By: Henderson S.B. No. 244
73R3496 LJD-D
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) The director
5-17 may issue a video lottery game license only to a racetrack that is
5-18 licensed under the Texas Racing Act (Article 179e, Vernon's Texas
5-19 Civil Statutes).
5-20 (b) A racetrack licensed under this section must meet the
5-21 requirements for licensing as a sales agent of lottery tickets
5-22 except as otherwise specifically provided by this Act. A license
5-23 issued under this section authorizes the operation of video lottery
5-24 game machines only and may not be construed as a license to engage
5-25 in any other lottery activity under this Act.
5-26 (c) A racetrack licensed under this section:
5-27 (1) shall place the video lottery game machines in an
6-1 area where the racetrack prevents access to the machines by minors;
6-2 and
6-3 (2) may offer only the video lottery games authorized
6-4 by the director.
6-5 (d) A license held under this section expires immediately if
6-6 the racetrack license held by the racetrack is suspended or
6-7 revoked.
6-8 (e) A racetrack licensed under this section may install and
6-9 operate any type or brand of video lottery game machine if the
6-10 machine meets the requirements imposed by this Act and each
6-11 applicable rule adopted under this Act.
6-12 SECTION 7. Sections 3.02(a) and (i), State Lottery Act
6-13 (Article 179g, Vernon's Texas Civil Statutes), are amended to read
6-14 as follows:
6-15 (a) After a hearing, the director shall deny an application
6-16 for a license or the comptroller shall suspend or revoke a license
6-17 if the director or comptroller, as applicable, finds that the
6-18 applicant or sales agent:
6-19 (1) is an individual who:
6-20 (A) has been convicted of a felony, criminal
6-21 fraud, gambling or a gambling-related offense, or a misdemeanor
6-22 involving moral turpitude, if less than 10 years has elapsed since
6-23 the termination of the sentence, parole, mandatory supervision, or
6-24 probation served for the offense;
6-25 (B) is or has been a professional gambler; or
6-26 (C) is married to or related in the first degree
6-27 of consanguinity or affinity to an individual:
7-1 (i) described in Paragraph (A) or (B) of
7-2 this subdivision; or
7-3 (ii) who is currently delinquent in the
7-4 payment of any state tax;
7-5 (2) is not an individual, and an individual described
7-6 in Subdivision (1) of this subsection:
7-7 (A) is an officer or director of the applicant
7-8 or sales agent;
7-9 (B) holds more than 10 percent of the stock in
7-10 the applicant or sales agent;
7-11 (C) holds an equitable interest greater than 10
7-12 percent in the applicant or sales agent;
7-13 (D) is a creditor of the applicant or sales
7-14 agent who holds more than 10 percent of the applicant's or sales
7-15 agent's outstanding debt;
7-16 (E) is the owner or lessee of a business that
7-17 the applicant or sales agent conducts or through which the
7-18 applicant will conduct a ticket sales agency;
7-19 (F) shares or will share in the profits, other
7-20 than stock dividends, of the applicant or sales agent;
7-21 (G) participates in managing the affairs of the
7-22 applicant or sales agent; or
7-23 (H) is an employee of the applicant or sales
7-24 agent who is or will be involved in:
7-25 (i) selling tickets; or
7-26 (ii) handling money from the sale of
7-27 tickets;
8-1 (3) is currently delinquent in the payment of any
8-2 state tax;
8-3 (4) is a person whose location for the sales agency
8-4 is:
8-5 (A) a racetrack at which wagering is authorized
8-6 under the Texas Racing Act (Article 179e, Vernon's Texas Civil
8-7 Statutes), except as provided by Section 3.011 of this Act;
8-8 (B) a location licensed for games of bingo under
8-9 the Bingo Enabling Act (Article 179d, Vernon's Texas Civil
8-10 Statutes);
8-11 (C) on land that is owned by:
8-12 (i) this state; or
8-13 (ii) a political subdivision of this
8-14 state, other than land used as a mass transportation facility that
8-15 is used by commercial carriers; or
8-16 (D) a location for which a person holds a wine
8-17 and beer retailer's permit, mixed beverage permit, mixed beverage
8-18 late hours permit, private club registration permit, or private
8-19 club late hours permit issued under Chapter 25, 28, 29, 32, or 33,
8-20 Alcoholic Beverage Code, unless the applicant is a racetrack
8-21 eligible for a video lottery game license under Section 3.011 of
8-22 this Act;
8-23 (5) has violated this Act or a rule adopted under this
8-24 Act.
8-25 (i) The director shall not issue a license <to sell lottery
8-26 tickets> to applicants who fail to certify to the director the
8-27 applicant's compliance with the federal Americans With Disabilities
9-1 Act.
9-2 SECTION 8. Section 4.01, State Lottery Act (Article 179g,
9-3 Vernon's Texas Civil Statutes), is amended to read as follows:
9-4 Sec. 4.01. TICKETS AND VOUCHERS. (a) The director shall
9-5 prescribe the form of tickets and video lottery game vouchers. The
9-6 toll-free "800" telephone number established by the Texas
9-7 Commission on Alcohol and Drug Abuse under Section 461.018, Health
9-8 and Safety Code, must be printed on each ticket and on each
9-9 voucher. The overall estimated odds of winning a prize in a given
9-10 game or activity must be printed on each ticket, but not on a
9-11 voucher, and prominently displayed in association with the sale of
9-12 lottery products. The estimate must be based on reasonable
9-13 projections and past experience.
9-14 (b) By purchasing a ticket in a particular lottery game or
9-15 activity or operating a video lottery game machine, a player agrees
9-16 to abide by and be bound by the division's rules, including the
9-17 rules applicable to the particular lottery game or activity
9-18 involved. The player also acknowledges that the determination of
9-19 whether the player is a valid winner is subject to the division's
9-20 rules and claims procedures, including those developed for the
9-21 particular lottery game or activity involved, and subject to any
9-22 validation tests established by the division for the particular
9-23 lottery game or activity involved. If the lottery uses tickets, an
9-24 abbreviated form of the rules or a reference to the rules may
9-25 appear on the tickets.
9-26 SECTION 9. Article 4, State Lottery Act (Article 179g,
9-27 Vernon's Texas Civil Statutes), is amended by adding Section 4.011
10-1 to read as follows:
10-2 Sec. 4.011. VIDEO LOTTERY GAME REGULATIONS. (a) A video
10-3 lottery game machine may not:
10-4 (1) award free games in lieu of credits; or
10-5 (2) directly dispense coins, cash, tokens, or anything
10-6 else of value, except the voucher required by Section 5.031 of this
10-7 Act.
10-8 (b) A racetrack holding a video lottery game license is
10-9 entitled to offer for play at the racetrack an unlimited number of
10-10 video lottery game machines. Video lottery games may be offered
10-11 for play at the racetrack at any time and regardless of whether the
10-12 racetrack is simultaneously conducting a live or simulcast
10-13 pari-mutuel event.
10-14 SECTION 10. Sections 4.02(b), (c), (d), (g), (h), and (i),
10-15 State Lottery Act (Article 179g, Vernon's Texas Civil Statutes),
10-16 are amended to read as follows:
10-17 (b) Except as provided by this subsection, a person who is
10-18 not a sales agent or an employee of a sales agent commits an
10-19 offense if the person intentionally or knowingly sells a ticket or
10-20 offers a video lottery game machine for play. An offense under
10-21 this subsection is a felony of the third degree. A lottery
10-22 operator may sell tickets to a licensed sales agent. A person who
10-23 is not a sales agent may distribute tickets as premiums to
10-24 customers, employees, or other persons who deal with the person if
10-25 no purchase or service is required to entitle the recipient to the
10-26 ticket.
10-27 (c) A person commits an offense if the person sells a ticket
11-1 at a location other than the location of a sales agency or offers a
11-2 video lottery game machine for play at a location other than the
11-3 licensed location. An offense under this subsection is a Class A
11-4 misdemeanor.
11-5 (d) A sales agent or an employee of a sales agent may not
11-6 intentionally or knowingly sell or offer to sell a ticket to an
11-7 individual or allow an individual to play a video lottery game if
11-8 <that> the person knows that the individual is younger than 18
11-9 years of age.
11-10 (g) A sales agent or an employee of a sales agent commits an
11-11 offense if the person intentionally or knowingly sells a ticket to
11-12 another person or allows another person to play a video lottery
11-13 game by extending credit or lending money to the person to enable
11-14 the person to purchase the ticket or play the game. An offense
11-15 under this subsection is a Class C misdemeanor.
11-16 (h) A person may not purchase a ticket or play a video
11-17 lottery game:
11-18 (1) with a food stamp coupon issued under the food
11-19 stamp program administered under Chapter 33, Human Resources Code;
11-20 (2) with a credit card or a debit card;
11-21 (3) over the telephone; or
11-22 (4) by mail-order sales.
11-23 (i) A person may not pay for a ticket or play a video
11-24 lottery game with the proceeds of a check issued as a payment under
11-25 the Aid to Families with Dependent Children program administered
11-26 under Chapter 31, Human Resources Code.
11-27 SECTION 11. Section 4.03(e), State Lottery Act (Article
12-1 179g, Vernon's Texas Civil Statutes), is amended to read as
12-2 follows:
12-3 (e) A person commits an offense if the person intentionally
12-4 or knowingly tampers with, damages, defaces, or renders inoperable
12-5 any vending machine, electronic computer terminal, video lottery
12-6 game machine, or other mechanical device used in a lottery game.
12-7 An offense under this subsection is a felony of the third degree.
12-8 SECTION 12. Sections 5.01(a), (b), (d), (e), (f), and (g),
12-9 State Lottery Act (Article 179g, Vernon's Texas Civil Statutes),
12-10 are amended to read as follows:
12-11 (a) Except as provided by Subsection (e) of this section,
12-12 all revenue received from the sale of tickets, all revenue received
12-13 from video lottery games, and all money credited to the state
12-14 lottery account from any other source shall be deposited in the
12-15 state treasury through approved state depositories on the
12-16 settlement day or days established by the director.
12-17 (b) The director may require sales agents to establish
12-18 separate electronic funds transfer accounts for the purposes of
12-19 depositing money from ticket sales and video lottery games, making
12-20 payments to the division, and receiving payments from the division.
12-21 The comptroller by rule shall establish the procedures for
12-22 depositing money from ticket sales and video lottery games into
12-23 electronic funds transfer accounts, as well as other procedures
12-24 regarding the handling of money from ticket sales and video lottery
12-25 games. The director may not permit a sales agent to make payments
12-26 to the division or a lottery operator in cash.
12-27 (d) The director may require a sales agent to file with the
13-1 division reports of receipts and transactions relating to the sale
13-2 of tickets or the operation of video lottery game machines in the
13-3 form and containing the information that the director requires.
13-4 Each sales agent shall maintain records adequate to establish the
13-5 disposition of each ticket provided to the sales agent, the amounts
13-6 of money received for the sale of those tickets or the operation of
13-7 video lottery game machines, and any prizes awarded by the sales
13-8 agent.
13-9 (e) The director may provide for a sales agent to retain
13-10 from the money received from the sale of tickets or the operation
13-11 of video lottery game machines the amount of prizes paid by the
13-12 agent, <or> the agent's commission, if any, or amounts not
13-13 allocated to the state under Section 5.021 of this Act, and may
13-14 establish how often the agent will make settlement payments to the
13-15 treasury.
13-16 (f) The director may provide for a sales agent to pay
13-17 amounts received for the sale of tickets or the operation of video
13-18 lottery game machines directly to an officer or employee of the
13-19 division for immediate deposit in the state treasury.
13-20 (g) A sales agent is liable to the division for all tickets
13-21 accepted or generated by the sales agent or any employee or agent
13-22 of the sales agent, and tickets shall be deemed to have been
13-23 purchased by the sales agent unless returned to the division within
13-24 the time and manner prescribed by the division. Money received by
13-25 a sales agent from the sales of tickets or the operation of video
13-26 lottery game machines, less the amount retained for prizes paid by
13-27 the sales agent, <or> for the agent's commission, if any, or for
14-1 amounts not allocated to the state under Section 5.021 of this Act,
14-2 together with any unsold tickets, shall be held in trust for the
14-3 benefit of the state before delivery to a lottery operator or the
14-4 division or electronic transfer to the state treasury, and the
14-5 sales agent is liable to the division for the full amount of the
14-6 money or unsold tickets so held. If the sales agent is not an
14-7 individual, each officer, director, or owner of the sales agent is
14-8 personally liable to the division for the full amount of the money
14-9 or unsold tickets held in trust for the benefit of the state.
14-10 SECTION 13. Section 5.02(a), State Lottery Act (Article
14-11 179g, Vernon's Texas Civil Statutes), is amended to read as
14-12 follows:
14-13 (a) A special account in the general revenue fund to be
14-14 known as the state lottery account is established. The account
14-15 consists of all revenue received from the sale of tickets, all
14-16 revenue received from video lottery games, license and application
14-17 fees under this Act, and all money credited to the account from any
14-18 other fund or source under law. Interest earned by the state
14-19 lottery account shall be deposited in the unobligated portion of
14-20 the general revenue fund.
14-21 SECTION 14. Article 5, State Lottery Act (Article 179g,
14-22 Vernon's Texas Civil Statutes), is amended by adding Section 5.021
14-23 to read as follows:
14-24 Sec. 5.021. ALLOCATION OF VIDEO LOTTERY GAME REVENUE. (a)
14-25 Revenue derived from video lottery games, after payment of prizes,
14-26 shall be allocated as follows:
14-27 (1) 20 percent to the state lottery account;
15-1 (2) 50 percent to the racetrack at which the video
15-2 lottery games were offered for play;
15-3 (3) 18 percent to the person providing the video
15-4 lottery game machines and associated communication system to the
15-5 racetrack;
15-6 (4) 10 percent to:
15-7 (A) the owners of kennels who are under contract
15-8 with the racetrack under Section 10.03, Texas Racing Act (Article
15-9 179e, Vernon's Texas Civil Statutes), if the racetrack conducts
15-10 greyhound races; or
15-11 (B) the owners of horses who are awarded any
15-12 portion of a purse from a race conducted at the racetrack, if the
15-13 racetrack conducts horse races;
15-14 (5) one percent to the county in which the racetrack
15-15 is located; and
15-16 (6) one percent to:
15-17 (A) the municipality in which the racetrack is
15-18 located; or
15-19 (B) the county in which the racetrack is
15-20 located, in addition to the amount allocated under Subdivision (5)
15-21 of this subsection, if the racetrack is not located in a
15-22 municipality.
15-23 (b) If a racetrack is located in more than one county or
15-24 more than one municipality, the amounts allocated under Subsection
15-25 (a)(5) or (6) of this section shall be allocated among the counties
15-26 or municipalities based on population.
15-27 SECTION 15. Article 5, State Lottery Act (Article 179g,
16-1 Vernon's Texas Civil Statutes), is amended by adding Section 5.031
16-2 to read as follows:
16-3 Sec. 5.031. VIDEO LOTTERY GAME PRIZE PAYMENTS; PAYBACK
16-4 PERCENTAGE. (a) A racetrack that holds a license under Section
16-5 3.011 of this Act shall pay in cash all credits owed to a player as
16-6 shown on a valid video lottery game voucher.
16-7 (b) A video lottery game machine must be capable of printing
16-8 a voucher showing any credits owed to a winning player at the
16-9 completion of each game.
16-10 (c) For each video lottery game machine located at a
16-11 racetrack, the racetrack shall prescribe a reasonable return to
16-12 winning players that is not less than 70 percent of the value spent
16-13 by players on that machine.
16-14 (d) Each video lottery game machine must have an electronic
16-15 accounting device that may be used to verify the winning
16-16 percentage.
16-17 SECTION 16. Section 5.07, State Lottery Act (Article 179g,
16-18 Vernon's Texas Civil Statutes), is amended to read as follows:
16-19 Sec. 5.07. EXEMPTION FROM TAXATION. (a) A political
16-20 subdivision of this state may not impose:
16-21 (1) a tax on the sale of a ticket or on a game played
16-22 on a video lottery game machine;
16-23 (2) a tax on the payment of a prize under this Act; or
16-24 (3) an ad valorem tax on tickets or on a game played
16-25 on a video lottery game machine.
16-26 (b) The receipts from the sale, use, or other consumption of
16-27 a ticket or the receipts from a video lottery game machine are
17-1 exempt from taxation under Chapter 151, Tax Code.
17-2 SECTION 17. Section 2.02(k), State Lottery Act (Article
17-3 179g, Vernon's Texas Civil Statutes), is repealed.
17-4 SECTION 18. The importance of this legislation and the
17-5 crowded condition of the calendars in both houses create an
17-6 emergency and an imperative public necessity that the
17-7 constitutional rule requiring bills to be read on three several
17-8 days in each house be suspended, and this rule is hereby suspended,
17-9 and that this Act take effect and be in force from and after its
17-10 passage, and it is so enacted.