1-1                                   AN ACT
 1-2     relating to the assignment or deposit of certain lottery prizes.
 1-4           SECTION 1.  Section 466.402(d), Government Code, is amended
 1-5     to read as follows:
 1-6           (d)  The state is discharged of all further liability on the
 1-7     payment of a prize under Section 466.403, 466.404, 466.406, [or]
 1-8     466.407, or 466.410 or this section or under any additional
 1-9     procedures established by rule.
1-10           SECTION 2.  Section 466.406, Government Code, is amended to
1-11     read as follows:
1-12           Sec. 466.406.  RIGHT TO PRIZE NOT GENERALLY ASSIGNABLE.  (a)
1-13     Except as [otherwise] provided by this section and Section 466.410,
1-14     the right of any person to a prize is not assignable.
1-15           (b)  Payment of prize payments not previously assigned as
1-16     provided by this section or Section 466.410 shall [a prize may] be
1-17     made to the estate of a deceased prizewinner if the prizewinner was
1-18     an individual.
1-19           (c)  A prize to which a winner is otherwise entitled may be
1-20     paid to any person under an appropriate judicial order.
1-21           SECTION 3.  Section 466.408(b), Government Code, is amended
1-22     to read as follows:
1-23           (b)  If a claim is not made for prize money on or before the
1-24     180th day after the date on which the winner was selected, the
 2-1     prize money shall be deposited to the credit of the Texas
 2-2     Department of Health state-owned multicategorical teaching hospital
 2-3     account or the tertiary care facility account as follows:
 2-4                 (1)  not more than $40 million in prize money each
 2-5     biennium may be deposited to or appropriated from the Texas
 2-6     Department of Health state-owned multicategorical teaching hospital
 2-7     account, which is an account in the general revenue fund; and
 2-8                 (2)  all prize money subject to this section in excess
 2-9     of $40 million each biennium shall be deposited in the tertiary
2-10     care facility account.  Money deposited in the tertiary care
2-11     facility account may only be appropriated to the department for
2-12     purposes specified in Chapter 46, Health and Safety Code [used to
2-13     provide additional money to the state lottery account for the
2-14     purposes prescribed by Section 466.355(b)(1)].
2-15           SECTION 4.  Subchapter I, Chapter 466, Government Code, is
2-16     amended by adding Section 466.410 to read as follows:
2-17           Sec. 466.410.  ASSIGNMENT OF PRIZES.  (a)  A person may
2-18     assign, in whole or in part, the right to receive prize payments
2-19     that are paid by the commission in installments over time if the
2-20     assignment is made to a person designated by an order of a district
2-21     court of Travis County, except that installment prize payments due
2-22     within the final two years of the prize payment schedule may not be
2-23     assigned.
2-24           (b)  A district court shall issue an order approving a
2-25     voluntary assignment and directing the commission to direct prize
2-26     payments in whole or in part to the assignee if:
2-27                 (1)  a copy of the petition for the order and copies of
 3-1     all notices of any hearing in the matter have been served on the
 3-2     executive director not later than 20 days prior to any hearing or
 3-3     entry of any order.  The commission may intervene in a proceeding
 3-4     to protect the interests of the commission but shall not be
 3-5     considered an indispensable or necessary party.  A petition filed
 3-6     under this section shall include in the caption the prizewinner's
 3-7     name as it appears on the lottery claim form;
 3-8                 (2)  the assignment is in writing, executed by the
 3-9     assignor and assignee (or designated agent), and by its terms
3-10     subject to the laws of this state; and
3-11                 (3)  the assignor provides a sworn and notarized
3-12     affidavit stating that the assignor:
3-13                       (A)  is of sound mind, over 18 years of age, is
3-14     in full command of the person's faculties, and is not acting under
3-15     duress;
3-16                       (B)  has been advised regarding the assignment by
3-17     independent legal counsel and has had the opportunity to receive
3-18     independent financial and tax advice concerning the effects of the
3-19     assignment;
3-20                       (C)  understands that the assignor will not
3-21     receive the prize payments, or portions of the prize payments, for
3-22     the assigned years;
3-23                       (D)  understands and agrees that with regard to
3-24     the assigned payments, the state, the commission, and its officials
3-25     and employees will have no further liability or responsibility to
3-26     make the assigned payments to the assignor;
3-27                       (E)  has been provided a one-page written
 4-1     disclosure statement stating, in boldfaced type, 14 points or
 4-2     larger:
 4-3                             (i)  the payments being assigned, by
 4-4     amounts and payment dates;
 4-5                             (ii)  the purchase price being paid, if
 4-6     any;
 4-7                             (iii)  if a purchase price is paid, the
 4-8     rate of discount to the present value of the prize, assuming daily
 4-9     compounding and funding on the contract date; and
4-10                             (iv)  the amount, if any, of any
4-11     origination or closing fees that will be charged to the assignor;
4-12     and
4-13                       (F)  was advised in writing, at the time the
4-14     assignment was signed, that the assignor had the right to cancel
4-15     without any further obligation not later than the third business
4-16     day after the date the assignment was signed.
4-17           (c)  It shall be the responsibility of the assignor to bring
4-18     to the attention of the court, either by sworn testimony or by
4-19     written declaration submitted under penalty of perjury, the
4-20     existence or nonexistence of a current spouse.  If married, the
4-21     assignor shall identify his or her spouse and submit to the court a
4-22     sworn and notarized statement wherein the spouse consents to the
4-23     assignment.  If the assignor is married and the sworn and notarized
4-24     statement is not presented to the court, the court shall determine,
4-25     to the extent necessary and as appropriate under applicable law,
4-26     the ability of the assignor to make the proposed assignment without
4-27     the spouse's consent.
 5-1           (d)  With respect to any given prize, the order shall also
 5-2     recite and identify all prior assignments by amount of or fraction
 5-3     of payment assigned, the identity of the assignee, and the date(s)
 5-4     of payment(s) assigned.  A court order obtained pursuant to this
 5-5     section, together with all such prior orders, shall not require the
 5-6     commission to divide any single prize payment among more than three
 5-7     different persons.
 5-8           (e)  The court order shall include specific findings as to
 5-9     compliance with the requirements of Subsections (b), (c), and (d)
5-10     and shall specify the prize payment or payments assigned, or any
5-11     portion thereof, including the dates and amounts of the payments to
5-12     be assigned, the years in which each payment is to begin and end,
5-13     the gross amount of the annual payments assigned before taxes, the
5-14     prizewinner's name as it appears on the lottery claim form, the
5-15     assignor's social security or tax identification number, and, if
5-16     applicable, the citizenship or resident alien number of the
5-17     assignee if an individual.
5-18           (f)  A certified copy of a court order granted under this
5-19     section shall be delivered to the commission and such order must be
5-20     provided to the commission no later than 20 days prior to the date
5-21     upon which the first assigned payment is to be paid to the
5-22     assignee.  Within 20 days of receipt of the court order, the
5-23     commission shall acknowledge in writing to both the assignor and
5-24     the assignee its receipt of said court order.  Unless the
5-25     commission provides written notice to the assignor and assignee
5-26     that the commission cannot comply with the court order, the
5-27     commission shall thereafter make the prize payments in accordance
 6-1     with the court order.
 6-2           (g)  The commission shall establish and collect a reasonable
 6-3     fee to defray any administrative expenses associated with an
 6-4     assignment made under this section, including the cost to the
 6-5     commission of any processing fee imposed by a private annuity
 6-6     provider.  The commission shall establish the amount of the fee to
 6-7     reflect the direct and indirect costs associated with processing
 6-8     the assignment.
 6-9           (h)  An assignment pursuant to court order may not include or
6-10     cover payments or portions of payments that are subject to any
6-11     offset provided by this chapter.
6-12           (i)  Notwithstanding any other provision of this section,
6-13     there will be no right to assign prize payments following:
6-14                 (1)  the issuance, by the Internal Revenue Service, of
6-15     a technical rule letter, revenue ruling, or other public ruling of
6-16     the Internal Revenue Service that determines that, based on the
6-17     right of assignment as provided by this section, a lottery
6-18     prizewinner who does not assign prize payments would be subject to
6-19     an immediate income tax liability for the value of the entire prize
6-20     rather than annual income tax liability for each installment when
6-21     paid; or
6-22                 (2)  the issuance by a court of a published decision
6-23     holding that, based on the right of assignment as provided by this
6-24     section, a lottery prizewinner who does not assign prize payments
6-25     would be subject to an immediate income tax liability for the value
6-26     of the entire prize rather than annual income tax liability for
6-27     each installment when paid.
 7-1           (j)  After receiving a letter or ruling from the Internal
 7-2     Revenue Service or a published decision of a court as provided by
 7-3     Subsection (i)(1) or (2), the executive director shall immediately
 7-4     file a copy of the letter, ruling, or published decision with the
 7-5     secretary of state.  When the executive director files a copy of
 7-6     the letter, ruling, or published decision with the secretary of
 7-7     state, an assignor is ineligible to assign a prize under this
 7-8     section, and the commission shall not make any payment to an
 7-9     assignee pursuant to a court order entered after the date of such
7-10     letter or ruling.
7-11           SECTION 5.  This Act takes effect September 1, 1999.
7-12           SECTION 6.  The change in law made by this Act to Section
7-13     466.408(b), Government Code, applies only to a prize for which the
7-14     winner is selected on or after September 1, 1999.  A prize for
7-15     which the winner was selected before September 1, 1999, is governed
7-16     by the law as it existed immediately before the effective date of
7-17     this Act, and that law is continued in effect for that purpose.
7-18           SECTION 7.  The importance of this legislation and the
7-19     crowded condition of the calendars in both houses create an
7-20     emergency and an imperative public necessity that the
7-21     constitutional rule requiring bills to be read on three several
7-22     days in each house be suspended, and this rule is hereby suspended.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.B. No. 1799 was passed by the House on April
         28, 1999, by a non-record vote; that the House refused to concur in
         Senate amendments to H.B. No. 1799 on May 22, 1999, and requested
         the appointment of a conference committee to consider the
         differences between the two houses; and that the House adopted the
         conference committee report on H.B. No. 1799 on May 30, 1999, by a
         non-record vote.
                                                 Chief Clerk of the House
               I certify that H.B. No. 1799 was passed by the Senate, with
         amendments, on May 20, 1999, by a viva-voce vote; at the request of
         the House, the Senate appointed a conference committee to consider
         the differences between the two houses; and that the Senate adopted
         the conference committee report on H.B. No. 1799 on May 30, 1999,
         by a viva-voce vote.
                                                 Secretary of the Senate
         APPROVED:  _____________________