By: Hupp H.B. No. 1407
Substitute the following for H.B. No. 1407:
By: Flores C.S.H.B. No. 1407
A BILL TO BE ENTITLED
AN ACT
relating to the exhibition and regulation of amusement redemption
machines by certain nonprofit organizations and others where
approved by local option.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 2153, Occupations Code, is amended by
adding Subchapter K to read as follows:
SUBCHAPTER K. AMUSEMENT REDEMPTION MACHINES
Sec. 2153.501. DEFINITIONS. In this subchapter:
(1) "Amusement redemption machine" means a skill or
pleasure coin-operated machine that by operation of chance or a
combination of skill and chance affords the user an opportunity to
receive a prize, or a representation of value redeemable for a
prize, but does not include a machine:
(A) that awards the user a prize or prizes solely
and directly from the machine, including claw, crane, or similar
machines; or
(B) from which the opportunity to receive a
prize, or a representation of value redeemable for a prize, varies
depending on the user's ability to throw, roll, flip, toss, hit, or
drop a ball or other physical object into the machine or a part of
the machine, including basketball, skeeball, golf, bowling,
pusher, or similar machines.
(2) "Authorized organization" has the meaning
assigned by Section 2001.002.
(3) "Coin-operated machine" includes a machine or
device operated by the payment or insertion of paper currency or any
other consideration.
(4) "Political subdivision" means a county, justice
precinct, or municipality.
(5) "Prize" means non-cash merchandise, toys, or
novelties.
(6) "Representation of value" means a ticket, a gift
certificate, or gift card that may be presented to a merchant and is
redeemable solely for a prize.
(7) "User" means an individual who for consideration
operates an amusement redemption machine for the opportunity to win
a prize.
Sec. 2153.502. REGULATORY AUTHORITY. (a) The comptroller
shall adopt rules for regulating the exhibition, display,
operation, promotion, and use of amusement redemption machines.
(b) Nothing in this chapter limits the authority of a
political subdivision of this state to regulate the location of
amusement redemption machines as permitted by Section 2153.452.
Sec. 2153.503. CERTIFICATION OF MACHINES. To be treated as
a coin-operated amusement redemption machine under this
subchapter, a machine must be certified as a coin-operated
amusement redemption machine by the comptroller or a competent
private testing service that has contracted with the comptroller to
certify machines as coin-operated amusement redemption machines.
The comptroller by rule shall set the certification standards to
facilitate the auditing and accountability of amusement redemption
machines.
Sec. 2153.504. LICENSING OF AUTHORIZED ORGANIZATIONS TO
EXHIBIT AMUSEMENT REDEMPTION MACHINES. (a) On application of an
authorized organization, the comptroller shall issue to the
organization a license under Section 2153.152 that authorizes the
organization to exhibit an amusement redemption machine to a user
of the machine as provided by this subchapter.
(b) A license issued under Section 2153.152 does not
authorize the holder to exhibit an amusement redemption machine to
a user of the machine unless the license holder is an authorized
organization and:
(1) the authorized organization holds a license issued
under this subchapter;
(2) the amusement redemption machine is located in a
political subdivision in which an election has been held under this
subchapter authorizing the use of amusement redemption machines and
that authorization is still in effect in that location; and
(3) the amusement redemption machine is owned by the
authorized organization or leased by the organization from a person
authorized by law to lease the amusement redemption machine to the
organization.
(c) An authorized organization that holds a license to
conduct bingo under Chapter 2001 is entitled to a license under this
subchapter if the organization:
(1) provides proof to the comptroller that the license
to conduct bingo is in effect; and
(2) pays the applicable license fees and registration
fees under this subchapter for the amusement redemption machines to
be exhibited under the license.
(d) A license issued under Subsection (c) expires on the
61st day after the date on which the authorized organization ceases
to hold an active license to conduct bingo issued under Chapter
2001. This subsection does not prohibit the organization from
obtaining a separate license under this subchapter before the
license issued under Subsection (c) expires.
(e) The comptroller may not issue a license under this
subchapter to an authorized organization if an officer or director
of the organization has been convicted of a felony, criminal fraud,
a gambling or gambling-related offense, or a crime of moral
turpitude and less than 10 years has elapsed since the termination
of a sentence, parole, mandatory supervision, or community
supervision served for the offense.
(f) An authorized organization may not exhibit an amusement
redemption machine under a license issued under this subchapter to
a user who is younger than 18 years of age.
Sec. 2153.505. ADDITIONAL GENERAL BUSINESS LICENSE
PROVISIONS APPLICABLE TO AMUSEMENT REDEMPTION MACHINES. An
application for a license under Subchapter D for a person engaging
in a business for which a license is required by Section 2153.151
that involves amusement redemption machines must, in addition to
the information required by Section 2153.153, include the physical
street address at which any amusement redemption machine is or will
be located.
Sec. 2153.506. DISPLAY OF LICENSE. A license holder shall
display a license issued under this subchapter relating to
amusement redemption machines at all times in a conspicuous place
in each location where amusement redemption machines are exhibited
or operated under the license.
Sec. 2153.507. ISSUANCE OF LICENSE TO ENTITY OTHER THAN AN
AUTHORIZED ORGANIZATION. (a) Notwithstanding any other law, the
comptroller shall issue a license under Section 2153.152 that
authorizes a person other than an authorized organization to
exhibit an amusement redemption machine to a user, subject to the
requirements and limitations of this section.
(b) Not more than five amusement redemption machines may be
exhibited for play at one time on a premises by a person licensed
under this section. For purposes of this subsection, an amusement
redemption machine designed to be operated simultaneously by more
than one user shall be counted as one machine multiplied by the
number of possible simultaneous users.
(c) A license issued under this section authorizes the
license holder to exhibit an amusement redemption machine to a user
if the machine is located within a political subdivision in which an
election has been held under this subchapter authorizing the use of
an amusement redemption machine.
(d) Notwithstanding Subsections (b) and (f), two or more
locations where amusement redemption machines were lawfully
operated under separate ownership and control before January 1,
2003, are considered separate premises for purposes of this
section, regardless of the actual distance of the locations from
each other or whether the locations are under a common roof or over
a common foundation.
(e) The comptroller shall adopt rules establishing criteria
applicants must demonstrate to prove that the requirements of
Subsection (d) are satisfied.
(f) For purposes of this section, "premises" means any
facility located under a common roof or located over a common
foundation and includes any area within 200 feet of the common roof
or foundation.
Sec. 2153.508. FEES. (a) Notwithstanding Section
2153.157, the registration fee for an amusement redemption machine
that is exhibited to users under this subchapter is $500 per year.
(b) In addition to the license fees required by Section
2153.154, the comptroller shall collect an annual license fee
applicable to each license holder described in Section 2153.152 who
owns one or more amusement redemption machines. The annual license
fee under this subsection is $10,000.
(c) In addition to any other fee authorized by this chapter,
the comptroller may set and collect a fee necessary to cover any
additional costs of determining the eligibility of an applicant for
a license under this subchapter.
Sec. 2153.509. TAX ON AMUSEMENT REDEMPTION MACHINE PRIZES.
(a) A tax is imposed on each cash or cash equivalent prize awarded
from play of a coin-operated amusement redemption machine to be
collected by the operator of the amusement redemption machine on
behalf of the comptroller. The amount of the tax is a percentage of
the value of a prize subject to the tax equal to the percentage of
the sales price of a taxable item that constitutes the sales tax
rate imposed under Chapter 151, Tax Code.
(b) Sections 2153.404 and 2153.407 apply to the tax imposed
by this section.
Sec. 2153.510. ADDITIONAL TAX PERMIT PROVISIONS APPLICABLE
TO AMUSEMENT REDEMPTION MACHINES. A tax permit issued for an
amusement redemption machine must state the physical street address
designated by the license holder when the permit is issued, and is
valid only while affixed to the amusement redemption machine at
that address.
Sec. 2153.511. OWNER OR EXHIBITOR OF AMUSEMENT REDEMPTION
MACHINES NOT EXEMPT. Section 2153.008 does not apply to a person
who owns or exhibits an amusement redemption machine.
Sec. 2153.512. (a) LOCAL OPTION AUTHORIZATION OR
PROHIBITION ELECTIONS. The governing body of a county, justice
precinct, or municipality:
(1) shall order and hold an election under this
subchapter in the appropriate political subdivision if the
governing body is presented with a petition for an election that
meets the requirements of this subchapter; and
(2) may order and hold an election on its own motion.
(b) For purposes of this subchapter, the county
commissioners court is the governing body of a justice precinct.
Sec. 2153.513. ELECTION PETITIONS. (a) A petition for an
election to authorize amusement redemption machines under this
subchapter must have a statement substantially as follows preceding
the space reserved for signatures on each page: "This petition is to
require that an election be held in (name of political subdivision)
to authorize the operation of amusement redemption machines under
Chapter 2153, Occupations Code."
(b) A petition for an election to prohibit amusement
redemption machines under this subchapter must have a statement
substantially as follows preceding the space reserved for
signatures on each page: "This petition is to require that an
election be held in (name of political subdivision) to prohibit the
operation of amusement redemption machines under Chapter 2153,
Occupations Code."
(c) A petition is valid for purposes of Section 2153.512
only if it is signed by a number of registered voters of the
political subdivision that exceeds 10 percent of the number of
registered voters who voted in the political subdivision in the
most recent general election for state and county officers, or the
number of registered voters specified in the document governing the
administration of the political subdivision, whichever is less. If
boundaries of the political subdivision do not coincide with
boundaries of election precincts in effect for that general
election, the officer verifying the petition may use a reasonable
method to estimate the number of registered voters who voted in that
election in the political subdivision.
(d) A signer must enter beside the signer's signature the
date of signing the petition. A signature may not be counted if the
signer fails to enter the date or if the date of signing is earlier
than the 90th day before the date the petition is submitted to the
governing body.
(e) In addition to the signature and date of signing, the
petition must include each signer's:
(1) current voter registration number;
(2) printed name; and
(3) residence address, including zip code.
(f) Not later than the fifth day after the date the
governing body receives a petition for an election, the governing
body shall submit the petition for verification to the county clerk
if the petition is applicable to a county or justice precinct or to
the municipal secretary if the petition is applicable to a
municipality.
(g) The officer to whom the petition is submitted for
verification shall determine whether the petition is signed by the
required number of registered voters of the political subdivision
in which the election is requested.
(h) Not later than the 30th day after the date the petition
is submitted to the officer for verification, the officer shall
certify in writing to the governing body whether the petition is
valid. If the officer determines that the petition is invalid, the
officer shall state all reasons for the determination.
Sec. 2153.514. ELECTION ORDER. If the officer responsible
for certifying a petition determines that a petition is valid, the
governing body shall:
(1) order that an election be held in the appropriate
political subdivision on the next uniform election day provided by
Section 41.001(a), Election Code, that occurs not earlier than the
45th day after the date of the officer's certification; and
(2) notify the comptroller by certified mail, return
receipt requested, that an election has been ordered.
Sec. 2153.515. BALLOT PROPOSITIONS. (a) In an election to
authorize amusement redemption machines under this subchapter in a
political subdivision, the ballot shall be prepared to provide for
voting for or against the proposition: "Authorizing the operation
of amusement redemption machines under Chapter 2153, Occupations
Code, in (name of political subdivision)."
(b) In an election to prohibit amusement redemption
machines under this subchapter in a political subdivision, the
ballot shall be prepared to provide for voting for or against the
proposition: "Prohibiting the operation of amusement redemption
machines under Chapter 2153, Occupations Code, in (name of
political subdivision)."
Sec. 2153.516. EFFECT OF ELECTION. (a) The governing body
of a political subdivision in which an amusement redemption machine
election has been held shall not later than the 10th day after the
date of the election give written notification to the comptroller
of the results of the election.
(b) If a majority of the qualified voters voting on the
question in an authorization election vote in favor of
authorization, amusement redemption machines are authorized
throughout the political subdivision beginning on the 10th day
after the date the result of the election is officially declared,
except as otherwise provided as to a part of the political
subdivision for which Subsection (g) requires a contrary status.
(c) If a majority of the qualified voters voting on the
question in a prohibitory election vote in favor of prohibition,
amusement redemption machines are prohibited throughout the
political subdivision beginning on the 10th day after the date the
result of the election is officially declared, except as otherwise
provided as to a part of the political subdivision for which
Subsection (g) requires a contrary status.
(d) If a majority of the qualified voters voting on the
question in an authorization election do not favor authorization,
or if a majority of the qualified voters voting on the question in a
prohibitory election do not favor prohibition, the election has no
effect on the status under this subchapter of the political
subdivision in which the election is held.
(e) If as a result of the election amusement redemption
machines are authorized in the political subdivision, the governing
body shall furnish the comptroller with a map prepared by the
governing body indicating the boundaries of the political
subdivision in which amusement redemption machines are authorized.
(f) In determining whether amusement redemption machines
under this subchapter are authorized in an area, the rules provided
by this section apply. Amusement redemption machines are
authorized in an area only as the result of a successful election
held under this subchapter.
(g) To the extent that the results of local option elections
held by different types of political subdivisions conflict with
regard to the same territory, the relative dates of the elections
are of no consequence and the following rules apply:
(1) the status of an area as determined by a municipal
election prevails over a contrary status as determined by a justice
precinct or county election; and
(2) the status of an area as determined by a justice
precinct election prevails over the contrary status of the area as
determined by a county election.
(h) If two or more local option elections held at the
justice precinct level apply to the same territory, the most recent
election prevails.
(i) If a municipality has established a status by a
municipal election, territory annexed to the municipality after
that status is established assumes the status under this subchapter
of the rest of the municipality. Territory detached from the
municipality assumes the status the territory would have had if it
had never been a part of the municipality. If the detached
territory is added to another municipality that has established a
status by a municipal election, the territory assumes the status of
the municipality to which it is added.
(j) The addition of territory to or detachment of territory
from a justice precinct does not affect the status under this
subchapter of the added or detached territory.
SECTION 2. Section 47.01(4), Penal Code, is amended to read
as follows:
(4) "Gambling device" means any electronic,
electromechanical, or mechanical contrivance not excluded under
Paragraph (B) that for a consideration affords the player an
opportunity to obtain anything of value, the award of which is
determined solely or partially by chance, even though accompanied
by some skill, whether or not the prize is automatically paid by the
contrivance. The term:
(A) includes, but is not limited to, gambling
device versions of bingo, keno, blackjack, lottery, roulette, video
poker, or similar electronic, electromechanical, or mechanical
games, or facsimiles thereof, that operate by chance or partially
so, that as a result of the play or operation of the game award
credits or free games, and that record the number of free games or
credits so awarded and the cancellation or removal of the free games
or credits; and
(B) does not include any electronic,
electromechanical, or mechanical contrivance designed, made, and
adapted solely for bona fide amusement purposes if:
(i) the contrivance:
(a) rewards the player with noncash
merchandise prizes, toys, or novelties solely and directly from the
machine, including claw, crane, or similar machines; or
(b) offers the player the opportunity
to receive noncash merchandise prizes, toys, or novelties, or a
representation of value redeemable for those items, depending on
the user's ability to throw, roll, flip, toss, hit, or drop a ball
or other physical object into the machine or a part of the machine,
including basketball, skeeball, golf, bowling, pusher, or similar
machines; and
(ii) the [exclusively with] noncash
merchandise prizes, toys, or novelties, or a representation of
value redeemable for those items, that may be awarded have a
wholesale value available from a single play of the game or device
of not more than 10 times the amount charged to play the game or
device once or $5, whichever is less.
SECTION 3. Section 47.02(c), Penal Code, is amended to read
as follows:
(c) It is a defense to prosecution under this section that
the actor reasonably believed that the conduct:
(1) was permitted under Chapter 2001, Occupations
Code;
(2) was permitted under Chapter 2002, Occupations
Code;
(3) consisted entirely of participation in the state
lottery authorized by the State Lottery Act (Chapter 466,
Government Code);
(4) was permitted under the Texas Racing Act (Article
179e, Vernon's Texas Civil Statutes); [or]
(5) consisted entirely of participation in a drawing
for the opportunity to participate in a hunting, fishing, or other
recreational event conducted by the Parks and Wildlife Department;
or
(6) was authorized under Subchapter K, Chapter 2153,
Occupations Code, or a license issued under that subchapter.
SECTION 4. Section 47.06(f), Penal Code, is amended to read
as follows:
(f) It is a defense to prosecution under Subsection (a) or
(c) that the person owned, manufactured, transferred, or possessed
the gambling device, equipment, or paraphernalia for the sole
purpose of shipping it:
(1) within this state to a location at which amusement
redemption machines may be exhibited under a license issued under
Subchapter K, Chapter 2153, Occupations Code, if the item is an
amusement redemption machine as defined by that subchapter or a
component part of or supply for use in an amusement redemption
machine as defined by that subchapter; or
(2) to another jurisdiction where the possession or
use of the device, equipment, or paraphernalia was legal.
SECTION 5. Section 47.09, Penal Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) It is a defense to prosecution under this chapter that
the conduct:
(1) was authorized under:
(A) Chapter 2001, Occupations Code;
(B) Chapter 2002, Occupations Code; [or]
(C) the Texas Racing Act (Article 179e, Vernon's
Texas Civil Statutes); or
(D) Subchapter K, Chapter 2153, Occupations
Code, or a license issued under that subchapter;
(2) consisted entirely of participation in the state
lottery authorized by Chapter 466, Government Code; or
(3) was a necessary incident to the operation of the
state lottery and was directly or indirectly authorized by:
(A) Chapter 466, Government Code;
(B) the lottery division of the Texas Lottery
Commission;
(C) the Texas Lottery Commission; or
(D) the director of the lottery division of the
Texas Lottery Commission.
(c) The defense provided by Subsection (a)(1)(D) does not
apply to conduct committed in accordance with a license issued
under Subchapter K, Chapter 2153, Occupations Code, if the actor
obtained the license by false pretense, false statement, or
material omission made in the license application or other manner.
SECTION 6. This Act does not attempt to supersede federal
law or the Texas Constitution. If this Act is declared
unconstitutional by a final judgment of a court with appropriate
jurisdiction, this Act has no effect.
SECTION 7. (a) Except as provided by Subsection (b) of
this section, this Act takes effect immediately if it receives a
vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.
(b) Section 2 of this Act takes effect September 1, 2005,
and applies only to an offense committed on or after that date. An
offense committed before that date is covered by the law in effect
when the offense was committed, and the former law is continued in
effect for that purpose. For purposes of this subsection, an
offense was committed before September 1, 2005, if any element of
the offense was committed before that date.