Office of House Bill AnalysisH.B. 1799
By: King, Phil
Licensing & Administrative Procedures


Currently, large Texas state lottery prizes may be paid in annual
installments over a period of 20 years.  Many state lotteries have
established procedures that allow prizewinners to sell their right to
collect lottery prizes over time in exchange for a lump sum cash payment
from a third party, including individuals, banks, investment or loan
companies.  H.B. 1799 regulates the assignment of lottery payment streams
and clarifies that voluntary assignment of lottery prize payments, as
authorized by court order, is allowable, but only subject to specified
consumer protection safeguards.  

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


SECTION 1.  Amends Section 466.402(d), Government Code, to make conforming
and nonsubstantive changes. 

SECTION 2.  Amends Section 466.406, Government Code, to make conforming and
nonsubstantive changes. 

SECTION 3. Amends Subchapter I, Chapter 466, Government Code, by adding
Section 466.410, as follows: 

Sec. 466.410.  ASSIGNMENT OF PRIZES.  (a) Authorizes a person to assign, in
whole or in part, the right to receive payments over time by the Texas
Lottery Commission (commission) if the assignment is made to a person
designated by an order of a district court of Travis County. 

(b) Authorizes the commission to intervene in a proceeding under this
section, but is not a necessary or indispensable party in the proceeding. 

(c) Requires a district court to issue an order approving a voluntary
assignment of prize payments and directing the commission to direct them in
whole or in part to the assignee if: 

(1) a copy of the petition and notice of hearing are served on the
executive director of the commission no later than 10 days before the
(2) the assignment is in writing and executed by the assignor under the
laws of this state; 
(3) the assignor provides a sworn affidavit stating that the assignor is
over 18 years old; of sound mind and not acting under duress; has been
advised on the legal, financial and tax implications of the assignment;
understands that the assignor will not receive prize payment or portions
thereof for the assigned years; understands that this relieves the state,
the commission, and its officials and employees of further liability for
the assigned payments; has been provided with a one-page written disclosure
statement containing certain specified information; and was informed in
writing that the assignor has the right to cancel the assignment no later
than the third day after it is signed. 
(d) Requires the order to include specific findings regarding compliance
with the requirements of Subsection (c) and specify the prize payments or
portions assigned, the year in which each assigned payment is to be made,
the gross amount of annual payments assigned before taxes, the
prizewinner's name or assignor's name if it is different, the assignor's
social security or tax identification number, and the assignee's full name
and social security or tax identification number, and citizenship or
resident alien number if applicable. 

(e) Requires the prizewinner to declare by sworn statement or notarized
declaration the marital status of the prizewinner, and if married, requires
the prizewinner's spouse to submit a notarized statement consenting to the
assignment, or authorizes the court to determine that the assignment can be
made without the consent of the spouse. 

(f) Requires the commission, on receipt of a certified copy of a court
order, to provide the assignor and the assignee a written acknowledgment of
the commission's receipt of the court order, and make prize payments as
provided by the order. 

(g) Prohibits a voluntary assignment from including a payment or portion of
a payment subject to any deduction required by this chapter. 

(h) Requires the commission to establish and collect a reasonable fee to
defray administrative expenses, including processing fees imposed by a
private annuity provider. Requires the commission to itemize the fee to
reflect direct and indirect costs. 

(i) Prohibits a prizewinner from assigning prize payments unless the
director of the lottery division of the commission (director) has received
an official determination from the Internal Revenue Service (IRS) that a
lottery prizewinner who does not assign prize payments is not subject to
immediate income tax liability for the assignment value of the entire prize
rather than annual income tax liability for each installment when paid. 

(i) Requires the director to request an IRS determination as described in
Subsection (i). Requires the director to immediately file the official
determination, if one is received, with the secretary of state's office for
publication in the Texas Register. 

SECTION 4.Emergency clause.
  Effective date: upon passage.