C.S.S.B. 270 78(R)    

BILL ANALYSIS


C.S.S.B. 270
By: Jackson
Ways & Means
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

The Sunset Advisory Commission regularly assesses the continuing need for
a state agency to exist or whether the agency's functions continue to be
needed.  Agencies subject to Sunset review typically undergo review every
12 years.  The review provides an opportunity for the legislature to make
changes to an agency's operations if needed.  The Texas Lottery Commission
is scheduled to be abolished September 1, 2003, unless continued in
existence by the legislature.  C.S.S.B. 270 continues the commission until
September 1, 2015, and modifies provisions relating to the commission and
the operation of the lottery and bingo. 

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Texas Lottery Commission in SECTIONS 5, 7, 10, 15, 17, 33,
36, 39, 45, 53, 55, 63, 64, 67, 70, 73, 74, 76, and 78 and to the
comptroller of public accounts in SECTION 14  of this bill. 

ANALYSIS

C.S.S.B. 270 continues the Texas Lottery Commission (commission) until
September 1, 2015, and sets forth standard Sunset Advisory Commission
recommendations regarding conflicts of interest, commission member
training, equal employment, commission member removal, standards of
conduct, separation of responsibilities, the state employee incentive
program, public participation, and complaints.  

The bill authorizes the comptroller to assess a penalty against a person
who exhibits, displays, or provides to another a prohibited gaming machine
and allocates money from the state lottery account to the comptroller for
enforcement and to the criminal justice division of the governor's office
to provide grants to assist local governments in the prosecution of
offenses involving gambling devices. The bill also allocates money to the
comptroller to provide grants to state residents to pay the costs of
attending specified educational institutions. 

The bill authorizes the commission to purchase or lease facilities, goods,
and services and make any contracts necessary for carrying out the state
lottery.  The commission may delegate to the executive director of the
commission (executive director) the authority to approve procurements
other than major procurements.  The bill provides that a contract between
the lottery division and a lottery operator must contain a provision
allowing the contract to be terminated without penalty if the division is
abolished.  The bill authorizes the commission to make available for sale
lottery promotional merchandise to market and promote ticket sales,
requires the commission to adopt rules regarding the sales, and requires
proceeds from the sales to be deposited in the general revenue fund. The
bill authorizes a licensed commercial lessor to advertise bingo. 

The bill requires the commission to develop a comprehensive business plan
to guide the commission's major initiatives and to review the plan at
least annually to assess the performance and value of each commission
program and project.  The bill also requires the commission to develop and
implement a policy requiring the executive director and commission
employees to research and propose technological solutions  to improve the
commission's ability to perform its functions, including ensuring the
public's ability to access commission information and services.  The bill
sets  forth provisions regarding acquisition and use of intellectual
property and exempts the property from public disclosure.  The bill
requires the commission to reasonably support the efforts of licensed
authorized organizations to develop and offer new bingo games and related
technology.  The bill requires the commission to develop and implement a
policy to encourage the use of negotiated rulemaking and alternative
dispute resolution.  The bill requires the bingo advisory committee
annually to develop a work plan detailing the committee's objectives and
issues to be addressed and to perform a review at the end of each year. 

In making a determination whether to renew a state lottery sales agent
license or a bingo license, the bill requires the commission to consider
the compliance history of a license holder.  The bill sets forth
provisions regarding an opportunity for a hearing and provides for the
expiration of licenses on various dates and the proration of license fees.
The bill requires the commission to determine if a bingo license holder is
in compliance with the Bingo Enabling Act or rules adopted under that Act.
The bill sets forth provisions regarding qualifications for and renewal of
a bingo license and standards of conduct for a license holder.  The bill
provides for an administrative penalty schedule for violations of the
Bingo Enabling Act or rules adopted under that Act. 

The bill requires a person claiming a lottery prize to disclose the
person's name and social security number or employer identification
number, however, personal information collected is exempt from public
disclosure, except a person's name.  A legal entity claiming a prize shall
disclose all legal and beneficial interests to the commission. 

The bill authorizes the commission to adopt rules and enter into a written
agreement with appropriate officials  for the participation in a
multijurisdiction lottery game.  With certain exceptions, revenue received
from the sale of multijurisdiction lottery tickets is to be deposited in
the state lottery account.  The bill provides for the payment of prizes
and sharing of costs. 

The bill requires the commission to employ a bingo operations director to
supervise all bingo games who is authorized to contract with persons to
assist in the administration and regulation of bingo. The bill provides
for the commission, executive director, and bingo operations director to
employ personnel to perform the duties of the commission.  The bill sets
forth procedures authorizing a person to request from the director of
bingo operations an advisory opinion regarding compliance with the Bingo
Enabling Act and related commission rules. 

The bill modifies the eligibility of authorized organizations for a bingo
license to provide that an organization is eligible for a license if the
organization has been in existence for the time required by commission
rule.  The bill authorizes the commission to issue a commercial lessor
license to a person who leases premises on which bingo is conducted to not
more than seven licensed authorized organizations.  The bill modifies the
times at which licensed authorized organizations may conduct bingo. 

To obtain a license or to renew a license effective for two years, an
applicant for a license to conduct bingo or a commercial lessor license
may pay twice the annual license fee plus $25.  A manufacturer or
distributor of bingo equipment or supplies may obtain a two-year license
by paying two times the annual license amount plus $1,000.  The bill sets
forth procedures for the suspension and denial of a sales agent's license
and for licenses issued under the Bingo Enabling Act, including provisions
for notice and hearing for summary suspensions of licenses.  The bill sets
forth provisions regarding the liability of officers, directors, or owners
of a sales agent. 

The bill sets forth provisions regarding amending the license of a sales
agent to change the location of a sales agency.  The bill modifies
provisions regarding the locations at which lottery tickets may be sold,
licensed authorized organizations may conduct bingo, and commercial
lessors may be licensed.  The bill provides that the commission has
oversight, including the authority to conduct audits, inspections, and
investigations, of a game of chance or related equipment in certain
locations. 
The bill provides that a licensed authorized organization and a licensed
commercial lessor may file a joint application to change a bingo location
or bingo game times.  The bill prohibits an individual from participating
in bingo without holding an authorized organization employee license.  The
bill includes provisions relating to fees; license renewal, denial,
suspension, and revocation; and other record keeping provisions.  The bill
authorizes two or more licensed authorized organizations  conducting bingo
at the same premises to jointly hire bingo employees and specifies other
employment provisions.  

The bill authorizes two or more licensed authorized organizations to share
revenues, expense, and inventory related to bingo by executing a unit
accounting agreement.  More than one unit may be formed at a single
location.  The bill specifies how the organizations are to interact under
the agreement.  The bill requires a unit to establish one checking
account, maintain one inventory of bingo supplies and equipment, and
maintain an interest-bearing savings account.  The bill provides for
deposit and disbursement of funds.  The bill specifies the duties of a
unit manager, including filing a quarterly report with the commission and
paying taxes and fees and maintaining the bingo inventory and financial
records of the unit.  The bill provides for a unit manager license and
license eligibility.  The bill sets forth provisions for a unit that does
not utilize a unit manager and specifies the duties of a designated agent
for the unit.  The bill specifies responsibilities of licensed authorized
organizations that are members of units, provisions relating to trust
agreements, and commission authority over these provisions. 

The bill requires the commission to adopt rules to allow a licensed
authorized organization to retain a maximum amount of net proceeds as
operating capital in the organization's bingo account.  The net proceeds
retained may not exceed an amount established by commission rule.    The
bill sets forth provisions for the sanctioning of licensed authorized
organizations.  The bill sets forth provisions regarding temporary bingo
licenses and the suspension of such licenses. 

The bill authorizes  licensed authorized organizations to deposit funds
collected through a debit card transaction in the bingo fund within 72
hours.  The bill expands the list of expenses reasonable or necessary to
conduct bingo.  The bill provides that a person conducting certain bingo
activities, including bingo at employee picnics and family reunions under
certain circumstances, does not commit an offense.  The bill increases
bingo offenses and specifies venue for prosecution.  The bill sets forth
provisions for the issuance of subpoenas and related procedures. 

The bill requires the commission to adopt rules and procedures by
specified deadlines.  The bill sets forth transition provisions for the
implementation of the Act. 

EFFECTIVE DATE

On passage, or, if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003.  

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.S.B. 270 differs from the engrossed version by adding provisions
relating to personal information exempt from public disclosure, assessment
of penalties and prosecution of gambling offenses, the sale of lottery
promotional merchandise, procedures for changing license locations,
circumstances under which licenses are denied, locations at which lottery
tickets are sold, suspension of licenses, notification requirements, and a
multijurisdiction lottery game.  The bill also allocates money to the
comptroller to provide grants to state residents to pay the costs of
attending specified educational institutions.  The bill maintains the
current number of commissioners.  The bill requires the employment of a
director of bingo operations and specifies duties.  The bill provides for
the employment of additional personnel to accomplish the purposes of the
commission and specifies conditions on employment. 

The bill adds provisions relating to intellectual property.  The bill
modifies the times and locations of bingo activities.  The bill modifies
provisions relating to advisory opinions.  The bill sets forth provisions
relating to authorized organization employee licenses.  The bill modifies
provisions relating to commercial lessor licenses.  The bill provides for
summary suspension of bingo licenses. The bill provides the commission
oversight of a game of chance at certain locations.  The bill modifies
provisions relating to a licensed authorized organization's bingo account
and expenses. The bill provides that a person does not commit an offense
for conducting certain bingo activities. The bill increases bingo offenses
and specifies venue.  The bill adds provisions relating to subpoenas and
related procedures.  The bill modifies deadlines for adopting rules and
changes the effective date.