STATE OF MICHIGAN
MICHIGAN GAMING CONTROL BOARD

PUBLIC MEETING
Cadillac Place
3062 W. Grand Blvd., Suite L-700
Detroit, MI

Monday, November 3, 2008

9:00 a.m.

MINUTES

On Monday, November 3, 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
                                                 Ms. Barbara Rom
                                                 Mr. Michael Watza

                                     Also attending were:

                                                Richard Kalm
                                                John Page
                                                Fred Cleland
                                                Insp. Ellis Stafford
                                                Donald McGehee
                                                Kara Kabia

Business:       

Board Chairman Damian Kassab called the staff briefing of the public meeting to order at 9:09 a.m.  There being no preliminary business to discuss, Chairman Kassab noted for the record that all Board members were present with the exception of the Honorable Benjamin Friedman.  Chairman Kassab noted that since Mr. Donald Robinson's retirement, we do not have a replacement yet.

Chairman Kassab stated that the first order of business was to approve the minutes from the October 8, 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 Ms. Rom that the minutes of the October 8, 2008 meeting be approved.  A voice vote was taken.

Motion carried.

Next Mr. Kalm presented the Executive Director's report.  Mr. Kalm advised the Board that since the last Board meeting, Regulation Officer Dale Thibodeau was promoted as the Regulation Manager 15 in the Investigations Section in the Licensing Division, leaving 14 authorized positions to fill, seven of which we have authorization to fill and seven 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 for fiscal year 2008, from October 1, 2007 through October 27, 2008, the Board has incurred total expenditures of $18,455,672.00 leaving the unexpended balance of $1,807,328.00 in appropriated funding for FY 2008, which includes funds for anticipated expenditures by the Attorney General's Office and the Michigan State Police.  Mr. Kalm went on to say that the final book closing for FY 2008 would be completed on November 21, 2008.  Once the final book closing is completed, a comparison of surplus for FY 2006, FY 2007 and FY 2008 will be completed and reported at the December 17, 2008 meeting.

Mr. Kalm next reported that the casinos continue to operate 24/7, and because the November 2008 Board meeting was rescheduled earlier in the month, the gaming revenue and tax information is being provided as of October 25, 2008.  As of October 25, 2008, revenue for MGM Grand Detroit, MotorCity Casino and Greektown Casino were $40.4 Million, $31.4 Million, and $20.3 Million respectfully.

As of October 25, 2008, gaming taxes for the three Detroit casinos were $8.284 Million compared to $14.3 Million as of October 31, 2007.  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, and the early book closing.  Ms. Rom asked for a comparison of the revenue once the month closed, Mr. Kalm indicated that the revenue and comparison for the three Detroit casinos would be forwarded.

In regards to supplier licensing and vendor registration, Mr. Kalm advised the Board that as of October 23, 2008, 3,092 active vendor exemptions are registered, 222 casino supplier companies have been granted exemptions from supplier licensing requirements, and 50 active temporary nongaming-related supplier licenses and 8 active temporary gaming-related supplier licenses are in effect.  In addition, a total of 149 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 October 24, 2008, the Board's Employee Licensing Section had issued a total of 2,754 valid occupational licenses to MGM Grand Detroit Casino employees; 1,950 valid occupational licenses to MotorCity Casino employees; and 1,596 valid occupational licenses to Greektown Casino employees.  To date, the Board has authorized the issuance of 15,498 occupational licenses to casino and supplier license employees; renewed 13,970 occupational licenses and denied 392 occupational license applications.

Mr. Kalm advised the Board that the required background investigations for 66 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 October 2008.  He stated there have been no staffing changes since the October 8, 2008 report.  During the period October 1, 2008 through October 26, 2008, the MSP Gaming Section investigated 50 criminal complaints and made 13 arrests.

Next Mr. Kalm reported on the Vendor Complimentary Program (Comp Program).  He stated that since the October 8, 2008 Board meeting, Bahn Thai Café, Laikon Café and Sweet Georgia Brown's have been suspended from the Comp Program, and the Summit Group (Holiday Inn Express) relinquished their exemption due to a severed Comp Program relationship with the casinos, Olympia Shish Kebab is being reviewed for a possible violation of the Michigan Gaming Control & Revenue Act and Administrative Rules, and the Licensing and Enforcement Division staff will work together to identify the Comp Program participants who will be investigated further.  The Licensing Division staff along with the Attorney General's Office is in the process of reviewing Resolution 2006-01.  The purpose of this review is to ensure its consistency with the Michigan Gaming Control Board as it relates to the Comp Program.  The recommended changes to Resolution 2006-01, specifically Section D, which deals primarily with the Comp Program, will be submitted to the Board at their December 17, 2008 meeting.  There are other provisions within Resolution 2006-01, which will be addressed at a later meeting. 

Ms. Rom asked when Greektown Casino would qualify for the tax rollback.  Mr. Kalm advised the Board that the primary concern is to make sure the City of Detroit is satisfied with Greektown Casino meeting the requirements within the Development Agreement.  The statute states that Greektown Casino should have certain areas open to the public and the completion of a 400-room hotel.  Mr. Kalm went on to say that the Board would consult with the City of Detroit to ensure that prior to a roll back approval the City of Detroit will need to confirm that Greektown Casino has met the requirements within their Development Agreement.  Ms. Rom asked, putting aside the City of Detroit issues, if Greektown Casino would qualify for a tax roll back in January 2009 with a partial opening.  Mr. Kalm advised the Board that according to the statute, Greektown Casino has to have the 400-room hotel open to the public and be fully operational.

Upon conclusion of Mr. Kalm's report, Chairman Kassab stated that the next item on the agenda is a resolution honoring Donald Robinson, who unfortunately was unable to attend the meeting due to his anniversary, and hopefully Mr. Robinson will be able to attend the December 17, 2008 meeting for the presentation of the plaque.  Chairman Kassab read Resolution 2008-03 and asked for a motion to adopt the resolution as presented. 

It was moved by Ms. Rom seconded by Mr. Watza to adopt Board Resolution 2008-03 acknowledging the contributions and accomplishments of Donald Robinson, and commending him for his distinguished and honorable service to the Michigan Gaming Control Board and the People of the State of Michigan.  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 66 Level 1 and 2 occupational license applications. 

It was moved by Mr. Watza and seconded by Ms. Rom to accept the recommendations of the Executive Director and the Licensing Division's staff for the 66 Level 1 and 2 occupational license applications.  A voice vote was taken.

Motion carried.

Next the Board considered the Executive Director's Report and Licensing Division's staff recommendation regarding the pending transfer of interest in Atronic Americas, L.L.C. and Spielo Manufacturing, ULC.  Chairman Kassab asked the other members of the Board if they had the opportunity to review the revision to the percentage of ownership amount in Atronic Americas, L.L.C. and Spielo Manufacturing, ULC.  Ms. Rom and Mr. Watza indicated they had.

There being no questions from Board members, it was moved by Ms. Rom and seconded by Mr. Watza that the Board enter an order approving the proposed transfer of interest in Atronic Americas, L.L.C. and Spielo Manufacturing, ULC, 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 Report and Licensing Division's staff recommendation regarding the pending supplier license application of Renaissance Man Food Services, Inc.

There being no questions from Board members, it was moved by Mr. Watza and seconded by Ms. Rom that the Board enter an order finding and concluding that Renaissance Man Food Services, Inc. is 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 Report and Licensing Division's staff recommendation regarding the pending supplier license renewal request of Allied-Eagle Supply Company, L.L.C.

There being no questions from Board members, it was moved by Ms. Rom and seconded by Mr. Watza that the Board enter an order finding and concluding that Allied-Eagle Supply Company, L.L.C., and its 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 renewal for a one-year period beginning November 3, 2008.  A voice vote was taken.

Motion carried.

The Board next considered the Executive Director's Report and Licensing Division's staff recommendation regarding the amended Board Order of the pending supplier license renewal request of Resource Data Systems Corporation.

Again, there being no questions from Board members it was moved by Mr. Watza and seconded by Ms. Rom that the Board enter an amended order finding and concluding that Resource Data Systems Corporation, 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 November 3, 2008.  A voice vote was taken.

Motion carried.

The Board next considered the Executive Director's Report and Licensing Division's staff recommendation regarding the request to withdraw supplier license application of My Media Resource, L.L.C.

Again, there being no questions from Board members it was moved by Mr. Watza and seconded by Ms. Rom that the Board enter an order granting the request of My Media Resource, L.L.C. for withdrawal of its supplier license application, based upon the Board's staff report and recommendation.  A voice vote was taken.

Motion carried.

The Board next considered the Acknowledgment of Violation of supplier licensee TIE Leasing Company.

Upon Chairman Kassab's request Mr. Page gave a brief summary of the case. 

Chairman Kassab acknowledged for the record the presence of Dave Waddell, counsel for TIE Leasing.  Mr. Waddell thanked the Board and its staff on behalf of TIE Leasing, that TIE Leasing did not intentionally violate the requirements, and TIE Leasing voluntarily enters into the Acknowledgment of Violation.

Upon conclusion of Mr. Waddell's comments, it was moved by Mr. Watza seconded by Ms. Rom that the Board accept the proposed Acknowledgement of Violation as agreed to by the Michigan Gaming Control Board staff and supplier licensee TIE Leasing Company, and issue an order adopting, accepting and incorporating the Acknowledgment of Violation as the Board's final decision.  A voice vote was taken.

Motion carried.

The next order of business was the Acknowledgment of Violation of casino licensee Detroit Entertainment, L.L.C. (d/b/a MotorCity Casino).

Upon Chairman Kassab's request Mr. Page gave a brief summary of the case.

Chairman Kassab acknowledged for the record the presence of Cheryl Scott Dube, counsel for Detroit Entertainment, L.L.C. and Michael Roy, Vice President of Compliance & Analysis. 

Ms. Scott Dube thanked the Board and its staff for their assistance and indicated that MotorCity Casino voluntarily enters into the Acknowledgment of Violation.  Ms. Scott Dube advised the Board that she and Mr. Roy intend to submit a proposal for Board staff review related to subsection six of the Rule which has a specific provision that allows the Board to exempt from licensing requirements persons who are not or do not need to be licensed in order to protect the public or protect the purposes of the Act.  Mr. Kalm stated that Board staff will be happy to review the proposal and give their input, but the rule is clear that if the casino is paying individuals to conduct work, the casino has some responsibility to ensure those individuals are licensed.  Mr. Watza suggested that when the proposal is submitted, the rule be compared with the rule of other state jurisdictions. 

Upon conclusion of Ms. Dube's and Board staff comments and questions from Board members were answered, it was moved by Ms. Rom seconded by Mr. Watza that the Board accept the proposed Acknowledgement of Violation as agreed to by the Michigan Gaming Control Board staff and casino licensee Detroit Entertainment, L.L.C., and issue an order adopting, accepting and incorporating the Acknowledgment of Violation as the Board's final decision.  A voice vote was taken.

Motion Carried.

The next order of business was the Greektown Casino, L.L.C. Executive Director's Report and the Enforcement Division Staff's Executive Summary of Compliance with the Acknowledgment of Violations and the Final Decision and Order of the Board, CDA-2004-4.

Upon Chairman Kassab's request Mr. Page gave a brief summary of the report.  Gaming Lab Auditor Erik Pedersen came forward and identified himself for the record.  Mr. Page and Mr. Pedersen advised the Board that Greektown Casino have met the conditions listed within the Acknowledgment of Violations and answered Board members' questions.

Upon conclusion of Board members' questions, the next order of business was the Greektown Casino, L.L.C. monthly status report pursuant to the show cause board order of June 10, 2008.

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

Mr. Moore reported on the bankruptcy court proceedings and the recent orders entered, in particular the order authorizing employment of Moelis & Company as investment banker.  Mr. Moore went on to report that the monthly omnibus hearing will be held on November 17, 2008, and at that hearing, a motion will be heard to extend the period of exclusivity to February 15, 2009.  Mr. Moore reported there is a preliminary hearing scheduled on November 6, 2008 for a motion that was filed by Jenkins/Skanska to compel the debtors to assume the construction contract. 

Upon conclusion of the Board members' questions related to the bankruptcy court proceedings, Mr. Moore continued with his report .

Mr. Moore reported on the exit paths being pursued.  The one path is a sale option the other path is through a plan of reorganization.   Mr. Moore stated that Moelis & Company will pursue both paths. 

Upon Chairman Kassab's request, Moelis & Company representatives Thane Carlston and Frank Sellman came forward and identified themselves for the record.  Mr. Sellman reported that they are working on the offering memorandum and datarum, which will be completed by November 17, 2008, if not earlier.  After Board members' questions were answered by Mr. Sellman, Mr. Moore continued with his report.

Mr. Moore explained the third amendment of the Debtor-In-Possession credit agreement, which waives any covenant violations through October 31, 2008, and extends the date by when a CEO has to be in place. 

Upon conclusion of Board members' questions Chairman Kassab made a motion that the Board's legal counsel seek a determination from Judge Shapero that the automatic stay provisions under Section 362 of the United States Bankruptcy Code, or any other applicable provision of the Code, do not prevent or impair the Board's police and regulatory authority to exercise its powers to both non renew Greektown Casino L.L.C's gaming license and/or to invoke the sales transaction process as fully described in this Board's Order of November 15, 2005, as further reserved through its order of June 10, 2008.   Upon conclusion of additional comments made related to the bankruptcy court proceedings, First Assistant Attorney General Donald McGehee stated that because this involves pending litigation and strategies with respect to litigation this can be addressed in closed session pursuant to the Open Meetings Act.

Next the Board considered the Board's amended schedule of the remaining public meetings for FY 2008-09. 

After Board discussion, it was moved by Mr. Watza and seconded by Ms. Rom to adopt and post the amended schedule of the Board's remaining regular public meetings for fiscal year 2008-2009 which began October 1, 2008 in accordance with the Open Meetings Act and that the schedule that is before us be amended to have those meetings begin at 9:30 a.m.  A voice vote was taken.

Motion Carried.

Next 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
                        Ms. Rom:                        Aye
                        Mr. Watza:                      Aye


There being no other business to discuss, Chairman Kassab adjourned the meeting at 10:29 a.m.

____________________________

Kara Kabia, Board Secretary