renewal?
Frank Baca: Yes
Commissioner Dutton: I think it should reflect that and I would even like to have a time limit in it, even if the time limit is June 15th.
Chairman: What’s the date in the contract for approval?
Billy Blackburn: According to the proxy according to the documents that are signed between Centerbridge and Fortress and Penn it is June 15th at midnight.
Tom Auriemma - Penn National: but there is a four month extension as you can imagine built into that contract we may have all our approvals by June 5th but to finalize everything, the closing could occur June 20th, I can’t guarantee the exact closing date at this point in time.
Billy Blackburn: but that has a penalty obviously at so much per day by the shareholders
Chairman: after June 15th?
Tom Auriemma: Yes, to Fortress/Centerbridge there’s a penalty to them of a million dollars a day.
Commission Padilla: Shouldn’t we have a June 15th deadline for the resolution of the machines otherwise in effect they would be transferring a license that they don’t even have.
Chairman: We can put the June 15th deadline; we’re going to have it resolved one way or another by then.
Chairman: All in favor of renewing the Zia Park license. Vote: 3 yes, 2 no. D. Dutton and D. Padilla opposed. D. Norvell, A. Rael and J. Peterson voted yes.
Billy Blackburn: The motion does have the caveat as I understand it with the requirement that it be resolved before June 15, 2008. You indicated that there may be a special that’s what the Board is contemplating on a special meeting?
Chairman: I hope that we can try to figure out what to do with this before April 15th.
Billy Blackburn: I might as well let you know I am going to be gone all of next week.
Chairman: Mr. Auriemma thank you for coming, I hope we can get this thing resolved.
Mr. Auriemma: I appreciate being here. See you on the 15th.
13 Adjournment. There being no other business to come before the Board, Chairman David Norvell entertained a motion to adjourn. A. Rael. Second: D. Padilla. Vote: 5-0. All voted in favor of the motion: A. Rael, D. Dutton, D. Norvell, D. Padilla and James Peterson.
/s/David Norvell, Esq. Date Approved: 05-20-08
Chairman