By:  Jones, D.                                        H.B. No. 1597
       73R6209 T
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the regulation of video lottery games; providing
    1-3  penalties.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 1.02, State Lottery Act (Article 179g,
    1-6  Vernon's Texas Civil Statutes), is amended by amending Subdivisions
    1-7  (3), (6), and (7) and adding Subdivisions (9) and (10) to read as
    1-8  follows:
    1-9              (3)  "Lottery" means the procedures operated by the
   1-10  state under this Act through which prizes are awarded or
   1-11  distributed by chance among persons who have paid, or
   1-12  unconditionally agreed to pay, for a chance or other opportunity to
   1-13  receive a prize and includes all procedures associated with the
   1-14  operation of video lottery games.
   1-15              (6)  "Player" means a person who contributes any part
   1-16  of the consideration for a ticket or for a video lottery game.
   1-17              (7)  "Sales agent" or "sales agency" means a person
   1-18  licensed under this Act to sell lottery tickets or operate video
   1-19  lottery game machines.
   1-20              (9)  "Video lottery game" means a single turn or
   1-21  opportunity to play a video game in which the player, by chance,
   1-22  may receive a voucher described in Section 5.031 of this Act.
   1-23              (10)  "Video lottery game machine" means any electronic
   1-24  video gambling machine using a video display screen and
    2-1  microprocessor that, on the making of a required payment, is
    2-2  available to play or simulate the play of a video lottery game.
    2-3  The term does not include any device authorized to be used in the
    2-4  conducting of charitable gaming.
    2-5        SECTION 2.  Article 1, State Lottery Act (Article 179g,
    2-6  Vernon's Texas Civil Statutes), is amended by adding Section 1.05
    2-7  to read as follows:
    2-8        Sec. 1.05.  EXEMPTION FROM FEDERAL LAW.  Video lottery game
    2-9  machines operated or to be operated under this Act are exempted
   2-10  from 15 U.S.C. Section 1172.
   2-11        SECTION 3.  Section 2.01(e), State Lottery Act (Article 179g,
   2-12  Vernon's Texas Civil Statutes), is amended to read as follows:
   2-13        (e)  The director may employ or contract with marketing
   2-14  representatives to promote the sale of tickets and the installation
   2-15  of video lottery game machines, to encourage persons to apply to
   2-16  become sales agents, or to investigate the qualifications of sales
   2-17  agent applicants.  The marketing representatives are exempted from
   2-18  the Position Classification Act of 1961 (Article 6252-11, Vernon's
   2-19  Texas Civil Statutes) and may be compensated based on a sales
   2-20  incentive system to be established by the director.
   2-21        SECTION 4.  Sections 2.02(c) and (d), State Lottery Act
   2-22  (Article 179g, Vernon's Texas Civil Statutes), are amended to read
   2-23  as follows:
   2-24        (c)  The comptroller shall adopt rules to the extent they are
   2-25  not inconsistent with the Open Meetings Act (Article 6252-17,
   2-26  Vernon's Texas Civil Statutes) and the Open Records Act (Article
   2-27  6252-17a, Vernon's Texas Civil Statutes) governing the:
    3-1              (1)  security for the lottery and the division,
    3-2  including the development of an internal security plan;
    3-3              (2)  apportionment of the total revenues from the sale
    3-4  of tickets and from all other sources in the amounts provided by
    3-5  this Act;
    3-6              (3)  enforcement of prohibitions on access to video
    3-7  lottery games by and the sale of tickets to or by an individual
    3-8  younger than 18 years of age; and
    3-9              (4)  enforcement of prohibitions on a person playing a
   3-10  lottery game or activity by telephone.
   3-11        (d)  The comptroller may adopt rules governing the
   3-12  establishment and operation of the lottery, including rules
   3-13  governing:
   3-14              (1)  the type of lottery games or activities to be
   3-15  conducted;
   3-16              (2)  the price of each ticket;
   3-17              (3)  the number of winning tickets and amount of the
   3-18  prize paid on each winning ticket;
   3-19              (4)  the frequency of the drawing or selection of a
   3-20  winning ticket;
   3-21              (5)  the number and types of locations at which a
   3-22  ticket may be sold;
   3-23              (6)  the method to be used in selling a ticket;
   3-24              (7)  the use of vending machines, video lottery game
   3-25  machines, or electronic or mechanical devices of any kind, other
   3-26  than machines or devices that dispense currency or coins as prizes;
   3-27              (8)  the manner of paying a prize to the holder of a
    4-1  winning ticket;
    4-2              (9)  the investigation of possible violations of this
    4-3  Act or any rule adopted under this Act;
    4-4              (10)  the means of advertising to be used for the
    4-5  lottery;
    4-6              (11)  the qualifications of vendors of lottery services
    4-7  or equipment;
    4-8              (12)  the confidentiality of information relating to
    4-9  the operation of the lottery, including:
   4-10                    (A)  trade secrets;
   4-11                    (B)  security measures, systems, or procedures;
   4-12                    (C)  security reports;
   4-13                    (D)  bids or other information regarding the
   4-14  division's contracts, if disclosure of the information would impair
   4-15  the division's ability to contract for facilities, goods, or
   4-16  services on terms favorable to the division;
   4-17                    (E)  personnel information unrelated to
   4-18  compensation, duties, qualifications, or responsibilities; and
   4-19                    (F)  information obtained by division security
   4-20  officers or investigators;
   4-21              (13)  the development and availability of a model
   4-22  agreement governing the division of a prize among multiple
   4-23  purchasers of a winning ticket purchased through a group purchase
   4-24  or pooling arrangement;
   4-25              (14)  the criteria to be used in evaluating bids for
   4-26  contracts for lottery facilities, goods, and services; or
   4-27              (15)  any other matter necessary or desirable as
    5-1  determined by the comptroller, to promote and ensure:
    5-2                    (A)  the integrity, security, honesty, and
    5-3  fairness of the operation and administration of the lottery; and
    5-4                    (B)  the convenience of players and holders of
    5-5  winning tickets.
    5-6        SECTION 5.  Section 3.01(d), State Lottery Act (Article 179g,
    5-7  Vernon's Texas Civil Statutes), is amended to read as follows:
    5-8        (d)  A separate license is required for each location at
    5-9  which tickets are to be sold or video lottery game machines are to
   5-10  be installed.  A person who desires to operate more than one
   5-11  location to sell tickets or operate video lottery game machines
   5-12  must submit a separate application for each location.
   5-13        SECTION 6.  Article 3, State Lottery Act (Article 179g,
   5-14  Vernon's Texas Civil Statutes), is amended by adding Section 3.011
   5-15  to read as follows:
   5-16        Sec. 3.011.  VIDEO LOTTERY GAME LICENSING.  (a)  Video
   5-17  lottery machine manufacturer, distributor, operator and
   5-18  establishment licenses required -- Fees.  Each video lottery
   5-19  machine manufacturer, distributor, operator and licensed
   5-20  establishment shall be licensed by the executive director before
   5-21  any video lottery machine or associated equipment is manufactured,
   5-22  distributed, sold or placed for public use in this state.
   5-23        (b)  General Qualifications To be selected as a video lottery
   5-24  machine operator, a natural person acting as a sole proprietor
   5-25  shall:
   5-26              (1)  Be at least twenty-one years of age;
   5-27              (2)  Be of good character and reputation in the
    6-1  community;
    6-2              (3)  Have sufficient financial resources to support the
    6-3  activities required to place and service video lottery machines;
    6-4  and
    6-5              (4)  Be current in payment of all taxes, interest and
    6-6  penalties owed to the state of Texas excluding items under formal
    6-7  dispute or appeal pursuant to applicable statutes.
    6-8                    (B)  Persons ineligible for licensing:  No
    6-9  natural person may be selected as a video lottery machine operator,
   6-10  who:
   6-11              (1)  Has been convicted of a felony in this or any
   6-12  other jurisdiction, unless at least ten years have passed since
   6-13  satisfactory completion of the sentence or probation imposed by the
   6-14  court in each such felony;
   6-15              (2)  Has been found to have violated the provisions of
   6-16  this chapter or any rule adopted pursuant to this chapter;
   6-17              (3)  Is a lottery vendor or an employee or agent of any
   6-18  lottery vendor doing business with the Texas lottery;
   6-19              (4)  Is a member of the immediate family of an employee
   6-20  of the Texas lottery or of a member of the lottery commission; or
   6-21              (5)  Has knowingly made a false statement of material
   6-22  fact to the Texas lottery.
   6-23                    (C)  Partnership as a video lottery machine
   6-24  operator.  For a partnership to be selected as a video lottery
   6-25  machine operator, the partnership shall meet the requirements of
   6-26  subdivisions (3) and (4) of Sec. 3.011(b) and each partner thereof
   6-27  shall meet the requirements of subdivisions (1) and (2) of Section
    7-1  3.011(b) and subdivisions (1) through (5) of Sec. B.0111(c).
    7-2                    (D)  Associations or Corporations as Video
    7-3  Machine Operators.  For an association or corporation to be
    7-4  licensed as a video lottery machine operator, the association or
    7-5  corporation shall meet the requirements of subdivisions (3) and (4)
    7-6  of Sec. 3.011(b) and each officer and director and each stockholder
    7-7  who owns ten percent or more of the stock of such corporation or
    7-8  association shall meet the requirements of subdivisions (1) and (2)
    7-9  of Sec.  3.011(b) and subdivisions (1) through (5) of Sec. 3.011 of
   7-10  the Act.
   7-11                    (E)  A manufacturer cannot be licensed as an
   7-12  operator.
   7-13                    (F)  Fees The commission may establish an annual
   7-14  fee for each license not to exceed the following:
   7-15              (1)  Video lottery machine distributor - $5,000.00
   7-16              (2)  Video lottery machine operator - $2,500.00 or
   7-17  $100.00 per machine licensed whichever is greater.
   7-18        SECTION 7.  Sections 3.02(a) and (i), State Lottery Act
   7-19  (Article 179g, Vernon's Texas Civil Statutes), are amended to read
   7-20  as follows:
   7-21        (a)  After a hearing, the director shall deny an application
   7-22  for a license or the comptroller shall suspend or revoke a license
   7-23  if the director or comptroller, as applicable, finds that the
   7-24  applicant or sales agent:
   7-25              (1)  is an individual who:
   7-26                    (A)  has been convicted of a felony, criminal
   7-27  fraud, gambling or a gambling-related offense, or a misdemeanor
    8-1  involving moral turpitude, if less than 10 years has elapsed since
    8-2  the termination of the sentence, parole, mandatory supervision, or
    8-3  probation served for the offense;
    8-4                    (B)  is or has been a professional gambler; or
    8-5                    (C)  is married to or related in the first degree
    8-6  of consanguinity or affinity to an individual:
    8-7                          (i)  described in Paragraph (A) or (B) of
    8-8  this subdivision; or
    8-9                          (ii)  who is currently delinquent in the
   8-10  payment of any state tax;
   8-11              (2)  is not an individual, and an individual described
   8-12  in Subdivision (1) of this subsection:
   8-13                    (A)  is an officer or director of the applicant
   8-14  or sales agent;
   8-15                    (B)  holds more than 10 percent of the stock in
   8-16  the applicant or sales agent;
   8-17                    (C)  holds an equitable interest greater than 10
   8-18  percent in the applicant or sales agent;
   8-19                    (D)  is a creditor of the applicant or sales
   8-20  agent who holds more than 10 percent of the applicant's or sales
   8-21  agent's outstanding debt;
   8-22                    (E)  is the owner or lessee of a business that
   8-23  the applicant or sales agent conducts or through which the
   8-24  applicant will conduct a ticket sales agency;
   8-25                    (F)  shares or will share in the profits, other
   8-26  than stock dividends, of the applicant or sales agent;
   8-27                    (G)  participates in managing the affairs of the
    9-1  applicant or sales agent; or
    9-2                    (H)  is an employee of the applicant or sales
    9-3  agent who is or will be involved in:
    9-4                          (i)  selling tickets; or
    9-5                          (ii)  handling money from the sale of
    9-6  tickets;
    9-7              (3)  is currently delinquent in the payment of any
    9-8  state tax;
    9-9              (4)  is a person whose location for the sales agency
   9-10  is:
   9-11                    (A)  a racetrack at which wagering is authorized
   9-12  under the Texas Racing Act (Article 179e, Vernon's Texas Civil
   9-13  Statutes), except as provided by Section 3.011 of this Act;
   9-14                    (B)  a location licensed for games of bingo under
   9-15  the Bingo Enabling Act (Article 179d, Vernon's Texas Civil
   9-16  Statutes);
   9-17                    (C)  on land that is owned by:
   9-18                          (i)  this state; or
   9-19                          (ii)  a political subdivision of this
   9-20  state, other than land used as a mass transportation facility that
   9-21  is used by commercial carriers; or
   9-22                    (D)  a location for which a person holds a wine
   9-23  and beer retailer's permit, mixed beverage permit, mixed beverage
   9-24  late hours permit, private club registration permit, or private
   9-25  club late hours permit issued under Chapter 25, 28, 29, 32, or 33,
   9-26  Alcoholic Beverage Code, unless the applicant is a location to
   9-27  exhibit for play video lottery machines only;
   10-1              (5)  has violated this Act or a rule adopted under this
   10-2  Act.
   10-3        (i)  The director shall not issue a license <to sell lottery
   10-4  tickets> to applicants who fail to certify to the director the
   10-5  applicant's compliance with the federal Americans With Disabilities
   10-6  Act.
   10-7        SECTION 8.  Section 4.01, State Lottery Act (Article 179g,
   10-8  Vernon's Texas Civil Statutes), is amended to read as follows:
   10-9        Sec. 4.01.  TICKETS AND VOUCHERS.  (a)  The director shall
  10-10  prescribe the form of tickets and video lottery game vouchers.  The
  10-11  toll-free "800" telephone number established by the Texas
  10-12  Commission on Alcohol and Drug Abuse under Section 461.018, Health
  10-13  and Safety Code, must be printed on each ticket and on each
  10-14  voucher.  The overall estimated odds of winning a prize in a given
  10-15  game or activity must be printed on each ticket, but not on a
  10-16  voucher, and prominently displayed in association with the sale of
  10-17  lottery products.  The estimate must be based on reasonable
  10-18  projections and past experience.
  10-19        (b)  By purchasing a ticket in a particular lottery game or
  10-20  activity or operating a video lottery game machine, a player agrees
  10-21  to abide by and be bound by the division's rules, including the
  10-22  rules applicable to the particular lottery game or activity
  10-23  involved.  The player also acknowledges that the determination of
  10-24  whether the player is a valid winner is subject to the division's
  10-25  rules and claims procedures, including those developed for the
  10-26  particular lottery game or activity involved, and subject to any
  10-27  validation tests established by the division for the particular
   11-1  lottery game or activity involved.  If the lottery uses tickets, an
   11-2  abbreviated form of the rules or a reference to the rules may
   11-3  appear on the tickets.
   11-4        SECTION 9.  Article 4, State Lottery Act (Article 179g,
   11-5  Vernon's Texas Civil Statutes), is amended by adding Section 4.011
   11-6  to read as follows:
   11-7        Sec. 4.011.  VIDEO LOTTERY GAME REGULATIONS.  (a)  A video
   11-8  lottery game machine may not:
   11-9              (1)  award free games in lieu of credits; or
  11-10              (2)  directly dispense coins, cash, tokens, or anything
  11-11  else of value, except the voucher required by Section 5.031 of this
  11-12  Act.
  11-13        (b)  A location holding a video lottery game license is
  11-14  entitled to offer for play at the location no more than four video
  11-15  lottery game machines.  Video lottery games may be offered for play
  11-16  during all normal and legal business hours of the location.
  11-17        (c)  Video lottery games may be placed in premises licensed
  11-18  or permitted for on premise sale of alcholoic beverages and in
  11-19  other locations where access to the machines is prohibited and
  11-20  prevented for persons under 18 years of age.
  11-21        (d)  Requirements for licensed video lottery machines.  Each
  11-22  video lottery machine licensed under this chapter:
  11-23              (1)  Shall offer only games licensed by the Texas
  11-24  lottery and authorized by the commission;
  11-25              (2)  May not have any means of manipulation that affect
  11-26  the random probabilities of winning a video lottery game;
  11-27              (3)  Shall have one or more mechanisms that accept
   12-1  coins or cash in the form of bills.  The mechanisms shall be
   12-2  designed to prevent obtaining credits without paying by stringing,
   12-3  slamming, drilling or other means.  If such attempts involve
   12-4  physical tampering, the machine shall suspend itself from operation
   12-5  until reset;
   12-6              (4)  Shall have nonresettable meters housed in any
   12-7  readily accessible locked machine area that keep a permanent record
   12-8  of all cash inserted into the machine, all refunds of winnings made
   12-9  by the machines's printer, credits played for video lottery games
  12-10  and credits won by video lottery players;
  12-11              (5)  Shall be capable of printing a ticket voucher
  12-12  stating the value of the prize for the player at the completion of
  12-13  each video lottery game; the time of the day in a twenty-four hour
  12-14  format showing hours and minutes; the date; the machine serial
  12-15  number; the sequential number of the ticket vouchers; and an
  12-16  encrypted validation number from which the validity of the prize
  12-17  may be determined;
  12-18              (6)  Shall have accounting software that keeps an
  12-19  electronic record which includes, but is not limited to the
  12-20  following:  total cash inserted into the machine; the value of
  12-21  winning tickets claimed by players; the total video lottery credits
  12-22  played and the total video lottery credits awarded by a video
  12-23  lottery game; and the payback percentage credited players of each
  12-24  video lottery game;
  12-25              (7)  Shall be linked under a central communications
  12-26  system to provide auditing program information as approved by the
  12-27  commission.  In no event may the communications system approved by
   13-1  the commission limit participation to only one manufacturer of
   13-2  video lottery machines by either the cost in implementing the
   13-3  necessary program modifications to communicate or the inability to
   13-4  communicate with the central communications system.
   13-5                    (E)  Limit on amount played and awards given.  A
   13-6  video lottery machine may not allow more than two dollars to be
   13-7  played on a game or award free games or credits in excess of the
   13-8  value of one hundred twenty-five dollars per credit value of
   13-9  twenty-five cents played.  The payback value of one credit shall be
  13-10  at least eighty percent of the value of the credit.
  13-11                    (F)  Display of license for video lottery
  13-12  machine -- Confiscation -- Violation.  Each video lottery machine
  13-13  shall be licensed by the director before placement or operation on
  13-14  the premises of a licensed establishment.  Each machine shall have
  13-15  the license prominently displayed thereon.  Any machine which does
  13-16  not display the license required by this section is contraband and
  13-17  a public nuisance subject to confiscation by any law enforcement
  13-18  officer.  A violation of this section is a Class A misdemeanor.
  13-19                    (G)  Examination of video lottery
  13-20  machines -- Costs paid by manufacturer -- Contract for examination.
  13-21  The Texas lottery shall examine prototypes of video lottery
  13-22  machines and associated equipment of manufacturers seeking a
  13-23  license as required in this chapter.  The Texas lottery shall
  13-24  require the manufacturer seeking the examination and approval of a
  13-25  video lottery machine or associated equipment to pay the
  13-26  anticipated actual costs of the examination in advance and, after
  13-27  the completion of the examination, shall refund overpayments or
   14-1  charge and collect amounts sufficient to reimburse the Texas
   14-2  lottery for underpayments of actual costs.  The Texas lottery may
   14-3  contract for the examination of video lottery machines and
   14-4  associated equipment as required by this section.
   14-5                    (H)  The Commission shall promulgate rules to
   14-6  carry out the statutory purposes.  These rules shall cover but not
   14-7  be limited to the following:
   14-8              (1)  The mechanical and electronic specifications for
   14-9  each video lottery machine.
  14-10              (2)  Machine security testing and inspection
  14-11  procedures:
  14-12              (3)  Liability for machine malfunction:
  14-13              (4)  Machine maintenance and repair;
  14-14              (5)  Financial responsibility of persons licensed under
  14-15  this chapter;
  14-16              (6)  Accounting procedures for net machine income;
  14-17              (7)  Licensing procedures under this chapter;
  14-18              (8)  The formula to determine the state's percentage of
  14-19  net machine income based on varying revenue schedules; and
  14-20              (9)  Such other matters necessary or desirable for the
  14-21  efficient or economical operation of the lottery or for the
  14-22  convenience of the public.
  14-23        SECTION 10.  Sections 4.02(b), (c), (d), (g), (h), and (i),
  14-24  State Lottery Act (Article 179g, Vernon's Texas Civil Statutes),
  14-25  are amended to read as follows:
  14-26        (b)  Except as provided by this subsection, a person who is
  14-27  not a sales agent or an employee of a sales agent commits an
   15-1  offense if the person intentionally or knowingly sells a ticket or
   15-2  offers a video lottery game machine for play.  An offense under
   15-3  this subsection is a felony of the third degree.  A lottery
   15-4  operator may sell tickets to a licensed sales agent.  A person who
   15-5  is not a sales agent may distribute tickets as premiums to
   15-6  customers, employees, or other persons who deal with the person if
   15-7  no purchase or service is required to entitle the recipient to the
   15-8  ticket.
   15-9        (c)  A person commits an offense if the person sells a ticket
  15-10  at a location other than the location of a sales agency or offers a
  15-11  video lottery game machine for play at a location other than the
  15-12  licensed location.  An offense under this subsection is a Class A
  15-13  misdemeanor.
  15-14        (d)  A sales agent or an employee of a sales agent may not
  15-15  intentionally or knowingly sell or offer to sell a ticket to an
  15-16  individual or allow an individual to play a video lottery game if
  15-17  <that> the person knows that the individual is younger than 18
  15-18  years of age.
  15-19        (g)  A sales agent or an employee of a sales agent commits an
  15-20  offense if the person intentionally or knowingly sells a ticket to
  15-21  another person or allows another person to play a video lottery
  15-22  game by extending credit or lending money to the person to enable
  15-23  the person to  purchase the ticket or play the game.  An offense
  15-24  under this subsection is a Class C misdemeanor.
  15-25        (h)  A person may not purchase a ticket or play a video
  15-26  lottery game:
  15-27              (1)  with a food stamp coupon issued under the food
   16-1  stamp program administered under Chapter 33, Human Resources Code;
   16-2              (2)  with a credit card or a debit card;
   16-3              (3)  over the telephone; or
   16-4              (4)  by mail-order sales.
   16-5        (i)  A person may not pay for a ticket or play a video
   16-6  lottery game with the proceeds of a check issued as a payment under
   16-7  the Aid to Families with Dependent Children program administered
   16-8  under Chapter 31, Human Resources Code.
   16-9        SECTION 11.  Section 4.03(e), State Lottery Act (Article
  16-10  179g, Vernon's Texas Civil Statutes), is amended to read as
  16-11  follows:
  16-12        (e)  A person commits an offense if the person intentionally
  16-13  or knowingly tampers with, damages, defaces, or renders inoperable
  16-14  any vending machine, electronic computer terminal, video lottery
  16-15  game machine, or other mechanical device used in a lottery game.
  16-16  An offense under this subsection is a felony of the third degree.
  16-17        SECTION 12.  Sections 5.01(a), (b), (d), (e), (f), and (g),
  16-18  State Lottery Act (Article 179g, Vernon's Texas Civil Statutes),
  16-19  are amended to read as follows:
  16-20        (a)  Except as provided by Subsection (e) of this section,
  16-21  all revenue received from the sale of tickets, all revenue received
  16-22  from video lottery games, and all money credited to the state
  16-23  lottery account from any other source shall be deposited in the
  16-24  state treasury through approved state depositories on the
  16-25  settlement day or days established by the director.
  16-26        (b)  The director may require sales agents to establish
  16-27  separate electronic funds transfer accounts for the purposes of
   17-1  depositing money from ticket sales and video lottery games, making
   17-2  payments to the division, and receiving payments from the division.
   17-3  The comptroller by rule shall establish the procedures for
   17-4  depositing money from ticket sales and video lottery games into
   17-5  electronic funds transfer accounts, as well as other procedures
   17-6  regarding the handling of money from ticket sales and video lottery
   17-7  games.  The director may not permit a sales agent to make payments
   17-8  to the division or a lottery operator in cash.
   17-9        (d)  The director may require a sales agent to file with the
  17-10  division reports of receipts and transactions relating to the sale
  17-11  of tickets or the operation of video lottery game machines in the
  17-12  form and containing the information that the director requires.
  17-13  Each sales agent shall maintain records adequate to establish the
  17-14  disposition of each ticket provided to the sales agent, the amounts
  17-15  of money received for the sale of those tickets or the operation of
  17-16  video lottery game machines, and any prizes awarded by the sales
  17-17  agent.
  17-18        (e)  The director may provide for a sales agent to retain
  17-19  from the money received from the sale of tickets or the operation
  17-20  of video lottery game machines the amount of prizes paid by the
  17-21  agent, <or> the agent's commission, if any, or amounts not
  17-22  allocated to the state under Section 5.021 of this Act, and may
  17-23  establish how often the agent will make settlement payments to the
  17-24  treasury.
  17-25        (f)  The director may provide for a sales agent to pay
  17-26  amounts received for the sale of tickets or the operation of video
  17-27  lottery game machines directly to an officer or employee of the
   18-1  division for immediate deposit in the state treasury.
   18-2        (g)  A sales agent is liable to the division for all tickets
   18-3  accepted or generated by the sales agent or any employee or agent
   18-4  of the sales agent, and tickets shall be deemed to have been
   18-5  purchased by the sales agent unless returned to the division within
   18-6  the time and manner prescribed by the division.  Money received by
   18-7  a sales agent from the sales of tickets or the operation of video
   18-8  lottery game machines, less the amount retained for prizes paid by
   18-9  the sales agent, <or> for the agent's commission, if any, or for
  18-10  amounts not allocated to the state under Section 5.021 of this Act,
  18-11  together with any unsold tickets, shall be held in trust for the
  18-12  benefit of the state before delivery to a lottery operator or the
  18-13  division or electronic transfer to the state treasury, and the
  18-14  sales agent is liable to the division for the full amount of the
  18-15  money or unsold tickets so held.  If the sales agent is not an
  18-16  individual, each officer, director, or owner of the sales agent is
  18-17  personally liable to the division for the full amount of the money
  18-18  or unsold tickets held in trust for the benefit of the state.
  18-19        SECTION 13.  Section 5.02(a), State Lottery Act (Article
  18-20  179g, Vernon's Texas Civil Statutes), is amended to read as
  18-21  follows:
  18-22        (a)  A special account in the general revenue fund to be
  18-23  known as the state lottery account is established.  The account
  18-24  consists of all revenue received from the sale of tickets, all
  18-25  revenue received from video lottery games, license and application
  18-26  fees under this Act, and all money credited to the account from any
  18-27  other fund or source under law.  Interest earned by the state
   19-1  lottery account shall be deposited in the unobligated portion of
   19-2  the general revenue fund.
   19-3        SECTION 14.  Article 5, State Lottery Act (Article 179g,
   19-4  Vernon's Texas Civil Statutes), is amended by adding Section 5.021
   19-5  to read as follows:
   19-6        Sec. 5.021.  ALLOCATION OF VIDEO LOTTERY GAME REVENUE.  (a)
   19-7  Revenue derived from video lottery games, after payment of prizes,
   19-8  shall be allocated as follows:
   19-9              (1)  26 percent to the state lottery account;
  19-10              (2)  35 percent to the licensed location at which the
  19-11  video lottery games were offered for play;
  19-12              (3)  35 percent to the licensed operator providing the
  19-13  video lottery game machines and associated communication system to
  19-14  the location;
  19-15              (4)  2 percent to the county in which the location is
  19-16  located; and
  19-17              (5)  2 percent to;
  19-18                    (A)  the municipality in which the location is
  19-19  located; or
  19-20                    (B)  the county in which the location is located,
  19-21  in addition to the amount allocated under Subdivision (4) of this
  19-22  subsection, if the location is not located in a municipality.
  19-23        SECTION 15.  Article 5, State Lottery Act (Article 179g,
  19-24  Vernon's Texas Civil Statutes), is amended by adding Section 5.031
  19-25  to read as follows:
  19-26        Sec. 5.031.  VIDEO LOTTERY GAME PRIZE PAYMENTS; PAYBACK
  19-27  PERCENTAGE.  (a)  A location that holds a license under Section
   20-1  3.011 of this Act shall pay in cash all credits owed to a player as
   20-2  shown on a valid video lottery game voucher.
   20-3        (b)  A video lottery game machine must be capable of printing
   20-4  a voucher showing any credits owed to a winning player at the
   20-5  completion of each game.
   20-6        (c)  For each video lottery game machine, the comptroller
   20-7  shall prescribe a reasonable return to winning players that is not
   20-8  less than 70 percent of the value spent by players on that machine.
   20-9        (d)  Each video lottery game machine must have an electronic
  20-10  accounting device that may be used to verify the winning
  20-11  percentage.
  20-12        SECTION 16.  Section 5.07, State Lottery Act (Article 179g,
  20-13  Vernon's Texas Civil Statutes), is amended to read as follows:
  20-14        Sec. 5.07.  EXEMPTION FROM TAXATION.  (a)  A political
  20-15  subdivision of this state may not impose:
  20-16              (1)  a tax on the sale of a ticket or on a game played
  20-17  on a video lottery game machine;
  20-18              (2)  a tax on the payment of a prize under this Act; or
  20-19              (3)  an ad valorem tax on tickets or on a game played
  20-20  on a video lottery game machine.
  20-21        (b)  The receipts from the sale, use, or other consumption of
  20-22  a ticket or the receipts from a video lottery game machine are
  20-23  exempt from taxation under Chapter 151, Tax Code.
  20-24        SECTION 17.  Section 2.02(k), State Lottery Act (Article
  20-25  179g, Vernon's Texas Civil Statutes), is repealed.
  20-26        SECTION 18.  The importance of this legislation and the
  20-27  crowded condition of the calendars in both houses create an
   21-1  emergency and an imperative public necessity that the
   21-2  constitutional rule requiring bills to be read on three several
   21-3  days in each house be suspended, and this rule is hereby suspended,
   21-4  and that this Act take effect and be in force from and after its
   21-5  passage, and it is so enacted.