79R7126 YDB-F
By: Armbrister S.B. No. 1327
A BILL TO BE ENTITLED
AN ACT
relating to the establishment, oversight, and operation of video
lottery terminals owned by Indian tribes on Indian lands; providing
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. VIDEO LOTTERY ON INDIAN LANDS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2004.001. DEFINITIONS. In this chapter:
(1) "Communication technology" means the methods used
and the components employed to facilitate the transmission of
information, including transmission and reception systems that
transmit information through wire, cable, radio, microwave, light,
optics, or computer data networks.
(2) "Disable" with respect to video lottery terminals
means the process that causes a video lottery terminal to cease
functioning on issuance of a shutdown command from the video
lottery central system.
(3) "Distribute" with respect to a video lottery
terminal means the sale, lease, marketing, offer, or other
disposition of a video lottery terminal, the electronic computer
components of a video lottery terminal, the cabinet in which a video
lottery terminal is housed, video lottery equipment, or video
lottery game software intended for use or play in this state or on
Indian lands in this state.
(4) "Division" means the video lottery division
established by the comptroller under this chapter.
(5) "Gaming agreement" means an agreement authorized
under Subchapter F in effect between this state and a federally
recognized Indian tribe under which this state permits the tribe to
conduct limited gaming activities authorized under this chapter or
applicable federal law regulated by tribal gaming agencies subject
to strict and enforceable state oversight.
(6) "House-banked card game" means a game of chance
played with a deck or decks of cards:
(A) in which the house plays as a participant;
(B) in which the house takes on all players,
collects from all losers, and pays all winners; and
(C) that the house has an opportunity to win.
(7) "Indian lands" means:
(A) land located within an Indian reservation;
(B) land over which an Indian tribe exercises
governmental power and the title to which:
(i) on January 1, 1998, was held in trust by
the United States for the benefit of an Indian tribe or individual
member of an Indian tribe and that currently remains held in trust;
or
(ii) on January 1, 1998, was held by an
Indian tribe or an individual member of an Indian tribe and subject
to restriction by the United Sates against alienation, and that
currently remains held in trust; and
(C) land within the same county in which land
that qualifies under Paragraph (A) or (B) is located, provided the
land is more than one-half mile from the property line of a school
or place of established religious worship.
(8) "Manufacture," with respect to video lottery,
means to design, assemble, fabricate, produce, program, or make
modifications to a video lottery terminal, the electronic computer
components of a video lottery terminal, the cabinet in which a video
lottery terminal is housed, video lottery equipment, or video
lottery game software intended for use or play in this state or on
Indian lands in this state.
(9) "Net terminal income" means the total amount of
money paid to play video lottery games, less the value of all
credits redeemed for money or prizes including any progressive
prizes, by the players of the video lottery games. Noncash prizes
deducted from the total amount of money paid must be valued at the
actual cost incurred by the video lottery terminal establishment
for the prize. Promotional prizes offered by a video lottery
terminal establishment may not be deducted or otherwise considered
credits redeemed for money by players for the purpose of
determining net terminal income. A promotional prize is a prize
unrelated to the play of the game.
(10) "Player" means a person who contributes any part
of the consideration to play a video lottery game under this
chapter.
(11) "Slot machine" means a mechanical, electrical, or
other type of device, contrivance, or machine that plays or
operates on insertion of a coin, currency, token, or similar object
or on payment of any other consideration, and that is not connected
to the video lottery central system, and the play or operation of
which, through the skill of the operator, by chance, or both, 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
in any other manner. The term does not include any equipment,
machine, technological aid, or other device in connection with the
play of bingo under Chapter 2001.
(12) "Sports event" means a football, basketball,
baseball, or similar game, or a horse or greyhound race on which
pari-mutuel wagering is allowed.
(13) "Substantial interest holder" means any of the
following that is not a federally recognized Indian tribe or a bona
fide lender, bank, or other authorized or licensed lending
institution that holds a mortgage or other lien acquired in the
ordinary course of business or a vendor of the applicant or license
holder that is not otherwise a substantial interest holder:
(A) a person who directly, indirectly, or
beneficially owns any interest in a privately owned corporation,
association, trust, partnership, limited partnership, joint
venture, subsidiary, or other entity, regardless of its form,
structure, or nature;
(B) a person who directly, indirectly, or
beneficially owns 10 percent or more of any publicly owned
corporation, association, trust, partnership, limited partnership,
joint venture, subsidiary, or other entity, regardless of its form,
structure, or nature;
(C) a person associated with an applicant or
license holder who the comptroller determines has the power or
authority to:
(i) control the activities of the applicant
or license holder; or
(ii) elect or select the applicant's or
license holder's comptroller, managers, or partners, or a majority
of the board of directors of the applicant or license holder; and
(D) any key personnel of a video lottery terminal
establishment, including the applicant's or license holder's
comptroller or an officer, director, manager, member, partner,
limited partner, executive, employee, or agent who the comptroller
determines has the power to exercise significant influence over
decisions concerning any part of the applicant's or license
holder's business operation.
(14) "Video lottery central system" means the system
of procedures and facilities operated and controlled by a tribal
gaming agency that links together all video lottery terminals
operated in this state by the applicable Indian tribe on its Indian
lands and allows the tribal gaming agency, subject to strict state
oversight, to continuously monitor the activity of each of those
video lottery terminals and to disable any of those video lottery
terminals.
(15) "Video lottery central system provider" means a
person that, by contract with a tribal gaming agency, provides the
video lottery central system to the agency.
(16) "Video lottery equipment" means:
(A) a video lottery terminal;
(B) equipment, components, or contrivances used
remotely or directly in connection with a video lottery terminal
to:
(i) affect the reporting of gross revenue
and other accounting information, including a device for weighing
and counting money;
(ii) connect video lottery terminals
together for accounting or wide-area prize or progressive prize
purposes;
(iii) monitor video lottery terminal
operations; and
(iv) provide for the connection of video
lottery terminals to a video lottery central system; or
(C) any other communications technology or
equipment necessary for the operation of a video lottery terminal.
(17) "Video lottery game" means an electronically
simulated game approved and controlled by a tribal gaming agency,
pursuant to a gaming agreement in effect, the outcome of which is
determined solely by chance based on a computer-generated random
selection of winning combinations of symbols or numbers, and that
is displayed on a video lottery terminal that:
(A) is connected to a video lottery central
system;
(B) operates by a player's insertion of a coin,
currency, voucher, or token into the video lottery terminal that
causes the video lottery terminal to display credits that entitle
the player to select one or more symbols or numbers or cause the
video lottery terminal to randomly select symbols or numbers;
(C) allows the player to win additional game play
credits, coins, or tokens based on game rules that establish the
random selection of winning combinations of symbols or numbers and
the number of free play credits, coins, or tokens to be awarded for
each winning combination; and
(D) allows the player at any time to clear all
game play credits and receive a video lottery ticket entitling the
player to receive the cash value of those credits.
(18) "Video lottery manager" means a person who is
licensed by a tribal gaming agency under this chapter to manage a
video lottery terminal establishment or who provides management
services for a video lottery terminal establishment on Indian
lands.
(19) "Video lottery system" means the system
authorized under this chapter under which individuals play lottery
games on video lottery terminals as authorized under this chapter
at video lottery terminal establishments on Indian lands subject to
strict state oversight.
(20) "Video lottery terminal" means an interactive
electronic terminal device that is connected to a video lottery
central system and displays video lottery games authorized under
this chapter. The term does not include a house-banked card game, a
slot machine, or any other stand-alone video gambling device that
is not connected to a video lottery central system or that is
otherwise prohibited under state law.
(21) "Video lottery terminal establishment" means
premises at which the operation of video lottery terminals is
authorized by a tribal gaming agency pursuant to a gaming agreement
in effect.
(22) "Video lottery terminal provider" means a person
in the business of manufacturing or distributing video lottery
terminals in this state.
(23) "Video lottery ticket" means the tangible
evidence issued by a video lottery terminal to reflect winnings
from the play of a video lottery game.
Sec. 2004.002. APPLICATION OF SUNSET ACT. This chapter is
subject to Chapter 325, Government Code (Texas Sunset Act). Unless
continued in existence as provided by that chapter, this chapter
expires September 1, 2017.
Sec. 2004.0025. CONTINUITY OF STATE OVERSIGHT. (a)
Notwithstanding any other provision of this chapter, if any gaming
agreement that allows video lottery is in effect, the comptroller
or another state agency designated by the legislature must provide
oversight of the regulation by a tribal gaming agency for video
lottery games as necessary to comply with a gaming agreement under
this chapter.
(b) The expiration provision of Section 2004.002 does not
apply to this section.
Sec. 2004.003. NONINTERFERENCE BY STATE POLITICAL
SUBDIVISIONS. (a) A political subdivision of this state may not
impose:
(1) a tax on the play of a video lottery terminal;
(2) a tax on the payment of a prize under this chapter;
(3) an ad valorem tax on video lottery games;
(4) a tax, fee, or other assessment on consideration
paid to play a video lottery game; or
(5) a tax or fee for attendance at or admission to a
video lottery terminal establishment.
(b) Nothing in this chapter precludes an Indian tribe and a
political subdivision from entering into an agreement for municipal
services or for mitigation of impacts from the tribe's video
lottery terminal establishments.
Sec. 2004.004. LOCAL LAW PREEMPTED; APPLICABILITY OF OTHER
LAWS. (a) This chapter applies uniformly throughout this state and
all political subdivisions of this state.
(b) To the extent of any inconsistency between Chapter 2003
and a comptroller rule governing video lottery terminals or a
provision of this chapter, the comptroller rule or provision of
this chapter controls in all matters related to video lottery
terminals, including hearings before the State Office of
Administrative Hearings.
[Sections 2004.005-2004.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF COMPTROLLER
Sec. 2004.051. OVERSIGHT; RULES; CONTRACT AUTHORITY. (a)
The comptroller has oversight authority of tribal regulation over
all video lottery games located on Indian lands to promote and
ensure integrity, security, honesty, and fairness in the operation
and administration of video lottery games on Indian lands.
(b) The comptroller may adopt rules as necessary to carry
out the purposes of this chapter.
(c) The comptroller may contract with or employ a person to
perform a function, activity, or service in connection with the
comptroller's oversight of the operation of video lottery games on
Indian lands. A contract relating to the oversight of the operation
of video lottery games on Indian lands must be consistent with a
gaming agreement in effect. A person with whom the comptroller
contracts to provide services or equipment in connection with the
oversight of video lottery games on Indian lands must be licensed,
registered, or approved by the applicable tribal gaming agency in
accordance with the gaming agreement in effect.
(d) The comptroller may award a contract for equipment or
services, including a contract under Subsection (c), pending the
completion of any investigation and licensing, registration, or
other approval authorized and required by this chapter. A contract
awarded under this section must include a provision permitting the
comptroller to terminate the contract without penalty if the
investigation reveals that the person to whom the contract is
awarded does not satisfy the applicable requirements for licensing,
registration, or other approval under the gaming agreement in
effect.
(e) In the acquisition or provision of facilities,
supplies, equipment, materials, or services related to the
comptroller's oversight of video lottery games on Indian lands, the
comptroller is exempt from:
(1) procurement procedures prescribed under Subtitle
D, Title 10, Government Code; and
(2) any bidding or contract requirements provided by
any other law or by comptroller rules.
Sec. 2004.052. AUDIT AUTHORITY AND COOPERATION WITH
COMPTROLLER. (a) The comptroller shall conduct or cause to be
conducted an independent audit of a tribal video lottery terminal
establishment's and the tribal gaming agency's annual financial
statements in accordance with generally accepted auditing
standards that requires the accountant to express an opinion on the
conformity of the financial statements with generally accepted
accounting principles. An outside firm contracted by the
comptroller in connection with the audit may not have a significant
financial interest in a video lottery vendor, video lottery
manager, video lottery retailer, video lottery terminal provider,
video lottery central system provider, or lottery operator. The
comptroller shall present an audit report to the governor, the
tribal gaming agency, and the legislature not later than the 30th
day after the submission date for the annual financial report
required by the General Appropriations Act. The state auditor may
review the results of and working papers related to the audit.
(b) The records of a video lottery manager, video lottery
retailer, video lottery terminal provider, or video lottery central
system provider are subject to audit by the comptroller and the
state auditor. For the purpose of carrying out this chapter, the
comptroller or state auditor may examine all books, records,
papers, or other objects that the comptroller or state auditor
determines are necessary for conducting a complete examination
under this chapter and may also examine under oath any officer,
director, or employee of a video lottery manager, video lottery
retailer, video lottery terminal provider, or video lottery central
system provider. The comptroller or state auditor may conduct an
examination at the principal office or any other office of the video
lottery manager, video lottery retailer, video lottery terminal
provider, or video lottery central system provider, or may require
the video lottery manager, video lottery retailer, video lottery
terminal provider, or video lottery central system provider to
produce the records at the office of the comptroller or state
auditor. If a video lottery manager, video lottery retailer, video
lottery terminal provider, or video lottery central system provider
refuses to permit an examination or to answer any question
authorized by this subsection, the tribal gaming agency shall
summarily suspend the license or registration of the video lottery
manager, video lottery retailer, video lottery terminal provider,
or video lottery central system provider until the examination is
completed as required.
Sec. 2004.053. INVESTIGATIONS. The attorney general, the
district attorney for Travis County, or the district attorney,
criminal district attorney, or county attorney performing the
duties of district attorney for the county in which the violation or
alleged violation occurred may investigate a violation or alleged
violation of this chapter and of the penal laws of this state.
Sec. 2004.054. AUTHORITY OF STATE LAW ENFORCEMENT OFFICERS.
(a) To administer this chapter, the comptroller may employ
security officers or investigators as the comptroller considers
necessary and may commission security officers or investigators as
peace officers.
(b) Except as limited by this section, a security officer or
investigator employed by the comptroller or a peace officer who is
working in conjunction with the comptroller or the Department of
Public Safety in the enforcement of this chapter may:
(1) without a search warrant, search a video lottery
terminal or other gaming equipment that is located on premises for
which a person holds a video lottery retailer or video lottery
manager license issued under this chapter; or
(2) on non-Indian lands, seize a video lottery
terminal or other gaming equipment that is being used or is in the
possession of any person in violation of this chapter.
(c) If the gaming equipment is located on the Indian lands
of a tribe that has entered into a gaming agreement under this
chapter that is in effect, the security officer or investigator
shall notify the applicable tribal gaming agency of the need to
seize the equipment. The tribal gaming agency shall take the action
recommended by the state officer by securing the equipment and
preventing further play of the equipment by gaming patrons. If the
tribal gaming agency concludes, after 24 hours have elapsed since
the seizure, that further play of the equipment does not violate
this chapter or other applicable law or threaten the integrity of
the gaming operation, the agency shall notify the comptroller. The
tribal gaming agency may allow the equipment to be placed back into
operation not earlier than 72 hours after the notice to the
comptroller unless the comptroller within that 72-hour period
secures an injunction to prohibit that action.
Sec. 2004.055. CONFIDENTIALITY OF RECORDS. (a) In
addition to the comptroller's records excepted from disclosure
under Chapter 552, Government Code, the following information is
confidential and is exempt from disclosure:
(1) information relating to all system operations of
video lottery games, including the operation of the video lottery
system, security related to video lottery games, and plans and
procedures intended to ensure the integrity and security of the
operation of video lottery games; and
(2) information provided by a tribe or tribal gaming
agency pursuant to the Indian tribe's obligations under this
chapter or under a gaming agreement that is in effect.
(b) Information that is confidential under this section
includes information that:
(1) is required by the comptroller to be furnished to
the comptroller under a gaming agreement in effect or that may
otherwise be obtained by the comptroller from any source;
(2) pertains to a tribal gaming agency license
applicant's criminal record, antecedents, and background that is
furnished to or obtained by the comptroller from any source,
including information obtained by the comptroller from a tribal
gaming agency;
(3) is provided to the comptroller, a comptroller
employee, or an investigator acting on behalf of the comptroller or
on behalf of a tribal gaming agency by a governmental agency or an
informer or on the assurance that the information will be held in
confidence and treated as confidential;
(4) is obtained by the comptroller from a video
lottery manager, video lottery retailer, video lottery terminal
provider, or video lottery central system provider;
(5) is prepared or obtained by an agent or employee of
the comptroller or of a tribal gaming agency relating to a license
application, a finding of suitability, or any approval required
under a gaming agreement in effect; or
(6) is provided by an Indian tribe pursuant to the
tribe's obligations under this chapter or under a gaming agreement
in effect.
(c) Information that qualifies as confidential under this
section may be disclosed in whole or in part only as necessary to
administer this chapter or on the order of a court of competent
jurisdiction. The comptroller, subject to appropriate procedures,
may disclose the information to an authorized agent of a political
subdivision of this state, the United States, another state or a
political subdivision of another state, a tribal law enforcement
agency, or the government of a foreign country for official
purposes of the other entity.
(d) The comptroller in the comptroller's discretion may
disclose a compilation of statistical information that is otherwise
confidential under this section if the compilation does not
disclose the identity of an applicant, license holder, or video
lottery terminal establishment.
(e) Notwithstanding any other provision of state law, the
information provided under Subsection (c) or (d) may not otherwise
be disclosed without specific comptroller authorization.
Sec. 2004.056. RESTRICTION ON AUTHORITY TO CONTRACT. An
Indian tribe or tribal gaming agency may not award a contract for
the purchase or lease of facilities, goods, or services related to
video lottery operations to a person who:
(1) is not registered as a video lottery terminal
provider by the tribal gaming agency; or
(2) is deemed unsuitable for a license under the
gaming agreement in effect.
Sec. 2004.057. ESTABLISHMENT OF STATE VIDEO LOTTERY
ACCOUNT. The state video lottery account is a special account in
the general revenue fund. The account consists of all revenue
received under gaming agreements with federally recognized Indian
tribes under this chapter. Interest earned by the state lottery
account shall be deposited in the unobligated portion of the
general revenue fund.
[Sections 2004.058-2004.100 reserved for expansion]
SUBCHAPTER C. AUTHORIZATION OF VIDEO LOTTERY GAMES
ON INDIAN LANDS
Sec. 2004.101. LEGISLATIVE FINDINGS AND DECLARATIONS. The
legislature finds and declares the following:
(1) The purpose and intent of this chapter is to carry
out the intent of the voters as established by the approval of
Section 47(f), Article III, Texas Constitution, to expand the
revenue-generating ability of this state by authorizing this state
to enter into gaming agreements with federally recognized Indian
tribes to govern the play of video lottery games on Indian lands
consistent with public policy strictly limiting the expansion of
gambling in this state.
(2) Except for the operation of the state lottery and
the operation of video lottery terminals on certain Indian lands,
the people of this state intend to prohibit the operation and
possession of gaming devices.
(3) This state has the authority and responsibility to
control the proliferation of gambling by:
(A) limiting the play of video lottery terminals
to a fixed number of federally recognized Indian tribes;
(B) extending state oversight and supervision to
all persons, locations, practices, and associations related to the
operation of video lottery games; and
(C) providing comprehensive law enforcement
supervision of video lottery game activities.
(4) This state's ability to monitor and control the
operation of all video lottery terminals, including strict
oversight of the operation of video lottery terminals on Indian
lands, ensures the integrity of the system and provides for the most
efficient oversight and supervision. Costs incurred for oversight
and supervision of gambling will be significantly less than if
video lottery terminals were not operated as part of video lottery
central systems. In addition, providing for strict oversight of
regulation of video lottery games located on Indian lands will
protect against criminal infiltration of gambling operations.
(5) The federal policy of supporting tribal
self-governance and self-sufficiency is enhanced by the ability of
Indian tribes with Indian lands in this state to offer video lottery
games subject to strict state oversight as a means to generate
urgently needed governmental revenues to enable tribal governments
to provide adequate governmental services and to prudently steward
tribal lands.
(6) Through the video lottery system, the comptroller
will have strict oversight of the regulation of video lottery
terminals located on Indian lands to ensure maximum security unique
to government-operated gambling, and each operating video lottery
terminal on Indian lands will be connected to video lottery central
systems. The state lottery is in the for-profit governmental
gaming business as a competitor for the public's disposable
entertainment dollars and, as such, it is inappropriate for the
Texas Lottery Commission, the agency that oversees the state
lottery, to perform regulatory functions in connection with video
lottery games on Indian lands.
(7) The authorization for tribal-controlled video
lottery terminals subject to strict state oversight for the purpose
of raising revenue is consistent with this state's public policy
prohibiting gambling so long as the gambling is not, in any way,
expanded beyond that directly controlled or overseen by this state.
(8) By limiting operation of video lottery terminals
to those connected to a video lottery central system and to certain
Indian lands and to certain types of games, the legislature seeks to
foster this state's legitimate sovereign interest in regulating the
growth of gambling activities in this state. Historically, this
state has banned commercial nongovernmental gambling, and,
therefore, it is in this state's best interest to limit the
placement of governmental gambling operations to certain
locations. Limiting video lottery terminals to those controlled by
the three federally recognized Indian tribes with Indian lands in
this state and subject to strict state oversight is reasonably
designed to defend against the criminal infiltration of gambling
operations and adverse impacts on communities statewide. By
restricting gambling such as video lottery terminals to carefully
limited locations and video lottery terminals controlled by this
state that may be disabled by order to a tribal gaming agency if
necessary to protect the public, this state furthers the state's
purpose of ensuring that such gambling activities are free from
criminal and undesirable elements.
(9) This chapter is game-specific and may not be
construed to allow the operation of any other form of gambling
unless specifically allowed by this chapter. This chapter does not
allow the operation of slot machines, dice games, roulette wheels,
house-banked card games, or games in which winners are determined
by the outcome of a sports contest that are expressly prohibited
under state law.
(10) In considering limitations on expanded gambling
in this state, it is a critical factor to effectuate the will of the
voters that any gaming on lands of the Ysleta del Sur Pueblo (Tigua
Tribe), the Alabama-Coushatta Tribes of Texas, and the Kickapoo
Traditional Tribe of Texas are entitled to operate video lottery
terminals only in strict compliance with the gaming agreement
required by this chapter. Nothing in this chapter is intended to
authorize any other form of gaming on Indian lands.
(11) In considering limitations on expanded gambling
in this state, it is a critical factor to effectuate the will of the
voters that any gaming on lands of the Ysleta del Sur Pueblo (Tigua
Tribe), the Alabama-Coushatta Tribes of Texas, and the Kickapoo
Traditional Tribe of Texas be in material part consideration for
the exclusive right to operate video lottery terminals at locations
on the Indian lands in this state, and through revenue-sharing both
the policy of self-governance for the tribes and this state's
interests in generating additional revenue for public education and
other state governmental programs can be promoted.
(12) Participation in a video lottery game by a
license or registration holder under this chapter is considered a
privilege conditioned on the proper and continued qualification of
the license or registration holder and on the discharge of the
affirmative responsibility of each license or registration holder
to provide to the regulatory and investigatory authorities
established by this chapter any assistance and information
necessary to assure that the policies declared by this chapter are
achieved. Consistent with this policy, it is the intent of this
chapter to:
(A) preclude the creation of any property right
in any license, registration, or approval issued or granted by a
tribal gaming agency under this chapter, the accrual of any value to
the privilege of participation in any video lottery game operation,
or the transfer of a license or permit; and
(B) require that participation in video lottery
game operations be solely conditioned on the individual
qualifications of persons seeking this privilege.
(13) Video lottery terminals lawfully operated on
Indian lands pursuant to a gaming agreement in effect are hereby
expressly excepted from the prohibitions and restrictions of the
Johnson Act (15 U.S.C. Section 1171 et seq.).
Sec. 2004.102. AUTHORITY TO OPERATE VIDEO LOTTERY. The
comptroller may allow the operation of video lottery terminals
pursuant to this chapter at locations on Indian lands in accordance
with an effective gaming agreement and in compliance with
applicable federal law.
Sec. 2004.103. STATE OVERSIGHT OF VIDEO LOTTERY SYSTEM.
(a) In accordance with Section 47(f), Article III, Texas
Constitution, the comptroller shall have oversight authority,
including the ability to monitor activity of video lottery
terminals located on Indian lands and the ability to direct a tribal
gaming agency to remotely disable video lottery terminals for the
public safety, health, and welfare or the preservation of the
integrity of the lottery and to prevent any financial loss to an
Indian tribe and to this state.
(b) This section does not affect or restrict the ability of
the video lottery retailer or manager to monitor activity of video
lottery terminals and to disable video lottery terminals in
accordance with comptroller rules.
(c) The comptroller may order a tribal gaming agency to
disable a video lottery terminal located on Indian lands if a video
lottery retailer's or video lottery manager's license is revoked,
surrendered, or summarily suspended or to prevent any financial
loss to this state.
[Sections 2004.104-2004.150 reserved for expansion]
SUBCHAPTER D. LICENSING, REGISTRATION, AND APPROVAL
Sec. 2004.151. REGISTRATION AND APPROVAL OF VIDEO LOTTERY
TERMINAL PROVIDERS. (a) A person may not manufacture or distribute
video lottery equipment for use or play in this state unless the
person is registered under this chapter as a video lottery terminal
provider by the comptroller and registered by the tribal gaming
agency or is otherwise approved by a tribal gaming agency pursuant
to a gaming agreement in effect to manufacture or distribute video
lottery equipment in this state.
(b) Unless suspended or revoked, the registration or
approval expires on the date specified in the registration issued
by the comptroller or the date specified in the registration or
approval by the tribal gaming agency, which may not be later than
the fifth anniversary of the date of the registration or approval.
(c) To be eligible for registration or approval as required
by this section, an applicant must satisfy all requirements under
this chapter.
(d) The comptroller and each tribal gaming agency shall
adopt rules governing the registration and approval of video
lottery terminal providers. The rules at a minimum must require the
application and any other form or document submitted to the
comptroller and a tribal gaming agency by or on behalf of the
applicant to determine qualification under this section to be sworn
to or affirmed before an officer qualified to administer oaths. The
applicant must provide the following information:
(1) the full name and address of the applicant;
(2) the full name and address of each location at which
video lottery equipment is or will be manufactured or stored in this
state;
(3) the name, home address, and share of ownership of
the applicant's substantial interest holders;
(4) a full description of each separate type of video
lottery equipment that the applicant seeks to manufacture or
distribute in this state;
(5) the brand name under which each type of video
lottery equipment is to be distributed;
(6) if the applicant is incorporated under laws other
than the laws of this state, an irrevocable designation by the
applicant of the secretary of state as resident agent for service of
process and notice in accordance with the laws of this state;
(7) a list of all businesses or organizations in this
state in which the applicant has any financial interest and the
details of that financial interest, including all arrangements
through which a person directly or indirectly receives any portion
of the profits of the video lottery terminal provider and
indebtedness between the license holder and any other person, other
than a regulated financial institution, in excess of $5,000;
(8) a list of all affiliated businesses or
corporations in which the applicant or an officer, director, or
substantial interest-holder of the applicant, either directly or
indirectly, owns or controls as a sole proprietor or partner more
than 10 percent of the voting stock of a publicly traded
corporation;
(9) a list of all businesses or corporations licensed
to conduct gambling activities or to supply gambling-related
equipment, supplies, or services in which the applicant or an
officer, director, or substantial interest-holder of the applicant
has any interest;
(10) a list of all jurisdictions in which the
applicant or an officer, director, or substantial interest-holder
of the applicant has been licensed, registered, qualified, or
otherwise approved for gambling-related activities during the
preceding 10 years from the date of the filing of the application;
(11) a statement indicating whether the applicant or
an officer, director, or substantial interest-holder of the
applicant has ever had a license, registration, qualification, or
other approval for gambling-related activities denied, revoked, or
suspended by any jurisdiction or has been fined or otherwise
required to pay penalties or monetary forfeitures for
gambling-related activities in any jurisdiction, including all
related details; and
(12) a statement acknowledging that the applicant will
make available for review at the time and place requested by the
tribal gaming agency or by the comptroller all records related to
the ownership or operation of the business.
(e) A tribal gaming agency and the comptroller may require
the following information from an applicant:
(1) personal financial and personal history records of
all substantial interest-holders;
(2) all records related to the scope of activity,
including sales of product, purchases of raw materials and parts,
and any contracts, franchises, patent agreements, or similar
contracts or arrangements related to manufacturing or distributing
video lottery terminals; and
(3) records related to any financial or management
control of or by customers and suppliers.
(f) The applicant must demonstrate the ability to comply
with all manufacturing, quality control, and operational
restrictions imposed on authorized video lottery equipment,
patented or otherwise restricted video lottery games, or other
video lottery equipment that the applicant seeks to manufacture or
distribute for use in this state. The registration process must
include an on-site review of the applicant's manufacturing
equipment and process for each separate type of authorized video
lottery equipment to ensure capability to comply with all
regulatory requirements of this chapter or rules adopted under this
chapter.
(g) An applicant, not later than the 10th day after the date
of the change, shall notify the applicable tribal gaming agency and
the comptroller of any change in the information submitted on or
with the application form, including changes that occur after the
registration or other approval has been granted by the comptroller
or tribal gaming agency.
(h) The applicant shall comply with all federal and state
laws, local ordinances, and rules and where applicable, tribal laws
and regulations.
(i) An applicant seeking registration under this section
must pay a nonrefundable application fee in the amount prescribed
by comptroller rule that is sufficient to pay the comptroller's
costs of administering this section. An applicant seeking approval
under this section must pay a nonrefundable application fee in the
amount prescribed by tribal gaming agency rule that is sufficient
to pay the costs to the tribal gaming agency of administering this
section. Application fees paid under this subsection shall be
retained by the agency or comptroller, as applicable, to defray
costs incurred in the administration and enforcement of this
chapter relating to the operation of video lottery terminals.
Sec. 2004.152. LICENSING OF VIDEO LOTTERY RETAILERS AND
VIDEO LOTTERY MANAGERS. (a) Except as provided by a gaming
agreement, a person may not own or operate a video lottery terminal
if the person does not satisfy the requirements of this section and
is not:
(1) licensed by a tribal gaming agency to act on behalf
of the Indian tribe; and
(2) licensed by the comptroller.
(b) An officer, partner, director, key employee,
substantial interest-holder, video lottery game operation
employee, and owner of video lottery game operations must be
eligible and maintain eligibility in accordance with this chapter
to be involved in video lottery games in this state.
(c) An applicant for a tribal gaming agency license must
submit a nonrefundable application processing fee in the amount
prescribed by tribal gaming agency rule that is sufficient and
reasonable to pay the costs of determining the applicant's
eligibility. An applicant for a license issued by the comptroller
must submit a nonrefundable application processing fee in the
amount prescribed by comptroller rule that is sufficient and
reasonable to pay the costs of determining the applicant's
eligibility. An application may not be processed until the
applicant provides the nonrefundable application fee.
(d) An applicant for a tribal gaming agency issued license
under this section must apply to the tribal gaming agency under
rules adopted by the tribal gaming agency, provide the information
necessary to determine the applicant's eligibility for a license,
and provide other information considered necessary by the tribal
gaming agency.
(e) An applicant for a license issued by the comptroller
under this section must apply to the comptroller under rules
adopted by the comptroller, provide the information necessary to
determine the applicant's eligibility for a license, and provide
other information considered necessary by the comptroller.
(f) An applicant for a license under this section must:
(1) be one of the three federally recognized Indian
tribes with trust lands within the external boundaries of this
state;
(2) have a valid and executed contract with a person
that satisfies the requirements of Subdivision (1) to act as a video
lottery manager for the person subject to licensing under this
chapter; or
(3) demonstrate to the comptroller's satisfaction and
to the tribal gaming agency's satisfaction that the applicant seeks
to act as a video lottery retailer or manager for a federally
recognized Indian tribe that has entered into a gaming agreement
with this state that is in effect and governs the regulation of
video lottery terminals on Indian lands in this state.
(g) An applicant for a tribal gaming agency issued license
has the burden of proving qualification for a license by clear and
convincing evidence. In addition to satisfying minimum
requirements established by tribal gaming agency rules, an
applicant for a tribal gaming agency issued license must:
(1) be a person of good character, honesty, and
integrity;
(2) be a person whose background and prior activities,
including criminal record, reputation, habits, and associations,
do not pose a threat to the security and integrity of video lottery
or to the public interest of this state or to the effective
operation and control of video lottery games, or do not create or
enhance the dangers of unsuitable, unfair, or illegal practices,
methods, and activities in the conduct of video lottery games or in
the carrying on of the business and financial arrangements
incidental to the video lottery games;
(3) if applying for a new license, provide
fingerprints for a criminal records evaluation by the Department of
Public Safety or other law enforcement agency, including
fingerprints for each person required to be named in an
application, accompanied by a signed authorization for the release
of information to the tribal gaming agency and comptroller by the
Department of Public Safety and the Federal Bureau of
Investigation;
(4) not have been convicted of an offense under this
chapter or of any crime related to theft, bribery, gambling, or
involving moral turpitude;
(5) demonstrate adequate business probity,
competence, experience, and financial stability as defined by the
tribal gaming agency;
(6) demonstrate adequate financing for the operation
of the facility at which the video lottery terminals will be
operated by disclosing all financing or refinancing arrangements
for the purchase, lease, or other acquisition of video lottery
equipment in the degree of detail requested by the tribal gaming
agency, and the agency shall determine whether the financing is
from a source that meets the requirements of this section and is
adequate to support the successful performance of the duties and
responsibilities of the license holder;
(7) when applying for a new license or renewing a
license under this chapter, present evidence to the tribal gaming
agency and to the comptroller of the existence and terms of any
agreement regarding the proceeds from the operation of video
lottery terminals;
(8) demonstrate that each substantial interest-holder
meets all applicable qualifications under this subchapter;
(9) provide all information, including financial data
and documents, consents, waivers, providers of surety and
insurance, and any other materials requested by the tribal gaming
agency and the comptroller for purposes of determining
qualifications for a license;
(10) as part of its application, expressly waive any
and all claims against the comptroller, this state, and a member,
officer, employee, or authorized agent of the comptroller or this
state for damages resulting from any background investigation,
disclosure, or publication relating to an application for a license
issued by the comptroller; and
(11) as part of its application, expressly waive any
and all claims against the tribal gaming agency, the tribe, and a
member, officer, employee, or authorized agent of the agency or the
tribe for damages resulting from any background investigation,
disclosure, or publication relating to an application for a tribal
gaming agency license.
(h) An application, registration, or disclosure form and
any other document submitted to the tribal gaming agency or
comptroller by or on behalf of the applicant for purposes of
determining qualification for a license must be sworn to or
affirmed before an officer qualified to administer oaths.
(i) An applicant who knowingly fails to reveal any fact
material to qualification for a license, finding of suitability, or
other approval or who knowingly submits false or misleading
material information is ineligible for a license under this
section.
(j) An applicant for a facility site for a video lottery
terminal establishment must ensure that the facility will comply
with all applicable building codes and rules of the tribal gaming
agency. A video lottery terminal establishment shall provide
office space for the comptroller sufficient for at least one
comptroller employee.
(k) An applicant or license holder must provide information
as required by tribal gaming agency and comptroller rule relating
to the applicant's or license holder's video lottery terminal
establishment and update the information at least annually.
(l) An applicant shall notify the tribal gaming agency and
the comptroller of any change in the application information for a
license or renewal of a license not later than the 10th day after
the date of the change, except that a publicly traded corporation or
other business association or entity applicant is not required to
notify the agency and comptroller of a transfer by which any person
directly or indirectly becomes the beneficial owner of less than 10
percent of the stock of the corporation or association.
(m) Unless suspended or revoked, a license, other than a
video lottery retailer license, issued under this chapter expires
on the date specified in the license, which may not be later than
the fifth anniversary of the date of issuance. To be eligible for
renewal of a license, an applicant must satisfy all licensing
requirements under this chapter.
(n) An application to receive or renew a license or to be
found suitable constitutes a request for a determination of the
applicant's general character, integrity, and ability to
participate or engage in or be associated with the operation of
video lottery terminals. Any written or oral statement made in the
course of an official tribal gaming agency or comptroller
proceeding or investigative activities related to an application
for licensing, registration, or other approval under this chapter,
by any member or agent or any witness testifying under oath that is
relevant to the purpose of the proceeding, is absolutely privileged
and does not impose liability for defamation or constitute a ground
for recovery in any civil action.
(o) A tribal gaming agency or the comptroller by rule may
establish other qualifications for a license under this section the
agency or comptroller determines are in the public interest and
consistent with the declared policy of this state.
(p) A tribal gaming agency or the comptroller may require a
suitability finding for any person doing business with or in
relation to the operation of video lottery terminals who is not
otherwise required to obtain a license or registration from the
agency for the person's video lottery-related business operations.
Sec. 2004.153. AUTHORITY TO ISSUE PROVISIONAL LICENSES.
(a) A tribal gaming agency and the comptroller may establish a
provisional license or other classes of licenses necessary to
regulate and administer the quantity and type of video lottery
games provided at each video lottery terminal establishment.
(b) A tribal gaming agency may not issue a provisional
license to a person or entity that the comptroller has informed the
agency to be unsuitable for a license. The agency shall suspend a
provisional license on notice by the comptroller that the
comptroller concludes the person or entity is not suitable for a
license.
Sec. 2004.154. LICENSE TERM. Unless suspended or revoked,
a license issued by the comptroller or a tribal gaming agency
expires on the date specified in the license, which may not be later
than the fifth anniversary of its date of issuance.
Sec. 2004.155. COMPTROLLER AUTHORITY TO INVESTIGATE. The
comptroller is entitled to conduct an investigation of and is
entitled to obtain criminal history record information maintained
by the Department of Public Safety, the Federal Bureau of
Investigation identification division, or another law enforcement
agency to assist in the investigation of:
(1) a person required to be named in a tribal gaming
agency license application;
(2) a video lottery manager, video lottery retailer,
video lottery terminal provider, or video lottery central system
provider or prospective video lottery manager, video lottery
retailer, video lottery terminal provider, or video lottery central
system provider;
(3) an employee of a video lottery terminal
establishment, video lottery manager, video lottery retailer,
video lottery terminal provider, or video lottery central system
provider or prospective video lottery manager, video lottery
retailer, video lottery terminal provider, or video lottery central
system provider, if the employee is or will be directly involved in
video lottery operations;
(4) a person who manufactures or distributes video
lottery equipment or supplies, or a representative of a person who
manufactures or distributes video lottery equipment or supplies
offered to a video lottery terminal establishment on Indian lands;
(5) a person who has submitted a written bid or
proposal to the tribe or tribal gaming agency in connection with the
procurement of goods or services by the tribe or agency, if the
amount of the bid or proposal exceeds $500;
(6) a person who proposes to enter into or who has a
contract with the comptroller to supply goods or services to the
comptroller in connection with its oversight of video lottery
terminal establishments on Indian lands; or
(7) if a person described in Subdivisions (1) through
(6) is not an individual, an individual who:
(A) is an officer or director of the person;
(B) holds more than 10 percent of the stock in the
person;
(C) holds an equitable interest greater than 10
percent in the person;
(D) is a creditor of the person who holds more
than 10 percent of the person's outstanding debt;
(E) is the owner or lessee of a business that the
person conducts or through which the person will conduct video
lottery-related activities;
(F) shares or will share in the profits, other
than stock dividends, of the person; or
(G) participates in managing the affairs of the
person.
Sec. 2004.156. CRIMINAL HISTORY INVESTIGATION FOR VIDEO
LOTTERY. (a) Except as otherwise provided by this section and
Section 2004.103, a criminal history investigation of a video
lottery retailer, video lottery manager, video lottery terminal
provider, or video lottery central system provider is governed by
tribal gaming agency rules adopted under the gaming agreement in
effect.
(b) The Department of Public Safety, this state, the tribal
gaming agency of an Indian tribe with a gaming agreement in effect,
or a local law enforcement agency in this state, in accordance with
an interagency agreement with the comptroller, shall provide any
assistance requested by the comptroller in the administration and
enforcement of this chapter, including conducting background
investigations of a person seeking a tribal gaming agency or
comptroller license, registration, or other authorization required
under the gaming agreement in effect or of any person required to be
named in an application for a license, registration, or other
authorization under this chapter.
(c) This section does not limit the comptroller's right to
obtain criminal history record information from any other local,
state, tribal, or federal agency. The comptroller may enter into a
confidentiality agreement with the agency as necessary and proper.
(d) Criminal history record information obtained by the
comptroller under this section may be disclosed only:
(1) to another law enforcement agency to assist in or
further an investigation related to the comptroller's operation and
oversight of video lottery;
(2) to a tribal gaming agency consistent with a gaming
agreement in effect; or
(3) under a court order.
Sec. 2004.157. TRANSFER RESTRICTIONS. A tribal gaming
agency issued license, registration, or approval and a comptroller
issued license or registration are not transferable.
Sec. 2004.158. LICENSING, REGISTRATION, SUITABILITY,
QUALIFICATION, AND REGULATORY APPROVAL AS REVOCABLE PERSONAL
PRIVILEGES. (a) An applicant for a license, registration,
suitability, qualification, or other affirmative regulatory
approval under this chapter does not have any right to the license,
registration, suitability, or qualification, or the granting of the
approval sought. Any license, registration, suitability, or
qualification issued or other regulatory approval granted under
this chapter by a tribal gaming agency or by the comptroller is a
revocable privilege, and a holder of the privilege does not acquire
any vested right in or under the privilege.
(b) A license, registration, suitability, qualification, or
regulatory approval granted or renewed under this chapter may not
be transferred or assigned to another person, and a license,
registration, suitability, qualification, or approval may not be
pledged as collateral. The purchaser or successor of a person who
has been granted a license, registration, suitability,
qualification, or regulatory approval must independently qualify
for a license, registration, suitability, qualification, or
approval required by this chapter.
(c) The following acts void the license, registration,
suitability, qualification, or other regulatory approval of the
holder unless approved in advance by the comptroller or tribal
gaming agency, as applicable:
(1) the transfer, sale, or other disposition of an
interest in the holder that results in a change in the identity of a
substantial interest holder; or
(2) the sale of the assets of the holder, other than
assets bought and sold in the ordinary course of business, or any
interest in the assets to any person not already determined to have
met the applicable qualifications of this chapter.
[Sections 2004.159-2004.200 reserved for expansion]
SUBCHAPTER E. VIDEO LOTTERY SYSTEM OPERATIONS
Sec. 2004.201. VIDEO LOTTERY TERMINAL ESTABLISHMENT;
PROCUREMENT OF VIDEO LOTTERY TERMINALS. (a) An Indian tribe shall
provide all necessary capital investments and required
improvements at a video lottery terminal establishment on the
tribe's Indian lands.
(b) A tribal gaming agency shall provide all video lottery
retailers or video lottery managers with a list of registered video
lottery terminal providers, video lottery games, and video lottery
terminals authorized for operation under this chapter.
(c) A video lottery terminal provider may not distribute a
video lottery terminal or other video lottery equipment for
placement at a video lottery terminal establishment in this state
unless the video lottery terminal has been approved by a tribal
gaming agency. Only a video lottery terminal provider registered
with the tribal gaming agency and the comptroller may apply for
approval of a video lottery terminal or other video lottery
equipment. At least 10 days before the date of shipment to a
location in this state, a video lottery terminal provider shall
file a report with the tribal gaming agency and the comptroller
itemizing all video lottery terminals and other video lottery
equipment to be provided to a video lottery retailer or video
lottery manager in the shipment.
(d) A video lottery terminal provider shall submit two
copies of terminal illustrations, schematics, block diagrams,
circuit analysis, technical and operation manuals, and any other
information requested by a tribal gaming agency or the comptroller
for the purpose of analyzing and testing the video lottery terminal
or other video lottery equipment.
(e) A tribal gaming agency and the comptroller may require a
working model of a video lottery terminal to be provided. At the
sole discretion of the agency or comptroller, this requirement may
be waived if the video lottery terminal provider can provide a
certification by an approved independent testing laboratory that
the video lottery terminal is compatible and functions as required
by the agency or comptroller.
(f) The video lottery terminal provider is responsible for
the assembly and installation of all video lottery terminals and
other video lottery equipment. The video lottery terminal provider
and video lottery retailer or video lottery manager may not change
the assembly or operational functions of a video lottery terminal
authorized by a tribal gaming agency for placement in this state
unless a request for modification of an existing video lottery
terminal prototype is approved by the agency. The request must
contain:
(1) a detailed description of the type of change;
(2) a detailed description of the reasons for the
change; and
(3) technical documentation of the change.
(g) A video lottery terminal approved by a tribal gaming
agency for placement at a video lottery terminal establishment must
conform to the specifications of the video lottery terminal
prototype tested or approved by the agency. If any video lottery
terminal that has not been approved by the agency is distributed by
a video lottery terminal provider or operated by an Indian tribe or
if an approved video lottery terminal malfunctions, the agency
shall require the terminal to be removed from use and play. The
comptroller may order that an unapproved terminal be seized by the
agency. The agency or the comptroller may suspend or revoke the
license of a video lottery retailer or video lottery manager or the
registration of a video lottery terminal provider for the
distribution, possession, or operation of an unauthorized video
lottery terminal. The tribe may retain on the premises of the video
lottery terminal establishment a number of machines that the
retailer or manager deems necessary to provide for spare parts, for
repair purposes, or as replacement machines. The tribe must each
month provide a list of machines it retains under this subsection to
the agency and the comptroller.
(h) The tribal gaming agency shall adopt rules for approval
of video lottery terminals, including requirements for video
lottery game tickets. An agency approved video lottery terminal
must meet the following minimum specifications:
(1) a surge protector must be installed on the
electrical power supply line to each video lottery terminal, a
battery or equivalent power backup for the electronic meters must
be capable of maintaining the accuracy of all accounting records
and video lottery terminal status reports for a period of 180 days
after power is disconnected from the video lottery terminal, and
the power backup device must be in the compartment specified in
Subdivision (3);
(2) the operation of each video lottery terminal may
not be adversely affected by any static discharge or other
electromagnetic interference;
(3) the main logic boards of all electronic storage
mediums must be located in a separate compartment in the video
lottery terminal that is locked and sealed by the tribal gaming
agency;
(4) the instructions for play of each game must be
displayed on the video lottery terminal face or screen, including a
display detailing the credits awarded for the occurrence of each
possible winning combination of numbers or symbols, and the tribal
gaming agency shall reject any instructions for play that the
agency determines to be incomplete, confusing, or misleading;
(5) communication equipment and devices must be
installed to enable each video lottery terminal to communicate with
an authorized video lottery central system through the use of a
communications protocol which must include information retrieval
and programs to activate and disable the terminal provided by the
tribal gaming agency to each registered video lottery terminal
provider; and
(6) a video lottery terminal may be operated only if
connected to an authorized video lottery central system, and play
on the terminal may not be conducted unless the terminal is
connected to an authorized video lottery central system.
Sec. 2004.202. TRAVEL AND INVESTIGATION COSTS. The travel
and investigative expenses of the comptroller shall be paid from
revenue received from the appropriate Indian tribe as provided by
the gaming agreement with the tribe that is in effect.
Sec. 2004.203. CONSENT TO TRIBAL GAMING AGENCY AND
COMPTROLLER DETERMINATION. An application for a license,
registration, finding of suitability, qualification, or other
approval and any other factor attaching to an application under
this chapter and the rules adopted under this chapter constitutes a
request to the tribal gaming agency or comptroller, as applicable,
for a decision on the applicant's general suitability, character,
integrity, and ability to participate or engage in or be associated
with the lottery in the manner or position sought. By filing an
application with the tribal gaming agency or comptroller, the
applicant specifically consents to the agency's decision at the
agency's election or to the comptroller's decision at the
comptroller's election when the application, after filing, becomes
moot for any reason other than death.
Sec. 2004.204. ABSOLUTE AUTHORITY OF TRIBAL GAMING AGENCY
AND COMPTROLLER; AUTHORITY TO WAIVE REQUIREMENTS; EFFECT OF DENIAL.
(a) Subject to the oversight authority of the comptroller, a tribal
gaming agency has full and absolute power and authority to deny any
application or limit, condition, restrict, revoke, or suspend any
agency license, registration, or finding of suitability or
approval, and to fine any person licensed, registered, found
suitable, or approved for any cause deemed reasonable by the
agency.
(b) A person whose application for a license or registration
has been denied may not have any interest in or association with a
video lottery terminal establishment or any other business
conducted in connection with video lottery without prior permission
of the tribal gaming agency. Any contract between a person holding
a license or registration and a person denied a license or
registration must be terminated immediately on receipt of notice
from the agency. If the person denied a license or registration has
previously been granted a temporary license or registration, the
temporary license or registration expires immediately on denial of
the permanent license or registration. Except as otherwise
authorized by the agency, a person denied a license or registration
may not reapply for any license or registration before the second
anniversary of the date of the denial.
Sec. 2004.205. LIMITATION ON OPERATION OF VIDEO LOTTERY
TERMINALS. (a) The hours of operation for video lottery terminals
are to be set by the video lottery terminal establishment, which may
provide for unlimited hours of operation, except that the tribal
gaming agency by rule may prescribe restrictions reasonably
necessary for accounting and collecting revenue generated by video
lottery terminal operations and performing other operational
services on the video lottery system.
(b) Communication between a video lottery central system
and each video lottery terminal must be continuous and on a
real-time basis as prescribed by the tribal gaming agency.
(c) Placement or movement of video lottery terminals in a
video lottery terminal establishment must be consistent with a
video lottery terminal establishment floor plan filed with the
tribal gaming agency.
(d) A video lottery terminal establishment must:
(1) be aware of patron conditions and prohibit play by
visibly intoxicated patrons;
(2) comply with state alcoholic beverage control laws;
(3) at all times maintain sufficient change and cash
in denominations accepted by video lottery terminals;
(4) promptly report all video lottery terminal
malfunctions and downtime;
(5) install, post, and display prominently any
material required by the tribal gaming agency;
(6) prohibit illegal gambling and any related
paraphernalia;
(7) supervise employees and activities to ensure
compliance with all applicable tribal gaming agency and comptroller
rules and this chapter;
(8) maintain continuous camera coverage of all aspects
of video lottery game operations, including video lottery
terminals; and
(9) maintain an entry log for each video lottery
terminal on the premises of the video lottery terminal
establishment and maintain and submit complete records on receipt
of each video lottery terminal on the premises as determined by the
tribal gaming agency.
(e) All transportation and movement of video lottery
terminals into or within this state is prohibited, except as
permitted by this chapter and approved by the tribal gaming agency.
(f) An obsolete video lottery terminal or a video lottery
terminal that is no longer in operation must be promptly reported to
the tribal gaming agency and the comptroller.
(g) An Indian tribe is responsible for the management of
video lottery game operations, including validation and payment of
prizes and the management of cashiers, food and beverage workers,
floor workers, security personnel, the security system, building
completion, janitorial services, landscaping design, and
maintenance. Nothing in this subsection limits the authority of
the comptroller, the Department of Public Safety, or another law
enforcement agency to administer and enforce this chapter as
related to video lottery.
(h) The video lottery central system provider shall pay for
the installation and operation of tribal gaming agency approved
communication technology to provide real-time communication
between each video lottery terminal located on Indian lands and the
tribe-controlled video lottery central system.
(i) In addition to other requirements under this chapter
relating to video lottery, a video lottery terminal establishment
at all times shall:
(1) operate only video lottery terminals that are
distributed by a registered video lottery terminal provider and
provide a secure location for the placement, operation, and play of
the video lottery terminals;
(2) prevent any person from tampering with or
interfering with the operation of a video lottery terminal;
(3) ensure that communication technology from the
video lottery central system to the video lottery terminals is
connected and prevent any person from tampering or interfering with
the operation of the connection;
(4) ensure that video lottery terminals are in the
sight and control of designated employees of the tribe and in the
sight of video cameras as required under this chapter;
(5) ensure that video lottery terminals are placed and
remain placed in the locations in the video lottery terminal
establishment that are consistent with the tribal gaming agency
approved floor plan;
(6) monitor video lottery terminals to prevent access
to or play by persons who are under 18 years of age or who are
visibly intoxicated;
(7) pay all credits won by a player on presentment of a
valid winning video lottery game ticket;
(8) conduct only the video lottery game advertising
and promotional activities consistent with criteria prescribed by
the tribal gaming agency, including prohibiting undue influence,
offensive language, and anything that would affect the integrity of
video lottery operation;
(9) install, post, and display prominently at the
licensed location redemption information and other informational
or promotional materials as required by the tribal gaming agency;
(10) maintain general liability insurance coverage
for the video lottery terminal establishment and all video lottery
terminals in the amounts required by the tribal gaming agency;
(11) assume liability for money lost or stolen from
any video lottery terminal; and
(12) annually submit an audited financial statement to
the comptroller in accordance with generally accepted accounting
principles.
Sec. 2004.206. TECHNICAL STANDARDS FOR VIDEO LOTTERY
EQUIPMENT. A tribal gaming agency by rule shall provide minimum
technical standards for video lottery equipment that may be
operated in this state.
Sec. 2004.207. INCIDENT REPORTS. A video lottery terminal
establishment shall record all unusual occurrences related to
gaming activity in a video lottery terminal establishment operated
by the retailer or manager. Each material incident shall be
assigned a sequential number and, at a minimum, the following
information must be recorded in a permanent record prepared in
accordance with tribal gaming agency rules to ensure the integrity
of the record:
(1) the number assigned to the incident;
(2) the date and time of the incident;
(3) the nature of the incident;
(4) each person involved in the incident; and
(5) the name of the employee or other agent of the
video lottery terminal establishment who investigated the
incident.
Sec. 2004.208. EXCLUSION OF PERSONS. (a) A tribal gaming
agency shall compile a list of persons that a video lottery terminal
establishment must bar from a video lottery terminal establishment
based on a person's criminal history or association with criminal
offenders or because the person poses a threat to the integrity of
the lottery. The video lottery terminal establishment shall use
best efforts to exclude those persons from entry into the
establishment.
(b) A video lottery terminal establishment may exclude a
person for any reason not related to the person's race, sex,
national origin, physical disability, or religion.
(c) A person who believes the person may be playing video
lottery games on a compulsive basis may request that the person's
name be placed on a list compiled by the tribal gaming agency and
maintained separate and apart from the list compiled under
Subsection (a). All video lottery game employees shall receive
training in identifying players with a compulsive playing problem.
Signs and other materials shall be readily available to direct
compulsive players to agencies that offer appropriate counseling.
Sec. 2004.209. ACCOUNTING, FINANCIAL, AND OTHER REPORTING
PROCEDURES. (a) Not later than the fifth day after the date of
acquiring knowledge of any litigation relating to a video lottery
terminal establishment, including a criminal proceeding, involving
a matter related to character or reputation relevant to a person's
suitability under this chapter, an Indian tribe shall report the
litigation to the tribal gaming agency and to the comptroller.
(b) A tribal gaming agency by rule shall establish general
accounting and auditing requirements and internal control
standards for a video lottery terminal establishment.
(c) A video lottery terminal establishment shall keep a
database of video lottery terminal events. A tribal gaming agency
by rule shall determine what constitutes a video lottery terminal
event for purposes of this subsection.
Sec. 2004.210. EMPLOYEE REPORTING. (a) On or before the
15th day of each month, a video lottery terminal establishment
shall submit to the tribal gaming agency and to the comptroller an
employee report for the video lottery terminal establishment. The
report must provide for each employee of the retailer or manager the
employee's name, job title, date of birth, and social security
number.
(b) The employee report is confidential and may not be
disclosed except as provided for in Section 2004.055.
(c) A tribal gaming agency or the comptroller may conduct
criminal history investigations for employees of video lottery
terminal establishments and all persons and entities that provide
equipment and services to video lottery terminal establishments.
(d) The tribal gaming agency shall prohibit an employee from
performing any act relating to video lottery terminals if the
tribal gaming agency finds that an employee has:
(1) committed, attempted, or conspired to do any act
prohibited by this chapter;
(2) concealed or refused to disclose any material fact
in any investigation by the tribal gaming agency or the
comptroller;
(3) committed, attempted, or conspired to commit
larceny or embezzlement;
(4) been convicted in any jurisdiction of an offense
involving or relating to gambling;
(5) accepted employment in a position for which the
employee is required to have tribal gaming agency approval after
approval was denied for a reason involving personal unsuitability
or after failing to apply for a license or approval on agency
request;
(6) wilfully defied any legislative investigative
committee or other officially constituted body acting on behalf of
the United States or any state, county, or municipality, or any
tribal gaming agency acting pursuant to its authority under a
gaming agreement in effect, that sought to investigate alleged or
potential crimes relating to gaming, corruption of public
officials, or any organized criminal activities; or
(7) been convicted of any felony or any crime
involving moral turpitude.
(e) A tribal gaming agency may prohibit an employee from
performing any act relating to video lottery terminals for any
reason the agency finds appropriate, including a refusal by a
regulatory authority to issue a license, permit, or other approval
for the employee to engage in or be involved with the lottery or
with regulated gaming or pari-mutuel wagering in any jurisdiction,
or a revocation or suspension of any gaming or wagering license,
permit, or approval.
(f) In this section, "employee" includes any person
connected directly with or compensated by an applicant or license
holder as an agent, personal representative, consultant, or
independent contractor for activities directly related to video
lottery operations.
Sec. 2004.211. REPORT OF VIOLATIONS. A person who holds a
license or registration under this chapter shall immediately report
to the comptroller or tribal gaming agency a violation or suspected
violation of this chapter or a rule adopted under this chapter by
any license or registration holder, by an employee of a license or
registration holder, or by any person on the premises of a video
lottery terminal establishment, whether or not associated with the
license or registration holder.
Sec. 2004.212. SECURITY. (a) A video lottery terminal
establishment shall comply with the following security procedures:
(1) all video lottery terminals must be continuously
monitored through the use of a closed-circuit television system
that records activity for a continuous 24-hour period and all video
tapes or other media used to store video images shall be retained
for at least 30 days and made available to the tribal gaming agency
or the comptroller on request;
(2) access to video lottery terminal locations shall
be restricted to persons over the age of 18;
(3) a video lottery terminal establishment must submit
for tribal gaming agency approval a security plan and a floor plan
of the area where video lottery terminals are to be operated showing
video lottery terminal locations and security camera mount
locations; and
(4) each video lottery terminal establishment shall
employ at least the minimum number of private security personnel
the tribal gaming agency determines is necessary to provide for
safe and approved operation of the video lottery terminal
establishment and the safety and well-being of the players.
(b) Private security personnel must be present during all
hours of operation at each video lottery terminal establishment.
(c) An agent or employee of the tribal gaming agency, the
comptroller, or the Department of Public Safety or any other law
enforcement personnel may be present in public areas of a video
lottery terminal establishment at any time.
(d) The tribal gaming agency may adopt rules to impose
additional surveillance and security requirements related to video
lottery terminal establishments and the operation of video lottery
terminals.
Sec. 2004.213. VIDEO LOTTERY TERMINAL ESTABLISHMENT
VISITS. The comptroller or the comptroller's representative, after
displaying appropriate identification and credentials, has the
free and unrestricted right to enter the premises of a video lottery
terminal establishment and to enter any other locations involved in
operation or support of video lottery at all times to examine the
systems and to inspect and copy the records of an Indian tribe
pertaining to the operation of video lottery. A tribal gaming
agency shall establish protocol for an Indian tribe to contact the
comptroller and verify that such credentials are valid and that
such presence is authorized by the comptroller. Failure or
inability of the comptroller to provide such verification is
grounds for denial of access.
Sec. 2004.214. INDEMNIFICATION, INSURANCE, AND BONDING
REQUIREMENTS; PATRON DISPUTES. (a) A license or registration
holder shall indemnify and hold harmless this state, the
comptroller, and all officers and employees of this state and the
comptroller from any and all claims that may be asserted against a
license holder, the comptroller, this state, and the members,
officers, employees, and authorized agents of this state or the
comptroller arising from the license holder's participation in the
video lottery system authorized under this chapter.
(b) Surety and insurance required under this chapter shall
be issued by companies or financial institutions financially rated
"A" or better as rated by A.M. Best Company or another rating
organization designated by the tribal gaming agency and duly
licensed, admitted, and authorized to conduct business in this
state, or by other surety approved by the tribal gaming agency and
the comptroller.
(c) The comptroller shall be named as the obligee in each
required surety and as an additional insured in each required
insurance contract.
(d) An Indian tribe may be self-insured with regard to video
lottery terminal operations under this section, but only on
approval of the comptroller. The comptroller may allow for
self-insurance if the comptroller is satisfied that the coverage
meets or exceeds the coverage otherwise available and is satisfied
that the solvency of the insurance fund meets or exceeds insurance
industry standards.
(e) A tribal gaming agency by rule shall establish minimum
insurance coverage requirements for a video lottery terminal
establishment.
(f) This state and the comptroller are not liable for any
video lottery terminal malfunction or error by a video lottery
retailer, video lottery manager, or video lottery terminal provider
that causes credit to be wrongfully awarded or denied to patrons or
players. Any dispute arising between a patron or player and a video
lottery terminal establishment shall be resolved by the tribal
gaming agency as follows:
(1) if the fair market value of the prize is less than
$1,000, the dispute shall be resolved in accordance with the agency
approved written policies of the video lottery retailer or video
lottery manager and without any relief available from the
comptroller or this state; or
(2) if the dispute arises on Indian lands and the fair
market value of the prize is $1,000 or more, the dispute shall be
resolved by the tribal gaming agency, which shall establish rules
consistent with the rules of the comptroller.
(g) A player has no further direct appeal from the decision
of the tribal gaming agency under Subsection (f).
(h) If the comptroller believes that a tribal gaming agency
acted in violation of Subsection (f)(2), the comptroller may seek
relief, including specific performance under the dispute
resolution provisions of the gaming agreement in effect. Nothing
in this chapter shall be interpreted to confer standing on the
patron or player in any action against the Indian tribe or tribal
gaming agency.
(i) A court of this state does not have jurisdiction to
review the decision of the tribal gaming agency resolving a dispute
between a patron or player and a video lottery retailer, video
lottery manager, or video lottery terminal provider.
Sec. 2004.215. COLLECTION OF REVENUE; ACCOUNTING AND
DISTRIBUTION OF NET TERMINAL INCOME. (a) The comptroller shall
deposit funds received under this chapter to the state video
lottery account.
(b) For the first two years this chapter is in effect, the
comptroller is authorized to expend an amount not to exceed $5
million from the state lottery account to perform the comptroller's
oversight functions under this chapter. From revenue received
under a gaming agreement in effect, the comptroller is hereby
appropriated the amount necessary to reimburse the state lottery
account for the total amount of funds from that account used to
perform those functions.
(c) Two percent of the net terminal income distributed to
this state under Subsection (e) shall be allocated to the
comptroller to defray expenses incurred in administering this
chapter related to video lottery including expenses incurred to
oversee tribal gaming agencies. All money allocated to the
comptroller under this subsection may be retained by the
comptroller to defray expenses of administering this chapter
related to video lottery.
(d) [RESERVED]
(e) This state acknowledges that a principal goal of federal
Indian policy is to promote tribal economic development, tribal
self-sufficiency, and strong tribal government. Tribes are
required by federal and tribal law to use revenue generated from
gaming for traditional governmental purposes such that 100 percent
of tribal gaming revenues are taxed. Net terminal income derived
from the operation of video lottery terminals on Indian lands under
a gaming agreement authorized under this chapter shall be
distributed as set forth in the gaming agreement, provided that the
agreement must provide that this state shall receive not more than
_____ percent of the net terminal income.
(f) The comptroller shall require an Indian tribe to
establish a separate electronic funds transfer account for
depositing money from video lottery terminal operations, making
payments to the comptroller or its designee, and receiving payments
from the comptroller or its designee. The tribe may not make
payments to the comptroller in cash. As authorized by the
comptroller, the Indian tribe may make payments to the comptroller
by cashier's check.
(g) The video lottery terminal establishment at least
weekly shall transfer this state's share of net terminal income of a
video lottery terminal establishment to the comptroller through the
electronic transfer of the funds. The comptroller by rule shall
establish the procedures for depositing money from video lottery
terminal operations into electronic funds transfer accounts, as
well as procedures regarding the handling of money from video
lottery terminal operations. This state's share of net terminal
income from video lottery terminal operations shall be held in
trust for the state.
(h) Unless otherwise directed by the comptroller, a video
lottery retailer or a video lottery manager shall maintain in its
account this state's share of the net terminal income from the
operation of video lottery terminals, to be electronically
transferred by the comptroller on dates established by the
comptroller. On a license holder's failure to maintain this
balance, the comptroller may direct the tribal gaming agency to
disable all of a license holder's video lottery terminals until
full payment of all amounts due is made. Interest shall accrue on
any unpaid balance at a rate consistent with the amount charged
under Section 111.060, Tax Code. The interest shall begin to accrue
on the date payment is due to the comptroller.
(i) In the tribal gaming agency's sole discretion, rather
than disable a license holder's video lottery terminals, the agency
may elect to impose a fine on a license holder in an amount
determined by the agency. If the license holder fails to remedy the
violation, including payment of any amounts assessed by or due to
this state, within 10 days, the agency may disable the license
holder's video lottery terminals or use any other means for
collection.
(j) The tribe is solely responsible for resolving any income
discrepancies between actual money collected and the net terminal
income reported by the video lottery central system. Unless an
accounting discrepancy is resolved in favor of the tribe, the
comptroller may not make any credit adjustments. Any accounting
discrepancies that cannot otherwise be resolved shall be resolved
in favor of the comptroller.
(k) A tribe shall remit payment as directed by the
comptroller if the electronic transfer of funds is not operational
or the comptroller notifies the tribe that other remittance is
required. The tribe shall report this state's share of net terminal
income and remit the amount generated from the terminals during the
reporting period.
(l) The comptroller has the right to examine all accounts,
bank accounts, financial statements, and records in a tribe's
possession or control or in which the tribe has an interest, and the
tribe shall authorize and direct all third parties in possession or
in control of the accounts or records to allow examination of any of
those accounts or records by the comptroller.
(m) The tribe shall furnish to the comptroller all
information and bank authorizations required to facilitate the
timely transfer of money to the comptroller. The tribe must provide
the comptroller advance notice of any proposed account changes in
information and bank authorizations to assure the uninterrupted
electronic transfer of funds. The comptroller is not responsible
for any interruption or delays in the transfer of funds. The tribe
is responsible for any interruption or delay in the transfer of
funds.
Sec. 2004.216. LIABILITY OF TRIBE FOR REVENUE SHARE. An
Indian tribe is liable to the comptroller for the state's share of
net terminal income reported by the video lottery central system.
Net terminal income received by the tribe shall be held in trust for
the benefit of this state before delivery of the state's share to
the comptroller or electronic transfer to the state treasury, and
the tribe is liable to the comptroller for the full amount of the
money held in trust.
Sec. 2004.217. PRIZES. (a) Payment of prizes is the sole
and exclusive responsibility of a video lottery terminal
establishment.
(b) Nothing in this chapter limits the authority of a video
lottery terminal establishment to provide promotional prizes in
addition to prize payouts regulated by the tribal gaming agency.
(c) A video lottery ticket from a terminal located on Indian
lands is redeemable only for 180 days following the date of
issuance. If a claim is not made for prize money on or before the
180th day after the date on which the video lottery ticket was
issued, the prize money becomes the property of the tribe. The
tribal gaming agency shall enact rules consistent with this section
governing the use and redemption of prizes and credits recorded on
electronic player account records, such as players' club cards and
smart cards.
Sec. 2004.218. LIMITED WAIVER OF SOVEREIGN IMMUNITY; NO
LIABILITY OF STATE OR TRIBE FOR ENFORCEMENT. (a) This state does
not waive its sovereign immunity by negotiating gaming agreements
with Indian tribes for the operation of video lottery terminals or
other video lottery games under this chapter. An actor or agent on
behalf of this state does not have any authority to waive the
state's sovereign immunity absent an express legislative grant of
the authority. The only waiver of sovereign immunity relative to
video lottery terminal operations is that expressly provided for in
this section.
(b) With regard to video lottery terminal operations on
Indian lands, this state consents to the jurisdiction of the
district court of the United States for the county where the Indian
lands are located solely for the purpose of resolving disputes
arising from a gaming agreement authorized under this chapter for
declaratory or injunctive relief or contract damages of $100,000 or
more. Any disputes relating to damages or other awards valued at
less than $100,000 shall be arbitrated under the rules of the
American Arbitration Association.
(c) All financial obligations of the tribe are payable
solely out of the income, revenues, and receipts of the video
lottery terminal establishments and are subject to statutory
restrictions and appropriations.
(d) The tribe, video lottery terminal establishment, and
the tribal gaming agency are not liable if performance by the tribe,
video lottery terminal establishment, or agency is compromised or
terminated by acts or omissions of the legislature or of the state
or federal judiciary.
(e) This state and the comptroller are not liable related to
any enforcement of this chapter.
Sec. 2004.219. ABSOLUTE PRIVILEGE OF REQUIRED
COMMUNICATIONS AND DOCUMENTS. (a) Any communication or document
of a video lottery central system provider, video lottery terminal
provider, video lottery retailer, or video lottery manager, an
applicant, or a license or registration holder that is made or
transmitted to the comptroller or any of the comptroller's
employees, or to the tribal gaming agency or any of its employees,
to comply with any law or the rules of the agency, to comply with a
subpoena issued by the agency or the comptroller, or to assist the
agency, comptroller, or designee in the performance of their
respective duties is absolutely privileged, does not impose
liability for defamation, and is not a ground for recovery in any
civil action.
(b) If the document or communication contains any
information that is privileged under state law, the privilege is
not waived or lost because the document or communication is
disclosed to the tribal gaming agency or any of the agency's
employees or the comptroller or any of the comptroller's employees.
The agency and the comptroller shall maintain all privileged
information, documents, and communications in a secure place as
determined in the sole discretion of each accessible only to
members of the agency and authorized agency employees or the
comptroller and authorized comptroller employees.
Sec. 2004.220. PROHIBITED GAMES. (a) An Indian tribe 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 operation of any game using a video lottery machine,
slot machine, or other gambling device that is not connected to an
authorized video lottery central system as required by this chapter
is prohibited.
Sec. 2004.221. PLAYER AGREEMENT TO ABIDE BY RULES AND
INSTRUCTIONS. By purchasing a ticket in a particular video lottery
game or participating as a player in a video lottery game, a player
agrees to abide by and be bound by the tribal gaming agency's rules
and instructions, including the rules or instructions applicable to
the particular video lottery game involved. The player also
acknowledges that the determination of whether the player is a
valid winner is subject to:
(1) the tribal gaming agency's rules, instructions,
and claims procedures, including those developed for the particular
video lottery game involved;
(2) any validation tests established by the tribal
gaming agency for the particular video lottery game involved; and
(3) the limitations and other provisions prescribed by
this chapter.
[Sections 2004.222-2004.250 reserved for expansion]
SUBCHAPTER F. GAMING AGREEMENT
Sec. 2004.251. VIDEO LOTTERY GAMES BY INDIAN TRIBES
AUTHORIZED. Notwithstanding any other law, an Indian tribe may
operate video lottery games and video lottery terminals as
authorized by this chapter pursuant to a gaming agreement with the
governor.
Sec. 2004.252. MODEL GAMING AGREEMENT. Not later than the
30th day after the date the governor receives a request from the
Ysleta del Sur Pueblo Indian tribe, the Alabama-Coushatta Indian
tribe, or the Kickapoo Traditional Tribe of Texas, accompanied by
or in the form of a duly enacted resolution of the tribe's governing
body, to enter into a gaming agreement under this section, the
governor shall execute a gaming agreement containing the terms set
forth in the model gaming agreement pursuant to this chapter. If
the tribal resolution is accompanied with a gaming agreement that
is the same in all material respects as the provisions set forth in
this subchapter, the governor's execution of the agreement is a
ministerial act. If the governor has not executed the agreement
prior to the 31st day after receiving the request, the gaming
agreement shall be deemed as having been executed by the governor.
If the tribal resolution is accompanied with a gaming agreement
that varies in any material aspect with the provisions set forth in
this subchapter, the governor's execution is a discretionary act
that may not be exercised if the gaming agreement does not, at a
minimum, include the provisions set forth in this subchapter.
Sec. 2004.253. RESTRICTIONS ON VIDEO LOTTERY GAMES BY
INDIAN TRIBES. (a) To operate video lottery games under this
chapter, an Indian tribe must be an Indian tribe as listed by the
United States secretary of the interior under 25 U.S.C. Section
479a–1 on or before January 1, 1998, and must on or before January
1, 1998, have had Indian lands in trust status within the boundaries
of this state. At no time may there be more than three Indian tribes
operating video lottery games on Indian lands in this state.
(b) An Indian tribe may operate video lottery games under
this chapter only on Indian lands as specifically defined by this
chapter.
(c) An Indian tribe may not operate video lottery games in a
manner that violates any provision of this chapter or the
applicable tribal gaming code. The comptroller has independent
jurisdiction to sanction violations of this chapter or violations
of the gaming agreement against any person or entity other than an
Indian tribe. Alleged violations by the tribe or tribal gaming
agency are governed by the dispute resolution provisions contained
in the gaming agreement as set forth in this subchapter.
Sec. 2004.254. GAMING AGREEMENT: REQUIRED PROVISIONS. A
gaming agreement entered into under this subchapter shall contain
the following provisions:
GAMING AGREEMENT
GOVERNING VIDEO LOTTERY TERMINAL OPERATIONS
between the [Name of Tribe]
and the STATE OF TEXAS
This gaming agreement between the [as applicable: the
Alabama–Coushatta Tribes of Texas or Ysleta del sur Pueblo (Tigua
Tribe) or Traditional Kickapoo Tribe of Texas] shall govern gaming
activities occurring on the Tribe's Indian lands, consistent with
State law generally and Chapter 2004, Texas Occupations Code,
specifically, wherein the Tribe and the State of Texas agree to the
following:
Art. 1. The comptroller of public accounts of the State of
Texas ("comptroller") may inspect all public and nonpublic areas of
the premises where the Tribe operates video lottery games or other
gaming activity at any time.
Art. 2. The Tribe consents to an annual audit by the
comptroller or an auditor selected by the comptroller of the
Tribe's video lottery game operations.
Art. 3. The comptroller may examine and review all
financial records of the Tribe's video lottery game operations at
any reasonable time. The comptroller shall have jurisdiction
concurrent with the Tribal Gaming Agency to enforce violations of
Chapter 2004, Texas Occupations Code.
Art. 4. The Tribe shall establish a Tribal Gaming Agency.
The agency shall operate independently of the gaming operation and
shall adopt and impose licensing standards and operational
procedures to protect the fairness, honesty, and integrity of the
gaming which occurs on the Tribe's Indian lands. The standards
adopted by the Tribal Gaming Agency shall meet or exceed the
standards required by Chapter 2004, Texas Occupations Code. The
agency shall use the Tribe's best efforts to adopt rules and
procedures reasonable and necessary to protect the fairness,
honesty, and integrity of the gaming which occurs on the Tribe's
Indian lands and shall vigorously enforce those rules and
procedures. If the comptroller finds that the agency is not
fulfilling its obligations under this agreement, or otherwise, the
comptroller may seek specific performance and other appropriate
equitable relief pursuant to the dispute resolution provisions of
this gaming agreement to cause the agency to take actions necessary
to protect the fairness, honesty, and integrity of the gaming which
occurs on the Tribe's Indian lands.
Art. 5. (a) The Tribal Gaming Agency shall adopt rules
governing:
(1) security for the lottery and the Tribal Gaming
Agency, including the development of an internal security plan;
(2) apportionment of the total revenues from sales
from all sources in the amounts provided by Chapter 2004, Texas
Occupations Code;
(3) enforcement of prohibitions on the play of video
lottery games by an individual younger than 18 years of age;
(4) enforcement of prohibitions on a person playing a
lottery game by telephone;
(5) [reserved];
(6) enforcement of prohibitions provided by Texas law
on the sale of any purchase or play of a video lottery game; and
(7) licensing all vendors providing equipment and or
services to video lottery terminal establishments valued in the
aggregate to exceed $50,000 in any calendar year, including video
lottery terminal providers, video lottery terminal managers, and
video lottery retailers as those terms are defined by Chapter 2004,
Texas Occupations Code.
Art. 6. The Tribal Gaming Agency may establish a
provisional license or other classes of licenses necessary to
regulate and administer the quantity and type of video lottery
games provided at each video lottery terminal establishment. The
Tribal Gaming Agency shall not issue a provisional license to a
person or entity that the comptroller has informed the Tribal
Gaming Agency would not be suitable for a license. The agency shall
suspend a provisional license on notice by the comptroller that the
comptroller concludes the person or entity is not suitable for a
license.
Art. 7. At least once every two years, the Tribal Gaming
Agency, in consultation with the comptroller, shall employ an
independent firm that is experienced in security, including
computer security and systems security, to conduct a comprehensive
study of all aspects of video lottery security.
Art. 8. The Tribal Gaming Agency shall, every two years,
employ an independent firm experienced in demographic analysis to
conduct a demographic study of video lottery players. The study
must include the income, age, sex, race, education, and frequency
of participation of players.
Art. 9. The comptroller shall have unqualified access to
the Tribal Gaming Agency at all times and may oversee any aspect of
the agency's activity.
Art. 10. The Tribal Gaming Agency shall establish or cause
to be established a video lottery central system to link all video
lottery terminals in the video lottery system located on the
Tribe's Indian lands. The Tribal Gaming Agency rules applicable to
the video lottery central system shall, at a minimum, include:
(1) auditing and other reporting information required
by the Tribal Gaming Agency;
(2) procedures for the Tribal Gaming Agency control
over the activation and disabling of video lottery terminals;
(3) procedures to provide to a registered video
lottery terminal provider or an applicant applying for registration
as a video lottery terminal provider the protocol documentation
data necessary to enable the provider's or applicant's video
lottery terminals to communicate with the Tribe's video lottery
central system;
(4) procedures to ensure compatibility between the
video lottery central system and video lottery terminals supplied
by potential video lottery terminal providers except for providers
that fail to meet specifications set by the Tribal Gaming Agency;
and
(5) requiring the video lottery terminal
establishment to prepare at least weekly a report on the net
terminal income for the week and forward the report to the
comptroller and to the Tribal Gaming Agency.
Art. 11. A video lottery terminal establishment shall
conduct business for the operation of video lottery terminals only
with entities that possess a temporary, provisional, or permanent
license issued by the Tribal Gaming Agency.
Art. 12. (a) The Tribe may award a contract for lottery
supplies, equipment, or services, pending the completion of any
investigation and licensing, registration, or other approval
authorized and required by this chapter.
(b) A contract awarded under this article must include a
provision permitting the Tribe to terminate the contract without
penalty if an investigation by the Tribal Gaming Agency or the
comptroller reveals that the person to whom the contract is awarded
would not satisfy the applicable requirements for licensing,
registration, or other approval under this gaming agreement in
effect or under Chapter 2004, Texas Occupations Code.
Art. 13. (a) Nothing in the gaming agreement is intended to
diminish or otherwise preclude this state from enforcing the
criminal provisions of Texas gaming laws for gaming operated
inconsistently with the terms of the gaming agreement in effect.
(b) The Tribal Gaming Agency shall cooperate with duly
authorized state law enforcement officials in the investigation and
prosecution of violations of Texas gaming laws.
Art. 14. The State of Texas, acting through the
comptroller, may request additional agreements with the Tribe to
ensure the integrity, security, honesty, and fairness of the
operation and to protect the gaming patrons, as necessary. The
State of Texas and the Tribe shall negotiate such additional
agreements in good faith. If the two governments fail to reach an
agreement within 90 days of the initial request, the State or the
Tribe may submit the matter to the dispute resolution provisions of
this agreement.
Art. 15. GENERAL DISPUTE RESOLUTION. (a) Non-Emergency
Compliance. If either the comptroller or the Tribe believes the
designated representative of the other party has failed to comply
with any of the provisions of this gaming agreement, the
comptroller or Tribe may invoke the procedure provided under this
article.
(b) Informal Dispute Resolution.
(1) The party asserting noncompliance shall serve
written notice on the other party. The party asserting the
noncompliance shall identify the specific provision of this gaming
agreement alleged to have been violated and shall specify the
factual basis thereof. If the alleged violation is of a regulation
or procedure that is incorporated by this gaming agreement or the
authorizing state law, the comptroller and the Tribe shall
thereafter meet within 10 days in an effort to resolve the dispute.
(2) If the dispute is not resolved to the satisfaction
of the parties within 30 days after the service of the notice under
Subdivision (1), either party may request informal mediation with a
mediation service acceptable to both parties. In the event the
parties cannot agree on a mediation service, each party may appoint
a mediator, who shall work jointly to resolve the dispute.
(3) If the dispute is not resolved to the satisfaction
of the parties within 30 days after the service of the notice under
Subdivision (1), either party may pursue the remedies provided in
this article.
(c) Arbitration. If agreement cannot be reached as provided
by Subsection (b) of this article, the issues may be submitted to
binding arbitration on consent of both parties as follows:
(1) Either party shall serve written notice of intent
to arbitrate on the other party on the final day of negotiation.
The party serving notice of intent to arbitrate shall identify the
specific provisions of this gaming agreement and issues, which
shall be submitted for arbitration.
(2) Both parties shall within five days of notice of
intent to arbitrate provide a list of five names of individuals
available as prospective arbitrators. Each party shall, within
five days of the receipt of the other party's list, select a person
from that list as an arbitrator. Within 10 days of selection, the
two individuals shall select a third arbitrator from a list of not
less than five nominees from an independent arbitrator or
alternative dispute resolution organization. If the individuals do
not agree on such organization, the organization must be Judicial
Arbitration and Mediation Services, or its successor in interest.
If that organization no longer exists and has no successor in
interests, the organization shall be the American Arbitration
Association. If that association no longer exists and the parties
cannot otherwise agree, then the parties shall proceed to judicial
resolution. The State of Texas and the Tribe agree that the
arbitrators shall be required to submit their decision within 90
days of the selection of the third arbitrator.
(3) The arbitrators shall have authority to issue such
orders and decisions as shall be reasonably necessary or desirable
to bring about an expeditious decision consistent with the judicial
decision made in the initial declaratory judgment action.
(4) Arbitration expenses will be billed equally to the
respective parties.
(5) Except as may be determined by a federal court,
arbitration decisions shall have the same effect as if a part of
this gaming agreement and are incorporated in full herein. They
shall be in effect unless and until determined otherwise by a
federal court.
(6) Nothing herein shall preclude the parties from
agreeing to an alternate form of dispute resolution.
(d) Judicial Resolution.
(1) On completion of the informal dispute resolution
process of Subsections (b) and (c), both the comptroller and the
Tribe consent to the jurisdiction of the federal courts for the
resolution of any dispute arising from activities governed by this
gaming agreement.
(2) The waivers of immunity of the Tribe and the State
of Texas shall not limit the court's equitable jurisdiction to
award specific performance or otherwise fashion relief to force a
party's compliance with the provisions of the gaming agreement or
with Chapter 2004, Texas Occupations Code.
Art. 16. Emergency Compliance.
(1) On notification from the comptroller to the Tribal
Gaming Agency of the need to seize or disable equipment, the Tribal
Gaming Agency shall take the action recommended by the comptroller
by securing the equipment at issue and preventing its further play
by gaming patrons. If, after a 24-hour period, the Tribal Gaming
Agency concludes that further play of the equipment does not
violate the gaming agreement, applicable Texas law, other
applicable law, or threaten the integrity of the gaming operation,
the agency shall so notify the comptroller. The Tribal Gaming
Agency may not allow the equipment to be placed back into operation
sooner than 72 hours after notice to the comptroller unless the
comptroller, within that 72-hour period, secures a court-ordered
injunction from the federal court.
(2) On notification from the comptroller to the Tribal
Gaming Agency of the need to take emergency action, the Tribal
Gaming Agency shall take the action recommended by the comptroller.
The comptroller shall only invoke this provision if the comptroller
concludes that such action is necessary to protect the
establishment from an immediate threat and irreparable harm. If,
after a 24-hour period, the Tribal Gaming Agency concludes that
action is not an emergency, does not violate the gaming agreement,
Chapter 2004, Texas Occupations Code, or other applicable law, the
agency shall so notify the comptroller. The Tribal Gaming Agency
may reverse the action taken not sooner than 72 hours after such
notice to the comptroller unless the comptroller, within that
72-hour period, secures a court-ordered injunction from the federal
court.
Art. 17. No Third Party Rights. Nothing herein shall be
interpreted as providing standing to any person or entity other
than the Tribe or the comptroller to bring an action for enforcement
of the terms of this gaming agreement.
[Sections 2004.255-2004.300 reserved for expansion]
SUBCHAPTER G. DISCIPLINARY ACTIONS; OFFENSES
Sec. 2004.301. REVOCATION OF LICENSE, REGISTRATION, OR
OTHER REGULATORY APPROVAL. (a) A tribal gaming agency or the
comptroller shall revoke or suspend a license, registration, or
other regulatory approval issued under this chapter if the license
or registration holder or holder of the approval at any time fails
to meet the eligibility requirements set forth in this chapter.
(b) Failure to timely remit revenue generated by video
lottery terminals to the appropriate tribal gaming agency or any
tax or other fee owed to this state as demonstrated by report from
the applicable taxing authority or to timely file any report or
information required under this chapter as a condition of any
license, registration, or other approval issued under this chapter
may be grounds for suspension or revocation, or both, of a license,
registration, or other approval issued under this chapter.
Sec. 2004.302. DEPRIVATION HEARING FOR REVOCATION OR
SUSPENSION OF REGISTRATION OR LICENSE. (a) Before a tribal gaming
agency or the comptroller revokes or suspends a video lottery
terminal provider's registration or video lottery retailer's or
video lottery manager's license, or imposes monetary penalties for
a violation of this chapter, the tribal gaming agency or
comptroller shall provide written notification to the license or
registration holder of the revocation, the period of suspension, or
the monetary penalty. The notice shall include:
(1) the effective date of the revocation or the period
of suspension or the amount of the monetary penalty, as applicable;
(2) each reason for the revocation, suspension, or
penalty;
(3) an explanation of the evidence supporting the
reasons;
(4) an opportunity to present the license or
registration holder's position in response on or before the 15th
day after the effective date of the revocation; and
(5) a statement explaining the person's right to an
administrative hearing to determine whether the revocation,
suspension, or penalty is warranted.
(b) The notice required under Subsection (a) must be made by
personal delivery or by mail to the person's mailing address as it
appears on the tribal gaming agency's or comptroller's records.
(c) To obtain an administrative hearing on a suspension,
revocation, or penalty under this section, a person must submit a
written request for a hearing to the tribal gaming agency or
comptroller, as applicable, not later than the 20th day after the
date notice is delivered personally or is mailed. If the agency or
comptroller receives a timely request under this subsection, the
agency or comptroller, as applicable, shall provide the person with
an opportunity for a hearing as soon as practicable. If the agency
or comptroller does not receive a timely request under this
subsection, the agency or comptroller, as applicable, may impose
the penalty, revoke or suspend a license or registration, or
sustain the revocation or suspension without a hearing. Except as
provided by Subsection (d), the hearing must be held not earlier
than the 11th day after the date the written request is submitted to
the agency.
(d) The tribal gaming agency or comptroller may provide that
a revocation or suspension takes effect on receipt of notice under
Subsection (a) if the agency or comptroller finds that the action is
necessary to prevent or remedy a threat to public health, safety, or
welfare. The agency and comptroller by rule shall establish a
nonexclusive list of violations that present a threat to the public
health, safety, or welfare. A hearing on a revocation or suspension
that takes effect on receipt of notice must be held not later than
the 14th day after the date the agency or comptroller receives the
request for hearing under Subsection (c). The revocation or
suspension continues in effect until the hearing is completed. If
the hearing is continued, the revocation or suspension shall
continue in effect beyond the 14-day period at the request of the
license or registration holder or on a finding of good cause by the
tribal gaming agency, comptroller, tribal court, or administrative
law judge.
(e) To prevail in a post-deprivation administrative hearing
under this section, the license or registration holder must
demonstrate by clear and convincing evidence that the deprivation
or imposition of a penalty was unwarranted or otherwise unlawful.
The post-deprivation hearing may be conducted by the tribal court
for a tribal gaming agency license or registration or referred to
the State Office of Administrative Hearings for an agency or
comptroller license or registration. The administrative record
created by the hearing conducted by the State Office of
Administrative Hearings shall be provided to the agency and
comptroller for review and determination on the revocation or
suspension. If an administrative law judge of the State Office of
Administrative Hearings conducts a hearing under this section and
the proposal for decision supports the agency's or comptroller's
position, the administrative law judge shall include in the
proposal a finding of the costs, fees, expenses, and reasonable and
necessary attorney's fees the tribe or comptroller incurred in
bringing the proceeding. The agency or comptroller may adopt the
findings for costs, fees, and expenses and make the finding a part
of the final order entered in the proceeding. Proceeds collected
from a finding made under this subsection shall be paid to the tribe
or comptroller, as applicable.
(f) A license or registration holder agrees that the
privilege of holding a license or registration under this chapter
is conditioned on the holder's agreement to this section in its
entirety and, thereby, waives any right to challenge or otherwise
appeal the enforceability of this section.
Sec. 2004.303. SUMMARY SUSPENSION; TERMINAL DISABLED. (a)
The tribal gaming agency may summarily suspend a tribal gaming
agency issued registration or license and the comptroller may
summarily suspend a comptroller issued registration or license
without notice or hearing if the agency or comptroller finds the
action is necessary to maintain the integrity, security, honesty,
or fairness of the operation or administration of the video lottery
or to prevent financial loss to this state and:
(1) the license holder fails to deposit money received
from video lottery terminal operations as required by this chapter
or tribal gaming agency or comptroller rule;
(2) an event occurs that would render the license
holder ineligible for a license under this chapter;
(3) the license holder refuses to allow the tribal
gaming agency, the tribal gaming agency's agents, the comptroller,
the comptroller's agents, or the state auditor, or their designees,
to examine the license holder's books, records, papers, or other
objects; or
(4) the tribal gaming agency or comptroller learns the
license holder failed to disclose information that would, if
disclosed, render the license holder ineligible for a license under
this chapter.
(b) The comptroller may direct the tribal gaming agency to
disable a video lottery terminal operated by a license holder under
this subchapter at the time:
(1) a proceeding to summarily suspend the license is
initiated;
(2) the tribal gaming agency or comptroller discovers
the license holder failed to deposit money received from video
lottery terminal operations as required if the license is being
summarily suspended under this section; or
(3) of the occurrence of an act or omission that, under
tribal gaming agency or comptroller rules, justifies the
termination of video lottery terminal operations to protect the
public health, welfare, or safety or the integrity of the lottery or
to prevent financial loss to this state.
(c) The comptroller shall inform the applicable tribal
gaming agency of recommended action as provided by this section. In
the unlikely event that the tribal gaming agency does not concur,
the matter shall be governed by the dispute resolution process set
forth in the gaming agreement.
Sec. 2004.304. VENUE. (a) Venue is proper in Travis County
or any county in which venue is proper under Chapter 13, Code of
Criminal Procedure, for:
(1) an offense under this chapter; or
(2) an offense under the Penal Code, if the accused:
(A) is not an Indian tribe and otherwise is a
video lottery manager, video lottery retailer, video lottery
terminal provider, video lottery central system provider; and
(B) is alleged to have committed the offense
while engaged in video lottery activities.
(b) If the accused is an Indian tribe or a tribal gaming
agency, venue shall be governed by the gaming agreement in effect.
Sec. 2004.305. UNAUTHORIZED OPERATION, USE, OR POSSESSION
OF VIDEO LOTTERY TERMINAL. (a) A person may not operate, use, or
possess a video lottery terminal or other electronic gambling
device unless the operation, use, or possession is expressly
authorized by this chapter.
(b) Except during transport to or from a video lottery
terminal establishment and as provided by this chapter, a person
commits an offense if the person operates, uses, or possesses any
video lottery terminal that is not at all times connected to a video
lottery central system. An offense under this subsection is a
felony of the third degree.
(c) A person commits an offense if the person operates,
uses, or possesses a gambling device, other than a video lottery
terminal authorized under this chapter, including a slot machine,
dice game, roulette wheel, house-banked game, or game in which a
winner is determined by the outcome of a sports contest. An offense
under this subsection is a felony of the third degree.
(d) Notwithstanding Subsection (b) or (c), a video lottery
retailer, video lottery manager, or registered video lottery
terminal provider may store or possess a video lottery terminal as
authorized by the comptroller or by a tribal gaming agency pursuant
to a gaming agreement in effect, and the comptroller or tribal
gaming agency may possess video lottery terminals for study and
evaluation.
(e) Nothing in this section shall be construed to prohibit
the operation, use, or possession of equipment, machines,
technological aids, or other devices allowed in connection with the
play of bingo under Chapter 2001 or allowed in with the play off
Texas State Lottery games under Chapter 466, Government Code.
Sec. 2004.306. SALE OF TICKET OR LOTTERY GAME TO OR PURCHASE
OF TICKET OR LOTTERY GAME BY PERSON YOUNGER THAN 18 YEARS OF AGE.
(a) A video lottery manager, video lottery retailer, or an employee
of a video lottery manager or video lottery retailer or an employee
of a tribe-owned video lottery gaming establishment commits an
offense if the person intentionally or knowingly allows a person
younger than 18 years of age to play a video lottery game.
(b) An individual who is younger than 18 years of age
commits an offense if the individual:
(1) plays a video lottery game; or
(2) falsely represents the individual to be 18 years
of age or older by displaying evidence of age that is false or
fraudulent or misrepresents in any way the individual's age in
order to purchase a ticket or play a video lottery game.
(c) An offense under Subsection (a) or (b) is a Class C
misdemeanor.
Sec. 2004.307. PURCHASE OF TICKET OR VIDEO LOTTERY GAME
WITH PROCEEDS OF AFDC CHECK OR FOOD STAMPS. (a) A person commits an
offense if the person intentionally or knowingly plays a video
lottery game with:
(1) the proceeds of a check issued as a payment under
the Aid to Families with Dependent Children program administered
under Chapter 31, Human Resources Code; or
(2) a food stamp coupon issued under the food stamp
program administered under Chapter 33, Human Resources Code.
(b) An offense under this section is a Class C misdemeanor.
Sec. 2004.308. FORGERY; ALTERATION OF VIDEO LOTTERY TICKET.
(a) A person commits an offense if the person intentionally or
knowingly alters or forges a ticket or video lottery game,
including tickets provided by a video lottery terminal.
(b) An offense under this section is a felony of the third
degree unless it is shown on the trial of the offense that the prize
alleged to be authorized by the video lottery ticket is forged or
altered is greater than $10,000, in which event the offense is a
felony of the second degree.
Sec. 2004.309. TAMPERING WITH VIDEO LOTTERY EQUIPMENT. (a)
A person commits an offense if the person intentionally or
knowingly tampers with, damages, defaces, or renders inoperable any
vending machine, electronic computer terminal, video lottery
terminal or other video lottery equipment, or other mechanical
device used in a lottery game.
(b) An offense under this section is a felony of the second
degree.
SECTION 2. Section 47.01(4), Penal Code, is amended to read
as follows:
(4) "Gambling device" means any electronic,
electromechanical, or mechanical contrivance not excluded under
Paragraph (B) or (C) 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, slot machines, or similar electronic, electromechanical, or
mechanical games, or facsimiles thereof, that operate by chance or
partially so, that as a result of the play or operation of the game
award credits or free games, and that record the number of free
games or credits so awarded and the cancellation or removal of the
free games or credits; [and]
(B) does not include any electronic,
electromechanical, or mechanical contrivance designed, made, and
adapted solely for bona fide amusement purposes if:
(i) the contrivance 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;
(ii) any merchandise or a representation of
value received by a player may be exchanged only at the same
business and business location at which the contrivance operated by
the player is located and may not be exchanged for a gift
certificate or similar conveyance that is redeemable at another
business or business location; and
(iii) the contrivance or device does not
resemble a slot machine or any other casino game; and
(C) does not include equipment, machines,
technological aids, or other devices allowed in connection with the
playing of bingo under Chapter 2001, Occupations Code, or video
lottery terminals authorized under Chapter 2004, Occupations Code.
SECTION 3. Section 47.02(c), Penal Code, is amended to read
as follows:
(c) It is a defense to prosecution under this section that
the actor reasonably believed that the conduct:
(1) was permitted under Chapter 2001, Occupations
Code;
(2) was permitted under Chapter 2002, Occupations
Code;
(3) was permitted under Chapter 2004, Occupations
Code;
(4) consisted entirely of participation in the state
lottery authorized by the State Lottery Act (Chapter 466,
Government Code);
(5) [(4)] was permitted under the Texas Racing Act
(Article 179e, Vernon's Texas Civil Statutes); or
(6) [(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.
SECTION 4. Section 47.09, Penal Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) It is a defense to prosecution under this chapter that
the conduct:
(1) was authorized under:
(A) Chapter 2001, Occupations Code;
(B) Chapter 2002, Occupations Code; [or]
(C) Chapter 2004, Occupations Code; or
(D) the Texas Racing Act (Article 179e, Vernon's
Texas Civil Statutes);
(2) consisted entirely of participation in the state
lottery authorized by Chapter 466, Government Code; or
(3) was a necessary incident to the operation of the
state lottery and was directly or indirectly authorized by:
(A) Chapter 466, Government Code;
(B) the lottery division of the Texas Lottery
Commission;
(C) the Texas Lottery Commission; or
(D) the director of the lottery division of the
Texas Lottery Commission.
(c) Subsection (a)(1)(C) applies to a person manufacturing,
distributing, possessing, or operating a gambling device with the
authorization of the comptroller under a gaming agreement in effect
under Chapter 2004, Occupations Code.
SECTION 5. Chapter 47, Penal Code, is amended by adding
Section 47.095 to read as follows:
Sec. 47.095. INTERSTATE OR FOREIGN COMMERCE DEFENSE. It is
a defense to prosecution under this chapter that a person sells,
leases, transports, possesses, stores, or manufactures a gaming
device with the authorization of a tribal gaming agency under a
gaming agreement in effect under Chapter 2004, Occupations Code, or
with the authorization of the comptroller under that chapter.
SECTION 6. The legislature finds and declares the
following:
(1) Contingent on the approval of the voters, a
limited and narrow exception to the constitutional prohibition on
lotteries has been proposed to authorize tribe-operated video
lottery games subject to strict state oversight in accordance with
this Act.
(2) In light of the financial emergency faced by the
state in the event the voters approve the constitutional amendment,
the comptroller must be authorized to commence oversight of video
lottery games on Indian lands in accordance with this Act at the
earliest possible date, consistent with the intent of the voters
and legislative directive.
(3) The implementation of oversight of video lottery
games will require significant time for application investigations
and determinations and for video lottery terminal and video lottery
central system providers and manufacturers of video lottery games
to develop prototypes for testing for the video lottery central
system and video lottery terminals and games.
(4) The state's budget crisis constitutes an imminent
peril to the public welfare, requiring the adoption of rules and
authorization for the comptroller to conduct certain limited
pre-implementation activities related to the oversight of the
establishment of video lottery by Indian tribes to promote and
ensure the integrity, security, honesty, and fairness of the
operation and administration of the video lottery games.
(5) In order to commence operation of video lottery
games at the earliest possible date and to maintain the integrity of
the video lottery games authorized by this Act, the comptroller may
conduct limited pre-implementation acts before the constitutional
amendment proposed by the 79th Legislature, Regular Session, 2005,
to authorize the operation of video lottery games in this state by
certain Indian tribes on Indian lands is submitted to the voters for
approval.
SECTION 7. (a) As soon as practicable after the
constitutional amendment to authorize the video lottery games in
this state by certain Indian tribes on Indian lands proposed by the
79th Legislature, Regular Session, 2005, is approved by the voters
and becomes effective, the comptroller shall adopt the rules
necessary to implement the comptroller's oversight of those video
lottery games.
(b) Before the proposed constitutional amendment is
submitted to the voters, the comptroller may expend money from the
comptroller's appropriation for the 2005-2006 biennium for
purposes of conducting pre-implementation activities related to
the oversight of video lottery games by Indian tribes.
Notwithstanding Section 2004.057, Occupations Code, the money
authorized to be expended under this section may be withdrawn from
the state video lottery account and considered a part of the
transfer of funds from the state video lottery account authorized
by Section 2004.215, Occupations Code, as added by this Act, to fund
the pre-implementation activities.
(c) Before the proposed constitutional amendment is
submitted to the voters, the comptroller may accept from a tribal
gaming agency pre-implementation applications for video lottery
retailers and video lottery managers. On receipt of a complete
application, completion of all investigations, and submittal of the
nonrefundable investigatory fees the comptroller requires, the
comptroller may make preliminary findings of suitability for an
applicant of a video lottery terminal establishment. If the
comptroller determines that all the requirements have been
satisfied, the comptroller may issue a letter advising the
applicant of the status of preliminary approval of the application
pending approval by the voters of the proposed constitutional
amendment. If the comptroller determines that any requirements
under a gaming agreement in effect have not been satisfied, the
comptroller may request additional information or conduct further
investigations the comptroller considers necessary and may issue a
letter advising the applicant of the status of the application.
(d) Before the proposed constitutional amendment is
submitted to the voters, the comptroller may request and receive
information related to applications for licensing and registration
under Chapter 2004, Occupations Code, as added by this Act,
contingent on approval of the constitutional amendment. An
applicant's failure to comply with any requests made by the
comptroller under this subsection shall be grounds for a tribal
gaming agency to deny an application.
(e) A tribal gaming agency or the comptroller may not issue
any license, registration, or temporary license related to video
lottery under a gaming agreement in effect, unless and until the
constitutional amendment authorizing the operation of video
lottery games in this state by certain Indian tribes on Indian lands
is approved by the voters and becomes effective.
(f) Before the proposed constitutional amendment is
submitted to the voters, a tribal gaming agency and the comptroller
may conduct investigations and collect investigative fees related
to information requested and received for pre-implementation
applications under this section and necessary for a tribal gaming
agency's and the comptroller's evaluation and determination of an
application for any licensing, registration, or approval.
(g) Before the proposed constitutional amendment is
submitted to the voters, a tribal gaming agency and the comptroller
may conduct preregistration of potential video lottery terminal
providers. To qualify for preregistration under this subsection,
an applicant must satisfy the minimum application requirements
under Section 2004.151, Occupations Code, except that the
application fee required under that section is not due until the
applicant files an application for registration under a gaming
agreement in effect. A preregistration applicant shall submit
necessary money not later than the 10th day after the date the
applicant receives notice from the comptroller that it has incurred
actual costs for the preregistration investigation. If the
comptroller does not receive the necessary money from the applicant
on or before the 15th day after the date the applicant receives the
comptroller's notice, the tribal gaming agency or comptroller shall
suspend the application until the money is received by the
comptroller.
(h) A tribal gaming agency or the comptroller may not
register any video lottery terminal providers unless and until the
constitutional amendment authorizing the operation of video
lottery games in this state by certain Indian tribes on Indian lands
is approved by the voters and becomes effective.
(i) A video lottery terminal provider that has been
preregistered by a tribal gaming agency or the comptroller in
accordance with this section, a video lottery central system
provider, or a manufacturer of video lottery games, under a
contract with the tribe or tribal gaming agency, may manufacture
and test prototypes of or existing video lottery equipment for a
video lottery central system, video lottery terminals, and video
lottery games for the tribal gaming agency's and the comptroller's
consideration.
(j) Before the proposed constitutional amendment is
submitted to the voters, a tribal gaming agency may negotiate
contracts with preregistered video lottery terminal providers. The
comptroller or the tribal gaming agency may enter into contracts
with preregistered video lottery terminal providers, video lottery
central system providers, and manufacturers of video lottery games
as required for the creation and testing of video lottery central
systems, video lottery terminals, and video lottery games for the
comptroller's consideration.
(k) Before the proposed constitutional amendment is
submitted to the voters, the comptroller may negotiate and enter
into contracts as necessary to oversee video lottery games
conducted by Indian tribes. The comptroller is exempt from the
procurement procedures and any and all bidding requirements or
contract requirements provided by any other law or by rules of the
comptroller for the acquisition or provision of facilities,
supplies, equipment, materials, or services related to the
implementation of video lottery under this section.
(l) Before the proposed constitutional amendment is
submitted to the voters, the comptroller may employ additional
employees to administer this Act.
SECTION 8. Sections 1 through 5 of this Act take effect on
the date the amendment to Section 47, Article III, Texas
Constitution, authorizing the operation of video lottery games in
this state by certain Indian tribes on Indian lands proposed by the
79th Legislature, Regular Session, 2005, becomes effective.
Sections 6 and 7 of this Act and this section take effect
immediately if this Act receives a vote of two-thirds of all the
members elected to each house, as provided by Section 39, Article
III, Texas Constitution. If this Act does not receive the vote
necessary for immediate effect, Sections 6 and 7 of this Act and
this section take effect on the 91st day after the last day of the
legislative session.