STATE OF MICHIGAN

MICHIGAN GAMING CONTROL BOARD

PUBLIC MEETING

Cadillac Place
3062 W. Grand Blvd., Suite L-700
Detroit, Michigan

Wednesday, December 17, 2008
9:30 a.m.

MINUTES

On Wednesday, December 17, 2008, the Michigan Gaming Control Board held a public meeting at the Board office in the Cadillac Place, 3062 W. Grand Boulevard, Suite L-700, Detroit, Michigan.

Present:            In attendance were the following Board members:

                                                Mr. Damian Kassab, Chairman
                                                Hon. Benjamin Friedman
                                                Ms. Barbara Rom
                                                Mr. Michael Watza

                        Also attending were:

                                                Richard Kalm
                                                John Page
                                                Fred Cleland
                                                D/Lt. Robert Hendrix
                                                Donald McGehee
                                                Kara Kabia

Business:

Board Chairman Damian Kassab called the staff briefing of the public meeting to order at 9:43 a.m.  There being no preliminary business to discuss, Chairman Kassab noted for the record that all Board members were present.

Chairman Kassab stated that the first order of business was to approve the minutes from the November 3, 2008, regular public meeting.  Chairman Kassab noted that all Board members had previously received the minutes, and asked if there were any questions or concerns.

It was then moved by Mr. Watza and seconded by Judge Friedman that the minutes of the November 3, 2008 meeting be approved.  A voice vote was taken.

Motion carried.

Next Mr. Kalm presented the Executive Director's report.  Mr. Kalm reported that on the agenda is the Proposed Board Resolution No. 2008-04 which amends the Comp Program provisions of Resolution No. 2006-01, Section IV (5) (a-d) and will be addressed later in the meeting.  He went on to advise the Board that since the last Board meeting, there were a number of internal promotions, leaving 17 authorized positions to fill, 10 of which we have authorization to fill and 7 that need prior authorization from the Office of State Budget.  He further advised that the interview and selection process was ongoing for the remaining vacant positions.

In regards to the Board's budget, Mr. Kalm reported that as of November 30, 2008, total expenditures were $2,086,096.00.  This leaves an unexpended balance of $18,657,404.00 in appropriated funding for fiscal year 2009, which includes funds for anticipated expenditures by the Attorney General's Office and the Michigan State Police.  At the October 8, 2008 meeting the Board requested the surplus for fiscal years 2006, 2007 and 2008.  Mr. Kalm reported that the final book closing for fiscal year 2008 was completed on November 21, 2008.  He went on to say that the total fiscal year 2008 expenditures were $19,794,448.00 leaving a budget surplus of $468,552.00.  The budget surplus for fiscal year 2007 was $1,032,703.00 and for fiscal year 2006 the surplus was $1,074,942.00.  He went on to say that the funds are returned to the State Treasury and General Fund.

Mr. Kalm next reported that the casinos continue to operate 24/7.  As of November 30, 2008, the aggregate revenue and taxes for all 3 Detroit casinos were down by 6.74% compared to the same month last year.  Revenue for MGM Grand Detroit, MotorCity Casino and Greektown Casino were down by 0.69%, 7.06% and 16.36% respectively, compared to the same month last year.

As of November 30, 2008, gaming taxes for the 3 Detroit casinos were 9.49 Million compared to 13.70 Million for the same period last year.  The decrease in State of Michigan's gaming tax revenue is due to the tax rollback approved for MGM Grand Detroit Casino and MotorCity Casino.

Chairman Kassab asked Mr. Kalm if he had a sense of what the revenue would be for the month of December 2008.  Mr. Kalm responded by indicating that he did not have any numbers in front of him, but can speculate that there will be a drop in the Detroit gaming market, as a whole, over six percent.

In regards to supplier licensing and vendor registration, Mr. Kalm advised the Board that as of December 1, 2008, 3,137 active vendor exemptions are registered, 224 casino supplier companies have been granted exemptions from supplier licensing requirements, and 51 active temporary nongaming-related supplier licenses and 8 active temporary gaming-related supplier licenses are in effect.  In addition, a total of 148 full annual supplier licenses have been granted by the Board and to date, remain in effect.

In regards to employee licensing, Mr. Kalm advised the Board that as of December 1, 2008, the Board's Employee Licensing Section had issued a total of 2,722 valid occupational licenses to MGM Grand Detroit Casino employees; 1,963 valid occupational licenses to MotorCity Casino employees; and 1,608 valid occupational licenses to Greektown Casino employees.  To date, the Board has authorized the issuance of 15,622 occupational licenses to casino and supplier license employees; renewed 14,187 occupational licenses and denied 392 occupational license applications.

Mr. Kalm advised the Board that the required background investigations for 72 pending Level 1 and 2 licenses had been completed and would be considered for approval by the Board at today's meeting.

Next Mr. Kalm reported on the MSP Board related activity for the month of November 2008.  He stated that interviews were conducted on December 10, 2008, to fill two of the three position vacancies.  During the month of November 2008, the MSP Gaming Section investigated 48 criminal complaints and made 25 arrests.

Upon conclusion of Mr. Kalm's report, Chairman Kassab stated that at the November 3, 2008 regular public meeting the Board adopted Resolution No. 2008-03 acknowledging the contributions and accomplishments of Board member Donald Robinson.  Chairman Kassab indicated that Mr. Robinson is here today to accept this recognition.  Chairman Kassab and each Board member expressed their gratitude and wished Mr. Robinson the best.  Chairman Kassab then presented Mr. Robinson a plaque and badge, after which Mr. Robinson expressed that it was his honor to serve the citizens of this State and will miss working with Chairman Kassab, each Board member and Mr. Kalm and wished them the best.

Next Chairman Kassab stated that before consideration of the next item on the agenda, he announced this meeting was officially his last meeting as Chairman of the Board, but he has been reappointed by the Governor as Chairman for another term.

Next the Board considered the proposed Board Resolution No. 2008-04 amending the Comp Program provisions of Resolution No. 2006-01, Section IV (5) (a-d).  Chairman Kassab asked Mr. Kalm to come forward.

Mr. Kalm reported that what is being addressed in the Board Resolution is the immediate need for licensure when the threshold exceeds $200,000.  Mr. Kalm went on to say that when businesses are going to provide comps under $200,000, the Board can make provisions for them without licensure, but when they exceed $200,000, the casino licensees are responsible to ensure that they only participate with licensed personnel.  There are several comp participants that have been operating that do exceed the $200,000 threshold, and they have 30 days to comply with licensure.

Chairman Kassab asked that the thresholds be explained.  Mr. Kalm referred that question to Assistant Attorney General Melinda Leonard.  Ms. Leonard came forward and identified herself for the record.  Ms. Leonard reported that the reference to the $200,000/$400,000 threshold is articulated in Rule 1322.  She went on to say that if the entity exceeds that threshold, then they would be required to apply for a supplier license just as though that Rule applied to them in any instance without the exemption basis.  If they have already exceeded that threshold, then they can, within 30 days, submit their supplier license application and continue doing business under the exemption they currently have.

There being no questions from Board members, it was moved by Ms. Rom and seconded by Mr. Watza to adopt Board Resolution 2008-04.  A voice vote was taken.

Motion Carried.

Next the Board considered for approval the recommendations of the Executive Director and the Licensing Division's staff regarding the 72 Level 1 and 2 occupational license applications.

It was moved by Judge Friedman and seconded by Ms. Rom to accept the recommendations of the Executive Director and the Licensing Division's staff for the 72 Level 1 and 2 occupational license applications.  A voice vote was taken.

Motion carried.

Next the Board considered the Executive Director's Reports and Licensing Division's staff recommendations regarding the transfers of interest in Denn-Co Construction, Inc. and Midwest Steel, Inc.

There being no questions from Board members, it was moved by Mr. Watza and seconded by Judge Friedman that the Board enter an order approving the transfers of interest in Denn-Co Construction, Inc. and Midwest Steel, Inc. under the licensing standards and requirements of the Act and Rules of the Board.   A voice vote was taken.

Motion carried.

Next the Board considered the Executive Director's Reports and Licensing Division's staff recommendations regarding the eligibility and suitability of required key persons/qualifiers of Greektown Casino, L.L.C.

Chairman Kassab asked Mr. Kalm to come forward.  Mr. Kalm reported that there are three individuals Mr. Ted Gatzaros, Mr. Louis Glazier and Mr. Jacob Miklojcik being considered for licensure to sit on the Greektown Casino Management Board.

Mr. Kalm reported that previously Greektown Casino requested that Mr. Gatzaros not be allowed to sit on the Greektown Casino Management Board due to a possible conflict of interest since Mr. Gatzaros is a creditor and an equity holder.  Recently, the Greektown Casino Tribal Board has elected that Mr. Gatzaros be placed on the Greektown Casino Management Board.  Mr. Kalm stated that Board staff has found Mr. Gatzaros to be eligible and suitable to sit on the Greektown Casino Management Board but due to the requested change by Greektown Casino, Board staff did not indicate whether to grant or deny the recommendation and are leaving this decision to the discretion of the Board.

Chairman Kassab asked if there were any representatives in attendance from Greektown Casino.

Dan Weiner of Schafer and Weiner, counsel to the debtors, Mr. Robert Young, counsel for Mr. Gatzaros, and Mr. Joel Applebaum of Clark Hill, on behalf of the committee of unsecured creditors, identified themselves for the record and addressed the Board members' questions related to the position of Mr. Gatzaros on the Management Board.

Mr. Jacob Miklojcik, a key person/qualifier of the Greektown Casino Management Board, identified himself for the record and addressed the Board members questions related to his position on the Greektown Casino Management Board.

There being no further questions from Board members, it was moved by Ms. Rom and seconded by Judge Friedman that the Board enter orders finding and concluding that Ted Gatzaros, Louis Glazier and Jacob L. Miklojcik be found eligible and suitable for licensure under the licensing standards and requirements of the Act and Rules of the Board.  A voice vote was taken.

Motion carried.

Next the Board considered the Executive Director's Reports and Licensing Division's staff recommendations regarding the pending supplier license applications of CGS Entertainment, Inc., Eagle Star, Inc., FL Management, and LaSalle Group, Inc.

There being no questions from Board members, it was moved by Judge Friedman and seconded by Mr. Watza that the Board enter orders finding and concluding that CGS Entertainment, Inc., Eagle Star, Inc., FL Management, and LaSalle Group, Inc. and their qualifiers are eligible and suitable for licensure under the licensing standards and requirements of the Act and Rules of the Board.  And accordingly, grant the request for a one-year period beginning December 17, 2008.  A voice vote was taken.

Motion carried.

The Board next considered the Executive Director's Reports and Licensing Division's staff recommendations regarding the pending supplier license renewal reports of Advertising Specialties, L.L.C., C.L. Rieckhoff Co., Inc., Colombo Sales & Engineering, Inc., Detroit Office Interiors, L.L.C., First Tech Direct, L.L.C., Gemaco, Inc., Guideline Mechanical, Inc., James W. Kraft, Midwest Game Supply, National Precast, Inc., Reel Games, Inc., and Unique Linen Services, Inc.

Again, there being no questions from Board members it was moved by Mr. Watza and seconded by Judge Friedman that the Board enter orders finding and concluding that Advertising Specialties, L.L.C., C.L. Rieckhoff Co., Inc., Colombo Sales & Engineering, Inc., Detroit Office Interiors, L.L.C., First Tech Direct, L.L.C., Gemaco, Inc., Guideline Mechanical, Inc., James W. Kraft, Midwest Game Supply, National Precast, Inc., Reel Games, Inc., and Unique Linen Services, Inc., and its qualifiers are eligible and suitable for licensure under the licensing standards and requirements of the Act and Administrative Rules of the Board.  And accordingly, grant the request for renewal for a one-year period beginning December 17, 2008.  A voice vote was taken.

Motion carried.

Next the Board considered the Executive Director's Report and Licensing Division's Staff recommendation regarding the denial of the supplier license application of Gene's Landscape Service Company.

Chairman Kassab asked if there were any representatives in attendance from Gene's Landscape Service Company.  Chairman Kassab further noted that there were no representatives for the licensee present at the meeting.

There being no questions from Board members it was moved by Ms. Rom and seconded by Judge Friedman that the Board enter an order denying the supplier license application of Gene's Landscape Service Company.  A voice vote was taken.

Motion carried.

Next the Board considered the Executive Director's Report and Licensing Division's Staff recommendation regarding the denial of the supplier license renewal of G.L.J. Bakery Distributors, L.L.C.

Chairman Kassab asked if there were any representatives in attendance from G.L.J. Bakery Distributors, L.L.C.  Mr. Benjamin Aloia, Attorney for G.L.J. Bakery Distributors, L.L.C. identified himself for the record.

Chairman Kassab informed Mr. Aloia that he would first like Board staff to give a brief overview of the recommendation afterwhich Mr. Aloia could address the Board.

Mr. Fred Cleland came forward and identified himself for the record.  Mr. Cleland reported on the investigative process, requests made by Board staff, and interviews that took place to arrive at the recommendation to deny the supplier license renewal of G.L. J. Bakery Distributors, L.L.C.  Mr. Kalm and Assistant Attorney General Melinda Leonard also came forward and reported that G.L. J. Bakery Distributors, L.L.C. have had every opportunity to comply, and stressed the importance that the licensee has the obligation under the Act to cooperate in the Board's investigation.

Mr. Aloia came forward and reported on the interviews and investigative process that his clients have gone through.  He went on to report that his clients have fully cooperated with Board staff during the investigative process. 

Board members asked additional questions of Board staff and Mr. Aloia.  A controversial discussion was held regarding the process of the investigation and whether or not interrogatories should be incorporated as part of the investigative process.

There being no additional questions from Board members, it was moved by Judge Friedman and seconded by Mr. Watza to table the recommendation regarding the denial of the supplier license application of G.L.J. Bakery Distributors, L.L.C. until the February 10, 2009 regular public meeting.  A voice vote was taken.  Ms. Rom voted nay.

Motion Carried.

Chairman Kassab requested that Regulation Officer Gary Peterson attend the February 10, 2009 regular public meeting to answer questions related to the recommendation to deny the supplier license application of G.L. J. Bakery Distributors, L.L.C.

Next the Board considered the Executive Director's Report and Licensing Division's Staff recommendation regarding the denial of the supplier license application of Kone, Inc.

Chairman Kassab asked if there were any representatives in attendance from Kone, Inc.  Mr. Fred Cleland indicated that Cheryl Scott Dube, General Counsel of MotorCity does not represent Kone, Inc., but would like to address the Board.

Ms. Scott Dube identified herself for the record.  Ms. Scott Dube explained that Kone, Inc. is MotorCity Casino's elevator and escalator vendor and the importance of this supplier to MotorCity Casino.  She went on to say that she would welcome the opportunity to contact Kone, Inc. to find out the details of the problem and encourage them to cooperate with the Board.

There being no questions from Board members, it was moved by Mr. Watza and seconded by Judge Friedman to table the recommendation regarding the denial of the supplier license application of Kone, Inc. until the February 10, 2009 meeting. 

A voice vote was taken.

Motion Carried.

Chairman Kassab recessed the meeting at 11:40 a.m.

Chairman Kassab called the meeting back to order at 11:55 a.m.

Upon Chairman Kassab's request Mr. Chuck Moore of Conway MacKenzie & Dunleavy, financial advisors for Greektown Casino, gave a brief status report pursuant to the Board's June 10, 2008 show cause order. 

Upon conclusion of Board members questions related to Mr. Moore's status report, Chairman Kassab requested a motion to recess and go into closed session.

Therefore, it was moved by Ms. Rom and seconded by Mr. Watza, that the Board recess and go into closed session for the purpose of receiving legal advice and counsel from the Board's attorney regarding pending Board litigation, and receiving confidential notification regarding the names of the individuals placed on the Board's Dissociated Persons List since the Board's last public meeting as required by the Act.  A roll call vote was taken.

                        Chairman Kassab:                        Aye
                        Judge Friedman:                         Aye
                        Ms. Rom:                                    Aye
                        Mr. Watza:                                  Aye

Motion Carried.

Next Chairman Kassab reported that Laird's Upholstery wishes to address the Board related to contracting practices concerning Greektown Casino.  Mr. Kalm reported that Licensing Division staff have made arrangements to meet with Laird's Upholstery and Greektown Casino directly after the regular public meeting and therefore Larid's Upholstery no longer needed to address the Board.  Chairman Kassab requested that the court reporter unmark Laird's Upholstery as an exhibit.

Chairman Kassab announced the next regular public meeting on February 10, 2009 at 9:30 a.m.

There being no other business to discuss, Chairman Kassab adjourned the meeting at 12:17 p.m.


____________________________
Kara Kabia, Board Secretary