CHAIRPERSON JAMES: With that we're going to now move into our regular business meeting of the Commission.



COMMISSIONER DOBSON: -- may I take this opportunity to make a statement.

CHAIRPERSON JAMES: Certainly. Commissioner Dobson.

COMMISSIONER DOBSON: I was handed today a document written just today by Congressman John Shadegg about the Commission and it's a two-page statement and I think it's very well stated. With the permission of the Chair and our fellow Commissioners, I'd like to enter this into the record.

CHAIRPERSON JAMES: Certainly. Could someone get that and distribute it?

COMMISSIONER DOBSON: That's the first thing. The second is that as I mentioned earlier this morning, our staff did an analysis prior to our coming today with some of the studies and the media requests and the federal and state statements and so on and I have a copy of that for everybody. I'd like to also enter this document into our official statement. It is continually frustrating but expected that so little can be done in two months, I mean, two months and two days in a meeting of this nature and there's so many issues and so many questions that I would like us to deal with.

Obviously we can't and so if we'll just put that in the record that would be fine.

CHAIRPERSON JAMES: Thank you. I see that we have six Commissioners in attendance and needing only a majority present, we have a quorum to conduct the business of the Commission.

The staff have prepared minutes from the May meeting which were included in your briefing books at Tab 3. I hope you've had a chance to review those and I just want to ask if there are any corrections or changes. If not, I'd be happy to entertain a motion to adopt.


CHAIRPERSON JAMES: Do I hear a second?

COMMISSIONER BIBLE: Madam Chairman, what are you doing now?

CHAIRPERSON JAMES: The minutes from our May meeting.

COMMISSIONER BIBLE: All right, second.




(No response)

CHAIRPERSON JAMES: With that, the minutes of the May meeting are adopted. Now, I'd like to turn to Doctor Kelly, who is serving as our acting executive director for him to give his report.

DR. KELLY: We're at that moment where energies are waning. Every time I walk out and hit that 102 degrees it drains a little more from me, I don't know about the rest of you. Anyway, I'd like to give you an update on where we are. As you know, I have had the privilege of serving as the Commission's acting executive director for the past six weeks. During this time we have all worked hard to make sure that the Commission office remained pro-active and responsive to the agenda established by you, our Commissioners.

I'm proud of the extent to which we have accomplished that objective. Our hearings are on schedule. The research agenda is in full gear which we will cover in just a second and we're preparing to staff up for year two, which will focus on sort of a new focus, subcommittee work, analysis of the research collected as it starts coming in, and the report which will be due to the federal, state and tribal governments as we all know, in June of '99. So I think we're shifting our focus here appropriately as we enter sort of a phase two.

With that let me give you a brief review of where we are in our hearings, where we are with our research agenda and then some notes on operations. On the hearings; by now you can judge for yourself the high quality and sophistication of panel presentations assembled for this our fourth site hearing. Thank you all for the generous time and assistance you provided during the long process required to define panels and select presenters. I hope that you found the background materials and briefing papers to be helpful as you consider the complex issues raised over these two days.

I would say in passing I think the panels we had this morning were among the best that we've had at all. I also want to recognize especially Rick Hill and Jake Coin of the National Indian Gaming Association for their tremendous assistance in identifying relevant tribal leaders. It has been a pleasure to work with them and I'm looking forward to continuing to work with them as we move ahead.

This is the first hearing that included time for all four subcommittees to meet which is logical since they didn't exist before our last hearing and that has proven to be extremely helpful. Special recognition should go to the Indian Gambling subcommittee Commissioners. I think I would like to especially point out that Commissioners Moore, Wilhelm and Loescher, you provided invaluable face to face time with the tribal leaders on Tuesday in Del Mar. You will do so again at the Gila River Reservation and Saturday in Albuquerque.

I know from comments made by many of our tribal leaders and those in the tribes that that time is much, much appreciated and it has served us well, especially in terms of being able to gather more information for us as we proceed and I remind you all that all Commissioners are, of course, invited to all such meetings.

Our next site hearing, next to the last, thank you again for your help in defining panels and selecting presenters for our Mississippi/Louisiana hearing. The resultant proposed panels are listed in the work plan update, that's in Tab 6 in your briefing book there and please recognize that we do have a shorter period than usual to prepare for this visit, only six weeks, and I would ask your help in responding quickly to the draft agenda and panel requests. Towards that end, we will be mailing out to you a draft skeleton agenda of panels for your consideration late next week. So just a week from now we'll be turning our attention already to our Mississippi/Louisiana hearing.

And then our final hearing, our sixth and final hearing this calendar year for a site visit that is, it does seem particularly fitting that our final site hearing before we shift to focusing on findings and report writing will be in Las Vegas. Last month I was able to advance our upcoming visit since I was in Vegas for a conference. Governor Miller and Commissioner Bible's office, I'd like to say, were particularly helpful in arranging meetings with relevant individuals and groups. I met with several panels from Governor Miller's, and this is their term, National Gambling Impact Study Commission Visit Facilitation Committee. It consists of, I think, about 30 people.

I visited the impressive MGM Grand facilities which I maintain is basically a city/state and I saw Commissioner Bible's lab, which was very impressive. And, in fact, I learned a new term there, reverse engineering. I won't ask you to define that term, because I know if you do you'll have to kill us all because of the secrecy required for that but they basically reverse engineer machines that have been tampered with to figure out how they've been tampered with, how they work.

I also sat in on a treatment group for pathological gamblers there which was very instructive. Governor Miller's office coordinated much of the agenda and the meetings were both informative and very collegial. I think it's fair to say that the visitation committee there in Vegas is putting a tremendous effort into preparing for our arrival and they certainly stand ready to assist us in any way possible.

Much of my discussion with them at the time focused on asking them about possible data sources; for instance, on total casino revenues, number and quality of jobs, et cetera, that will help us as we prepare for that final site hearing. The Governor's chief of staff was particularly helpful in offering to collect such information for us and I'm glad to see that she was here present at this meeting as well, Kathryn Cortez. I'm not sure she's here at the moment, but I know she was here yesterday and at least part of today.

The propose panel definitions for Nevada are listed in that same work plan update so I'll call your attention to that once again, Tab 6 in your briefing book. I, of course, invite any further ideas that you might have for panel definitions for our final site hearing.

Let me turn to research, where are we on the research agenda. The Commission's five primary research contracts have been let, as we all know, and the selected researchers and research organizations are hard at work on our behalf and I would remind us that we have basically at this point a two and a half million dollar research initiative that's underway. That's very impressive and it's probably going to provide an anchor for literature in this area that's been sorely missing.

Attached under Tab 7 in the briefing book, the next one back, you will find more detailed progress reports from three major subcontractors, and by the way, I'll be doing this for you at each hearing. I'll get you updates from each of them in written form like this for your review later perhaps but you have them there from NORC, from NRC and from ACIR at Tab 7. What I will do here is just review quickly verbally a summary of what they reported.

NORC, the National Opinion Research Center, they have completed developing the survey instrument or questionnaire for the national phone survey, what we affectionately call the RDD, random digit dial survey that we are about to begin. It has been extensively reviewed by the research subcommittee and I do want to recognize the amazing amount of time that Commissioners on the research subcommittee have put into this and it was, of course, sent to all Commissioners for comments as well. We appreciate the tremendous amount of time that all of you have put into this in order to make sure that the resultant instrument is fair, objective and representative, which it will be.

Commissioner Lanni also provided several recommendations and we are in the process of responding to those. At the same time and even so NORC is even now pretesting the questionnaire to sort of fine tune the flowing content. We are, therefore, on schedule for a national survey to take place in early fall and this will be, to date, the definitive survey on gambling behaviors and their social and economic what we call correlates or those social and economic factors that are related to gambling. NORC has also developed a shortened version of the questionnaire for the patron pilot survey per the direction of the research subcommittee.

Once questionnaire pretesting is completed and pilot sites selected, the pilot study will be able to move forward and we're hoping that will take place in just a matter of weeks now. A full discussion of these current issues raised by -- to give you sort of a progress report, by NORC, of course, is included under Tab 7.

Secondly, NRC, the National Research Council, they are continuing to move ahead with their work on pathological gambling literature having held an open workshop on prevalence and etiology in Irvine, California. Their next and last open workshop in case any of you or your staff are interested is scheduled for September 2nd and 3rd in Washington, D.C., so just, I guess, six weeks or so from now. This meeting will focus on treatment for pathological gambling as well as social and economic impacts.

Please let me know if you or your staff would be interested in attending and I will, of course, send directions to you or help make arrangements that might be necessary towards that end. Also, please refer to their progress report in that same tab and note that on the NRC progress report they have included something that's unique for them. Their closed sessions are jealously guarded by them as something which the contractor may not participate in and we understand, we're okay with that. However, they have generated some notes for us on the general tone and flavor of discussions in those closed sessions so that we will see even what we were not able to attend what the type -- what the discussion and issues were that were raised. So that's included in their progress report.

Thirdly, the ACIR contract, ACIR is working on gambling laws and regulations and proceeding on schedule. They have contracted with several consultants from American University, my old alma mater, who will help guide and produce their report and they have already conducted several literature searches. For more information on their work, again, I refer you to their progress report. It's just a one-pager front and back but it is informative.

Fourthly, we are just completing the contracting process for lottery research, as many of you know, with Doctors Cook and Clotfelter, which includes working through the contract office of Duke University. That has slowed us down a little bit but are moving ahead nonetheless. Cook and Clotfelter have asked the Commission to help generate needed state lottery data. For that reason, the research subcommittee is developing a questionnaire which all of you have seen at this point to send to the state lottery directors. We hope to send the request to state lottery directors as early as next month and the resultant data, of course, will be a tremendous asset to Cook and Clotfelter as they do their work for us and to us as we look over basic lottery questions and related economic and social impacts that we've been discussing here.

Then our fifth and last contract is with Doctor Rose. Doctor Rose is moving ahead with his work which is he's charged with synthesizing the literature on the economic impact of casinos. If possible, I'm hoping that he will be able to deliver a preliminary report to us in Biloxi or New Orleans, in other words, at our next site hearing. He is on schedule and hopes to have that ready next month in August and so that should be possible.

Lastly, just a note on operations, on budget. Per the Chair's instruction as well as my own inclination, we are reviewing several potential cost-cutting measures. We're reviewing administrative overhead, conference costs, et cetera, in order to make sure that no funds are wasted and that we allocate as much as possible to our many research initiatives. For more information on the budget, please refer to Tab 5 in your briefing book, where I have the usual budget printout, sort of a snapshot.

And then just a note on communications or inter-governmental affairs, we continue, of course, to respond to any and all media inquiries and our website, which we're very proud of, continues to receive numerous hits daily. Also per the Chair's instruction, I have met recently with the following individuals involved with the Native American gambling. I thought I would just mention that to you so that you can the array of persons who are active in these areas. I met with Chris Stearns, the Counsel to the House Committee on Resources; Gary Bohnee, Majority Staff Director from the Senate Committee on Indian Affairs; Lloyd Jones, Majority Chief of Staff for the House Committee on Resources; and then of course, Rick Hill and Jake Coin, Chairman and Executive Director respectively of NIGA; Kevin Gover, Assistant Secretary for Indian Affairs and Patricia Zell, Minority Chief of Staff, Senate Committee on Indian Affairs.

All of these people really are a wealth of resource and data on some of these very issues that we have been working on these past two days. And these meetings are a part of our ongoing efforts to locate relevant information, analysts and input for our research and hearing agenda.

In conclusion, as the Chair has indicated, the Commission is at a strategic point in its work. We are moving from phase one into phase two. The first year we focused primarily on operational setup and site visit preparations and we worked hard to develop the groundwork and vehicles for our research agenda and we have done very well in that regard. At the start of our second year now, we are prepared to begin the final efforts on the remaining two site visits and perhaps even more importantly, the difficult task of accepting the research findings that we have funded, it's all going to start flowing in this fall, reviewing the data and assembling the final report based on those data.

And I know we're all proud to say that we're all committed that this will be a very data based Commission. I do appreciate the assistance and feedback I have received from each of you and I look forward to working with you and to answering any questions you may have.

CHAIRPERSON JAMES: Any questions? I'd like to open it up at this point for any of our subcommittee chairs who would like to give any report if you think that's necessary and important at this point.

COMMISSIONER McCARTHY: I have a brief report on the Subcommittee on Research.

CHAIRPERSON JAMES: Commissioner McCarthy.

COMMISSIONER McCARTHY: I want to again thank Jim Dobson and John Wilhelm for a lot of hours of contributive hard work and their staffs and Doctor Tim Kelly and Doctor Peter Reuter and I know I'm omitting somebody but they all have been terrific in fashioning the work product. I'm not going to reiterate what Tim just reported to us, only to indicate that I appreciate the comments about the form of some of the questions that both Commissioner Lanni and Commissioner Leone put in. It was helpful to the entire discussion.

As you recall, a few weeks back you were all sent, those of you not on the research subcommittee were all sent copies of the NORC general survey questionnaire and asked for comment and Lanni and Leone both did respond and I did appreciate it very much and I take it that meant the rest of you were satisfied with the form of the questions.

I do want to go on beyond that and mention that we're trying to develop information from primary sources in addition to the research that we're doing. An example of that is the questionnaire developed to the lottery directors and I want to ask Tim, are you sure that the other six Commissioners not on the research sub have been sent that questionnaire?

DR. KELLY: Yes, unless I'm misremembering. We sent that out to everyone for one final review, that particular draft of it.

COMMISSIONER McCARTHY: Okay, because we are attempting to format it so that when the lottery directors in all 37 states receive it, it will be easier for them to answer the questions because we have asked them for a ton of information and I think some of them are going to swoon when they receive that questionnaire. So we're a couple of weeks away from getting the new format for the questionnaire to the lottery directors.

Now, that's one source of primary resource information we're trying to gather. We very slightly discussed a similar questionnaire that we intend to formulate for casino owners, for casino owners in the country and for Indian gambling. Primarily what we're interested in is Class III operations and, of course, there are a lot of common questions to Indian and non-Indian casinos. I had a chance to chat very briefly with our colleague Commissioner Loescher the other day but there are also some unique questions that I think we need to formulate. Listening to all this testimony, we get a lot of anecdotal information on the results of what is mainly Casino III gambling in a lot of tribes and to be useful to us and in the final report that we will make, we need to figure out how to make that kind of information coming in more uniform and more reliable. So we'll be coming to you for some assistance in formulating those questions both as to the casino owner's questionnaire, we obviously want Commissioner Lanni to be involved in that, and Commissioner Loescher and really all of you involved in those categories.

Now, after yesterday's discussion -- rather testimony from the parimutuel owners and the assertion by at least two witnesses that race tracks -- that the hottest item being discussed in state legislature are horse race tracks attempting to bring in casino -- or slot machines that bear casino-like similarities. Five states already have it. Another seven or eight or nine are close to it. I think we ought to consider the possibility of a questionnaire to all parimutuel track owners as well, the corporations that own them and formulate questions but that's something we just for the first time mentioned at the research subcommittee meeting last night and that's not a decision that's been made.

We wanted to put it out there in front of all Commission members for your thoughts on any aspect of this. Let me mention briefly that after the Chicago testimony on risk disclosure, we have been searching for a way to try to see if we could develop a reliable approach to developing some risk disclosure criteria so that consumers would be better informed, whether it's a governmentally run lottery or a private sector or another form of gambling. So the consumers might be better for -- we're not there yet. We're not close to having a handle on it, but I wanted the members of the Commission to know that we're trying to grapple with that.

I also wanted to mention, you've heard me say this several times, we're trying to get a handle on credit usage. We haven't done that yet but we're trying to pull together the threads of that to see whether or not the issue of having easy access to credit right on the floor, the premises of the gambling commission is something we might want to consider making a comment about in our final report. We're not there yet. We don't have enough tangible material to even put in front of you.

Finally, the Indian gambling subcommittee is certainly looking at all aspects of Indian gambling. The research subcommittee will cooperate very closely with the members of the Indian gambling subcommittee in trying to formulate a questionnaire that will go to the managers of Indian gambling in the country. The Internet Mr. Bible has undertaken as his number one project on the regulatory subcommittee, trying to get a handle on the Internet issues so the research subcommittee has stepped back from that as well and is, of course, deferring to Mr. Bible's regulatory subcommittee.

That's the close of my report. Thank you.

CHAIRPERSON JAMES: Thank you. Any other Commissioners with reports on subcommittees?

COMMISSIONER BIBLE: I want to talk, Madam Chair, briefly about the Internet subcommittee.


COMMISSIONER BIBLE: We had an organizational meeting yesterday and we've identified the need to obtain some assistance for the subcommittee and perhaps the full Commission in order to kind of explore the technical issues involving the Internet and the regulation potentially of the Internet. As the Chair observed yesterday and Allison also testified to, the Kyl Bill has now passed out of the U.S. Senate, it's before the House of Representatives, so perhaps the policy decision is already being made.

In the event the policy decision is made, I believe there's still going to be a considerable debate about enforcement and potential enforcement mechanisms and I think it would be helpful for this Commission to be able to fully understand those issues as to whether prohibitions or regulation can be implemented in Internet applications. So we're actively exploring obtaining some assistance and you talked about it briefly today with the individual from the Department of Justice either a detailee from another federal department perhaps an intern or perhaps some other form of assistance to fully explore these measures so at least we understand the technical basis of the Internet.


COMMISSIONER WILHELM: Just for our understanding, your subcommittee is not just the Internet, is it?


COMMISSIONER WILHELM: Okay, I misunderstood. I'm sorry.

CHAIRPERSON JAMES: Any other? With that, I'd like to turn --



COMMISSIONER LOESCHER: I'm wondering about a couple of things. The report committee, does it have a report?

CHAIRPERSON JAMES: I do apologize, yes, and as Chair of the report committee, we did meet yesterday at -- not yesterday but the day before. We had full participation in the report subcommittee. The action items that came out of that particular committee was that we will be drafting, have staff directed to draft a time line that will get us to full production on June 20th and work back from that so that we can stay on schedule with the report.

We also have asked staff if they would prepare for us a format that -- some recommendations for formatting of a final document, what that would look like as well as to collect perhaps six or eight reports that have been done so that we could review them and begin to formalize our process of what it would actually look like. We had an excellent meeting. There was -- we feel confident that we will be able to produce this report on time and look forward to doing that on June 20th of 1999.

COMMISSIONER LOESCHER: Madam Chairman, one other area of inquiry regarding the administration of the Commission; are you prepared to make comments about the executive director and key staff and how those positions are going to be filled?

CHAIRPERSON JAMES: Not at this time, it's not on the agenda.

COMMISSIONER LOESCHER: Madam Chairman, I would just like to state for the record a couple of observations from my corner of the world. Time moves on and things happen and this Commission has a time line that we have to meet. We won't be meeting for another six weeks and my concern is over the issue of the executive director.

The statute provides for an executive director and I would expect that we would be recruiting for an executive director or designating an executive director and that's the way the statute is written, you get to pitch the candidates, we get to vote them up or down. And I believe that because of the statutory duties and the fiduciary duties that the Commission has and the Commissioners have that it is the prudent thing for us to designate an executive director.

We need somebody who can keep track of the day to day operations of the Commission, to keep track of the confidential data that we have, keep things going the way the committees and the statute have outlined and I don't see that happening very well without an executive director. So, for the record, I want to state my views on this matter.

The other thing is that I have been impressed with the quality of people that we've had in the Commission staff but, for whatever reason, they are moving on and we're -- as a result we lose a little bit in the continuity and the knowledge and experience that these people have had. And I think it's important to have positions within the Commission staff that can help us as we move towards the final report to utilize the record that's been built, the research that's going on and the knowledge and experience that's been gained by the Commission.

So I'm a little nervous about the executive -- acting executive director's comments that we're going on a cost-cutting approach and we're looking to reduce GNA and we're doing this and that. I want to make sure that when we're doing that, that we meet our other objectives that are required by statute. So for the record, I would like to do that.

The other thing for the record is that it's my understanding and it may not be a final recommendation yet, but that we are going to externalize the writing of our final report with a writer who is not employed by -- directly on the Commission and before we do that, I would like to know who that person is. I'd like to understand more about that whole process and also I'd like to juxtapose that with the role of Commissioners, the executive director and our fiduciary duties to consummate a final report before I hand the responsibility of writing that to some outside third party we don't even know. I'd like to know more about that process.

CHAIRPERSON JAMES: Thank you and it's duly noted for the record. For the record, I'm not quite sure where you got that information, Commissioner Loescher, about an external writer for the report. It's absolutely inaccurate. As a matter of fact, the -- I have been interviewing candidates, as have other members of the Commission for hiring that will be full time on staff and a member of the staff to produce the report.

With that, I will turn to old business. Is there any old business that needs to be brought before the Commission at this point? I failed in my duties and I realized that a little bit into our meeting this morning, to introduce Duncan Getchell, who is here on behalf of our normal general counsel, Mr. George Terwilliger, who is, in fact, called away for other business and has sent one of his law partners to fill in for him today. He does have a couple of items of business that he will bring before the Commission, I think, to respond to questions that were asked of the Commission at the last meeting.

Excuse me just a minute, yes.

COMMISSIONER BIBLE: Before he does that, Doctor Dobson indicates to me that he has to leave the meeting. I wondered if we could talk about an item of new business. If you'd like to bring on new business before, there's no reason why we can't do new business before old.

COMMISSIONER DOBSON: This is Commissioner Bible's item but I would want to hear it.


COMMISSIONER BIBLE: One of the items we talked about this morning was the proposal by the Department of the Interior to adopt regulations that would allow the Secretary of the Interior to act as arbitrator in disputes between the tribes and state governments. I think at least based upon the testimony I heard this morning that it would be appropriate for this Commission to go on record objecting to the adoption of those particular regulations until the tribal gaming subcommittee chaired by Doctor Moore and the full Commission has a chance to fully consider that issue. I believe that's a fairly important issue and if those regulations would go into effect that the scope of gaming may be substantially increased by the time this Commission issues its report in June and I think it would be appropriate at this time to adopt a motion that would request that the regulations not go into force or into effect and not be implemented until after this Commission has had an opportunity to file its report.

CHAIRPERSON JAMES: Would you like to offer that as a motion?

COMMISSIONER BIBLE: And I would make that as a motion.

COMMISSIONER DOBSON: And I would second it.

CHAIRPERSON JAMES: At that point, we're open for discussion. Is there any discussion on that particular motion that's before us? Hearing none, I'll call for the vote. All in favor of the motion to request that the -- of the Secretary of the Interior that the regulations not go into be implemented until this Commission finishes its work and we'll get the --

COMMISSIONER McCARTHY: Not be published.

CHAIRPERSON JAMES: Well, they're already published.

COMMISSIONER BIBLE: They're already published. They are published, I believe, I believe in final form. Apparently at least from the testimony this morning I gathered that he's barred by a prohibition that was contained in one of the appropriations act by the last Congress from implementing those regulations until October 1 of this year.

CHAIRPERSON JAMES: That's correct.

COMMISSIONER BIBLE: And I think our motion would include that that prohibition be extended beyond October 1st until this Commission has had an opportunity --

CHAIRPERSON JAMES: At least until June 20th, 1999.

COMMISSIONER BIBLE: -- till June 20th since we know the reports can be done by June of 1999.

CHAIRPERSON JAMES: Hearing no further discussion I'll call for the question. All in favor, please signify by saying "Aye".


CHAIRPERSON JAMES: Aye, any opposed?


CHAIRPERSON JAMES: Okay, the motion carries.

COMMISSIONER DOBSON: Madam Chairman, I have to get to Boston tonight. I apologize for having to leave early.

CHAIRPERSON JAMES: Well, Commissioner Dobson, we were delighted to see you here today and certainly recognize that you need to get to Boston.


CHAIRPERSON JAMES: You are more than welcome. We are about to hear from our general counsel.

MR. GETCHELL: At the May 21 meeting of this Commission, it was reported that your counsel had concluded that this Commission is housed in the legislative branch of the government and at that point Commissioner Bible asked Mr. Terwilliger to determine if the Commission is subject to any reporting requirements due to the legislative branch determination. I believe that Mr. Terwilliger said at that time that he was unaware of any further analysis and research has failed to disclose any and as a further check on that situation, the staff was requested to make an approach to the ethics committee of the Senate which was done and no such requirements were identified.

So it is the conclusion of your counsel that there are no additional reporting requirements.

COMMISSIONER BIBLE: Good, thank you.

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CHAIRPERSON JAMES: Any other old business?