By:  Armbrister                                                   S.B. No. 1244

A BILL TO BE ENTITLED
AN ACT
relating to operation of video lottery machines at racetracks. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 466.002, Government Code, is amended by amending Subdivisions (5), (8), and (9), and adding Subdivisions (11), (12), (13), and (14) to read as follows: (5) "Lottery means the procedures operated by the state under this Act through which prizes are awarded or distributed by chance among persons who have paid, or unconditionally agreed to pay, for a chance or other opportunity to receive a prize and includes all procedures associated with the operation of video lottery games. (8) "Player" means a person who contributes any part of the consideration for a ticket or for a video lottery game. (9) "Sales agent" or "sales agency" means a person licensed under this Act to sell lottery tickets or to operate video lottery game machines. (11) "Video lottery game" means a lottery game approved by the commission and conducted with or played on a video lottery machine, or a network of video lottery machines, that are connected to a central computer system operated by the commission. (12) "Video lottery agent" means a sales agent or sales agency licensed to operate a video lottery game on behalf of the state at a racetrack licensed under Article 179e, Vernon's Annotated Texas Civil Statutes. (13) "Video lottery machine manufacturer" means a person licensed by the commission to manufacture video lottery machines. (14) "Central computer system" means a central computer operated by the commission that each video lottery machine can communicate with to transmit auditing program information and that can be used for the activation and disabling of video lottery machines. SECTION 2. Section 466.024, Government Code, is amended to read as follows: Sec. 466.024. Prohibited Games. (a) The executive director or a lottery operator may not establish or operate a lottery game in which the winner is chosen on the basis of the outcome of a sports event. (b) The commission shall adopt rules prohibiting the operation of any game using a video lottery machine or machine other than a video lottery game as defined in section 466.002. (c) In this section: (1) "Sports event" means a football, basketball, baseball, or similar game, or a horse or dog race on which pari-mutuel wagering is allowed. (2) "Video lottery machine" or "machine" means any electronic video game machine that, upon insertion of cash, is available to play or simulate the play of a video game, including video poker, keno, and blackjack, using a video display and microprocessors in which the player may receive free games or credits that can be redeemed for cash, coins, or tokens or that directly dispenses cash, coins, or tokens. SECTION 3. Section 466.155(a), Government Code, is amended to read as follows: (a) After a hearing, the director shall deny an application for a license or the commission shall suspend or revoke a license if the director or the commission, as applicable, finds that the applicant or sales agent: (1) is an individual who: (A) has been convicted of a felony, criminal fraud, gambling or gambling related offense, or a misdemeanor involving moral turpitude, if less than 10 years has elapsed since the termination of the sentence, parole, mandatory supervision, or probation served for the offense; (B) is or has been a professional gambler; (C) is married to an individual: (i) described in Paragraph (A) or (B); or (ii) who is currently delinquent in the payment of any state tax; (D) is an officer or employee of the commission or a lottery operator; or (E) is a spouse, child, brother, sister, or parent residing as a member of the same household in the principal place of residence of a person described by Paragraph (D); (2) is not an individual, and an individual described in Subdivision (1): (A) is an officer or director of the applicant or sales agent; (B) holds more than 10 percent of the stock in the applicant or sales agent; (C) holds an equitable interest greater than 10 percent in the applicant or sales agent; (D) is a creditor of the applicant or sales agent who holds more than 10 percent of the applicant's or sales agent's outstanding debt; (E) is the owner or lessee of a business that the applicant or sales agent conducts or through which the applicant will conduct a ticket sales agency; (F) shares or will share in the profits, other than stock dividends, of the applicant or sales agent; or (G) participates in managing the affairs of the applicant or sales agent; (3) has been finally determined to be: (A) delinquent in the payment of a tax or other money collected by the comptroller, the Texas Workforce Commission, or the Texas Alcoholic Beverage Commission; (B) in default on a loan made under Chapter 52, Education Code; or (C) in default on a loan guaranteed under Chapter 57, Education Code; (4) is a person whose location for the sales agency is: (A) a location licensed for games of bingo under Chapter 2001, Occupations Code; (B) on land that is owned by: (i) this state; or (ii) a political subdivision of this state and on which is located a public primary or secondary school, an institution of higher education, or an agency of the state; or [(C) a location for which a person holds a wine and beer retailer's permit, mixed beverage permit, mixed beverage late hours permit, private club registration permit, or private club late hours permit issued under Chapter 25, 28, 29, 32, or 33, Alcoholic Beverage Code; or] (D) if the application is for a video lottery agent, a racetrack licensed after January 1, 2003; or (5) has violated this chapter or a rule adopted under this chapter. SECTION 4. Section 3.021, Texas Racing Act (Article 179e, Vernon's Annotated Texas Civil Statutes) is amended by adding Section 3.021(e) to read as follows: (a) Any provision in this Act to the contrary notwithstanding, the commission may license and regulate all aspects of greyhound racing and horse racing in this state, whether or not that racing involves pari-mutuel wagering. (b) To protect the health, safety, and welfare of race animals and participants in racing, to safeguard the interest of the general public, and to promote the orderly conduct of racing within the state, the commission may adopt rules for the licensing and regulation of races and workouts at racetracks that do not offer pari-mutuel wagering and for workouts at training facilities to secure past performances and workouts. (c) The commission may charge an annual fee for licensing and regulating a racetrack that does not offer pari-mutuel wagering or a training facility in a reasonable amount that may not exceed the actual cost of enforcing rules adopted for the licensing and regulation of races and workouts at such a facility. (d) The commission may not adopt rules restricting competitive bidding or advertising by a licensee except to prohibit false, misleading, or deceptive practices. In its rules to prohibit false, misleading, or deceptive practices, the commission may not include a rule that: (1) restricts the use of any medium for advertising; (2) restricts the use of a licensee's personal appearance or voice in an advertisement; (3) relates to the size or duration of an advertisement by the licensee; or (4) restricts the licensee's advertisement under a trade name. (e) The commission may license and regulate all aspects of the video lottery agents at racetracks in this state. In doing so, the commission shall coordinate with the Texas Lottery Commission to ensure no duplication of regulations. The commission may charge a reasonable fee, as determined by rule, for regulating video lottery agents at racetracks. SECTION 5. Article 6, Texas Racing Act (Article 179e, Vernon's Annotated Texas Civil Statutes) is amended by adding Section 6.011 to read as follows: Sec. 6.011. LICENSE REQUIRED FOR VIDEO LOTTERY. (a) A person may not operate a video lottery game in this state without obtaining a video lottery agent license from the commission. (b) The commission shall issue a license to operate a video lottery game to an applicant in good standing with the commission that holds a racetrack license issued by the commission on or before January 1, 2003. (c) The commission may adopt rules and charge fees to implement this section. SECTION 6. Article 6, Texas Racing Act (Article 179e, Vernon's Annotated Texas Civil Statutes) is amended by adding Section 6.095 to read as follows: Sec. 6.095. DEDUCTIONS FROM VIDEO LOTTERY PROCEEDS AT HORSE TRACKS. All proceeds, net of proceeds returned to players and the state, shall be allocated between the horse racetrack and horse purses pursuant to an agreement between the horse racetrack and the officially recognized horsemen's organization. SECTION 7. Article 6, Texas Racing Act (Article 179e, Vernon's Annotated Texas Civil Statutes) is amended by adding Section 6.096 to read as follows: Sec. 6.096. DEDUCTIONS FROM VIDEO LOTTERY PROCEEDS AT GREYHOUND RACETRACKS. All proceeds, net of proceeds returned to players and the state, shall be allocated between the greyhound racetrack and greyhound purses pursuant to an agreement between the greyhound racetrack and the official state greyhound breed registry. SECTION 8. Article 8, Texas Racing Act (Article 179e, Vernon's Annotated Texas Civil Statutes) is amended by adding Section 8.01(a) and (b) to read as follows: (a) The commission shall allocate the live and simulcast racing days for the conduct of live and simulcast racing at each racetrack licensed under this Act. Each racetrack shall accord reasonable access to races for all breeds of horses as determined by the racetrack through negotiations with the representative state breed registry with the final approval of the commission. In granting approval, the commission shall consider the factors of availability of competitive horses, economic feasibility, and public interest. In allocating race dates under this section, the commission shall consider live race dates separately from simulcast race dates. The commission may prohibit Sunday racing unless the prohibition would conflict with another provision of this Act. (b) A racetrack that is licensed as a video lottery agent may not offer for pari-mutuel wagering fewer live racing opportunities or simulcast days than the number of live racing opportunities conducted and simulcast days offered during the calendar year preceding the year this Act takes effect, unless otherwise agreed by mutual agreement by the affected parties. SECTION 9. Section 47.01(4), Penal Code, is amended to read as follows: (4) "Gambling device" means any electronic, electromechanical, or mechanical contrivance not excluded under Paragraph (B) or the State Lottery Act (Chapter 466, Government Code) that for a consideration affords the player an opportunity to obtain anything of value, the award of which is determined solely or partially by chance, even though accompanied by some skill, whether or not the prize is automatically paid by the contrivance. The term: (A) includes, but is not limited to, gambling device versions of bingo, keno, blackjack, lottery, roulette, video poker, or similar electronic, electromechanical, or mechanical games, or facsimiles thereof, that operate by chance or partially so, that as a result of the play or operation of the game award credits or free games, and that record the number of free games or credits so awarded and the cancellation or removal of the free games or credits; and (B) does not include any electronic, electromechanical, or mechanical contrivance designed, made, and adapted solely for bona fide amusement purposes if the contrivance rewards the player exclusively with noncash merchandise prizes, toys, or novelties, or a representation of value redeemable for those items, that have a wholesale value available from a single play of the game or device of not more than 10 times the amount charged to play the game or device once or $5, whichever is less. SECTION 10. Section 47.06, Penal Code, is amended by amending Subdivision (d) to read as follows: (d) It is a defense to prosecution under Subsections (a) and (c) that: (1) the device, equipment, or paraphernalia is used for or is intended for use in gambling that is to occur entirely in a private place; (2) a person involved in the gambling does not receive any economic benefit other than personal winnings; [and] (3) except for the advantage of skill or luck, the chance of winning is the same for all participants; and (4) the device, equipment or paraphernalia is used pursuant to a license issued under the State Lottery Act (Chapter 466, Government Code). SECTION 11. This Act takes effect September 1, 2003.