NDT H.B. 2086 75(R) BILL ANALYSIS LICENSING & ADMINISTRATIVE PROCEDURES H.B. 2086 By: Palmer 4-28-97 Committee Report (Amended) BACKGROUND Charitable bingo in Texas currently faces serious impediments to competition and productivity. Charities with commercial lessor licenses for bingo are losing ground competing with their grandfathered, commercial counterparts because of some discrepancies in state law and the rules adopted by the Lottery Commission. In addition, charitable operators are struggling to meet their charitable distribution rates because of ever increasing expenses on paper and pull tab games. PURPOSE This bill will: 1) grant the Lottery Commission more flexibility in setting guidelines for the relationship between the commercial lessor and charitable operator; 2) remove the consideration of rental income from the calculation of adjusted gross receipts; 3) exclude the purchase of paper and pull tabs from operating expenses and establish them as the cost of goods sold; and 4) prohibit an organization conducting charitable bingo from holding more than one commercial lessor's license and requires that bingo be conducted at only the licensed site. RULEMAKING AUTHORITY This bill expressly grants rulemaking authority to the Texas Lottery Commission under Section 19a of the Bingo Enabling Act (Article 179d, V.T.C.S.) for setting a maximum deduction for the cost of goods sold. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 19(d) of the Bingo Enabling Act (Article 179, V.T.C.S.) by changing "may" to "shall." SECTION 2. Amends Section 19a of the Bingo Enabling Act by amending Subsection (k) and adding Subsection (l). Subsection (k) Removes any consideration of income received from the rental of bingo premises from the calculation of adjusted gross receipts for charitable distribution. Also establishes cost of goods sold (cost of bingo paper, instant bingo tickets, or pull tab bingo games) as an allowable deduction in the calculation of adjusted gross receipts, and grants the Lottery Commission authority to establish rules governing the maximum deduction for cost of goods sold. Subsection (l) Prohibits an organization conducting charitable bingo from holding more than one commercial lessor's license and requires that bingo be conducted at only the licensed site. SECTION 3. Effective date. SECTION 4. Extended emergency clause. EXPLANATION OF AMENDMENTS The amendment reduces the amount of application paperwork for persons who have held a license for five years or more.