NATIONAL GAMBLING IMPACT STUDY COMMISSION

DISCUSSION OF STUDY CONTRACTS

CHAIRPERSON JAMES: Do we have any other questions for this panel before we begin those discussions? John?

COMMISSIONER WILHELM: Am I correct in understanding that this business about bidding is not a factor with respect to the NRC?

MS. TORREY: We don't bid. Our -- the people who serve on our committees are volunteers. We pay them their travel and their food. We give them cookies in the afternoon. We will pay occasionally for papers for workshops, but those are -- that is $1,000.00. And because we are not a federal agency, we don't have to bid.

CHAIRPERSON JAMES: They aren't bound by those sticky little procurement laws.

COMMISSIONER WILHELM: Is the ACIR's requirement because of us or because of them?

CHAIRPERSON JAMES: I think he answered that when he said it is because they are a federal agency and are bound by federal laws. Thank you very much. We appreciate your coming here today and thank you for the work you have done, particularly with our research subcommittee.

We are now, in fact, into the portion of our agenda where we are talking about the contract for both of these organizations.

COMMISSIONER MCCARTHY: I would like to move, Madam Chair, that we approve the plan of action submitted by the National Research Council as amplified by the presentation and the questions and answers we have just heard and authorize the Chair to move forward and negotiate a contract with them as promptly as possible.

CHAIRPERSON JAMES: Is there a second?

COMMISSIONER LOESCHER: I second the motion.

CHAIRPERSON JAMES: I'd like to open for discussion of that motion at this particular time.

COMMISSIONER MCCARTHY: I think that I am enormously impressed by the professionalism of this group and I think we are going to get a good product. I am mindful of the total budget research dollars we will have, but this one there is absolutely no question in my mind that we have all the data that we can hope to have before us and all of the appropriate information on which to make a judgment and I think the subject matter of pathological gambling is one of the critical ones that we are going to have to face on this Commission. And I would at least like to get this part of the research undertaken so that we don't defer all of the research that this committee is going to have to make a judgment upon. I have already talked to one member of the Commission who has a couple of good contacts at one or two foundations and we are going to try to work very hard to see if we can get some additional research dollars so that we are not caught short as the full Commission examines all areas that should appropriately be researched.

CHAIRPERSON JAMES: Jim?

COMMISSIONER DOBSON: Madam Chair, I am going to vote against the motion. Not because I oppose our affiliation with the NRC, but because I just feel like it is premature to make that decision. I may be the only one, but I would like to defer that judgment until we have a chance to look at all that we are trying to do and then fit the pieces together.

CHAIRPERSON JAMES: John?

COMMISSIONER WILHELM: As I started to say before, I support -- now that it is a motion, I support the motion because, one, the law requires the Commission to contract with the National Research Council. Two, as Leo said, I think all three of us on the research committee were quite impressed with the approach and professionalism of the National Research Council. Three, while I am sensitive to the point that Richard and Jim made before about the budget, and obviously we don't have a budget -- nevertheless, particularly in view of the NRC's response to Bill's question, that is, is this price negotiable, and I understood the answer to be not if you want us to do what it is that we are supposed to do with the rigor that we customarily do it, then it seems to me that for those reasons that it is not premature to contract with this group. And for that reason, I support the motion.

CHAIRPERSON JAMES: Paul?

COMMISSIONER MOORE: I will probably support the motion also, but I would like before we vote -- I am not very carried away with ACIR and maybe this is not the time to discuss that, but I would like to know what our legal ramifications are that we have to deal with ACIR. It seems to me like they are sort of like a shell company or whatever you call that. Someone didn't think that they ought to exist and didn't fund them and then he says they went back and did fund them. He says that they have two people and maybe two people working part-time, and they are going to go out and hire all of these people. There is going to be time in getting contracts or bidding these. And so I would just like to know what our legal obligations are. I don't know if this has anything to do with NRC, but I think they fall under the same category in the law.

CHAIRPERSON JAMES: What I would like to do is confine our discussion at this point to the motion that is on the table and that is NRC. And when we complete that, then I think it would be appropriate to entertain some discussion or a motion about ACIR.

COMMISSIONER BIBLE: Before we act on Leo's motion -- Leo, we have in our package of materials something referred to as general research policy guidelines that were prepared -- I guess you must have prepared these items.

COMMISSIONER MCCARTHY: Yes.

COMMISSIONER BIBLE: Would your motion include incorporating these guidelines into the proposed contract?

CHAIRPERSON JAMES: Can I ask Commissioners to please use the microphones?

COMMISSIONER MCCARTHY: Yes.

COMMISSIONER BIBLE: Good.

COMMISSIONER MCCARTHY: I don't think we need to formally include them in this agreement. I view those as applicable to all research that will be undertaken by the Commission.

COMMISSIONER BIBLE: No, and I would agree with that. I think that they are very good guidelines and we should use them in all endeavors.

CHAIRPERSON JAMES: My understanding is that you all discussed those research guidelines in your subcommittee and made some changes to them. And I think before Commissioners agree that they would like to see those included in the research as the guidelines, it may be helpful to know or have from the committee a report on what changes you did make.

COMMISSIONER MCCARTHY: I made changes. The changes referred to are ones that I made to John Wilhelm's original draft.

COMMISSIONER BIBLE: But they are in the copies --

COMMISSIONER MCCARTHY: They are included in this copy.

CHAIRPERSON JAMES: Okay. I am sure that I have them here in this stack of paper. But for the benefit of the Commission and of the audience, John, would you -- either John or you, Leo, if you could talk about what changes you made to them, that would be helpful.

COMMISSIONER MCCARTHY: As soon as I find a copy of it. I must have a copy of my own among these 3,000 pieces of paper I have here. I changed -- I made a suggested change which Mr. Wilhelm suggested in B. He had, "To the greatest extent possible, the Commission shall rely upon quantitative research." Originally the language also had "rather than qualitative research", and while I do agree that quantitative research to establish a trustworthy common base of data should be used in all research, in this kind of subject matter, there will be some qualitative research that is made, and I think Carol Petrie made reference to that in her presentation. So I asked John to remove that language so that we did not appear to be dismissive of qualitative research.

In D, I inserted the clause that begins that section, "In order to provide local, state, Indian tribal, and federal officials as well as the public with the data." That is practical for self- evident reasons as a basis for what follows after that. That's the main purpose, to get that out to the public and to all of the officials. I added card clubs to the list of forms of gambling that were included. That is in D also, toward the end of D. I made changes that Mr. Wilhelm was kind enough to accept in D and E -- I am trying to recall because I don't have both versions in front of me. Yes, I think it was primarily to give the Commission the flexibility that what we would want to look at is regions, not necessarily one locale, so that we could compare different forms of gambling and look at the differences in customer profiles that migrate from area to area. That language is in the latter half of that section. To the same point in G, that we should focus a substantial part of our research by selecting a defined number of regional areas. I don't know what those are yet or how to define them, but we are getting a better idea of that. Whether we group together Pequot and Atlantic City or Mississippi and Louisiana or California and Nevada, I am not sure. That is going to take a great deal of conversation. My point was not to in any microstudy select too small a base because it wouldn't give us the diversity that we need to provide useful data. I think that is pretty much it. John, do you want to --

COMMISSIONER WILHELM: There were just two others, Leo, that you had -- one that you had made in C. The earlier draft said "statistical methodology utilized by other governmental research organizations", and you changed it, I think appropriately, to "statistical methodology utilized by professionally respected private and public entities." And then the last change, which I think got omitted, Leo, on the copy the Commissioners have, was the one that Jim suggested in D. It should read in D at the beginning, "In order to provide local, state, Indian tribal, and federal officials as well as public officials with data of practical application in diverse communities and environments considering the limitation," -- that was Jim's insertion -- "initiation or expansion of legalized gambling."

COMMISSIONER MCCARTHY: Yes, that was in my version. So this must be the original version.

COMMISSIONER WILHELM: The word limitation along with initiation or expansion was supposed to be inserted there.

COMMISSIONER MCCARTHY: Right. What I distributed does have the limitation word in it.

COMMISSIONER WILHELM: Oh, it does? Okay, this one doesn't. Sorry. Those were the changes as far as I know.

CHAIRPERSON JAMES: Thank you. That was very helpful.

COMMISSIONER MCCARTHY: Now that isn't to suggest that some other member of the Commission is not going to say why did those three fellows on the subcommittee on research leave out this very critical area. A blinding light may strike them at 3:00 a.m. tomorrow morning while they are thinking about this material, and we are amenable to that. But we think we have got a set of principles here that would be useful. So the answer is, yes, I think -- to the extent practical, pathological gambling research is obviously going to be a lot different in many respects than economic impact. So we have to -- it has to be applied -- the principles have to be applied with common sense, of course. It is going to be easier to apply those principles in some forms of research like economic impact than it might be with pathological gambling.

COMMISSIONER BIBLE: But at least there is a commonality of data gathering. We will be collecting it uniformly, so that this contract won't look different than some other contract.

COMMISSIONER MCCARTHY: Yes.

CHAIRPERSON JAMES: May I make a suggestion then that we entertain a separate motion so that this will apply to all of the research that we do and not just insert it into this particular one? I think we ought to vote on the motion that is on the floor and then I would be happy to entertain a second motion that would adopt these as the general research guidelines. Any further discussion? Yes, Richard?

COMMISSIONER LEONE: I have a -- my head is with Dr. Dobson on this one because that is undoubtedly a problem to proceed even in an area as essential as this and commit what, if we are unsuccessful in raising outside money, could amount to a third or so of the research budget by any eyeballing of what we have got to do and what we have got. On the other hand, I understand this is -- I don't want to be Montgomery to Leo's Patton here. I understand the desirability of just going forward because the chances are excellent -- we have got the right group, I think, to look at this and they have obviously a professional approach and it has got to be part of the report. And to wait a few more months and then be in the same place with that much less time makes no sense. I guess to make me a little more comfortable with what I am sure is going to be the outcome of this vote -- I am sorry?

CHAIRPERSON JAMES: Yes. I was going to suggest that we focus on what the motion is and that the motion is not that we are signing a contract today.

COMMISSIONER LEONE: That is what I was going to say.

CHAIRPERSON JAMES: The motion is that we begin that process. And I think that when we are at the point where we have a final contract, we bring it back before this Commission and that will give us the opportunity, then, to fit it in with the larger --

COMMISSIONER LEONE: Kay, I am not asking for that. In fact, I was with you to that point. I wanted to be clear in my own mind that you would be negotiating this and put it in a context that made sense to you in terms of our overall budget. But I view this as delegating to you the ability to do that and I think you should. I don't think we should have to wait until October or November if your judgment is that we can put this thing together in a few weeks or a month when we have eyeballed some of the other numbers. Then I think we should do it in spite of the fact that in some parallel universe they are doing this in a more sensible way. We don't have that luxury. So I just -- with that in mind, then I will support this.

CHAIRPERSON JAMES: Any other discussion on the amendment that is before us?

COMMISSIONER LOESCHER: Madam Chairman, could you have the motion restated, please, from somebody who is taking minutes?

CHAIRPERSON JAMES: Certainly. Who was taking that? I am not sure that she is doing it contemporaneously. So that I would ask Leo --

COMMISSIONER MCCARTHY: Is somebody ready to copy down these extraordinary words that I am about to utter?

CHAIRPERSON JAMES: Absolutely.

COMMISSIONER MCCARTHY: I will speak slowly here. I move that the Commission, based on the prospectus and plan of action submitted by the National Research Council, authorize the Chairman of the Commission to proceed to negotiate and sign a contract to do the research that is outlined in the prospectus.

COMMISSIONER LOESCHER: I seconded the motion.

CHAIRPERSON JAMES: That is right. The motion was seconded by Mr. Loescher. We have had discussion. Are we ready for the vote? All in favor, please say aye?

COMMISSIONER LOESCHER: Madam Chairman, I would like a roll call vote.

CHAIRPERSON JAMES: You may certainly have one. Mr. Bible?

COMMISSIONER BIBLE: Aye.

CHAIRPERSON JAMES: Mr. Dobson?

COMMISSIONER DOBSON: No.

CHAIRPERSON JAMES: Mr. Lanni?

COMMISSIONER LANNI: Aye.

CHAIRPERSON JAMES: Mr. Leone?

COMMISSIONER LEONE: Aye.

CHAIRPERSON JAMES: Mr. Loescher?

COMMISSIONER LOESCHER: Yes.

CHAIRPERSON JAMES: Mr. McCarthy?

COMMISSIONER MCCARTHY: Aye.

CHAIRPERSON JAMES: Mr. Moore?

COMMISSIONER MOORE: Aye.

CHAIRPERSON JAMES: Mr. Wilhelm?

COMMISSIONER WILHELM: Aye.

CHAIRPERSON JAMES: And the Chair votes aye. That is 8:1, the motion carries. At this point, I would like to entertain a motion, perhaps from Mr. Wilhelm, on his general research guidelines. We delayed a discussion of that.

COMMISSIONER MCCARTHY: Madam Chair, if I may suggest, we are submitting that to you as a subcommittee -- oh, no, we are not because we didn't notice the meeting. So let me just state that Mr. Wilhelm may wish to make a motion. See how quickly -- of course, I will no longer state that the three of us share an opinion on the subcommittee anymore, but I will support Mr. Wilhelm's proposal.

COMMISSIONER WILHELM: And for purposes of our committee, the full title of that document is as drafted by Wilhelm and tweaked by McCarthy and Dobson. That was our official terminology. I move the adoption of the version that -- the amended version that was provided to the Commissioners. Let me just note for the record that there is more than one version floating around. And again, the version that not only me but several Commissioners have omits in D the word added by Dr. Dobson, which should be included.

CHAIRPERSON JAMES: Limitation?

COMMISSIONER WILHELM: Which is the word limitation immediately preceding initiation or expansion. So depending on whether or not your version has that, it should be there and I move their adoption.

COMMISSIONER BIBLE: And I will second the motion.

CHAIRPERSON JAMES: The motion has been moved and properly seconded. Is there any discussion? Mr. Loescher?

COMMISSIONER LOESCHER: Madam Chairman, I am not keeping up here. I don't know where the word limitation goes.

COMMISSIONER BIBLE: It is the fourth line up from -- excuse me, Madam Chair.

CHAIRPERSON JAMES: Yes, please.

COMMISSIONER BIBLE: It is the fourth line up from the bottom of the first page, the last word where it reads, "communities and environments considering the limitations..." and then onto the next line, "initiation, or expansion..." The fourth line up from the bottom.

COMMISSIONER MOORE: Put limitation there, right?

CHAIRPERSON JAMES: That is correct.

COMMISSIONER LOESCHER: I have it now. That is fine.

CHAIRPERSON JAMES: Any other questions or discussion? I call for the vote. All in favor, please say aye. Any opposed? Motion carries. We will note for the record that Mr. McCarthy was out of the room during the vote. Now we have the question before us of ACIR and any discussion. I know that Mr. -- can someone find Commissioner McCarthy and see?

COMMISSIONER WILHELM: If I may in Leo's absence, Kay?

COMMISSIONER MCCARTHY: I am here. You may anyway.

COMMISSIONER WILHELM: I wouldn't even think of it now that you are the chair of a committee as opposed to a mere subcommittee. Leo, the chair had just raised the question of the ACIR, and I thought perhaps you should reflect the state of that issue, at least in the minds of the research committee.

CHAIRPERSON JAMES: Mr. McCarthy? Yes, there you go.

COMMISSIONER MCCARTHY: I think the feeling of the committee is that there could be a serious opportunity for ACIR to assist us in some of the research of this. I think I would like to get just a little more information from Mr. Griffiths, with whom I had the chance to speak now several times and like very much. But if we could just get a clear definition of how the research would be done. I am sort of thrown for a loss about this business of this competitive bidding and who would do the agreements. Because I think Mr. Griffiths does have access to some people who are quite familiar with state government costs and finance and so on and that could possibly be quite valuable. So I am personally not in a position to vote for a contract this afternoon, but I would like to pursue it with Mr. Griffiths. And I especially would like to find a way to have a little more flexibility in how we put these bids out. That is enough.

CHAIRPERSON JAMES: Richard?

COMMISSIONER LEONE: Yes. I have a somewhat more negative -- of course, I haven't had the exchanges you have had. In my teaching days, I was something of a wonk, and I certainly had a high opinion of ACIR. However, as I understand the situation, this Commission is essentially being called upon to cover the entire overhead cost of keeping ACIR in business while they do this subcontractor work and other work for us. I have a high opinion of the people who remain there and of the people they would be likely to turn to, assuming the bidding process permitted us to get the quality we need. But I am troubled by it. It is an odd way to proceed. Again, I think it is an odd way -- it is not an odd way for Congress to proceed because Congress is sui generis on these matters. But it raises in my mind a question of whether -- this is probably why public meetings always are a source of trouble. But it would be a lot cheaper just to hire the two people who are there onto our staff and have them go out and get people to do the work. Not that I am suggesting that, but it is again -- it is something that troubles me. The arrangement troubles me. And I think that is going to be a problem no matter how we slice it. But if and when we have this committee formally in place, I am confident that they will come back with the answer. But I don't feel I have the answer today.

CHAIRPERSON JAMES: Jim?

COMMISSIONER DOBSON: Madam Chair, I think my opinion is already clear on this one, and it is very different than my view of the NRC, where I voted against the motion simply because of timing. But I can see the value of participating with them. I really do have major concerns about our asking the ACIR to do what they have proposed. They have virtually no staff at this time, as we have said, and certainly, as I can see, no specific expertise on the subject of gambling. They are conducting no research currently. They are an intermediary that is going to serve primarily as a go-between and that seems unnecessary to me at best. They would consume at least $1.4 million of our budget, whatever it happens to be, and perhaps as much as $20 million, if we should have that much.

Approximately 30 percent of which, if I heard correctly, goes for overhead. That is a chunk of change. Now it is not real money because it is tax money and so we can -- I am being facetious. I think we do have an obligation to look out for how we spend the money. And they, as has been mentioned, are required to seek competitive bids for research assistance, which will bog down the process.

Apparently the statute requires us to do something with them. They have to assist us, it says. But I would favor the minimum involvement or at least to limit their participation in some way.

CHAIRPERSON JAMES: I would like to make a suggestion at this point -- of course it is at the discretion and will of the Commission -- that we kick this one back to our -- what are we calling them now, committee or subcommittee -- to Leo and John and Jim and have them continue to ask some of these questions and to research this issue a little bit further and to report back to us when they feel that they have sufficiently answered those questions to their satisfaction. I don't think we necessarily have to have a vote on that. It is a consensus issue. Bob?

COMMISSIONER LOESCHER: Madam Chairman, I am against that suggestion and for the record, I oppose the idea. A couple of things come to my mind. The first one is an easy one. If we don't have to do the Internet gambling thing with ACIR, let's don't and figure out another way.

So I would like to sort of ask the Commissioners to think of that in that vein and see what we could conclude there. Another point is that I am persuaded by the arguments this morning that we should follow the law, and the law says that we have to contract with ACIR. I think we should in good faith try to implement the law. I really did like the way the NRC made their prospectus, and maybe we ought to give ACIR the opportunity to advance a prospectus in each of the segments that they are challenged to provide us advice with or reports on. I offer that as a suggestion rather than going this other way disparagingly saying that they are not capable, when we have not given them the chance. And also, not being responsive to the law in good faith. So I offer that idea.

CHAIRPERSON JAMES: John?

COMMISSIONER WILHELM: I would agree that it is premature to take the kind of decisive step with the ACIR that we took today with the National Research Council.

However, we ought not labor under the delusion that, at least as I read the law, there is any circumstance in which we will not have an agreement with the ACIR. Because the law says, as I read it, that we shall without any question contract with the ACIR for Section 7(a)(1)(A), which is a thorough review and cataloging of all applicable federal, state, local, and Native American tribal laws, regulations, and ordinances that pertain to gambling in the United States. And then (B) is assistance with respect to some of the other issues. So clearly we are going to have a contract with the ACIR, and I don't think there ought to be any lack of clarity about that. But how extensive it is, it seems to me that it would be premature to act upon today for the reasons others have stated.

CHAIRPERSON JAMES: John, I think you are absolutely right. There is absolutely no lack of clarity, at least in my mind, about the fact that there will be a contract with ACIR.

Having said that, I think that it would be important for you and Leo and Jim to sit down and figure out exactly what that scope would be and maybe to have them come forward with a prospectus and answer some of those difficult questions that were raised this morning and work through some of those problems related to contracting and subcontracting and staffing. There may be some easy answers to this. We just don't, at this particular point, know what they are. Having said that, that is the final agenda item on the Commission agenda for today.

COMMISSIONER LOESCHER: Madam Chairman?

CHAIRPERSON JAMES: Certainly I will recognize you in just a minute, Mr. Loescher. We have a full agenda for tomorrow. What I want to say as we bring up to a close our time today, if there are any additional items that Commission members would like to discuss before we adjourn for the day, at this point I would be happy to entertain any of those items. Mr. Loescher?

COMMISSIONER LOESCHER: Madam Chairman, your last comment before you moved to close this part of the session was -- and you stated it affirmatively again, not withstanding my objection, that you turn all of this research contracts to a committee of the Commission. I object. I don't want you to have the last word on it by declaration.

CHAIRPERSON JAMES: Mr. Loescher, I would suggest if you would like to make a motion -- the reason that I did not act on it is there was no motion before the Commission. If you would like to make a motion, I would be happy to see it. See if you can get a second and then we will have a discussion.

COMMISSIONER LOESCHER: Madam Chairman, as opposed to that, I don't want to make a motion. I just want to say for the record that if you think your declaration of transferring this to the committee is the last word on the record and that it is a fact of the Commission, then I object. I think that the thing should go to a motion to transfer it to a committee and I am not going to make that motion. But for the record, I object to transferring a major part of this Commission's business to a committee.

CHAIRPERSON JAMES: I am certainly happy to entertain any motion, Mr. Loescher, that you would like to make. Hearing none, the meeting -- oh, I see another person over here.

COMMISSIONER WILHELM: I don't have a motion. I have a different request.

CHAIRPERSON JAMES: Certainly.

COMMISSIONER WILHELM: When I asked the ACIR representative the source of the advice about bidding, it was Mr. Snowden, if I understood him. Will he be with us tomorrow when we discuss the rules?

CHAIRPERSON JAMES: Yes.

COMMISSIONER WILHELM: Good. That would be important. Because as you know, one of the proposed rules relates to the Commissions approval of contracts and subcontracts and so forth.

CHAIRPERSON JAMES: Certainly. One of the reasons that that portion is on the agenda tomorrow is because we will have certain legal counsel here from GSA and so I want to make sure that they are present to answer your questions to your satisfaction as we have that discussion. Terry?

COMMISSIONER LANNI: Thank you, Kay. I was wondering if also maybe Mr. Snowden or counsel could give us some advice as to what extent we are required -- maybe a little better definition of the ACIR and to what extent they are required. I understand it is clear in the statutes that they are specifically required. But I would like maybe a little more clarity on that tomorrow if we could.

CHAIRPERSON JAMES: That is fine. Paul?

COMMISSIONER MOORE: You just asked Leo and John and all to study and sort of condense it down. Then it comes back to the Commission.

CHAIRPERSON JAMES: That is correct. Any other questions or business before the Commission this evening? Then we will convene tomorrow morning at 9:00. Thank you.

(Whereupon, the meeting was adjourned at 4:29 p.m. to reconvene the following day at 9:00 a.m.)