1-1     By:  Junell, et al. (Senate Sponsor - Ellis)          H.B. No. 2530
 1-2           (In the Senate - Received from the House April 26, 2001;
 1-3     May 1, 2001, read first time and referred to Committee on Business
 1-4     and Commerce; May 10, 2001, reported favorably, as amended, by the
 1-5     following vote:  Yeas 4, Nays 3; May 10, 2001, sent to printer.)
 1-6     COMMITTEE AMENDMENT NO. 1
 1-7     Amend C.S.H.B. 2530, engrossed printing, as follows:
 1-8           (1)  On page 2, between lines 53 and 54 insert the following:
 1-9                 (4)  "Direct marketing" means using the United States
1-10     mail, facsimiles, electronic mail, or other methods for mass
1-11     distribution to individuals.
1-12                 (5)  "Conducting" a sweepstakes means distributing any
1-13     material that promotes a sweepstakes, that describes the prize or
1-14     prizes, that states one or more of the sweepstakes rules, that
1-15     includes any current or future opportunity to enter the
1-16     sweepstakes, or that provides any method for the recipient of the
1-17     material to obtain additional information about the sweepstakes.
1-18                 (6)  "Magazines" and "newspapers" means publications
1-19     that
1-20                       (i)  sell advertising space to companies other
1-21     than the publisher, its affiliates and the vendors for any of them,
1-22     and
1-23                       (ii)  more than 75% of the total number of copies
1-24     distributed of each issue go to paid subscribers.
1-25                 (7)  "Catalogues" means promotional booklets listing
1-26     merchandise for sale that either
1-27                       (i)  require customers to go to a physical
1-28     location to purchase the advertised items, or
1-29                       (ii)  are published by a company that derives
1-30     more than 65% of its total gross revenue from sales occurring at
1-31     physical locations.
1-32           (2)  On page 2, line 54 through line 56, strike "offering a
1-33     sweepstakes primarily through the mail, exclusive of mailed
1-34     newspapers and magazines," and substitute "conducting a sweepstakes
1-35     through direct marketing".
1-36           (3)  On page 3, line 21 through line 30, strike proposed
1-37     sections 43.002(a)(6) and 43.002(a)(7) and substitute the following
1-38     and renumber subsequent subdivisions appropriately:
1-39                 (6)  offer through direct marketing any non-sweepstakes
1-40     prize, gift, premium, giveaway, skill contest, coupon, rebate, or
1-41     other incentive or promotion of any kind, other than a competitive
1-42     price on goods or services, during the 12 month period immediately
1-43     following the last date on which the person conducted a sweepstakes
1-44     through direct marketing;
1-45           (4)  On page 4, line 39 through line 43, strike proposed
1-46     section 43.003 and substitute the following:
1-47           Sec. 43.003.  APPLICATION OF CHAPTER; ACTS NOT PROHIBITED.
1-48     (a)  This chapter does not apply to any sweepstakes that is
1-49     conducted through advertisements or inserts in magazines,
1-50     newspapers or catalogues sent through the mail.
1-51           (b)  This chapter does not apply to any charitable raffle
1-52     regulated by chapter 2002 of the Texas Occupations Code.
1-53           (c)  This chapter does not apply to any sweepstakes regulated
1-54     by the Alcoholic Beverage Code.
1-55           (d)  This chapter does not apply to any company that is an
1-56     air carrier subject to Title 49 of the United States Code.
1-57           (e)  This chapter does not apply to a drawing for the
1-58     opportunity to participate in a hunting, fishing, or other
1-59     recreational event conducted by the Parks and Wildlife Department.
1-60           (f)  If the one and only use of mail, facsimile, or
1-61     electronic mail is for consumers to return their entry forms to the
1-62     sponsor of the contest, then this chapter does not apply to that
1-63     sweepstakes.
1-64           (g)  This chapter does not prohibit a sweepstakes sponsor
1-65     from making a statement in the official rules of the sweepstakes
 2-1     describing the method to be used in choosing a winner, and this
 2-2     chapter does not prohibit a sweepstakes sponsor from notifying the
 2-3     winner after she or he has been selected.
 2-4           (h)  This chapter does not prohibit a sweepstakes sponsor,
 2-5     after determining the winner, from obtaining an affidavit from the
 2-6     person selected to verify that she or he is eligible to win the
 2-7     prize and has complied with the rules of the sweepstakes.
 2-8           (i)  This chapter never prohibits any person from offering a
 2-9     non-sweepstakes prize, gift, premium, giveaway, skill contest,
2-10     coupon, rebate, or other incentive or promotion of any kind so long
2-11     as that non-sweepstakes incentive or promotion is not conducted
2-12     through direct marketing.
2-13           (j)  This chapter does not apply to a sweepstakes if the most
2-14     valuable prize to be awarded is less than $20,000.00.  The value of
2-15     a prize is measured by the highest number among its face value, its
2-16     fair market value and its financial present value.
2-17           (5)  On page 4, line 60 through line 69, strike proposed
2-18     section 43.004(d) and substitute as follows:
2-19           (d)  If any person either
2-20                 (i)  provides names, addresses, fax numbers or
2-21     electronic mail addresses of any residents of this state so that
2-22     such information can be used in conducting a sweepstakes in
2-23     violation of this chapter, or
2-24                 (ii)  provides any services connected with mailing,
2-25     sending by facsimile, electronic mail, or other similar mass
2-26     distribution any materials connected with a sweepstakes that
2-27     violates this chapter, and if such person knew or should have known
2-28     that the sweepstakes was in violation of this chapter, then each
2-29     such person is jointly and severally liable for that portion of the
2-30     cumulative civil penalties that resulted from their conduct.
2-31     COMMITTEE AMENDMENT NO. 2
2-32     Amend H.B. 2530 as follows:
2-33           (1)  On page 2, line 51, strike lines 51 through 53.
2-34           (2)  On page 4, line 31, strike lines 31 through 38.
2-35                            A BILL TO BE ENTITLED
2-36                                   AN ACT
2-37     relating to certain prohibitions applicable to a person offering a
2-38     sweepstakes or operating a video sweepstakes; providing a civil
2-39     penalty.
2-40           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
2-41           SECTION 1. Title 4, Business & Commerce Code, is amended by
2-42     adding Chapter 43 to read as follows:
2-43                          CHAPTER 43.  SWEEPSTAKES
2-44           Sec. 43.001.  DEFINITIONS.  In this chapter:
2-45                 (1)  "Imply" means all methods and means by which an
2-46     implication can be conveyed, including a statement, a question, a
2-47     request, conduct, a graphic, a symbol, lettering, coloring, font
2-48     size, font style, or formatting.
2-49                 (2)  "Sweepstakes" means a contest that awards one or
2-50     more prizes based on chance or the random selection of entries.
2-51                 (3)  "Video sweepstakes" means a coin-operated machine
2-52     with a video interface operated for pleasure that dispenses as a
2-53     reward for play money or items redeemable for money or merchandise.
2-54           Sec. 43.002.  OFFENSES.  (a)  A person offering a sweepstakes
2-55     primarily through the mail, exclusive of mailed newspapers and
2-56     magazines, may not:
2-57                 (1)  require an individual to order or purchase a good
2-58     or service, or promise to purchase a good or service in the future,
2-59     to enter a sweepstakes;
2-60                 (2)  automatically enter an individual in a sweepstakes
2-61     because the individual ordered or purchased a good or service or
2-62     because the individual promised to order or purchase a good or
2-63     service;
2-64                 (3)  solicit business using an order form or purchasing
2-65     mechanism that has any role in the operation of a sweepstakes;
 3-1                 (4)  use a mechanism for entering a sweepstakes that:
 3-2                       (A)  has any connection to ordering or purchasing
 3-3     a good or service;
 3-4                       (B)  is not identical for all individuals
 3-5     entering the sweepstakes; and
 3-6                       (C)  does not have printed on the front and back
 3-7     of the entry form in a font size not less than 400 percent larger
 3-8     than the next largest font size used on the entry form the
 3-9     following language: "Buying Will Not Help You Win. Your chances of
3-10     winning without making a purchase are the same as the chances of
3-11     someone who purchases something. It is illegal to give any
3-12     advantage to buyers in a sweepstakes.";
3-13                 (5)  solicit an individual to enter a sweepstakes by
3-14     invitation or other opportunity and allow the individual to choose
3-15     or indicate the preferred characteristics of a prize to be awarded
3-16     in the sweepstakes, unless those choices:
3-17                       (A)  are made on the sweepstakes entering
3-18     mechanism; and
3-19                       (B)  do not appear on and are not connected in
3-20     any way to an order form or other purchasing mechanism;
3-21                 (6)  offer any non-sweepstakes prize, gift, premium,
3-22     giveaway, skill contest, coupon, rebate, or other incentive of any
3-23     kind, other than a competitive price on goods or services, during
3-24     the same calendar year in which the person offered an opportunity
3-25     to enter a sweepstakes;
3-26                 (7)  offer any opportunity to enter a sweepstakes
3-27     during the same calendar year in which the person offered a
3-28     non-sweepstakes prize, gift, premium, giveaway, skill contest,
3-29     coupon, rebate, or other incentive of any kind other than a
3-30     competitive price on goods or services;
3-31                 (8)  ask an individual for any information or any
3-32     action by that individual that would be consistent with the
3-33     individual winning a sweepstakes prize, unless the individual has
3-34     won a sweepstakes prize;
3-35                 (9)  provide an individual who has not yet won the
3-36     sweepstakes with any document or other item that simulates any
3-37     event, circumstance, or condition connected with being the winner
3-38     of the sweepstakes;
3-39                 (10)  send material accompanying or relating to a
3-40     sweepstakes or an offer to enter a sweepstakes that states or
3-41     implies that an individual must comply with a restriction or
3-42     condition to enter the sweepstakes, unless all individuals entering
3-43     the sweepstakes are required to comply with the identical
3-44     restriction or condition;
3-45                 (11)  use a scratch-off device or any other game piece
3-46     that suggests an element of chance or luck to convey information
3-47     about a sweepstakes or an offer to enter a sweepstakes;
3-48                 (12)  send material accompanying or relating to a
3-49     sweepstakes or an offer to enter a sweepstakes that:
3-50                       (A)  states or implies that an individual's
3-51     chances of winning a prize in the sweepstakes are raised, lowered,
3-52     or different in any way because of a factor or circumstance that
3-53     has no relation to the manner in which a winner of the sweepstakes
3-54     is selected;
3-55                       (B)  states or implies that a winner of a
3-56     sweepstakes prize will be selected at a time or place or in a
3-57     manner that is different from the actual time or place at which or
3-58     manner in which a winner is selected;
3-59                       (C)  states or implies falsely that the
3-60     individual receiving the advertisement has received any special
3-61     treatment or personal attention from the offeror of the sweepstakes
3-62     or any officer, employee, or agent of the offeror of the
3-63     sweepstakes;
3-64                       (D)  states or implies that an individual who
3-65     orders or purchases a good or service will receive a benefit in the
3-66     sweepstakes or be treated differently in the sweepstakes compared
3-67     with an individual who did not order or purchase a good or service;
3-68                       (E)  states or implies that an individual who
3-69     does not order or purchase a good or service will suffer a
 4-1     disadvantage in the sweepstakes or be treated differently in the
 4-2     sweepstakes compared with an individual who ordered or purchased a
 4-3     good or service; or
 4-4                       (F)  states or implies that the recipient of the
 4-5     material:
 4-6                             (i)  is a winner if the recipient is not a
 4-7     winner;
 4-8                             (ii)  may be a winner;
 4-9                             (iii)  will be a winner if certain
4-10     conditions are met or if certain events occur in the future;
4-11                             (iv)  is, may be, or will be among the
4-12     group from which a winner will be selected; or
4-13                             (v)  has in any way a better chance than
4-14     another individual of being chosen as a winner;
4-15                 (13)  publish or cause to be published different
4-16     advertisements for the same sweepstakes that contain inconsistent
4-17     descriptions of the grand prize awarded through the sweepstakes;
4-18                 (14)  offer more than one sweepstakes at the same time;
4-19                 (15)  award multiple prizes in a sweepstakes unless all
4-20     prizes are awarded on the same date and through the same selection
4-21     process;
4-22                 (16)  publish or cause to be published official rules
4-23     of a sweepstakes that do not uniquely identify the prizes to be
4-24     awarded and the date they will be awarded; or
4-25                 (17)  provide for entry in a sweepstakes by mail and
4-26     use:
4-27                       (A)  more than one address to accept entries in
4-28     the sweepstakes; or
4-29                       (B)  the address for entry in the sweepstakes for
4-30     any purpose other than entry in the sweepstakes.
4-31           (b)  A person may not operate a video sweepstakes in this
4-32     state.
4-33           (c)  The prohibition of operating a video sweepstakes as set
4-34     out in Subsection (b):
4-35                 (1)  does not authorize any otherwise illegal activity;
4-36     and
4-37                 (2)  does not apply to a facility operated by a
4-38     nonprofit organization of military veterans.
4-39           Sec. 43.003.  ACTS NOT PROHIBITED. Section 43.002(a)(12) does
4-40     not prohibit a person from making a statement in the official rules
4-41     of the sweepstakes describing the method to be used in choosing a
4-42     winner or prohibit a person from notifying the winner after the
4-43     sweepstakes has ended.
4-44           Sec. 43.004.  CIVIL PENALTY.  (a)  The attorney general may
4-45     initiate an action under this section by filing suit in a district
4-46     court in Travis County or in any county in which a violation
4-47     occurred.
4-48           (b)  For each violation found, the court shall award the
4-49     plaintiff a civil penalty of not less than $5,000 or more than
4-50     $50,000.
4-51           (c)  If the material accompanying or relating to a
4-52     sweepstakes or an offer to enter a sweepstakes contains multiple
4-53     statements, implications, representations, or offers that are
4-54     prohibited by this chapter, each statement, implication,
4-55     representation, or offer is a separate violation and shall result
4-56     in a separate civil penalty.  If the material is sent by mail,
4-57     facsimile, electronic mail, or other similar mass distribution,
4-58     each individual who receives the material constitutes an additional
4-59     and separate group of violations of this chapter.
4-60           (d)  If another person knew or should have known that a
4-61     person was offering a sweepstakes in violation of this chapter, and
4-62     if that other person provided names and addresses of residents of
4-63     this state to the person offering the sweepstakes or provided any
4-64     services connected with the mailing, sending by facsimile,
4-65     electronic mail, or other similar mass distribution of information
4-66     about the sweepstakes or an opportunity to enter the sweepstakes,
4-67     the other party is jointly and severally liable with the person
4-68     offering the sweepstakes for the cumulative civil penalties that
4-69     result from providing those names and addresses or services.
 5-1           (e)  If the attorney general substantially prevails, the
 5-2     court shall award the attorney general reasonable expenses incurred
 5-3     in recovering a civil penalty under this section, including court
 5-4     costs, reasonable attorney's fees, reasonable investigative costs,
 5-5     witness fees, and deposition expenses.
 5-6           (f)  A civil penalty recovered under this section shall be
 5-7     deposited in the state treasury.
 5-8           (g)  A court may also award injunctive relief or other
 5-9     equitable or ancillary relief that is reasonably necessary to
5-10     prevent future violations of this chapter.
5-11           SECTION 2. This Act takes effect September 1, 2001.
5-12                                  * * * * *