78R2386 EMT-F
By: Ellis S.B. No. 507
A BILL TO BE ENTITLED
AN ACT
relating to the authorization and regulation of casino gambling and
to the creation, powers, and duties of the Texas Gaming Commission;
authorizing taxes; providing civil and criminal penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 13, Occupations Code, is
amended by adding Chapter 2004 to read as follows:
CHAPTER 2004. CASINO GAMBLING
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2004.001. SHORT TITLE. This chapter may be cited as
the Texas Economic Development and Gaming Control Act.
Sec. 2004.002. PUBLIC POLICY. (a) All casino gaming that
is conducted in this state and that is authorized by law shall be
regulated and licensed under this chapter, unless the legislature
or federal law specifically provides otherwise.
(b) The legislature hereby finds, and declares it to be the
public policy of this state, that:
(1) the development of regulated limited casino gaming
in the state will benefit the general welfare of the people of this
state by enhancing investment, development, and tourism in this
state, resulting in new jobs and additional revenues to the state;
(2) the conduct of regulated casino gaming in a
limited number of casinos will not harm the people of this state;
(3) the regulation of gaming in this state is
important in order that gaming be conducted honestly and
competitively and that gaming be free from criminal and corruptive
elements;
(4) public confidence and trust can be maintained only
by strict regulation of all persons, locations, practices,
associations, and activities related to the conduct of gaming and
the casino service industry;
(5) persons owning any direct or indirect material
interest in a casino should be licensed and controlled to protect
the public health, safety, morals, good order, and general welfare
of the people of this state;
(6) certain operators and employees of casinos should
be regulated, licensed, and controlled to accomplish and promote
these public policies while protecting the public health, safety,
morals, good order, and general welfare of the people of this state;
(7) certain persons engaging in the casino service
industry should be regulated, licensed, and controlled to
accomplish and promote these public policies while protecting the
public health, safety, morals, good order, and general welfare of
the people of this state; and
(8) it is the intent of this chapter, where possible,
to use the resources, goods, labor, and services of the people of
this state in the operation and construction of casinos and
casino-related amenities to the extent allowable by law.
Sec. 2004.003. DEFINITIONS. In this chapter:
(1) "Affiliate" means a person who, directly or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with another person. A
person is considered to control a company if the person
beneficially owns more than a five percent equity interest in the
company under the beneficial ownership rules adopted by the
commission.
(2) "Applicant" means a person who has applied for an
owner's license, an operator's license, an occupational license, a
manufacturer's license, a casino service license, or a
qualification to hold an equity interest or creditor interest in an
owner licensee or who has applied for the approval of any act or
transaction for which approval is required or permitted under this
chapter.
(3) "Associated equipment" means any equipment or
mechanical, electromechanical, or electronic contrivance,
component, or machine used in connection with gaming or with any
game that would not otherwise be classified as a gaming device,
including dice, playing cards, links connecting progressive slot
machines, equipment affecting the proper reporting of gross gaming
revenue, computerized systems or software for monitoring slot
machines, and devices for weighing or counting money.
(4) "Casino" means a facility at which gambling games
are conducted for profit that are not authorized by a law other than
this chapter.
(5) "Casino operator" means a person, other than the
owner licensee, who contractually agrees to provide operational and
managerial services for the operation of a casino on behalf of the
owner licensee in return for receiving a payment based in whole or
part on profits or receipts from the casino.
(6) "Casino service" means the provision of goods or
services, including security service and gaming schools, to a
person holding an owner's or operator's license under this chapter,
other than a service requiring a manufacturer's license.
(7) "Casino service license" means a license issued
under Section 2004.252.
(8) "Casino service licensee" means the holder of a
casino service license.
(9) "Commission" means the Texas Gaming Commission.
(10) "Commission member" means a member of the
commission.
(11) "Company" means a corporation, partnership,
limited partnership, trust, association, joint stock company,
joint venture, limited liability company, or other form of business
organization, but does not include a sole proprietorship or natural
person.
(12) "Creditor interest" means a right or claim of any
character against a person for the payment of money borrowed,
whether secured or unsecured, matured or unmatured, liquidated or
absolute, fixed or contingent, and includes an obligation based on
the person's profits or receipts.
(13) "Director" means a member of the board of
directors of a corporation and a person performing similar
functions with respect to a company other than a corporation.
(14) "Equity interest" means a proprietary interest,
right, or claim allowing the holder either to vote with respect to
matters of organizational governance or to participate in the
profits and residual assets of a company, including common and
preferred stock in a corporation, a general or limited partnership
interest in a partnership, a similar interest in any other form of
business organization, and a warrant, right, or similar interest
convertible into, or to subscribe for, a proprietary right or
claim, with or without the payment of additional consideration.
(15) "Executive director" means the executive
director of the commission.
(16) "Family" means, with respect to a natural person,
any other natural person related to the person within the second
degree by affinity or the third degree by consanguinity, as
determined under Subchapter B, Chapter 573, Government Code.
(17) "Game" or "gambling game":
(A) means any game or similar activity that
involves making of a bet, as defined by Section 47.01, Penal Code,
for consideration, and includes:
(i) a banking or percentage game played
with cards, dice, or a mechanical, electromechanical, or electronic
device or machine for money, property, checks, credit, or a
representative of value, including roulette, keno, twenty-one,
blackjack, craps, poker, chuck-a-luck (dai shu), wheel of fortune,
chemin de fer, baccarat, pai gow, slot machine, any other
electronic game of chance, and any other game or device approved by
the commission;
(ii) simulcast wagering on pari-mutuel
greyhound or horse racing;
(iii) the maintenance of a race book; and
(iv) any other method of effecting a wager
approved by the commission; and
(B) does not include:
(i) bingo, as authorized by Chapter 2001;
(ii) charitable raffles, as authorized by
Chapter 2002; or
(iii) the state lottery conducted under
Chapter 466, Government Code.
(18) "Gaming" or "gambling" means to deal, operate,
carry on, conduct, maintain, or expose for play a game in a casino.
(19) "Gaming device" means a mechanical,
electromechanical, or electronic contrivance, component, or
machine used in connection with gaming or a game that affects the
result of a wager by determining win or loss. The term includes a
system for processing information that can alter the normal
criteria of random selection, affect the operation of a game, or
determine the outcome of a game.
(20) "Gaming employee":
(A) means an individual directly involved in the
operation or conduct of gaming in a casino performing a service in a
capacity that the commission finds appropriate for occupational
licensing under Section 2004.202 and includes:
(i) a boxman, a cashier, change personnel,
counting room personnel, a dealer, a floor person, a host empowered
to extend credit or complimentary services, a keno runner, a keno
writer, a machine mechanic, or security personnel;
(ii) a shift or pit boss or a supervisor or
manager involved in gaming activities;
(iii) accounting or internal auditing
personnel directly involved in recordkeeping or the examination of
records generated from gaming activities; and
(iv) a junketeer or other independent agent
whose compensation is based on how much a patron wagers or loses or
who is paid per patron more than the price of admission; and
(B) does not include bartenders, cocktail
waitresses, or other individuals engaged exclusively in preparing
or serving food or beverages or individuals providing nominal,
complimentary, or maintenance services.
(21) "Gross gaming revenue":
(A) means the total of the following, less the
total of all cash paid out as losses to patrons and those amounts
paid to purchase annuities to fund losses paid to patrons by
independent financial institutions and items made deductible as
losses under Section 2004.452:
(i) cash received by an owner licensee as
winnings;
(ii) cash received by an owner licensee in
payment for credit extended by the owner licensee to a patron for
the purposes of gaming; and
(iii) compensation received by an owner
licensee for conducting any game in which the owner licensee is not
a party to a wager; and
(B) does not include:
(i) counterfeit money or tokens;
(ii) coins of other countries that are
received in slot machines or gaming devices;
(iii) cash taken in fraudulent acts
perpetrated against an owner licensee for which the licensee is not
reimbursed; or
(iv) cash received as entry fees for
contests or tournaments in which the patrons compete for prizes.
(22) "Hearing examiner" means a person authorized by
the commission to conduct hearings.
(23) "Institutional investor" means a person, other
than a state or federal pension plan, that meets the requirements of
a "qualified institutional buyer" as defined in Section 144A,
Securities Act of 1933 (17 C.F.R. Section 230.144A), as amended,
and is:
(A) a bank as defined in Section 3(a)(6),
Securities Exchange Act of 1934 (15 U.S.C. Section 78c), as
amended;
(B) an insurance company as defined in Section
2(a)(17), Investment Company Act of 1940 (15 U.S.C. Section 80a-2),
as amended;
(C) an investment company registered under
Section 8, Investment Company Act of 1940 (15 U.S.C. Section
80a-8), as amended;
(D) an investment adviser registered under
Section 203, Investment Advisers Act of 1940 (15 U.S.C. Section
80b-3), as amended;
(E) a collective trust fund as defined by Section
3(c)(11), Investment Company Act of 1940 (15 U.S.C. Section 80a-3),
as amended;
(F) an employee benefit plan or pension fund that
is subject to the Employee Retirement Income Security Act of 1974
(29 U.S.C. Section 1001 et seq.), as amended, excluding an employee
benefit plan or pension fund sponsored by a publicly traded
corporation registered with the commission;
(G) a state or federal government pension plan;
(H) a group composed entirely of persons
specified in Paragraphs (A)-(F); or
(I) such other persons as the commission may
determine for reasons consistent with the policies expressed in
Section 2004.002.
(24) "Key executive" means a corporation's directors
and executive officers, a partnership's general partners, a trust's
trustee, a joint venture's managing venturers, and each person
possessing similar responsibilities and authorities in any other
form of business organization.
(25) "License" means an owner's license, an operator's
license, an occupational license, a casino service license, a
manufacturer's license, or a qualification to hold an equity
interest or creditor interest in an owner's licensee.
(26) "Licensee" means a person issued a license under
this chapter.
(27) "Manufacturer licensee" means the holder of a
manufacturer's license.
(28) "Manufacturer's license" means a license issued
under Section 2004.251.
(29) "Negotiable instrument" means a writing that
evidences a transaction between a natural person and an owner
licensee at the time of the transaction whose gaming chips, tokens,
or currency are exchanged for the instrument and includes a writing
taken in consolidation, redemption, or payment of a prior
instrument.
(30) "Occupational license" means a license issued
under Section 2004.202.
(31) "Occupational licensee" means the holder of an
occupational license.
(32) "Operator's license" means a license issued under
Section 2004.201.
(33) "Operator licensee" means the holder of an
operator's license.
(34) "Owner's license" means a license issued under
Section 2004.152 or 2004.153.
(35) "Owner licensee" means a person holding an
owner's license.
(36) "Principal manager" means a person who, under the
rules of the commission, holds or exercises managerial,
supervisory, or policy-making authority over the management or
operation of a gaming activity or casino service that in the
judgment of the commission warrants the occupational licensing as a
principal manager for the protection of the public interest.
"Principal manager" includes a key executive of a licensee that is a
company and each person controlling such a company.
(37) "Project commitment" means, with respect to an
application for an owner's license for a proposed casino, the total
cost of constructing and furnishing the casino and any related
hotel and entertainment, retail, and parking facilities, including
the cost of acquiring and preparing the underlying real estate, the
cost of obtaining requisite permits and approvals, the cost of
acquiring and installing slot machines, gaming devices, and
associated equipment, and fees for professional services and
financing.
(38) "Publicly traded company":
(A) means a company that:
(i) has one or more classes of securities
registered under Section 12, Securities Exchange Act of 1934 (15
U.S.C. Section 78l), as amended; or
(ii) is an issuer subject to Section 15(d),
Securities Exchange Act of 1934 (15 U.S.C. Section 78o), as
amended; and
(B) does not include a company or other legal
entity that has securities registered or is considered to be an
issuer solely because it guaranteed a security issued by an
affiliate under a public offering or is considered to be a co-issuer
of a public offering of securities under 17 C.F.R. Section 230.140.
(39) "Race book" means wagers accepted on the outcome
of an event held at a greyhound or horse racetrack that uses the
pari-mutuel system of wagering.
(40) "Slot machine" means a mechanical, electrical, or
other device or machine that, on insertion of a coin, token, or
similar object or on payment of consideration, is available to play
or operate, the play or operation of which, in whole or part by the
element of chance, may deliver or entitle the person playing or
operating the machine to receive cash, premiums, merchandise,
tokens, or any other thing of value, whether the payoff is made
automatically from the machine or is made in another manner.
Sec. 2004.004. EXEMPTION FROM FEDERAL STATUTES. (a) Under
Section 2, 64 Stat. 1134 (15 U.S.C. Section 1172), as amended, this
state declares that this state is exempt from that section.
(b) All shipments of gaming devices, including slot
machines, into this state, the registering, recording, and labeling
of which has been performed by the supplier under Sections 3 and 4
of the act of the Congress of the United States entitled "An act to
prohibit transportation of gambling devices in interstate and
foreign commerce," approved January 2, 1951, Chapter 1194, 64 Stat.
1134, designated as 15 U.S.C. Sections 1171-1178, are legal
shipments of the devices into this state.
Sec. 2004.005. APPLICATION OF SUNSET ACT. The Texas Gaming
Commission is subject to Chapter 325, Government Code (Texas Sunset
Act). Unless continued in existence as provided by that chapter,
the commission is abolished and this chapter expires September 1,
2015.
[Sections 2004.006-2004.050 reserved for expansion]
SUBCHAPTER B. TEXAS GAMING COMMISSION
Sec. 2004.051. TEXAS GAMING COMMISSION. (a) The Texas
Gaming Commission is composed of seven members. Six members shall
be appointed by the governor. The chairman of the Public Safety
Commission is an ex officio voting member of the commission.
(b) In making appointments to the commission, the governor
shall attempt to achieve representation of all the population
groups of this state.
Sec. 2004.052. QUALIFICATIONS OF COMMISSION MEMBERS. (a)
To be eligible for appointment to the commission, an individual:
(1) must be a citizen of the United States;
(2) must have resided in this state for the two years
preceding the date of the person's appointment;
(3) must submit a financial statement that contains
the information required by Chapter 572, Government Code;
(4) may not own a financial or other interest in a
person engaged in the conduct of gaming or the provision of casino
services, or in a security issued by that person, or be related
within the second degree by affinity or the third degree by
consanguinity, as determined under Chapter 573, Government Code, to
an individual who owns a financial or other interest or security;
(5) may not be an applicant for or holder of a license
under this chapter or hold an equity interest or creditor interest
in an owner licensee requiring qualification under Section
2004.163; and
(6) may not be a member of the governing body of a
political subdivision of this state.
(b) A person holding an elective office or an officer or
official of a political party is not eligible for appointment to the
commission.
Sec. 2004.053. TERM. Appointed members of the commission
hold office for staggered terms of six years. The terms of two
members expire February 1 of each odd-numbered year.
Sec. 2004.054. PRESIDING OFFICER. The governor shall
designate one member to serve as presiding officer of the
commission for a term of two years.
Sec. 2004.055. BOND. (a) Before assuming the duties of
office, an appointed member of the commission must execute a bond in
the amount of $25,000 payable to the state and conditioned on the
member's faithful performance of the member's duties of office.
(b) The bond must be approved by the governor.
(c) The cost of the bond shall be paid by the commission.
Sec. 2004.056. PROHIBITION OF CERTAIN ACTIVITIES. (a) An
appointed member of the commission may not:
(1) use the member's official authority to affect the
result of an election or nomination for public office; or
(2) directly or indirectly coerce, attempt to coerce,
command, or advise a person to pay, lend, or contribute anything of
value to another person for political purposes.
(b) A commission member or the spouse of a commission member
may not solicit or accept employment from a licensee or an applicant
for a license before the second anniversary of the date the
commission member's service ends.
Sec. 2004.057. REMOVAL. (a) It is a ground for removal
from the commission if an appointed member:
(1) does not have at the time of appointment the
qualifications required for appointment to the commission;
(2) does not maintain during service on the commission
the qualifications required for the appointment to the commission;
(3) violates a prohibition established by Section
2004.056;
(4) cannot discharge the member's duties for a
substantial part of the term for which the member is appointed
because of illness or disability; or
(5) is absent from more than one-half of the regularly
scheduled commission meetings that the member is eligible to attend
during a calendar year, unless the absence is excused by majority
vote of the commission.
(b) The validity of an action of the commission is not
affected by the fact that it is taken when a ground for removal of a
commission member exists.
(c) If the presiding officer has knowledge that a potential
ground for removal exists, the presiding officer shall notify the
governor and the attorney general.
Sec. 2004.0571. APPLICATION OF FINANCIAL DISCLOSURE LAW.
For purposes of Chapter 572, Government Code, a member of the
commission, the executive director, and the division directors are
appointed officers of a major state agency.
Sec. 2004.058. PER DIEM; EXPENSES. Each appointed member
of the commission is entitled to a per diem in an amount prescribed
by appropriation for each day spent in performing the duties of the
member and is entitled to reimbursement for actual and necessary
expenses incurred in performing those duties. Reimbursement for
expenses under this section is subject to any applicable limitation
in the General Appropriations Act. The ex officio member is
entitled to reimbursement for expenses from that member's agency as
provided by law for expenses incurred in the performance of that
member's other official duties.
Sec. 2004.059. EXECUTIVE DIRECTOR. (a) The commission
shall appoint an executive director, who serves at the pleasure of
the commission.
(b) A person holding an elective office or an officer or
official of a political party is not eligible for appointment as
executive director.
(c) The executive director must have five or more years of
responsible administrative experience in public or business
administration or possess broad management skills.
(d) The executive director may not pursue any other business
or occupation or hold any other office for profit.
(e) The executive director must meet all eligibility
requirements relating to members of the commission, except the
requirement for prior residency in this state.
(f) The executive director is entitled to an annual salary
and other compensation specified by the commission.
(g) The executive director may not, before the second
anniversary of the date the director's service to the commission
ends, acquire a direct or indirect interest in or be employed by a
person licensed in the conduct of gaming or the provision of casino
services in this state.
Sec. 2004.060. OFFICES. The commission shall maintain its
primary office in Travis County and may maintain other offices
determined to be necessary by the commission.
Sec. 2004.061. MEETINGS. (a) The commission shall meet not
less than six times in each calendar year.
(b) The commission shall meet at the call of the presiding
officer or as provided by commission rule.
Sec. 2004.062. AUTHORITY TO SUE OR BE SUED. (a) The
commission may sue and be sued.
(b) Service of process in a suit against the commission may
be secured by serving the executive director.
(c) A suit against the commission must be brought in Travis
County.
Sec. 2004.063. AUDIT. The transactions of the commission
are subject to audit by the state auditor under Chapter 321,
Government Code.
[Sections 2004.064-2004.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF COMMISSION
Sec. 2004.101. GENERAL POWERS. (a) All aspects of this
chapter, including those relating to licensing, qualification,
execution, and enforcement, shall be administered by the executive
director and the commission for the protection of the public and in
the public interest.
(b) The commission and the executive director have full
power and authority to hold hearings, and in connection to the
hearings, to issue subpoenas, to compel the attendance of witnesses
at any place in this state, to administer oaths, and to require
testimony under oath. Any process or notice relating to a hearing
may be served in the manner provided for service of process and
notices in civil actions. The commission and the executive
director may pay transportation and other expenses of witnesses as
they consider reasonable.
(c) The executive director and the executive director's
authorized employees may:
(1) inspect and examine a premises where gaming is
conducted or equipment or supplies, including a slot machine or
other gaming device, or associated equipment is manufactured,
assembled, produced, programmed, sold, leased, marketed,
distributed, repaired, or modified for use in gaming;
(2) for good cause, seize and remove from a premises
and impound equipment or supplies for the purpose of examination
and inspection; and
(3) demand access to, inspect, examine, photocopy, or
audit papers, books, and records of applicants and licensees, on
their premises or elsewhere as practicable, in the presence of the
licensee or the licensee's agent, reporting the gross income
produced by a gaming business, verification of the gross income,
and other matters affecting the enforcement of this chapter.
(d) For the purpose of conducting audits after the cessation
of gaming by a licensee, a former licensee shall furnish, on demand
of the executive director or the executive director's authorized
employees, books, papers, and records as necessary to conduct the
audits. The former licensee shall maintain all books, papers, and
records necessary for audits for three years after the date of the
surrender or revocation of the license. If the former licensee
seeks judicial review of a deficiency determination or files a
petition for a redetermination, the former licensee must maintain
all books, papers, and records until a final order is entered on the
determination.
Sec. 2004.102. RULEMAKING AUTHORITY. (a) The commission
shall adopt rules as the commission considers necessary or
desirable in the public interest in carrying out the policy and
provisions of this chapter.
(b) The rules shall set out:
(1) the method and form of application that an
applicant for a license must follow and complete before
consideration of an application by the commission;
(2) the information to be furnished by an applicant or
licensee concerning antecedents, habits, character, associates,
criminal record, business activities, and financial affairs;
(3) the criteria to be used in the award, revocation,
and suspension of licenses;
(4) the information to be furnished by a licensee
relating to the licensee's employees;
(5) the manner and procedure of hearings conducted by
the commission or a hearing examiner of the commission;
(6) the payment of fees or costs an applicant or
licensee must pay;
(7) the procedures for the issuance of temporary
licenses and temporary qualification to hold equity interests and
creditor interests in owner licensees;
(8) the manner and method of collection and payment of
fees and the issuance of licenses;
(9) the definition of "unsuitable method of
operation";
(10) the conditions under which the nonpayment of a
gambling debt by a licensee shall be deemed grounds for
disciplinary action;
(11) the manner of approval of new games, slot
machines, and gaming devices;
(12) access to confidential information obtained
under this chapter and means to ensure that the confidentiality of
the information is maintained and protected;
(13) financial reporting and internal control
requirements for licensees;
(14) the manner in which winnings, compensation from
games and gaming devices, and gross gaming revenue must be computed
and reported by an owner licensee;
(15) requirements for the annual audit of the
financial statements of a licensee;
(16) requirements for periodic financial reports from
each licensee consistent with standards and intervals prescribed by
the commission;
(17) the procedures to be followed by a licensee for
excluding a person from a casino; and
(18) the procedures for exempting or waiving
institutional investors from the licensing requirements for
shareholders of publicly traded corporations.
Sec. 2004.103. AUTHORITY OF EXECUTIVE DIRECTOR. (a) With
commission approval, the executive director may create executive
positions as the director considers necessary to implement the
provisions of this chapter.
(b) The executive director shall employ division directors
in the areas of audit, investigation, and enforcement. The
director of the audit division must be a certified public
accountant, have five or more years of progressively responsible
experience in general accounting, and have a comprehensive
knowledge of the principles and practices of corporate finance or
must possess qualifications of an expert in the field of corporate
finance and auditing, general finance, gaming, and economics.
Other directors must possess five or more years of training and
experience in the fields of investigation, law enforcement, law, or
gaming.
(c) The executive director may investigate, for the purpose
of prosecution, a suspected criminal violation of this chapter.
For the purpose of the administration and enforcement of this
chapter, the executive director and employees designated by the
executive director may be commissioned as peace officers.
(d) The executive director, to further the objectives and
purposes of this chapter, may:
(1) direct and supervise all administrative actions of
the commission;
(2) bring legal action in the name and on behalf of the
commission;
(3) make, execute, and effect an agreement or contract
authorized by the commission;
(4) employ the services of persons considered
necessary for consultation or investigation and set the salaries of
or contract for the services of legal, professional, technical, and
operational personnel and consultants, except that outside legal
assistance may be retained only with the approval of the attorney
general;
(5) acquire furnishings, equipment, supplies,
stationery, books, and all other things the executive director
considers necessary or desirable in carrying out the executive
director's functions; and
(6) perform such other duties the executive director
may consider necessary to effect the purposes of this chapter.
(e) Except as otherwise provided in this chapter, the costs
of administration incurred by the executive director shall be paid
in the same manner as other claims against the state are paid.
Sec. 2004.104. OFFICE OF HEARING EXAMINERS. (a) The
commission shall create an office of hearing examiners to assist
the commission in carrying out its powers and duties.
(b) The office of hearing examiners shall hold hearings
under the authority of the commission on matters relating to the
commission's administration of this chapter as the commission
orders and shall report after hearing in the manner prescribed by
the commission. The commission shall refer any contested case
arising under this chapter to the office of hearing examiners.
(c) The office of hearing examiners is independent of the
executive director and is under the exclusive control of the
commission.
(d) The office of hearing examiners shall be under the
direction of a chief hearing examiner appointed by the commission.
(e) The commission may authorize the chief hearing examiner
to delegate to one or more hearing examiners the authority to hold
any hearing called by the chief hearing examiner.
(f) The chief hearing examiner and all assistant hearing
examiners employed by the office of hearing examiners must be
attorneys licensed to practice law in this state.
(g) The chief hearing examiner and all assistant hearing
examiners may administer oaths, receive evidence, and issue
subpoenas to compel the attendance of witnesses and the production
of papers and documents in all matters delegated by the commission.
(h) The chief hearing examiner and all assistant hearing
examiners are entitled to an annual salary and other compensation
specified by the commission.
(i) The office of hearing examiners may contract for
additional services it considers necessary to carry out its powers.
Sec. 2004.105. JUDICIAL REVIEW IN CONTESTED CASES. A final
ruling of the commission in a contested case is subject to judicial
review under Chapter 2001, Government Code. Judicial review is
under the substantial evidence rule.
Sec. 2004.106. RECORDS. (a) The executive director shall
maintain a file of all applications for licenses under this
chapter, together with a record of all action taken with respect to
the applications.
(b) The commission and the executive director may maintain
other records they consider desirable.
(c) The information made confidential by this subsection
may be revealed, wholly or partly, only in the course of the
necessary administration of this chapter, under Section 2004.552,
or on the order of a court of competent jurisdiction, except that
the executive director or the commission may disclose the
information to an authorized agent of any agency of the United
States, another state, or a political subdivision of this state
authorized under commission rules. Notice of the content of any
information furnished or released under this subsection may be
given to any affected applicant or licensee as prescribed by
commission rule. The following information is confidential:
(1) information requested by the commission or the
executive director to be furnished to either of them under this
chapter or that may otherwise be obtained relating to the finances,
earnings, or revenue of an applicant or licensee;
(2) information pertaining to an applicant's criminal
record, antecedents, and background that has been furnished to or
obtained by the commission or the executive director from any
source;
(3) information provided to the commission or the
executive director or a commission employee by a governmental
agency or an informer or on the assurance that the information will
be held in confidence and treated as confidential; and
(4) information obtained by the executive director or
the commission from a casino service licensee relating to the
manufacturing, modification, or repair of slot machines or other
gaming devices.
Sec. 2004.107. REPRESENTATION BY ATTORNEY GENERAL. (a)
The attorney general shall represent the commission and the
executive director in any proceeding to which the commission or the
executive director is a party under this chapter or in any suit
filed against the commission or executive director.
(b) The office of the attorney general on request shall
advise the commission and the executive director in all other
matters, including representing the commission when the commission
acts in its official capacity.
[Sections 2004.108-2004.150 reserved for expansion]
SUBCHAPTER D. OWNER'S LICENSE
Sec. 2004.151. OWNER'S LICENSE. (a) Gaming may lawfully be
conducted in a casino operating under an owner's license.
(b) It is unlawful for a person to own an equity interest in
a casino that conducts gaming in this state for which an owner's
license is not in effect.
(c) A separate owner's license must be obtained for each
casino conducting gaming.
Sec. 2004.152. ALLOCATION OF OWNER'S LICENSES. (a) The
commission shall award owner's licenses to applicants in counties
within the following population classifications:
(1) four owner's licenses may be awarded to a county
with a population of more than 2.5 million;
(2) not fewer than three owner's licenses may be
awarded to a county with a population of not less than 1.8 million
but not more than 2.5 million;
(3) not fewer than two but not more than three owner's
licenses may be awarded to a county with a population of not less
than 1 million but less than 1.8 million;
(4) not less than one owner's license may be awarded to
all counties with a population of not less than 380,000 but less
than 1 million;
(5) not fewer than six owner's licenses may be awarded
to all counties with a population of not less than 180,000 but less
than 380,000;
(6) not fewer than two owner's licenses may be awarded
to all counties that are contiguous to an international boundary
and have a population of 35,000 or more; and
(7) other owner's licenses may be awarded in the
discretion of the commission.
(b) Notwithstanding Subsection (a):
(1) no more than 24 owner's licenses may be issued by
the commission under this section;
(2) a license may not be issued in a county unless the
voters of the county or of a municipality located within the county
have adopted a proposition legalizing casino gaming at a local
option election held under this chapter;
(3) not more than four owner's licenses may be issued
in one county;
(4) a license may not be issued in a county or
municipality in which gaming is being conducted under the Indian
Gaming Regulatory Act (25 U.S.C. Section 2701 et seq.) as of the
effective date of this chapter; and
(5) not fewer than three of the owner's licenses
allocated under Subsections (a)(5) and (6) may be awarded in
counties that contain an island in the Gulf of Mexico on which there
is an incorporated city with a population of at least 50,000, and in
allocating all licenses under this subsection, the commission shall
consider, in addition to the other suitability criteria described
in this chapter, the ability of the proposed casino facility to
attract interstate or international tourism and to develop jobs
within political subdivisions in which there has been a history of
unemployment in excess of six percent for a period of three
consecutive years out of the preceding five years as determined by
the commission.
(c) For purposes of determining the location of a casino, a
casino is considered to be located in the municipality in which the
main public entrance to the casino is located or, if the main public
entrance is located outside a municipality, in the county in which
the entrance is located.
(d) A person may not beneficially own, directly or
indirectly, an equity interest of more than five percent of the
total equity interest in more than three owner licensees.
(e) A person may not operate, either under an owner's
license or under an operator's license, more than three casinos.
(f) If gaming is not approved in a county, or in a
municipality within a county, to which an owner's license has been
allocated through a local option election in accordance with
Section 2004.651 within three years after the effective date of
this chapter, or if within that period no applicant for an owner's
license in a county that a license has been allocated to has been
awarded an owner's license by the commission, the commission may
award the licenses allocated to the county in Subsection (a) to any
other county at the commission's discretion.
Sec. 2004.153. ADDITIONAL OWNER'S LICENSES FOR CERTAIN
PARI-MUTUEL FACILITIES. (a) In addition to the owner's licenses
provided under Section 2004.152, the commission shall issue an
owner's license to be held in conjunction with each license to
operate a greyhound or Class I horse racetrack under the Texas
Racing Act (Article 179e, Vernon's Texas Civil Statutes) held on
the effective date of this chapter.
(b) The issuance of an owner's license under this section is
subject to the applicant's satisfaction of all application,
applicant eligibility, suitability, and other criteria applicable
to applicants under Section 2004.152, except those relating to
requisite economic impact under Section 2004.157. Except as
otherwise provided in Subsection (a), all provisions of this
chapter apply equally to licensees under this section and Section
2004.152.
(c) Notwithstanding anything to the contrary in the Texas
Racing Act (Article 179e, Vernon's Texas Civil Statutes), all
matters relating to owner's licenses issued under this section,
including licensing, manner of operation, and enforcement, are
regulated exclusively by the commission.
(d) Fees and taxes imposed with respect to owner's licenses
under this section shall be collected and paid as required by this
chapter.
(e) Except as to simulcast common pool wagering conducted in
a casino and except as otherwise authorized by the commission, the
casino operations and financial records of an owner licensee under
this section shall be kept separate from the racing operations and
records of the licensee.
(f) The commission shall adopt rules requiring the
continued common ownership of a casino licensed under this section
and the racetrack associated with the casino.
Sec. 2004.154. APPLICATION. (a) Application for an
owner's license shall be made according to the rules of the
commission and shall contain information the commission finds
necessary to determine the suitability and eligibility of the
applicant, the eligibility of the proposed location, and the
economic impact of the overall casino project.
(b) In addition to any other information the commission may
require, an application must include the following information
concerning the feasibility of the overall casino project:
(1) proof that gaming has been approved through a
local option election by the municipality where the applicant's
proposed casino is to be located or by the county where the casino
is to be located if the casino is proposed in an unincorporated
area;
(2) evidence that the applicant possesses, or has the
right to acquire, sufficient real property on which the proposed
casino will be located in order to allow the applicant's
construction and operation of the casino project substantially as
proposed;
(3) evidence that the applicant possesses, or
reasonably expects to obtain, all state, county, and municipal
permits and approvals necessary for the construction and operation
of the proposed casino within the time periods prescribed in this
chapter;
(4) evidence that the applicant possesses, or
reasonably expects to obtain, all funds or financing necessary to
construct and operate the applicant's proposed casino within the
time periods prescribed in this chapter; and
(5) evidence that the applicant is prepared to begin
construction of its proposed casino promptly on receiving an
owner's license and to proceed with the construction of the casino
without unnecessary delay.
(c) An applicant may apply for more than one owner's license
relating to more than one casino, but must submit a separate
application for each casino for which an owner's license is sought.
(d) An application for an owner's license must be
accompanied by the nonrefundable application fee set out in Section
2004.351.
Sec. 2004.155. MANDATORY REQUIREMENTS. (a) During the
first two years an individual holds an owner's license, the
individual must be a resident of this state and comply with the
residency requirements established by the commission.
(b) A company is eligible to apply for and hold an owner's
license only if:
(1) the company is incorporated or organized and in
good standing in this state or organized under the laws of another
state of the United States and qualified to do business in this
state;
(2) the company complies with all the laws of this
state; and
(3) either of the following applies:
(A) persons who beneficially own at least
one-third of the equity interest of the company in accordance with
the beneficial ownership criteria established by the commission are
residents of this state under the residency requirements set out by
the commission; or
(B) the company has held an owner's license for
two years or more.
(c) To be eligible to receive an owner's license to own a
casino located in a municipality or located in an unincorporated
area of a county, an applicant must submit its application to the
commission not less than 60 days after the later of:
(1) the date the governing body of the municipality or
county gives written notice to the commission under Section
2004.656 that gaming as authorized under this chapter has been
legalized through a local option election; or
(2) the date the commission establishes procedures for
application.
(d) An application may not be considered filed for purposes
of this chapter that does not include the information prescribed by
Section 2004.154(b) or that is not accompanied by the prescribed
application fee.
(e) This section does not supersede the residency and
ownership requirements prescribed in the Texas Racing Act (Article
179e, Vernon's Texas Civil Statutes) with respect to ownership and
operation of pari-mutuel racetracks.
Sec. 2004.156. LICENSE AWARD CONSIDERATIONS. (a) The
commission shall determine the initial and continuing suitability
of each applicant for or holder of an owner's license based on
suitability criteria the commission adopts to ensure that all owner
licensees are of good character, honesty, integrity, and financial
stability, that an owner licensee has sufficient business probity,
competence, and experience in gaming, and that an owner licensee is
otherwise qualified to be licensed.
(b) The commission shall give due consideration to the
protection of the public health, safety, morals, and general
welfare of the people of this state and for the reputation of the
state's gaming industry.
(c) The burden of proving suitability to receive or hold an
owner's license is on the applicant or licensee.
(d) In considering the initial and continuing suitability
of an applicant for or holder of an owner's license, the commission
may consider the suitability of:
(1) each person holding an equity interest or creditor
interest in the applicant or holder;
(2) each person holding, or proposed to receive, an
operator's license, occupational license, or manufacturer's
license employed by or doing business with the applicant or holder;
and
(3) each affiliate of the applicant or holder.
(e) An applicant for or holder of an owner's license may not
receive or hold an owner's license if the person:
(1) has ever been convicted of a felony under the laws
of this state, any other state, or the United States;
(2) has ever been convicted of a gambling or gaming
violation under the laws of this state or any other state;
(3) has ever knowingly or intentionally submitted an
application for a license under this chapter that contained false
information;
(4) served as a principal manager for a person
described by Subdivision (1), (2), or (3);
(5) retains or employs another person described by
Subdivision (1), (2), or (3);
(6) beneficially owns any material equity interest or
creditor interest in the applicant or holder and is a person
described by Subdivision (1), (2), or (3);
(7) holds a manufacturer's license or casino service
license;
(8) is a member of the commission; or
(9) is a member of the judiciary or an elected official
of this state.
(f) The commission may adopt rules providing for a person's
reciprocal determination of suitability to hold an owner's license
based on:
(1) a determination of suitability to own and operate
a casino in any other jurisdiction the commission considers
reasonable in light of the purpose of this chapter; or
(2) the person's ownership of a greyhound or Class I
horse racing facility under the Texas Racing Act (Article 179e,
Vernon's Texas Civil Statutes).
Sec. 2004.157. ECONOMIC IMPACT ANALYSIS. (a) In
determining whether or, in the case of multiple applicants
competing for a limited number of owner's licenses within a county,
to whom to grant an owner's license, the commission shall consider
the following factors:
(1) the relative prospective revenues to be collected
by the state from the conduct of gaming at the casino and the
overall economic impact of each competing applicant's proposed
casino and associated facilities;
(2) the relative number of residents of this state who
would be employed in an applicant's proposed casino and any
proposed associated hotel and nongaming businesses and the relative
extent of the applicant's good faith plan to recruit, train, and
promote a workforce that reflects the diverse populations of this
state in all employment classifications;
(3) the relative extent to which an applicant's
proposed casino and any proposed associated hotel and nongaming
businesses could be reasonably expected to encourage interstate
tourism to this state;
(4) the relative extent to which the scope, design,
location, and construction of the applicant's casino and any
associated hotel and nongaming businesses could be reasonably
expected to contribute to developing a first-class gaming industry
in this state; and
(5) the applicant's experience in conducting licensed
gaming operations and the applicant's financial ability to promptly
construct and adequately maintain the casino sought to be licensed,
including the experience of partners of the applicant, of
affiliated companies of the applicant or its partners, of key
personnel of the applicant or its partners, and of operating
companies under contract with the applicant.
(b) To ensure that a requisite level of economic development
benefiting the people of this state accompanies each casino for
which an owner's license is granted, the commission shall require
an applicant, as a condition to receiving and holding an owner's
license, to commit to provide new investment in conjunction with
the casino in the following amounts:
(1) a casino to be licensed in a county with a
population of 1 million or more must have a minimum project
commitment of $100 million;
(2) a casino to be licensed in a county with a
population of 500,000 or more but less than 1 million must have a
minimum project commitment of $80 million;
(3) a casino to be licensed in a county with a
population of 250,000 or more but less than 500,000 must have a
minimum project commitment of $60 million;
(4) a casino to be licensed in any county with a
population of 150,000 or more but less than 250,000 must have a
minimum project commitment of $40 million; and
(5) a casino to be licensed in any county with a
population of less than 150,000 must have a minimum project
commitment of $30 million.
Sec. 2004.158. PROOF OF LOCAL OPTION ELECTION. The
commission may not accept an application for an owner's license
relating to a casino proposed to be located in a municipality or in
an unincorporated area of a county before receiving certification
from the governing body of the municipality or county that gaming
has been legalized through a local option election.
Sec. 2004.159. REVIEW OF APPLICATION. (a) The commission
shall issue an order approving or denying an application for an
owner's license not more than six months after the date of the
filing of the application.
(b) The commission may adopt rules for awarding temporary or
interim licensing the commission finds necessary in the
administration of this chapter.
Sec. 2004.160. TRANSFERABILITY. An owner's license is not
transferable and applies only to the specific site identified in
the license.
Sec. 2004.161. DENIAL AND REVOCATION. (a) The commission
may deny an application or revoke an owner's license for a
reasonable cause.
(b) If the commission determines it has reasonable grounds
to believe that an owner licensee may be unsuitable to continue to
hold an owner's license, the commission shall conduct an
investigation and hearing under Section 2004.551 and may, based on
its determination, suspend, limit, or revoke the license. On
suspension or revocation of an owner's license, the licensee must
immediately cease all gaming.
(c) If the holder of an owner's license fails to begin
construction of a casino within one year after the receipt of the
owner's license, or fails to begin gaming operations within three
years after the receipt of the license, the license is forfeited,
unless the commission, for good cause, has previously granted an
appropriate extension of time.
(d) The right to receive and hold an owner's license is a
revocable privilege, and not a right or property under the United
States Constitution or the Texas Constitution. An applicant for or
holder of an owner's license does not have a vested interest or
right in a license granted under this chapter.
Sec. 2004.162. REGISTRATION OF INTEREST IN LICENSE. (a)
Except as provided by Subsection (b), a person who directly or
indirectly owns an equity or creditor interest in an applicant for
or holder of an owner's license shall register and qualify with the
commission under commission rules and shall provide information the
commission finds necessary to determine the suitability and
eligibility of the person to retain the interest.
(b) The following persons are not required to register or
qualify under this section:
(1) a key employee of the owner licensee that is
required to apply for an occupational license under Section
2004.202;
(2) an institutional investor;
(3) a person that beneficially owns five percent or
less of the total equity or creditor interest of the owner licensee;
and
(4) any other group or class of persons that the
commission by rule exempts from registration or qualification.
(c) A registration filed under this section must be
accompanied by the application fee set out in Section 2004.351.
Sec. 2004.163. TRANSFERABILITY OF INTEREST. (a) Except as
provided by this subsection, an owner licensee may not issue an
equity or creditor interest to a person without the commission's
determination of the qualification of the proposed subscriber or
purchaser to hold the interest. An owner licensee that is a
publicly held company may issue equity or creditor interests of
five percent or less of its equity or creditor interest to any
person without the consent of the commission.
(b) A person beneficially owning more than five percent of
the equity or creditor interest of an owner licensee may not
transfer any portion of the interest in the licensee to any person
without the commission's determination of the qualification of the
proposed transferee to hold the interest.
(c) A subscriber or proposed transferee of an interest by an
owner licensee shall provide the commission with information the
commission considers necessary to determine the qualification of
the person. The commission, not later than 60 days after the date
of the application, shall determine the qualification of a
subscriber or proposed transferee and approve or deny the issuance
or transfer.
Sec. 2004.164. DETERMINATION OF QUALIFICATION. (a) The
commission shall determine the qualification of a person to acquire
or continue to hold an equity or creditor interest in an applicant
for or holder of an owner's license based on the qualification
requirements the commission adopts for the protection of the public
interest to ensure that the persons holding securities issued by
licensees are of good character, honesty, integrity, and financial
stability, and are otherwise qualified to hold the interest.
(b) The burden of proving qualification to acquire or hold
an equity or creditor interest in a licensee is on the person
acquiring or holding the interest.
(c) A person is unsuitable to acquire or retain an equity or
creditor interest in an applicant for or holder of an owner's
license if the person would be unsuitable to receive an owner's
license under Section 2004.156(e).
(d) If the commission has reasonable grounds to believe that
a person holding an equity or creditor interest in an applicant for
or holder of an owner licensee may be unqualified to retain its
interest, the commission shall conduct an investigation and hearing
under Section 2004.551 and may, based on its determination, issue
an unsuitability finding and divestiture order to the holder of the
interest and the issuer of the interest. On receipt of a
divestiture order, the person holding the interest shall tender its
entire interest for purchase to the issuer or a third party on terms
the commission approves.
(e) If the commission issues an unsuitability finding and
divestiture order to a holder of an equity interest or creditor
interest, the person subject to the order may not:
(1) receive, directly or indirectly, a dividend,
interest, payment, or distribution of any kind relating to the
security that is the subject of the order; or
(2) exercise, directly or indirectly, any voting power
or other right with respect to the security the order relates to.
(f) A person subject to an order may receive payment for the
sale of the person's interest on terms the commission approves.
[Sections 2004.165-2004.200 reserved for expansion]
SUBCHAPTER E. OPERATOR'S AND OCCUPATIONAL LICENSES
Sec. 2004.201. OPERATOR'S LICENSE. (a) A person may not
provide services as a casino operator without holding an operator's
license.
(b) A casino operator must hold a separate license for each
casino that the casino operator operates unless the operator is
also the owner of the premises and holds an owner's license for the
premises.
Sec. 2004.202. OCCUPATIONAL LICENSE. (a) A person may not
be employed as a gaming employee without holding an occupational
license.
(b) A holder of an owner's or operator's license is not
required to obtain an occupational license to provide services as a
gaming employee in the casino to which the license relates.
(c) An owner must at all times have not less than one
occupational licensee designated as a key employee having
responsibility over all gaming activities who shall be available at
the casino at all times when gaming is conducted on the licensee's
premises.
(d) A gaming employee designated or determined to be a key
employee by the commission shall be issued an occupational license
designated as a key employee occupational license. In determining
whether an employee is a key employee, the commission is not
restricted by the title of the job performed by the employee but may
consider the functions and responsibilities of the employee in
making decisions.
(e) A person employed in the field of gaming as a gaming
employee shall obtain an occupational license designated as a
support occupational license. A person required to hold a support
occupational license may not be a gaming employee of or assist the
owner or operator licensee until the employee obtains a support
occupational license. A person licensed as a key employee does not
need to obtain a support occupational license.
Sec. 2004.203. APPLICATION. (a) Application for an
operator's license or an occupational license shall be made in
compliance with commission rules and must contain information the
commission finds necessary to determine the suitability and
eligibility of the applicant to function as a casino operator or to
be employed or retained as a gaming employee.
(b) An application for an operator's license or an
occupational license must be accompanied by the required
application fee.
(c) The commission may issue a temporary operator's license
and a temporary occupational license.
Sec. 2004.204. RESIDENCY. A person is eligible to apply for
and hold an operator's license or occupational license without
regard to the residency of the applicant.
Sec. 2004.205. DETERMINATION OF SUITABILITY. (a) The
commission shall determine the suitability of an applicant for or
holder of an operator's license or occupational license based on
suitability criteria the commission adopts in order to ensure that
a licensee:
(1) is of good character, honesty, and integrity;
(2) has sufficient business probity, competence, and
training or experience in the gaming industry to perform the
function contemplated; and
(3) is otherwise qualified to be licensed.
(b) The burden of proving suitability to receive and hold an
operator's license or occupational license is on the applicant or
licensee.
(c) In considering the suitability of a company applying for
or holding an operator's license or occupational license to receive
and continue to hold the license, the commission shall consider the
suitability of each principal manager and each holder of an equity
interest and creditor interest of the company to individually
receive and hold an occupational license based on the suitability
standards that apply to the applicants for the license generally.
(d) A person may not be found suitable to receive or hold an
operator's license or occupational license if that person would be
found unsuitable to hold an owner's license under Section
2004.156(e), except that an applicant for an operator's license or
occupational license who has been convicted of a felony may be found
suitable if the person is found to be adequately rehabilitated
under the rehabilitation requirements adopted by the commission,
and the applicant or licensee is otherwise suitable for licensing.
Sec. 2004.206. DENIAL OR REVOCATION OF LICENSE. (a) The
commission may deny an application for or revoke an operator's
license or occupational license for any reasonable cause.
(b) If the commission determines that it has reasonable
grounds to believe that a licensee may be unsuitable to continue to
hold the license, giving due consideration to the protection of the
health, safety, morals, and general welfare of this state and to the
reputation of the state's gaming industry, the commission shall
conduct an investigation and hearing provided in Section 2004.551
and may, based on its determination, suspend, limit, or revoke any
license.
(c) On the suspension or revocation of a license, the
licensee shall cease the provision of all services in any capacity
requiring a license under Section 2004.201 or 2004.202.
(d) A holder of an occupational license that has been
revoked or suspended may not:
(1) receive, directly or indirectly, any
compensation, consideration, or payment of any kind relating to the
conduct of gaming in any capacity requiring an occupational license
under Section 2004.201 or 2004.202, other than the payment for
services rendered before the suspension or revocation; or
(2) serve or function in a capacity that would require
a license under Section 2004.201 or 2004.202.
(e) The receipt and holding of a license is a privilege and
is not a right or property under the United States Constitution or
the Texas Constitution. An applicant for or holder of an operator's
license or occupational license does not have a vested interest or
right in a license granted under this chapter.
[Sections 2004.207-2004.250 reserved for expansion]
SUBCHAPTER F. MANUFACTURER'S AND OTHER SERVICE PROVIDERS'
LICENSES
Sec. 2004.251. MANUFACTURER'S LICENSE. (a) A person may
not engage in any segment of the slot manufacturing industry in this
state for which a manufacturer's license is required under this
section without obtaining a manufacturer's license covering that
segment of the industry.
(b) The commission shall adopt rules identifying segments
of the manufacturing industry directly involved in the design,
manufacture, assembly, production, programming, sale, lease,
marketing, distribution, repair, or modification of slot machines
or component parts of slot machines that the commission finds
appropriate for licensing under this section.
(c) A manufacturer's license is personal to the licensee and
allows the licensee to do business with any casino.
Sec. 2004.252. CASINO SERVICE LICENSE. (a) A person may
not engage in any segment of the casino service industry that
requires a license without obtaining a casino service license.
(b) The commission shall adopt rules identifying segments
of the casino service industry directly involved with providing
gaming-related services, equipment, and supplies that the
commission finds appropriate for licensing.
(c) A person is required to obtain a casino service license
if the person:
(1) operates, conducts, or maintains a gaming-related
business in a casino; or
(2) furnishes goods, property, or services to a casino
in exchange for:
(A) a payment based upon a percentage of the
earnings, profits, or receipts from the casino; or
(B) a payment the commission finds to be grossly
disproportionate to the value of the goods, property, or service
provided.
(d) A utility company, a municipality, or another political
subdivision is not required to obtain a casino service license
under this section.
(e) A casino service license is personal to the licensee and
allows the licensee to do business with any casino.
Sec. 2004.253. APPLICATION. (a) Application for a
manufacturer's license or casino service license shall be made in
compliance with commission rules and shall contain information the
commission finds necessary to determine the suitability and
eligibility of the applicant.
(b) An application for a manufacturer's license or casino
service license must be accompanied by the required application
fee.
Sec. 2004.254. DETERMINATION OF SUITABILITY. (a) In
considering the suitability of a company applying for or holding a
manufacturer's license or casino service license to receive and
continue to hold the license, the commission shall consider the
suitability of each principal manager and each holder of an equity
interest and creditor interest in the company applicant to
individually receive and hold a manufacturer's license or casino
service license based on the suitability standards that apply to
the company applicant. A person may not be found suitable to
receive or hold a manufacturer's license or casino service license
if that person would be found unsuitable to hold an owner's license
under Section 2004.156(e).
(b) If the commission determines that it has reasonable
grounds to believe that a licensee is unsuitable to hold a
manufacturer's license or casino service license, the commission
shall conduct an investigation and hearing under Section 2004.551
and may, based on its determination, suspend, limit, or revoke a
license.
(c) On suspension or revocation of a license, the licensee
must cease the performance of manufacturing activity or casino
service requiring a license under this chapter. After the
revocation or suspension of the license, the affected licensee may
not receive, directly or indirectly, compensation, consideration,
or payment of any kind relating to manufacturing activity or
provision of casino services in any capacity requiring a license
under this chapter, other than the payment for goods or services
provided before the suspension or revocation.
(d) An owner or casino operator who has entered into a lease
with a manufacturer licensee or casino services licensee whose
license has been revoked or suspended may continue to make payments
on the lease based upon its original terms and conditions without
modification or may accelerate the lease and pay it off, at the sole
option of the owner or operator.
(e) The burden of proving suitability to receive and hold a
manufacturer's license or casino service license is on the
licensee.
[Sections 2004.255-2004.300 reserved for expansion]
SUBCHAPTER G. LICENSE RENEWAL
Sec. 2004.301. TERMS; RENEWAL; TEMPORARY LICENSE. (a)
Before the issuance of a license, the commission may issue a
temporary license for six months or less and may renew the temporary
license as many times as the commission finds appropriate on the
payment of the fee and execution of the bond, if required.
(b) The commission may issue a temporary license only to a
person it believes will be determined to be qualified based on:
(1) the commission's review of the background
investigations conducted by other state agencies or other United
States jurisdictions with gaming activities; and
(2) the commission's determination that there is
nothing in those background investigations of the applicant that
would cause the applicant not to qualify for a license in this
state.
(c) An original or renewal license expires on the first
anniversary of the date it is issued.
(d) The fee for an owner's, operator's, occupational,
manufacturer's, or casino service license is in the amount
established by Section 2004.352 and must be paid annually. A
licensee may renew an unexpired license annually by meeting the
licensing requirements of the commission and by paying the annual
fee.
[Sections 2004.302-2004.350 reserved for expansion]
SUBCHAPTER H. APPLICATION AND LICENSE FEES
Sec. 2004.351. APPLICATION FEES. (a) An applicant for an
owner's license during the first two years after the effective date
of this chapter must pay a $100,000 application fee for each
application not later than the 30th day after the effective date of
this chapter. The fees shall be deposited in the Texas casino
gaming fund.
(b) Application fees tendered during the 30-day period
following the effective date of this chapter are not required to be
accompanied by an application. An application during the first two
years after the effective date of this chapter must be filed on a
date determined by commission rule.
(c) An application fee for an owner's license paid not later
than the 30th day after the effective date of this chapter must be
accompanied by a document indicating the name of the applicant or an
affiliate or partner of the applicant and the name of the county in
which the casino is proposed to be located.
(d) During the first two years after the effective date of
this chapter, an applicant may not apply for an owner's license for
a site in a county unless the application fee for a license in that
county was paid during the period set out in Subsection (a). If the
applicant seeks more than one license in a county during the first
two years after the effective date of this chapter, the applicant or
its affiliates or partners must file the number of application fees
designating that county that is equal to the number of licenses in
that county that the applicant is seeking.
(e) Notwithstanding Subsections (a), (b), (c), and (d), if
no applicant pays an application fee for a site in a specific
county, and a municipality within a county or the county passes a
local option election approving casino gaming, or if applicants pay
application fees for sites within a county and a municipality
within the county or the county fails to approve a local option
election approving casino gaming, the commission may accept
applications for a site in the jurisdiction that passes the local
option election from persons who have filed applications for other
sites where a local option election failed and for a site in other
counties or municipalities and apply the applicant's initial
application fee to the new site.
(f) An applicant for an owner's license who has not
submitted an application fee under Subsection (a) or (e) must send
with its application an application fee of $100,000.
(g) An applicant for a manufacturer's license must pay an
application fee of $100,000.
(h) An applicant for an operator's license must pay an
application fee of $50,000.
(i) An applicant for a casino service license must pay an
application fee of $100.
(j) A person registering and applying to qualify to hold an
equity interest or creditor interest in a licensee must pay an
application fee of $100.
(k) An individual applying for an occupational license must
pay an application fee of $100.
(l) All application fees must be in the form of a money order
or cashier's check and be payable to the Texas Gaming Commission.
Application fees are nonrefundable.
(m) Application fees shall be applied toward the cost of
investigating applicants' suitability for licensing or
qualification under this chapter. Any costs of investigation
incurred in excess of the application fee shall be paid by the
applicant.
Sec. 2004.352. LICENSE FEES. (a) A holder of an owner's
license must pay an annual license fee of $100,000.
(b) A holder of a manufacturer's license must pay an annual
license fee of $100,000.
(c) A casino operator holding an operator's license must pay
an annual license fee of $50,000.
(d) A holder of a casino service license must pay an annual
license fee of $100.
(e) A holder of an equity interest or creditor interest in
any licensee that is required to qualify with the commission must
pay an annual fee of $100.
(f) A holder of an occupational license must pay an annual
license fee of $100.
[Sections 2004.353-2004.400 reserved for expansion]
SUBCHAPTER I. CASINO GAMING FUND
Sec. 2004.401. TEXAS CASINO GAMING FUND. (a) The Texas
casino gaming fund is a special fund in the state treasury.
(b) All application fees, investigation fees, and license
fees collected by the commission or on the commission's behalf
shall be deposited to the credit of the Texas casino gaming fund.
(c) The Texas casino gaming fund may be used only for the
operation of the commission and the administration of this chapter.
However, if the money in the fund exceeds the amount necessary for
the operation of the commission and the administration of this
chapter, the legislature may transfer any excess amount to the
general revenue fund.
(d) All proceeds from the gaming tax imposed by Section
2004.451 that are allocated to the state shall be deposited to the
credit of the general revenue fund.
(e) The operation of the commission and the administration
of this chapter shall be supported by fees generated under this
chapter and by a portion of the gaming taxes imposed by Section
2004.451. The operation of the commission may never be a charge
against the general revenues of this state except to the extent
those revenues are raised by taxes or fees imposed on gaming
activities.
[Sections 2004.402-2004.450 reserved for expansion]
SUBCHAPTER J. TAX ON GROSS GAMING REVENUE
Sec. 2004.451. GAMING TAX; ALLOCATION OF TAX. (a) There is
imposed on each holder of an owner's license a gaming tax in an
amount equal to 15 percent of the gross gaming revenue of the casino
operated under the license. The tax shall be computed and paid on a
monthly basis as required by commission rule.
(b) Five-sixths of the tax imposed by this section, with the
exception provided by Subsection (d), is allocated to the general
revenue fund.
(c) Two-thirds and one-third of the remaining one-sixth of
the tax imposed by this section are allocated to the municipality
and county, respectively, in which the casino to which the license
relates is located, or, if the casino is located in an
unincorporated area, the remaining one-sixth of the tax imposed by
this section is allocated to the county in which the casino to which
the license relates is located.
(d) One-tenth of one percent of the gaming tax revenue
allocated to general revenue under Subsection (b) shall be
allocated to the Texas Commission on Alcohol and Drug Abuse for the
commission's compulsive gambling program under Section 461.018,
Health and Safety Code.
(e) The gaming taxes imposed by this section are due and
payable on or before the 20th day of the month following the month
in which the taxes are imposed.
(f) If the amount of gaming taxes required to be reported
and paid under this section is later determined to be greater or
less than the amount actually reported and paid by the licensee, the
commission shall:
(1) assess and collect the additional gaming taxes
determined to be due with interest until paid; or
(2) refund any overpayment, with interest, to the
licensee.
(g) Interest must be computed, until paid, at the rate of
one percent per month from the first day of the first month
following either the due date of the additional gaming taxes or the
date of overpayment.
Sec. 2004.452. DETERMINATION OF GROSS GAMING REVENUE. (a)
In calculating gross gaming revenue, a prize, premium, drawing,
benefit, or ticket that is redeemable for money, merchandise, or
other promotional allowance, except money or tokens paid at face
value directly to a patron as the result of a specific wager and the
amount of cash paid to purchase an annuity to fund winnings, may not
be deducted as a loss from winnings at any game except a slot
machine.
(b) In calculating gross gaming revenue from slot machines,
the actual cost to the licensee of any personal property
distributed to a patron as the result of a legitimate wager may be
deducted as a loss, but travel expenses, food, refreshments,
lodging, or services at the licensee's facility may not be
deducted. For the purposes of this subsection, "as the result of a
legitimate wager" means that the patron must make a wager before
receiving the personal property, regardless of whether the receipt
of the personal property is dependent on the outcome of the wager.
(c) Cash or the value of noncash prizes awarded to patrons
in a contest or tournament are not losses for purposes of
determining gross gaming revenue.
Sec. 2004.453. REFUND OF OVERPAYMENT. (a) Gaming taxes
that are erroneously collected may be refunded, on approval of the
commission, as other claims against the state are paid.
(b) Not later than the 90th day after the date of the mailing
of the notice of the commission's action on a claim for refund filed
under this chapter, the claimant may bring an action against the
commission on the grounds stated in the claim in any court of
competent jurisdiction for the recovery of any part of the amount of
the claim that has been disallowed.
(c) Failure to bring an action within the time specified by
Subsection (b) constitutes a waiver of any demand against the state
on account of alleged overpayments.
(d) If the commission fails to mail its notice of action on a
claim within six months after the date the claim is filed, the
claimant may consider the claim disallowed and bring an action
against the commission on the grounds set forth in the claim for the
recovery of any part of the amount claimed as an overpayment.
(e) In a case where a refund is granted, interest is allowed
at the rates provided in Subtitle B, Title 2, Tax Code.
(f) A claim for refund of gaming taxes paid in excess of the
amount required to be reported and paid must be filed not later than
two years after the date of overpayment.
Sec. 2004.454. DETERMINATION OF DEFICIENCY. (a) If an
owner licensee fails to make a report of the gaming taxes as
required by this chapter, or if the executive director is not
satisfied with the report of the gaming taxes required to be paid to
the state under this chapter by an owner licensee, the executive
director may compute and determine the amount required to be paid on
the basis of:
(1) the facts contained in the report, if any;
(2) an audit conducted by the executive director;
(3) an estimate of the amount of taxes due under this
chapter;
(4) any information in the commission's possession or
that may come in the executive director's possession; or
(5) any combination of the methods described by
Subdivisions (1)-(4).
(b) In making a determination, the commission may offset
overpayments and interest due against underpayments and interest or
penalties due for the period of the audit.
(c) The executive director shall give prompt written notice
of a determination of a deficiency under this section to the owner
licensee. Except in the case of fraud or intent to evade the payment
of the gaming tax fee imposed by this chapter, a notice of a
determination of a deficiency must be mailed not later than two
years after the last day of the calendar month following the
applicable reporting period in which the deficiency occurred or not
later than two years after the report is filed by the owner
licensee, whichever is later.
(d) If the reasons for the deficiency are not apparent, the
executive director shall include an explanation of those reasons in
the notice of a determination of a deficiency.
(e) If overpayments and interest exceed underpayments,
penalties, and interest, the excess payment shall be refunded to
the owner licensee.
Sec. 2004.455. PETITION FOR REVIEW. (a) An owner licensee
against whom a determination is made under Section 2004.454 may
petition the commission for a redetermination not later than the
30th day after the date of the service of notice of the
determination. If a petition for redetermination satisfying the
requirements of Subsection (c) is not filed within the 30-day
period, the determination becomes final.
(b) If a petition for redetermination satisfying the
requirements of Subsection (c) is filed within the 30-day period,
the commission shall reconsider the determination and, if the
petitioner requests, shall grant a hearing.
(c) A petition for redetermination must:
(1) specify the contested portions of the
determination of deficiency;
(2) specify the grounds for redetermination;
(3) state whether a hearing is requested; and
(4) be accompanied by payment in full of the
uncontested portion of the determination, including any interest
and penalties.
(d) An order or decision of the commission on a petition for
redetermination is final 10 days after the date of service on the
petitioner.
(e) A petitioner against whom an order or decision of the
commission becomes final may, not later than the 60th day after the
date the decision is final, petition for judicial review in the
manner provided by Chapter 2001, Government Code. The executive
director may not petition for judicial review.
Sec. 2004.456. CERTAIN POLITICAL SUBDIVISION TAXES
PROHIBITED. A county, municipality, or other political subdivision
of this state may not impose a license fee or tax on a person
licensed to conduct gaming under this chapter. This section does
not prohibit the imposition of generally applicable taxes or of
fees for standard municipal services.
Sec. 2004.457. TAX ADMINISTRATION. (a) The commission
shall perform all functions incident to the administration,
collection, enforcement, and operation of a fee or tax imposed
under this chapter. The commission may adopt rules and prescribe
forms for the administration, collection, and enforcement of a fee
or tax and for the reporting of a fee or tax.
(b) Except as modified by this chapter, Subtitle B, Title 2,
Tax Code, applies to the administration, collection, and
enforcement of a tax imposed under this chapter. For purposes of
the application of Subtitle B, Title 2, Tax Code, to a tax imposed
under this chapter, the powers and duties assigned to the
comptroller under that subtitle are assigned to the commission.
[Sections 2004.458-2004.500 reserved for expansion]
SUBCHAPTER K. REGULATION OF CASINO OPERATIONS
Sec. 2004.501. REGULATION OF CASINO OPERATIONS. (a) The
commission shall adopt rules applicable to the operation of casinos
as the commission finds necessary for the protection of the health,
safety, morals, and general welfare of this state and for the
reputation of the state's gaming industry.
(b) Casinos are entitled to operate 24 hours a day, seven
days a week. A licensee may elect other hours of operation.
(c) The commission may not authorize a casino to conduct
wagering on the outcome of a sports event or sports activity other
than greyhound or horse racing.
Sec. 2004.502. USE OF CHIPS OR TOKENS. All gaming must be
conducted with chips or tokens approved by the commission or with
the legal tender of the United States.
Sec. 2004.503. REPORTING REQUIREMENTS. (a) An owner
licensee shall keep the licensee's books and records in a manner
that clearly shows the total amount of gross gaming revenue and
other revenues received.
(b) The books and records kept by an owner licensee relating
to gaming operations are not public records and the publication and
dissemination of the materials by the commission is prohibited.
The commission may publish and disseminate gaming revenues of each
owner licensee at a frequency and in the level of detail as it
considers appropriate.
(c) An owner licensee shall file a report of each change of
the corporate officers and directors with the commission. The
commission shall, not later than the 90th day after the date of the
change, approve or disapprove the change. During the 90-day
period, the officer or director is entitled to exercise the powers
of the office to which the officer or director was elected or
appointed.
(d) An owner licensee shall report to the executive director
in writing a change in company employees who have been designated as
key employees.
(e) The commission may require that a company furnish the
commission with a copy of its federal income tax return not later
than the 30th day after the date the return is filed with the
federal government.
Sec. 2004.504. EXCLUSION OF PERSONS. (a) The commission by
rule shall provide for the establishment of a list of persons who
are to be excluded or ejected from a casino. The list may include a
person whose presence in the establishment is determined by the
commission to pose a threat to the interests of this state, to
licensed gaming, or to both interests.
(b) In making a determination under this section, the
commission may consider any:
(1) prior conviction of a crime that is a felony in
this state or under the laws of the United States or a crime
involving moral turpitude or a violation of the gaming laws of a
state; or
(2) violation of or conspiracy to violate the
provisions of this chapter relating to:
(A) the failure to disclose an interest in a
gaming establishment for which the person must obtain a license;
(B) wilful evasion of a fee or a tax;
(C) notorious or unsavory reputation that would
adversely affect public confidence and trust that the gaming
industry is free from criminal or corruptive elements; or
(D) a written order of a governmental agency that
authorizes the exclusion or ejection of the person from an
establishment where gaming or pari-mutuel wagering is conducted.
Sec. 2004.505. INTERNAL AUDIT AND CONTROL SYSTEMS. (a) An
owner licensee shall adopt an internal control system that provides
for:
(1) the safeguarding of its assets and revenues,
especially the recording of cash and evidences of indebtedness; and
(2) the provision of reliable records, accounts, and
reports of transactions, operations, and events, including reports
to the executive director and the commission.
(b) The internal control system must be designed to
reasonably ensure that:
(1) assets are safeguarded;
(2) financial records are accurate and reliable;
(3) transactions are performed only in accordance with
management's general or specific authorization;
(4) transactions are recorded adequately to permit
proper reporting of gaming revenue and of fees and taxes and to
maintain accountability for assets;
(5) access to assets is permitted only in accordance
with management's specific authorization;
(6) recorded accountability for assets is compared
with actual assets at reasonable intervals and appropriate action
is taken with respect to any discrepancies; and
(7) functions, duties, and responsibilities are
appropriately segregated and performed in accordance with sound
practices by competent, qualified personnel.
(c) An owner licensee and an applicant for an owner's
license shall describe, in a manner approved or required by the
executive director, the licensee's or applicant's administrative
and accounting procedures in detail in a written system of internal
control. An owner licensee and applicant for an owner's license
shall submit a copy of the licensee's or applicant's written system
to the executive director. A written system must include:
(1) an organizational chart depicting appropriate
segregation of functions and responsibilities;
(2) a description of the duties and responsibilities
of each position shown on the organizational chart;
(3) a detailed, narrative description of the
administrative and accounting procedures designed to satisfy the
requirements of Section 2004.503(a);
(4) a written statement signed by the licensee's chief
financial officer and either the licensee's chief executive officer
or an owner licensee attesting that the system satisfies the
requirements of this section;
(5) if the written system is submitted by an
applicant, a letter from an independent certified public accountant
stating that the applicant's written system has been reviewed by
the certified public accountant and complies with the requirements
of this section; and
(6) other items the executive director may require.
(d) The commission shall adopt minimum standards for
internal control procedures.
Sec. 2004.506. AGE REQUIREMENTS. A person under the age of
21 years may not:
(1) play, be allowed to play, place wagers, or collect
winnings, personally or through an agent, from any gaming
authorized under this chapter; or
(2) be employed as a gaming employee.
Sec. 2004.507. ACCEPTANCE OF NEGOTIABLE INSTRUMENTS. (a)
A negotiable instrument evidencing a gaming transaction may be
enforced by legal process.
(b) A licensee may accept an incomplete negotiable
instrument that is signed by a patron and states the amount of the
debt. The licensee may complete the instrument as is necessary for
the instrument to be presented for payment.
(c) A licensee:
(1) may not accept a negotiable instrument that is
incomplete, except as authorized by Subsection (b); and
(2) may accept a negotiable instrument that is payable
to an affiliate or may complete a negotiable instrument in the name
of an affiliate as payee if the negotiable instrument otherwise
complies with this section and the records of the affiliate
pertaining to the negotiable instrument are made available to the
executive director on request.
(d) This section does not prohibit the establishment of an
account by a deposit of cash, recognized traveler's check, or any
other instrument that is equivalent to cash.
(e) Any person, licensee, or the agents or employees of the
person or licensee who violate this section are subject only to the
penalties provided in the provisions of this chapter relating to
disciplinary actions. The failure of a person to comply with this
section or the rules of the commission does not invalidate a
negotiable instrument or affect the ability to enforce the
negotiable instrument or the transaction that the negotiable
instrument represents.
Sec. 2004.508. GAMING DEBTS. (a) Except as otherwise
provided by this chapter, gaming debts not evidenced by a
negotiable instrument are void and unenforceable and do not give
rise to any administrative or civil cause of action.
(b) A claim by a patron of a licensee for payment of a gaming
debt not evidenced by a negotiable instrument may be resolved by the
executive director under commission rules.
(c) The executive director shall send a copy of the
director's ruling by first class mail to the attorneys of record and
shall keep an appropriate copy of the mailing. If a party is not
represented by an attorney of record, the executive director shall
send a copy of the ruling by first class mail to the party and shall
keep an appropriate record of the mailing.
(d) A party or attorney of record notified by mail under
this section is presumed to have been notified on the date on which
the notice is mailed.
(e) A party aggrieved by the executive director's ruling is
entitled to have the claim resolved by the commission in a contested
case if the party files a written complaint with the commission
challenging the executive director's decision not later than the
20th day after the date on which the party or the party's attorney
of record is notified by mail.
Sec. 2004.509. DETENTION OF PERSONS. (a) An owner licensee
or the licensee's officers, employees, or agents may question any
person on the licensee's premises suspected of violating any of the
provisions of this chapter. An owner licensee or any of the
licensee's officers, employees, or agents is not criminally or
civilly liable:
(1) as a result of questioning; or
(2) for reporting the person suspected of the
violation to the executive director or law enforcement authorities.
(b) An owner licensee or the licensee's officer, employee,
or agent who has reasonable cause for believing that there has been
a violation of this chapter in the establishment by a person may
take that person into custody and detain the person in the
establishment in a reasonable manner and for a reasonable length of
time. The taking into custody and detention does not render the
licensee or the licensee's officer, employee, or agent criminally
or civilly liable unless it is established by clear and convincing
evidence that the taking into custody and detention are
unreasonable under all the circumstances.
(c) An owner licensee or the licensee's officer, employee,
or agent is not entitled to the immunity from liability provided for
in Subsection (a) unless there is displayed in a conspicuous place
in the licensee's establishment a notice in bold-faced type,
clearly legible, and in substantially this form:
AN OWNER LICENSEE OR AN OWNER LICENSEE'S OFFICER,
EMPLOYEE, OR AGENT WHO HAS A REASONABLE CAUSE TO
BELIEVE THAT A PERSON HAS VIOLATED A PROVISION OF THE
TEXAS ECONOMIC DEVELOPMENT AND GAMING CONTROL ACT MAY
DETAIN THAT PERSON IN THE ESTABLISHMENT.
[Sections 2004.510-2004.550 reserved for expansion]
SUBCHAPTER L. ENFORCEMENT
Sec. 2004.551. ENFORCEMENT. (a) The executive director
shall conduct an appropriate investigation to:
(1) determine whether there has been a violation of
this chapter or of a commission rule;
(2) determine facts, conditions, practices, or
matters that the director considers necessary or proper to aid in
the enforcement of a law or rule;
(3) aid in adopting rules;
(4) secure information as a basis for recommending
legislation relating to this chapter; and
(5) determine whether a licensee is able to meet the
licensee's financial obligations, including all financial
obligations imposed by this chapter, as they become due.
(b) If after an investigation the executive director is
satisfied that a license, registration, finding of suitability, or
prior approval by the commission of a transaction for which
approval was required or permitted under this chapter should be
limited, conditioned, suspended, or revoked, or that a fine should
be levied, the executive director shall initiate a hearing by
filing a complaint with the commission and transmit a summary of
evidence that bears on the matter and the transcript of testimony at
any investigative hearing conducted by or on behalf of the
executive director regarding the licensee. The complaint must be a
written statement of charges that must set forth in ordinary and
concise language the acts or omission with which the respondent is
charged. The complaint must specify the statute or rule that the
respondent is alleged to have violated. A complaint must contain a
factual allegation and shall not consist merely of charges raised
on the language of the statute or rule. On the filing of the
complaint, the executive director shall serve a copy of the
complaint on the respondent either personally or by registered or
certified mail at the respondent's address on file with the
executive director.
(c) Except as provided by Section 2004.455, the respondent
must answer not later than the 30th day after the date of the
service of the complaint.
(d) On receipt of the complaint of the executive director,
the commission shall review all matter presented in support and
shall appoint a hearing examiner to conduct further proceedings.
(e) The hearing examiner shall conduct proceedings under
Chapter 2001, Government Code. After the proceedings, the hearing
examiner may recommend that the commission take any appropriate
action, including revocation, suspension, limitation or
conditioning of a license, or imposition of a fine not to exceed
$5,000 for each violation.
(f) The commission shall review the recommendation. The
commission may remand the case to the hearing examiner for the
presentation of additional evidence on a showing of good cause as to
why the evidence could not have been presented at the previous
hearing.
(g) The commission shall accept, reject, or modify the
recommendation.
(h) If the commission limits, conditions, suspends, or
revokes a license or imposes a fine, or limits, conditions,
suspends, or revokes a registration, finding of suitability, or
prior approval, the commission shall issue its written order.
(i) A limitation, condition, revocation, suspension, or
fine imposed is effective until reversed following judicial review,
except that the commission may stay its order pending a rehearing or
judicial review on terms and conditions as it considers proper.
(j) Judicial review of an order or decision of the
commission may be had under Chapter 2001, Government Code.
Judicial review is under the substantial evidence rule.
Sec. 2004.552. PRIVILEGED DOCUMENTS. (a) A communication
or document of an applicant or licensee that is required by law or
commission rule or by a subpoena issued by the commission and that
is to be made or transmitted to the commission or the executive
director is privileged and does not impose liability for defamation
or constitute a ground for recovery in any civil action.
(b) If a document or communication contains information
that is privileged, the privilege is not waived or lost because the
document or communication is disclosed to the commission or the
executive director.
(c) Notwithstanding the powers granted to the commission
and the executive director by this chapter:
(1) the commission and the executive director may not
release or disclose privileged information, documents, or
communications provided by an applicant and required by a lawful
court order after timely notice of the proceedings has been given to
the applicant or licensee without the prior written consent of the
applicant or licensee;
(2) the commission and the executive director shall
maintain all privileged information, documents, and communications
in a secure place accessible only to members of the commission and
the executive director; and
(3) the commission shall adopt procedures to protect
the privileged nature of information, documents, and
communications provided by an applicant or licensee.
Sec. 2004.553. RELEASE OF CONFIDENTIAL INFORMATION. An
application to a court for an order requiring the commission or the
executive director to release any information declared by law to be
confidential shall be made only on a motion in writing delivered not
later than the 10th day before the date of application to the
commission, the attorney general, and all persons who may be
affected by the entry of the order. Copies of the motion and all
papers filed in support of it shall be served with the notice by
delivering a copy in person or by certified mail to the last known
address of the person to be served.
Sec. 2004.554. EMERGENCY ORDERS. (a) The commission may
issue an emergency order for suspension, limitation, or
conditioning of a license, registration, finding of suitability, or
work permit or may issue an emergency order requiring a casino to
keep an individual licensee from the premises of the licensed
gaming establishment or to not pay the licensee any remuneration
for services or any profits, income, or accruals on the licensee's
investment in the casino.
(b) An emergency order may be issued only if the commission
determines that:
(1) a licensee has wilfully failed to report, pay, or
truthfully account for a fee imposed under this chapter or wilfully
attempted in any manner to evade or defeat a fee or payment;
(2) a licensee or gaming employee has cheated at a
gambling game; or
(3) the action is necessary for the immediate
preservation of the public peace, health, safety, morals, good
order, or general welfare.
(c) The emergency order must state the grounds on which it
is issued, including a statement of facts constituting the alleged
emergency necessitating the action.
(d) An emergency order may be issued only with the approval
of and under the signature of four or more members of the
commission.
(e) An emergency order is effective immediately on issuance
and service on the licensee or resident agent of the licensee,
gaming employee, or, in cases involving registration or findings of
suitability, on issuance and service on the person or entity
involved or resident agent of the entity involved. An emergency
order may suspend, limit, condition, or take other action in
relation to the license of one or more persons in an operation
without affecting other individual licensees or the casino. An
emergency order remains effective until further order of the
commission or final disposition of the case.
(f) Not later than the fifth day after the date of issuance
of an emergency order, the executive director shall file a
complaint and serve it on the person or entity involved. The person
or entity against whom the emergency order has been issued and
served is entitled to a hearing before the commission and to
judicial review of the decision and order of the commission under
Chapter 2001, Government Code. Judicial review is under the
substantial evidence rule.
[Sections 2004.555-2004.600 reserved for expansion]
SUBCHAPTER M. PENALTIES AND OFFENSES
Sec. 2004.601. FAILURE TO PAY FEES. (a) License fees and
other fees required by this chapter must be paid to the commission
on or before the dates provided by law for each fee.
(b) A person failing to timely pay a fee or tax when due
shall pay in addition a penalty of not less than $50 or 25 percent of
the amount due, whichever is the greater. The penalty may not
exceed $1,000 if the fee or tax is less than 10 days late and may not
exceed $5,000 under any circumstances. The penalty shall be
collected as are other charges, license fees, and penalties under
this chapter.
Sec. 2004.602. FAILURE TO REPORT, PAY, OR ACCOUNT FOR FEE OR
TAX. (a) A person commits an offense if the person wilfully fails
to report, pay, or truthfully account for a fee or tax imposed under
this chapter or wilfully attempts in any manner to evade or defeat a
fee or tax.
(b) An offense under this section is a Class A misdemeanor.
Sec. 2004.603. FRAUD. (a) A person commits an offense if
the person knowingly:
(1) alters or misrepresents the outcome of a game or
other event on which wagers have been made after the outcome is made
sure but before it is revealed to the players;
(2) places, increases, or decreases a bet or
determines the course of play after acquiring knowledge, not
available to all players, of the outcome of the game or an event
that affects the outcome of the game or that is the subject of the
bet or aids anyone in acquiring such knowledge for the purpose of
placing, increasing, or decreasing a bet or determining the course
of play contingent on that event or outcome;
(3) claims, collects, or takes, or attempts to claim,
collect, or take, money or anything of value in or from a gambling
game, with intent to defraud, without having made a wager
contingent on the game, or claims, collects, or takes an amount
greater than the amount won;
(4) entices or induces another to go to a place where a
gambling game is being conducted or operated in violation of this
chapter, with the intent that the other person play or participate
in that gambling game;
(5) places or increases a bet after acquiring
knowledge of the outcome of the game or other event that is the
subject of the bet, including past posting and pressing bets;
(6) reduces the amount wagered or cancels the bet
after acquiring knowledge of the outcome of the game or other event
that is the subject of the bet, including pinching bets; or
(7) manipulates, with the intent to cheat, a component
of a gaming device in a manner contrary to the designed and normal
operational purpose for the component, including varying the pull
of the handle of a slot machine, with knowledge that the
manipulation affects the outcome of the game or with knowledge of an
event that affects the outcome of the game.
(b) An offense under this section is a felony of the third
degree.
Sec. 2004.604. USE OF PROHIBITED DEVICES. (a) A person
commits an offense if the person, at a casino, uses or possesses
with the intent to use a device, other than those customarily used
in the conduct of gaming to assist in:
(1) projecting the outcome of the game;
(2) keeping track of the cards played;
(3) analyzing the probability of the occurrence of an
event relating to the game; or
(4) analyzing the strategy for playing or betting to
be used in the game.
(b) An offense under this section is a felony of the third
degree.
Sec. 2004.605. USE OF COUNTERFEIT OR UNAUTHORIZED TOKEN,
CHIP, OR COIN. (a) A person commits an offense if the person
knowingly uses counterfeit chips or tokens in a gambling game.
(b) A person commits an offense if the person, in playing
any gambling game designed to be played with, receive, or be
operated by chips or tokens approved by the executive director or by
lawful coin of the United States of America:
(1) knowingly uses a chip, token, or coin other than
chips or tokens approved by the commission or lawful coin of the
United States of America, or uses a coin not of the same
denomination as the coin intended to be used in that gambling game;
or
(2) uses any device or means to violate the provisions
of this chapter.
(c) A person, other than an authorized employee of an owner
licensee acting in furtherance of the person's employment within an
establishment, commits an offense if the person knowingly has on
the person's body or in the person's possession on or off the
premises of a casino a device intended to be used to violate the
provisions of this chapter.
(d) A person, other than an authorized employee of an owner
licensee acting in furtherance of the person's employment within an
establishment, commits an offense if the person knowingly has on
the person's body or in the person's possession on or off the
premises of a casino a key or device known to have been designed for
the purpose of and suitable for opening, entering, or affecting the
operation of a gambling game, a drop box, or an electronic or
mechanical device connected to the game or box or for removing money
or other contents from the game or box.
(e) A person commits an offense if the person knowingly has
on the person's body or in the person's possession paraphernalia for
manufacturing slugs for use in gaming devices. In this subsection,
"paraphernalia for manufacturing slugs" means the equipment,
products, and materials that are intended for use or designed for
use in manufacturing, producing, fabricating, preparing, testing,
analyzing, packaging, storing, or concealing a counterfeit
facsimile of the chips or tokens approved by the executive director
or a lawful coin of the United States, the use of which is an offense
under Subsection (b). The term includes:
(1) lead or lead alloys;
(2) molds, forms, or similar equipment capable of
producing a likeness of a gaming token or United States coin;
(3) melting pots or other receptacles;
(4) torches; and
(5) tongs, trimming tools, or other similar equipment.
(f) Possession of more than one of the devices, equipment,
products, or materials described in this section permits a
rebuttable inference that the possessor intended to use them for
cheating.
(g) An offense under this section is a felony of the third
degree.
Sec. 2004.606. CHEATING. (a) A person commits an offense
if the person knowingly cheats at any gambling game.
(b) An offense under this section is a state jail felony.
Sec. 2004.607. POSSESSION OF UNLAWFUL DEVICES. (a) A
person commits an offense if the person knowingly possesses any
slot machine or other gaming device that has been manufactured,
sold, or distributed in violation of this chapter.
(b) An offense under this section is a Class A misdemeanor.
Sec. 2004.608. UNLAWFUL MANUFACTURE, SALE, OR DISTRIBUTION
OF GAMING EQUIPMENT. (a) A person commits an offense if the person
manufactures, sells, or distributes cards, chips, dice, a game, or
a device intended to be used to violate a provision of this chapter.
(b) A person commits an offense if the person marks, alters,
or otherwise modifies any associated equipment or gaming device in
a manner that:
(1) affects the result of a wager by determining win or
loss; or
(2) alters the normal criteria of random selection
that affect the operation of a game or determine the outcome of a
game.
(c) A person commits an offense if the person instructs
another person in cheating or in the use of a device for cheating at
any game authorized to be conducted at a casino, with the knowledge
or intent that the information or use may be employed to violate a
provision of this chapter.
(d) An offense under this section is a felony of the third
degree.
Sec. 2004.609. REPORTING PENALTIES. (a) A person commits
an offense if the person, in a license application, in a book or
record required to be maintained by this chapter or a rule adopted
under this chapter, or in a report required to be submitted by this
chapter or a rule adopted under this chapter:
(1) makes a statement or entry that the person knows to
be false or misleading; or
(2) knowingly fails to maintain or make an entry the
person knows is required to be maintained or made.
(b) A person commits an offense if the person knowingly
refuses to produce for inspection by the executive director a book,
record, or document required to be maintained or made by this
chapter or a rule adopted under this chapter.
(c) An offense under this section is a Class A misdemeanor.
Sec. 2004.610. GAMING BY MINORS. (a) A person commits an
offense if the person knowingly permits an individual that the
person knows is younger than 21 years of age to participate in
gaming at a casino.
(b) An individual younger than 21 years of age commits an
offense if the individual participates in gaming at a casino.
(c) An offense under this section is a Class C misdemeanor.
Sec. 2004.611. GENERAL PENALTY. (a) A person commits an
offense if the person knowingly or wilfully violates, attempts to
violate, or conspires to violate any of the provisions of this
chapter specifying a prohibited act.
(b) Unless another penalty is specified for the offense, an
offense under this section is a Class A misdemeanor.
[Sections 2004.612-2004.650 reserved for expansion]
SUBCHAPTER N. LOCAL OPTION ELECTIONS
Sec. 2004.651. ORDERING LOCAL OPTION ELECTION. The
governing body of a county or municipality may at any time order an
election to legalize casino gaming under this chapter in that
county or municipality. However, an election may not be held before
the date of the election at which the constitutional amendment
proposed by the 78th Legislature, Regular Session, 2003, is
submitted to the voters. The local option election authorized by
this section may be held on the same date as the election at which
the constitutional amendment proposed by the 78th Legislature,
Regular Session, 2003, is presented to the voters. The governing
body shall order and hold an election to legalize gaming under this
chapter in the county or municipality if the governing body is
presented with a petition that meets the requirements of Section
2004.652 and is certified as valid under Section 2004.653.
Sec. 2004.652. PETITION REQUIREMENTS. (a) A petition for a
legalization election must include a statement substantially as
follows before the space reserved for signatures on each page:
"This petition is to require that an election be held in (name of
county or municipality) to legalize casino gaming in (name of
county or municipality)."
(b) A petition is valid only if it is signed by registered
voters of the county or municipality in a number equal to or greater
than the lesser of:
(1) three percent of the number of votes cast for
governor by qualified voters of the county or municipality in the
most recent gubernatorial general election; or
(2) in an election to be held in a municipality, the
number specified in a municipality's charter.
(c) Each voter must enter beside the voter's signature the
date the voter signs the petition. A signature may not be counted
as valid if the date of signing is earlier than the 90th day before
the date the petition is submitted to the governing body. A
signature may be affixed to a petition before the effective date of
this section. A petition may not be presented to the governing body
of a county or municipality before the effective date of this
section.
(d) Each voter must provide on the petition the voter's
current voter registration number, printed name, and residence
address, including zip code.
Sec. 2004.653. VERIFICATION. (a) Not later than the fifth
day after the date a petition for an election under this chapter is
received in the office of the governing body, the governing body
shall submit the petition for verification to the municipal
secretary or county clerk, as applicable.
(b) 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 county or municipality.
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 or
invalid. If the officer determines that the petition is invalid,
the officer shall state the reasons for that determination.
Sec. 2004.654. ORDERING ELECTION. If the municipal
secretary or county clerk, as applicable, certifies that a petition
is valid, not later than the 30th day after the date of
certification, the governing body shall order that an election be
held in the municipality or county on the next uniform election date
under Section 41.001, Election Code, that occurs after the 45th day
after the date on which the governing body orders the election. The
governing body shall state in the order the issue to be voted on.
The municipal secretary or county clerk shall notify the commission
by certified mail, return receipt requested, that an election has
been ordered.
Sec. 2004.655. BALLOT PROPOSITION. The ballot in a
legalization election shall be printed to provide for voting for or
against the proposition: "Legalizing casino gaming within (name of
county or municipality)."
Sec. 2004.656. ELECTION RESULTS. (a) If the majority of
the votes cast in a legalization election favor the legalization of
casino gaming, casino gaming authorized under this chapter is
permitted within the county or municipality holding the election
effective on the 10th day after the date of the election.
(b) The governing body of a county or municipality in which
a legalization election has been held shall give written notice of
the results of the election to the commission not later than the
third day after the date the election is canvassed.
(c) If less than a majority of the votes cast in a
legalization election in any county or municipality are cast in
favor of the legalization of casino gaming, casino gaming is not
permitted in the county or municipality, and a subsequent election
on the issue may not be held in the county or municipality before
the corresponding uniform election date one year after the date of
the election.
(d) If less than a majority of the votes cast in two
consecutive legalization elections within any county or
municipality are cast in favor of the legalization of casino
gaming, casino gaming is not permitted in the county or
municipality, and a subsequent election on the issue may not be held
in the county or municipality before the corresponding uniform
election date five years after the date of the election.
(e) A countywide legalization election does not permit
casino gaming in any municipality within the county unless casino
gaming is legalized within the municipality through a separate
municipal legalization election. The failure of any countywide
legalization election has no effect on subsequent elections in
municipalities located within the county, and the failure of any
municipal legalization election has no effect on subsequent
countywide legalization elections.
SECTION 2. 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 permitted under the Texas Economic Development
and Gaming Control Act (Chapter 2004, Occupations Code).
SECTION 3. 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) to a casino licensed under Chapter 2004,
Occupations Code, for casino gaming; or
(2) to another jurisdiction where the possession or
use of the device, equipment, or paraphernalia was legal.
SECTION 4. Section 47.09(a), Penal Code, is amended 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) the Texas Economic Development and Gaming
Control Act (Chapter 2004, Occupations Code);
(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.
SECTION 5. Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.356 to read as follows:
Sec. 151.356. ELECTRONIC AND ELECTROMECHANICAL GAMING
DEVICES. An electronic or electromechanical gaming device
permitted under the Texas Economic Development and Gaming Control
Act (Chapter 2004, Occupations Code) is exempt from the tax imposed
by this chapter and from the other provisions of this chapter.
SECTION 6. Section 11.05, Texas Racing Act (Article 179e,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 11.05. UNLAWFUL WAGERING. A person shall not wager on
the result of a greyhound race or horse race in this state except as
permitted by this Act or by the Texas Economic Development and
Gaming Control Act (Chapter 2004, Occupations Code).
SECTION 7. All funds in the Texas casino gaming fund are
appropriated to the Texas Gaming Commission for the operation of
the commission and the administration of the Texas Economic
Development and Gaming Control Act (Chapter 2004, Occupations
Code), as added by Section 1 of this Act, for the biennium ending
August 31, 2005.
SECTION 8. The governor shall make the initial appointments
to the Texas Gaming Commission not later than the 30th day after the
effective date of this Act. In making the initial appointments to
the Texas Gaming Commission, the governor shall designate two
members for terms expiring in 2005, two members for terms expiring
in 2007, and two members for terms expiring in 2009.
SECTION 9. Subchapter N, Texas Economic Development and
Gaming Control Act (Chapter 2004, Occupations Code), as added by
Section 1 of this Act, takes effect September 1, 2003. The
remainder of this Act takes effect on the date on which the
constitutional amendment proposed by the 78th Legislature, Regular
Session, 2003, authorizing casino gaming takes effect. If that
amendment is not approved by the voters, then this entire Act has no
effect.