By King of Parker, Morrison                           H.B. No. 1799
         76R5312 GJH-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the assignment 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 ASSIGNABLE].  (a)  [Except
1-13     as otherwise provided by this section, the right  of any person to
1-14     a prize is not assignable.]
1-15           [(b)]  Payment of a prize may be made to the estate of a
1-16     deceased prizewinner.
1-17           (b) [(c)]  A prize to which a winner is otherwise entitled
1-18     may be paid to any person under an appropriate judicial  order.
1-19           SECTION 3.  Subchapter I, Chapter 466, Government Code, is
1-20     amended by adding Section 466.410 to read as follows:
1-21           Sec. 466.410.  ASSIGNMENT OF PRIZES.  (a)  A person may
1-22     assign, in whole or in part, the right to receive prize  payments
1-23     that are paid in installments over time by the commission if the
1-24     assignment is made to a person designated by an order of a district
 2-1     court of Travis County.
 2-2           (b)  The commission:
 2-3                 (1)  may intervene in a proceeding under this section;
 2-4     and
 2-5                 (2)  is not a necessary or indispensable party in the
 2-6     proceeding.
 2-7           (c)  A district court shall issue an order approving a
 2-8     voluntary assignment of prize payments and directing the commission
 2-9     to direct the payments in whole or in part to the assignee if:
2-10                 (1)  a copy of the petition for the order and a copy of
2-11     the notice of a hearing on the matter are served on the executive
2-12     director not later than the 10th day before the date of the
2-13     hearing;
2-14                 (2)  the assignment is in writing, is executed by the
2-15     assignor, and is subject to the laws of this state; and
2-16                 (3)  the assignor provides a sworn affidavit stating
2-17     that the assignor:
2-18                       (A)  is 18 years of age or older;
2-19                       (B)  is of sound mind, is in full command of the
2-20     person's faculties, and is not acting under duress;
2-21                       (C)  has been advised regarding the assignment by
2-22     an independent legal counsel and has had the opportunity to receive
2-23     independent financial and tax advice concerning the effects of the
2-24     assignment;
2-25                       (D)  understands that the person will not receive
2-26     the prize payments, or portions of the prize payments, for the
2-27     assigned years;
 3-1                       (E)  understands and agrees that the state, the
 3-2     commission, and its officials and employees will have no further
 3-3     liability or responsibility to make the assigned payments to the
 3-4     assignor;
 3-5                       (F)  has been provided a one-page written
 3-6     disclosure statement stating, in boldface type 14 points or larger:
 3-7                             (i)  the payments being assigned by amounts
 3-8     and payment dates;
 3-9                             (ii)  the purchase price;
3-10                             (iii)  the rate of discount to the present
3-11     value of the prize, assuming daily compounding and funding on the
3-12     contract date; and
3-13                             (iv)  the amount, if any, of any
3-14     origination or closing fees that will be charged to the assignor;
3-15     and
3-16                       (G)  was advised in writing, at the time the
3-17     assignment contract was signed, that the assignor had the right to
3-18     cancel the contract without any further obligation not later than
3-19     the third business day after the date the contract was signed.
3-20           (d)  The order shall include specific findings regarding
3-21     compliance with the requirements of Subsection (c) and specify:
3-22                 (1)  the prize payments or portion of prize payments
3-23     assigned;
3-24                 (2)  the year in which each assigned payment is to be
3-25     made;
3-26                 (3)  the gross amount of the annual payments assigned
3-27     before taxes;
 4-1                 (4)  the prizewinner's name as it appears on the
 4-2     lottery claim form;
 4-3                 (5)  the full legal name of the assignor if different
 4-4     from the prizewinner's name as it appears on the lottery claim
 4-5     form;
 4-6                 (6)  the assignor's social security number or tax
 4-7     identification number;
 4-8                 (7)  the assignee's full legal name and social security
 4-9     number or tax identification number; and
4-10                 (8)  if applicable, the citizenship and resident alien
4-11     number of the assignee.
4-12           (e)  The prizewinner shall declare to the court, by sworn
4-13     testimony or by notarized declaration submitted under penalty of
4-14     perjury, whether the prizewinner is married.  A married
4-15     prizewinner:
4-16                 (1)  shall identify the prizewinner's spouse and submit
4-17     to the court a notarized statement signed by the spouse consenting
4-18     to the assignment; or
4-19                 (2)  may allow the court to determine the ability of
4-20     the prizewinner to make the assignment without the consent of the
4-21     spouse.
4-22           (f)  On receipt of a certified copy of a court order under
4-23     this section, the commission shall:
4-24                 (1)  provide to the assignor and the assignee a written
4-25     acknowledgment of the commission's receipt of a court order granted
4-26     under this section; and
4-27                 (2)  make prize payments as provided by the order.
 5-1           (g)  A voluntary assignment may not include a payment or
 5-2     portion of a payment that is subject to any deduction required by
 5-3     this chapter.
 5-4           (h)  The commission shall establish and collect a reasonable
 5-5     fee to defray any administrative expenses associated with an
 5-6     assignment made under this section, including the cost to the
 5-7     commission of any processing fee imposed by a private annuity
 5-8     provider.  The commission shall itemize the amount of the fee to
 5-9     reflect the direct and indirect costs associated with processing
5-10     the assignment.
5-11           (i)  Notwithstanding any other provision of this section, a
5-12     prizewinner may not assign prize payments unless the director has
5-13     received an official determination from the Internal Revenue
5-14     Service that, based on the right of assignment provided by this
5-15     section, a lottery prizewinner who does not assign prize payments
5-16     is not subject to immediate income tax liability for the assignment
5-17     value of the entire prize rather than annual income tax liability
5-18     for each installment when paid.
5-19           (j)  The director shall request an official determination
5-20     described in Subsection (i) from the Internal Revenue Service.  If
5-21     the director receives an official determination from the Internal
5-22     Revenue Service, the director shall immediately file the official
5-23     determination with the secretary of state's office for publication
5-24     in the Texas Register.
5-25           SECTION 4.  The importance of this legislation and the
5-26     crowded condition of the calendars in both houses create an
5-27     emergency and an imperative public necessity that the
 6-1     constitutional rule requiring bills to be read on three several
 6-2     days in each house be suspended, and this rule is hereby suspended,
 6-3     and that this Act take effect and be in force from and after its
 6-4     passage, and it is so enacted.