80R7569 JPL-D

By: Flores H.B. No. 1156

Substitute the following for H.B. No. 1156:

By: Miles C.S.H.B. No. 1156

A BILL TO BE ENTITLED

AN ACT

relating to the operation and regulation of charitable bingo and the use of bingo proceeds.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2001.002, Occupations Code, is amended by adding Subdivisions (4-a), (8-a), (23-a), and (25-a) and amending Subdivision (11) to read as follows:

(4-a) "Bingo chairperson" means an officer of a licensed authorized organization who is designated in writing by the organization as responsible for overseeing the organization's bingo activities and reporting to the membership relating to those activities.

(8-a) "Crime of moral turpitude" means:

(A) a felony;

(B) a gambling offense;

(C) criminal fraud;

(D) forgery;

(E) theft;

(F) an offense that involves filing false information with a governmental agency; or

(G) any offense that:

(i) is classified in this state as a Class A misdemeanor; and

(ii) puts the honesty and integrity of the individual who committed the offense in question.

(11) "Fraternal organization" means any of the following other than an organization whose members are predominantly veterans or dependents of veterans of the armed services of the United States:

(A) a nonprofit organization organized to perform and engaged primarily in performing charitable, benevolent, patriotic, employment-related, or educational functions that meet the other requirements of this chapter; [or]

(B) a nonprofit National Historical District Association representing the owners and lessees of a majority of the real property located in a National Historical District designated for not less than five years by the National Register of Historic Places, Heritage Conservation and Recreation Service of the United States Department of the Interior, if the association's net proceeds are used for restoration, construction, maintenance, and security in the district; or

(C) an organization that is exempt from federal income taxes under Section 501(a), Internal Revenue Code of 1986, by being listed as an exempt organization under Section 501(c)(2), (3), (4), (5), (6), (7), (8), (9), (10), or (13), Internal Revenue Code of 1986. [The term "fraternal organization" does not include an organization whose members are predominantly veterans or dependents of veterans of the armed services of the United States.]

(23-a) "Proprietary, equitable, or credit interest" means ownership or control of, or the ability to exercise control of, the business, premises, land, buildings, equipment, fixtures, permits, assets, stock, stock options, convertible debentures, accounts payable or receivable, or any other tangible good owned or used by any organization or other person that conducts, promotes, or administers bingo, or that is produced by the conduct, promotion, or administration of bingo.

(25-a) "Regular license" means a license to conduct bingo that is issued by the commission and that expires on the first or second anniversary of the date of issuance unless revoked or suspended before that date by the commission. The term includes an annual license.

SECTION 2. Section 2001.059, Occupations Code, is amended by amending Subsection (a) and adding Subsection (g) to read as follows:

(a) An officer, primary operator, or business representative of a license holder or an attorney, accountant, or bookkeeper employed or retained by a license holder [A person] may request from the commission an advisory opinion regarding compliance with this chapter and the rules of the commission.

(g) The commission may refuse to issue an advisory opinion under this section on a matter that the commission knows to be in active litigation.

SECTION 3. Subchapter B, Chapter 2001, Occupations Code, is amended by adding Section 2001.060 to read as follows:

Sec. 2001.060. REPORTING. (a) On or before June 1 of each even-numbered year, the commission shall prepare and deliver to the governor, the lieutenant governor, the speaker of the house of representatives, and the chairs of the standing committees of the senate and house of representatives with primary jurisdiction over charitable bingo a report stating for each of the preceding two calendar years:

(1) the total amount of adjusted gross receipts reported by licensed authorized organizations from their bingo operations;

(2) the total amount of net proceeds reported by licensed authorized organizations from their bingo operations; and

(3) a comparison of the amounts reported under Subdivisions (1) and (2), including the percentage that the net proceeds represents of the adjusted gross receipts.

(b) For purposes of Subsection (a), "adjusted gross receipts" means the amount remaining after deducting prizes paid, excluding prize fees collected from bingo players.

(c) For purposes of Subsection (a), the commission shall determine the total amount of net proceeds in a manner that does not reduce gross receipts by the amount of rent paid for the rental of bingo premises by a licensed authorized organization to another licensed authorized organization if the other organization pays rent for the premises to a licensed commercial lessor.

SECTION 4. Section 2001.101(a), Occupations Code, is amended to read as follows:

(a) The commission may license a person who is an authorized organization eligible for a license to conduct bingo if the person is:

(1) a religious society that has existed in this state for at least eight years;

(2) a nonprofit organization:

(A) whose predominant activities are for the support of medical research or treatment programs; and

(B) that for at least three years:

(i) must have had a governing body or officers elected by a vote of members or by a vote of delegates elected by the members; or

(ii) must have been affiliated with a state or national organization organized to perform the same purposes as the nonprofit organization;

(3) a fraternal organization;

(4) a veterans organization; [or]

(5) a volunteer fire department; or

(6) a volunteer emergency medical services provider.

SECTION 5. Sections 2001.102(a) and (b), Occupations Code, are amended to read as follows:

(a) An applicant for a license to conduct bingo must file with the commission an [a written, executed, and verified] application on a form prescribed by the commission.

(b) The application must include:

(1) the name and address of the applicant;

(2) the names and addresses of the applicant's officers and directors;

(3) the address of the premises where and the time when the applicant intends to conduct bingo under the license sought;

(4) the name and address of the licensed commercial lessor of the premises, if the applicant intends to lease premises to conduct bingo from a person other than an authorized organization;

(5) [the capacity or potential capacity for public assembly in any premises owned or occupied by the applicant;

[(6) the amount of rent to be paid or other consideration to be given, directly or indirectly, for each occasion for use of the premises of another licensed authorized organization or for use of the premises of a licensed commercial lessor;

[(7) all other items of expense intended to be incurred or paid in connection with conducting, promoting, and administering bingo and the names and addresses of the persons to whom, and the purposes for which, the expenses are to be paid;

[(8) the specific purposes to and the manner in which the net proceeds of bingo are to be devoted;

[(9)] a statement that the net proceeds of bingo will go to one or more of the authorized charitable purposes under this chapter;

(6) [(10)] a designation of one or more active members of the applicant organization under whom bingo will be conducted accompanied by a statement signed by each designated member stating that the member will be responsible for the conduct of bingo under the terms of the license and this chapter;

(7) [(11) a statement that a copy of the application has been sent to the appropriate governing body;

[(12) the name and address of each person who will work at the proposed bingo occasion, the nature of the work to be performed, and a statement as to whether the person has been convicted of a felony, a gambling offense, criminal fraud, or a crime of moral turpitude; and

[(13)] sufficient facts relating to the applicant's incorporation and organization to enable the commission to determine whether the applicant is an authorized organization;

(8) a copy of the applicant organization's most recently filed Internal Revenue Service Form 990, if applicable;

(9) a letter of good standing from the applicant organization's parent organization, if the organization receives an exemption from federal income taxes as a member of a group of organizations;

(10) copies of the applicant organization's organizing instruments, including any bylaws, constitution, charter, and articles of incorporation;

(11) verification of the applicant organization's good standing with the secretary of state if the organization is organized under the law of this state; and

(12) information necessary to conduct criminal background checks on the applicant organization's officers, operators, and directors.

SECTION 6. Section 2001.103(e), Occupations Code, is amended to read as follows:

(e) Notwithstanding Subsection (c), an authorized organization that holds a regular license to conduct bingo may receive not more than 24 [12] temporary licenses during the 12-month period following the issuance or renewal of the license.

SECTION 7. Sections 2001.104(b) and (d), Occupations Code, are amended to read as follows:

(b) The commission by rule shall establish procedures to determine if the appropriate license fee [At the end of the license period the license holder and the commission shall compute the amount of gross receipts actually recorded during the license period to determine if the appropriate fee amount] was paid.

(d) An applicant shall pay the fees established under Subsection (a) annually. An applicant for a license or renewal of a license may obtain a license that is effective for two years by paying an amount equal to two times the amount of the annual license fee, or by paying the license fee for the first year at the time the applicant submits the application and the fee for the second year not later than the first anniversary of the date the license becomes effective [plus $25].

SECTION 8. Section 2001.105, Occupations Code, is amended by amending Subsection (b) and adding Subsections (d) and (e) to read as follows:

(b) The commission may not issue a license to an authorized organization to conduct bingo if an officer or director of the organization has been convicted of a felony, criminal fraud, a gambling or gambling-related offense, or a crime of moral turpitude if less than 10 years has elapsed since the termination of a sentence, parole, mandatory supervision, or community supervision served for the offense.

(d) A license holder who fails to renew the license holder's license before the date the license expires may renew the license after the expiration date if:

(1) the license holder files a complete license renewal application with the commission not later than the 10th day after the date the license expired, pays the annual renewal fee, and pays a late renewal fee equal to 10 percent of the annual renewal fee; or

(2) the license holder files a renewal application with the commission not later than the 60th day after the date the license expired, pays the annual renewal fee, and pays a late renewal fee equal to 10 percent of the annual renewal fee for each 10-day period occurring after the date the license expired and before the date the renewal application is filed with the commission.

(e) If a license holder applies for a renewal of a license after the 60th day after the date the license expired, the license holder must file an application for an original license and cease all bingo activities as of the 61st day after the date the license expired until the new license is issued.

SECTION 9. Section 2001.106, Occupations Code, is amended to read as follows:

Sec. 2001.106. FORM AND CONTENTS OF LICENSE. A license to conduct bingo must include:

(1) the name and address of the license holder;

(2) the names and addresses of the member or members of the license holder under whom the bingo will be conducted; and

(3) the address [an indication] of the premises where and the time when bingo is to be conducted[;

[(4) the specific purposes to which the net proceeds of bingo are to be devoted; and

[(5) a statement of whether a prize is to be offered and the amount of any authorized prize].

SECTION 10. Section 2001.107(a), Occupations Code, is amended to read as follows:

(a) Unless the organization is a member of a unit that designates a unit manager under Section 2001.437, the bingo chairperson for a licensed authorized organization [The person designated under Section 2001.102(b)(10)] shall complete the [eight hours of] training required [as provided] by commission rule. For a unit operating under Subchapter I-1, the unit manager shall complete the training if the unit designates a unit manager under Section 2001.437.

SECTION 11. Section 2001.154(a), Occupations Code, is amended to read as follows:

(a) The commission may not issue a commercial lessor license to or renew a commercial lessor license of:

(1) a person convicted of a felony, criminal fraud, a gambling or gambling-related offense, or a crime of moral turpitude if less than 10 years has elapsed since termination of a sentence, parole, mandatory supervision, or community supervision served for the offense;

(2) a public officer who receives any consideration, direct or indirect, as owner or lessor of premises offered for conducting bingo;

(3) a person who [extends credit to,] loans money to[,] or pays or provides for the payment of license fees for an authorized organization;

(4) a distributor or manufacturer; or

(5) a person who:

(A) has a proprietary, equitable, or credit interest of greater than 10 percent in [which] a person covered by Subdivision (1), (2), (3), or (4);

(B) is [or a person] married or related in the first degree by consanguinity or affinity, as determined under Chapter 573, Government Code, to a person who [one of those persons] has greater than a 10 percent proprietary, equitable, or credit interest in a person covered by Subdivision (1), (2), (3), or (4); or

(C) [in which one of those persons] is active in or employed by a person who has a proprietary, equitable, or credit interest of greater than 10 percent in a person covered by Subdivision (1), (2), (3), or (4)[;

[(6) a foreign corporation or other foreign legal entity;

[(7)an individual who is not a resident of this state;

[(8) a corporation or other legal entity owned or controlled by:

[(A)a foreign corporation; or

[(B) an individual who is not a resident of this state; or

[(9)a corporation or other legal entity:

[(A)whose shares are publicly traded; or

[(B) owned or controlled by a corporation whose shares are publicly traded].

SECTION 12. Section 2001.156, Occupations Code, is amended to read as follows:

Sec. 2001.156. LICENSE APPLICATION. (a) An applicant for a commercial lessor license must file with the commission an [a written verified] application on a form prescribed by the commission.

(b) The license application must include:

(1) the name and address of the applicant and each other person who has a financial interest in [or who is in any capacity a real party in interest in] the applicant's business as it pertains to this chapter or who is described by Section 2001.154(a)(5) in relation to the applicant;

(2) a designation and address of the premises [intended to be] covered by the license; and

(3) [the lawful capacity of the premises for public assembly purposes;

[(4) a statement that a copy of the application has been sent to the appropriate governing body; and

[(5)] a statement that the applicant complies with the conditions for eligibility for the license.

SECTION 13. Sections 2001.158(b) and (d), Occupations Code, are amended to read as follows:

(b) The commission by rule shall establish procedures for determining if the appropriate license fee [At the end of the license period, the license holder and the commission shall compute the amount of the gross rentals actually recorded during the license period to determine if the appropriate fee amount] was paid.

(d) An applicant for a commercial lessor license shall pay the fees established under Subsection (a) annually. An applicant for a license or renewal of a license may obtain a license that is effective for two years by paying an amount equal to two times the amount of the annual license fee, or by paying the license fee for the first year at the time the applicant submits the application and the fee for the second year not later than the first anniversary of the date the license becomes effective [plus $25].

SECTION 14. The heading to Section 2001.159, Occupations Code, is amended to read as follows:

Sec. 2001.159. LICENSE ISSUANCE OR RENEWAL.

SECTION 15. Section 2001.159(a), Occupations Code, is amended to read as follows:

(a) The commission shall issue or renew a commercial lessor license if the commission determines that:

(1) the applicant has paid the license fee as provided by Section 2001.158;

(2) the applicant qualifies to be licensed under this chapter;

(3) [the applicant satisfies the requirements for a commercial lessor under this subchapter;

[(4)] the rent to be charged is fair and reasonable [and will be charged and collected in compliance with Section 2001.406];

(4) [(5) there is no diversion of the funds of the proposed lessee from the lawful purposes under this chapter;

[(6)] the person whose signature or name appears in the application is in all respects the real party in interest and is not an undisclosed agent or trustee for the real party in interest; and

(5) [(7)] the applicant will lease the premises for the conduct of bingo in accordance with this chapter.

SECTION 16. Section 2001.202, Occupations Code, is amended to read as follows:

Sec. 2001.202. ELIGIBILITY FOR MANUFACTURER'S LICENSE. The following persons are not eligible for a manufacturer's license:

(1) a person convicted of a felony, criminal fraud, a gambling or gambling-related offense, or a crime of moral turpitude if less than 10 years has elapsed since the termination of a sentence, parole, mandatory supervision, or community supervision served for the offense;

(2) a person who is or has been a professional gambler or gambling promoter;

(3) an elected or appointed public officer or a public employee;

(4) an owner, officer, director, shareholder, agent, or employee of a licensed commercial lessor;

(5) a person who conducts, promotes, or administers, or assists in conducting, promoting, or administering, bingo for which a license is required by this chapter;

(6) a distributor required to be licensed under this chapter;

(7) a person who has had a license to manufacture, distribute, or supply bingo equipment or supplies revoked within the preceding year by another state;

(8) an owner, officer, director, or shareholder of, or a person holding an equitable or credit interest in, another manufacturer or distributor licensed or required to be licensed under this chapter; or

(9) a person:

(A) who has a greater than 10 percent proprietary, equitable, or credit interest in [which] a person described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8);

(B) who is [or in which a person] married or related in the first degree by consanguinity or affinity, as determined by Subchapter B, Chapter 573, Government Code, to a person:

(i) described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8); or

(ii) who [one of those persons] has greater than a 10 percent proprietary, equitable, or credit interest [or] in a person described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8);

(C) who [which one of those persons] is active in or employed by a person:

(i) described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8); or

(ii) who has greater than a 10 percent proprietary, equitable, or credit interest in a person described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8); or

(D) [(B)] in whose application for a manufacturer's license a person described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8) is required to be named.

SECTION 17. Sections 2001.203(a) and (b), Occupations Code, are amended to read as follows:

(a) An applicant for a manufacturer's license must file with the commission an [a written verified] application on a form prescribed by the commission.

(b) The application must include:

(1) the name and address of the applicant and the name and address of each of its locations where bingo supplies or equipment are manufactured;

(2) a full description of each type of bingo supply or equipment that the applicant intends to manufacture or market in this state and the brand name, if any, under which each item will be sold;

(3) [the name and address of the applicant and] if the applicant:

(A) is not a corporation, the name and home address of each owner; or

(B) is a corporation, the name and home address of each officer and director and each person owning more than 10 percent [or more] of a class of stock in the corporation;

(4) if the applicant is a foreign corporation or other legal entity, the name, business name and address, and [home] address of its registered agent for service in this state;

(5) the name and address of each manufacturer, supplier, and distributor in which the applicant has a financial interest and the details of that financial interest, including any indebtedness between the applicant and the manufacturer, supplier, or distributor of $5,000 [$500] or more;

(6) information regarding whether the applicant or a person required to be named in the application has been convicted in this state or another state of a felony, criminal fraud, a gambling or gambling-related offense, or a crime of moral turpitude;

(7) information regarding whether the applicant or a person required to be named in the application is an owner, officer, director, shareholder, agent, or employee of a licensed commercial lessor or conducts, promotes, administers, or assists in conducting, promoting, or administering bingo for which a license is required by this chapter;

(8) information regarding whether the applicant or a person required to be named in the application is a public officer or public employee in this state;

(9) the name of each state in which the applicant is or has been licensed to manufacture, distribute, or supply bingo equipment or supplies, each license number, the period of time licensed under each license, and whether a license has been revoked, suspended, withdrawn, canceled, or surrendered and, if so, the reasons for the action taken;

(10) information regarding whether the applicant or a person required to be named in the application is or has been a professional gambler or gambling promoter;

(11) the names and addresses of each manufacturer, supplier, or distributor of bingo equipment or supplies in which the applicant or a person required to be named in the application is an owner, officer, shareholder, director, agent, or employee; and

(12) any other information the commission requests.

SECTION 18. Section 2001.207, Occupations Code, is amended to read as follows:

Sec. 2001.207. ELIGIBILITY FOR DISTRIBUTOR'S LICENSE. The following persons are not eligible for a distributor's license:

(1) a person convicted of a felony, criminal fraud, a gambling or gambling-related offense, or a crime of moral turpitude if less than 10 years has elapsed since the termination of a sentence, parole, community supervision, or mandatory supervision served for the offense;

(2) a person who is or has been a professional gambler or gambling promoter;

(3) an elected or appointed public officer or a public employee;

(4) an owner, officer, director, shareholder, agent, or employee of a licensed commercial lessor;

(5) a person who conducts, promotes, or administers, or assists in conducting, promoting, or administering bingo for which a license is required by this chapter;

(6) a manufacturer required to be licensed under this chapter;

(7) a person who has had a license to manufacture, distribute, or supply bingo equipment or supplies revoked within the preceding year by another state;

(8) an owner, officer, director, or shareholder of, or a person having an equitable or credit interest in, another manufacturer or distributor licensed or required to be licensed under this chapter; or

(9) a person:

(A) who has a greater than 10 percent proprietary, equitable, or credit interest in [which] a person described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8);

(B) who is [or in which a person] married or related in the first degree by consanguinity or affinity, as determined under Subchapter B, Chapter 573, Government Code, to a person:

(i) described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8); or

(ii) who [one of those persons] has greater than a 10 percent proprietary, equitable, or credit interest [or] in a person described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8);

(C) who [which one of those persons] is active in or employed by a person:

(i) described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8); or

(ii) who has greater than a 10 percent proprietary, equitable, or credit interest in a person described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8); or

(D) [(B)] in whose application for a manufacturer's license a person described by Subdivision (1), (2), (3), (4), (5), (6), (7), or (8) is required to be named.

SECTION 19. Section 2001.208(b), Occupations Code, is amended to read as follows:

(b) The application must include:

(1) the full name and address of the applicant;

(2) the name and address of each location operated by the distributor from which bingo supplies or equipment are distributed or at which bingo supplies or equipment are stored;

(3) if a noncorporate distributor, the name and home address of each owner;

(4) if a corporate distributor, the name and home address of each officer or director and of each person owning more than [at least] 10 percent of a class of stock in the corporation;

(5) if a foreign corporation or other legal entity, the name, business name and address, and [home] address of its registered agent for service in this state;

(6) a full description of the type of bingo supply or equipment that the applicant intends to store or distribute in this state and the name of the manufacturer of each item and the brand name, if any, under which the item will be sold or marketed;

(7) the name and address of a manufacturer, supplier, or distributor in which the applicant has a financial interest and the details of that financial interest, including an indebtedness between the applicant and the manufacturer, supplier, or distributor of $5,000 [$500] or more;

(8) information regarding whether the applicant or a person required to be named in the application has been convicted in this state or another state of a felony, criminal fraud, a gambling or gambling-related offense, or a crime of moral turpitude;

(9) information regarding whether the applicant or a person required to be named in the application is an owner, officer, director, shareholder, agent, or employee of a licensed commercial lessor or conducts, promotes, administers, or assists in conducting, promoting, or administering bingo for which a license is required under this chapter;

(10) information regarding whether the applicant or a person required to be named in the application is a public officer or public employee in this state;

(11) the name of each state in which the applicant is or has been licensed to manufacture, distribute, or supply bingo equipment or supplies, each license number, the period of time licensed under each license, and whether a license was revoked, suspended, withdrawn, canceled, or surrendered and, if so, the reasons for the action taken;

(12) information regarding whether the applicant or a person required to be named in the application is or has been a professional gambler or gambling promoter;

(13) the name and address of each manufacturer, supplier, or distributor of bingo equipment or supplies in which the applicant or a person required to be named in the application is an owner, officer, shareholder, director, agent, or employee; and

(14) any other information the commission requests.

SECTION 20. Sections 2001.211(b), (c), and (d), Occupations Code, are amended to read as follows:

(b) If a change occurs after issuance of a manufacturer's or distributor's license, the license holder shall report the change to the commission not later than the 10th business day after the date of the change.

(c) Not later than the 10th business day after the date of the change, a license holder shall notify the commission of a change in:

(1) the license holder's organization, structure, or mode of operation;

(2) the identity of persons named or required to be named in the application and the nature or extent of those persons' interest; or

(3) any other facts stated in the application.

(d) Failure to give a notice required under this section is cause for:

(1) denial, suspension, or revocation of a license; or

(2) imposition of an administrative penalty or other administrative action.

SECTION 21. Section 2001.306(c), Occupations Code, is amended to read as follows:

(c) The holder of a license to conduct bingo may not change the location at which it conducts bingo until it has:

(1) returned [surrendered] its original license if available, or certified that the license is not available; and

(2) received an amended license for the new location.

SECTION 22. Section 2001.313, Occupations Code, is amended by adding Subsections (b-1), (h), and (i) and amending Subsections (d) and (e) to read as follows:

(b-1) A person's listing on the registry expires on the third anniversary of the date the person was initially included on the registry. The person may renew the listing before the expiration date. If the person fails to renew the listing, the commission shall remove the person's name from the registry. A person whose name is removed from the registry may reapply for listing on the registry.

(d) A person who is not listed on the registry established by this section may not act, and a licensed authorized organization may not allow the person to act, as an operator, manager, cashier, usher, caller, bingo chairperson, bookkeeper, or salesperson for the [a] licensed authorized organization.

(e) The commission may refuse to add a person's name to, or remove a person's name from, the registry established by this section if, after notice and, if requested by the person, a hearing, the person is finally determined to have:

(1) been convicted of an offense listed under Section 2001.105(b);

(2) converted bingo equipment in a premises to an improper use;

(3) converted funds that are in, or that should have been in, the bingo account of any licensed authorized organization;

(4) taken any action, individually or in concert with another person, that affects the integrity of any bingo game to which this chapter applies; [or]

(5) acted as an operator, manager, cashier, usher, caller, bingo chairperson, bookkeeper, or salesperson for a licensed authorized organization without being listed on the registry established under this section;

(6) failed to provide a complete application; or

(7) participated in any violation of this chapter or rules adopted by the commission for the administration of this chapter.

(h) A licensed authorized organization may employ a person who is not on the registry established by this section as an operator, manager, cashier, usher, caller, or salesperson on a provisional basis if the person is awaiting the results of a background check by the commission:

(1) for a period not to exceed 14 days if the person is a resident of this state; or

(2) for a period to be established by commission rule if the person is not a resident of this state.

(i) A person who has been removed from the registry under Subsection (e) and has not subsequently been listed on the registry under Subsection (g) may not be employed under Subsection (h).

SECTION 23. Section 2001.404, Occupations Code, is amended to read as follows:

Sec. 2001.404. PRINCIPAL LOCATION. A licensed authorized organization may conduct bingo only in:

(1) the county where the organization has its primary business office or another county contiguous to that county; or

(2) if the organization has no business office, in the county of the principal residence of its chief executive officer, or an adjacent county.

SECTION 24. Section 2001.407(a), Occupations Code, is amended to read as follows:

(a) A licensed manufacturer may furnish, by sale or otherwise, bingo equipment or supplies to a licensed distributor. A [Except as provided by Section 2001.257(b), a] licensed manufacturer may not furnish, by sale or otherwise, bingo equipment or supplies to a person other than a licensed distributor.

SECTION 25. Section 2001.411, Occupations Code, is amended by adding Subsection (c-1) to read as follows:

(c-1) An organization may designate as members of the organization one or more individuals who elect to become members, including all of the organization's directors, and the designated members are bona fide members of the organization for purposes of this section and other law.

SECTION 26. Section 2001.451, Occupations Code, is amended by amending Subsections (a), (c), (d), and (e) and adding Subsections (g), (h), (i), and (j) to read as follows:

(a) A licensed authorized organization shall establish and maintain one regular checking account designated as the organization's "bingo account." [The organization may also maintain an interest-bearing savings account designated as the "bingo savings account."]

(c) A licensed authorized organization may transfer [lend] money from its general fund or other account to the organization's [its] bingo account or to the bingo account of a unit of which the organization is a member under Subchapter I-1, if applicable, if:

(1) the balance in the bingo account to which the funds are transferred is less than the maximum amount permitted by this section; and

(2) the organization notifies [requests and receives the prior approval of] the commission of the transfer not later than the 10th working day after the date of the transfer. [Except as provided by this section, no other funds may be deposited in the bingo account.]

(d) Except as permitted by Subsection (c), a [A] licensed authorized organization may not commingle gross receipts derived from the conduct of bingo with other funds of the organization.

(e) Except as permitted by Subsection (c) of this section and by Section 2001.453(2), a [Sections 2001.453(a)(2) and (3), the] licensed authorized organization may not transfer gross receipts derived from the conduct of bingo to another account maintained by the organization.

(g) The bingo operations of a licensed authorized organization must:

(1) result in net proceeds over the organization's license period; or

(2) if the organization has a two-year license, result in net proceeds over each 12-month period that ends on an anniversary of the date the two-year license was issued.

(h) Except as provided by Subsection (i), a licensed authorized organization or a unit of licensed authorized organizations may retain operating capital in the organization's or unit's bingo account in an amount that:

(1) is equal to the organization's or unit's actual average bingo expenses per quarter based on the preceding license period, excluding prizes paid; and

(2) does not exceed a total of $50,000 for a single organization or $50,000 for each member of a unit.

(i) The commission shall adopt rules allowing a licensed authorized organization to retain a maximum amount of operating capital in the bingo account in excess of the amount provided by Subsection (h) if the organization:

(1) has conducted bingo for less than one year;

(2) experiences circumstances beyond the control of the organization, including force majeure, that necessitate an increase in operating capital; or

(3) provides to the commission a credible business plan for the conduct of bingo or for the organization's existing or planned charitable purposes that an increase in operating capital will reasonably further.

(j) A licensed authorized organization may apply to the commission for a waiver of the requirements of this section and Section 2001.457. The commission may grant the waiver on a showing of good cause by the organization that compliance with this section and Section 2001.457 is detrimental to the organization's existing or planned charitable purposes. An organization applying for a waiver establishes good cause by providing to the commission:

(1) credible evidence of circumstances beyond the control of the organization, including force majeure; or

(2) a credible business plan for the organization's conduct of bingo or the organization's existing or planned charitable purposes.

SECTION 27. Section 2001.452(c), Occupations Code, is amended to read as follows:

(c) A licensed authorized organization shall [keep and] account for all checks and withdrawal slips, including voided checks and withdrawal slips.

SECTION 28. Section 2001.453, Occupations Code, is amended to read as follows:

Sec. 2001.453. AUTHORIZED USES OF BINGO ACCOUNT. [(a)] A licensed authorized organization may draw a check on its bingo account only for:

(1) the payment of necessary or [and] reasonable bona fide expenses, including compensation of personnel, as permitted under Section 2001.458 incurred and paid in connection with the conduct of bingo; or

(2) the disbursement of net proceeds derived from the conduct of bingo as provided by this subchapter [to charitable purposes; or

[(3) the transfer of net proceeds derived from the conduct of bingo to the organization's bingo savings account pending a disbursement to a charitable purpose.

[(b) A licensed authorized organization must make the disbursement of net proceeds on deposit in the bingo savings account to a charitable purpose by transferring the intended disbursement back into the organization's bingo account and then withdrawing an amount by a check drawn on the bingo account].

SECTION 29. Sections 2001.457(a), (b), and (c), Occupations Code, are amended to read as follows:

(a) Before the end of each quarter, a licensed authorized organization shall disburse all [for charitable purposes an amount not less than 35 percent] of the organization's net proceeds [adjusted gross receipts] from the preceding quarter, other than amounts retained under Section 2001.451, as provided by this subchapter [less the amount of authorized expenses not to exceed six percent of the gross receipts].

(b) If a licensed authorized organization fails to meet the requirements of Subsection (a) [this section] for a quarter, the commission in applying appropriate sanctions shall [may] consider whether, taking into account the amount required to be disbursed [distributed] during that quarter and the three preceding quarters [and the charitable distributions for each of those quarters], the organization has disbursed [distributed] a total amount sufficient to have met the disbursement [35 percent] requirement for that quarter and the three preceding quarters combined.

(c) A licensed authorized organization that has ceased to conduct bingo for any reason and that has unexpended bingo funds shall disburse those funds as provided by this subchapter [to charitable purposes] before the end of the next calendar quarter after the calendar quarter in which the organization ceases to conduct bingo.

SECTION 30. Section 2001.459(a), Occupations Code, is amended to read as follows:

(a) The following items of expense incurred or paid in connection with the conduct of bingo must be paid from an organization's bingo account:

(1) advertising, including the cost of printing bingo gift certificates;

(2) security during a bingo occasion;

(3) the purchase or repair of bingo supplies and equipment;

(4) prizes, other than authorized cash prizes;

(5) stated rental expenses;

(6) bookkeeping, legal, or accounting services;

(7) fees for callers, cashiers, and ushers;

(8) janitorial services; and

(9) license fees[; and

[(10) payment for services provided by a system service provider].

SECTION 31. Section 2001.502, Occupations Code, is amended to read as follows:

Sec. 2001.502. PRIZE FEE. A licensed authorized organization shall:

(1) collect from a person who wins a bingo prize of more than $5 a fee in the amount of five percent of the amount or value of the prize; and

(2) remit to the commission a fee in the amount of five percent of the amount or value of all bingo prizes awarded.

SECTION 32. Sections 2001.505(a) and (b), Occupations Code, are amended to read as follows:

(a) A licensed authorized organization conducting bingo shall submit quarterly to the commission [and to the comptroller] a report under oath stating:

(1) the amount of the gross receipts derived from bingo;

(2) each item of expense incurred or paid;

(3) each item of expenditure made or to be made, the name and address of each person to whom each item has been paid or is to be paid, and a detailed description of the merchandise purchased or the services rendered;

(4) the net proceeds derived from bingo;

(5) the use to which the proceeds have been or are to be applied; and

(6) a list of prizes offered and given, with their respective values.

(b) A license holder shall[:

[(1)] maintain records to substantiate the contents of each report[; and

[(2) furnish a copy of each report to the appropriate governing body].

SECTION 33. Section 2001.514(b), Occupations Code, is amended to read as follows:

(b) The commission shall set the amount of the bond or other security, taking into consideration the amount of money that has or is expected to become due from the license holder. The amount required by the commission may not exceed [three times] the amount due according to the license holder's average quarterly reports.

SECTION 34. Section 2001.551(b), Occupations Code, is amended to read as follows:

(b) A person conducting, promoting, or administering bingo commits an offense if the person conducts, promotes, or administers bingo other than:

(1) under a license issued under this chapter;

(2) [within the confines of a home] for purposes of amusement or recreation when:

(A) no player or other person furnishes anything of [more than nominal] value as defined by rule [for the opportunity] to participate;

[(B) participation in the game does not exceed 15 players;] and

(B) [(C)] the prizes awarded or to be awarded are nominal as defined by rule;

(3) on behalf of an organization of individuals 60 years of age or over, a senior citizens' association, a senior citizens' community center program operated or funded by a governmental entity, the patients in a hospital or nursing home, residents of a retirement home, or the patients in a Veteran's Administration medical center or a military hospital, solely for the purpose of amusement and recreation of its members, residents, or patients, when:

(A) no player or other person furnishes anything of more than nominal value for the opportunity to participate; and

(B) the prizes awarded or to be awarded are nominal; or

(4) on behalf of a business conducting the game for promotional or advertising purposes if:

(A) the game is conducted by or through a newspaper or a radio or television station;

(B) participation in the game is open to the general public and is not limited to customers of the business;

(C) playing materials are furnished without charge to a person on request; and

(D) no player is required to furnish anything of value for the opportunity to participate.

SECTION 35. The following provisions of the Occupations Code are repealed:

(1) Sections 2001.002(3) and (10);

(2) Section 2001.057(b);

(3) Section 2001.160(c);

(4) Section 2001.161(a);

(5) Section 2001.204;

(6) Section 2001.305;

(7) Section 2001.406(c);

(8) Sections 2001.410(b) and (d);

(9) Section 2001.417;

(10) Section 2001.457(d);

(11) Section 2001.505(c);

(12) Section 2001.553(b); and

(13) Subchapter F, Chapter 2001.

SECTION 36. The Texas Lottery Commission shall adopt the rules required by Chapter 2001, Occupations Code, as amended by this Act, not later than April 1, 2008.

SECTION 37. (a) If on or after the effective date of this Act a licensed authorized organization has a balance in its bingo account of more than the maximum amount of operating capital allowed by Chapter 2001, Occupations Code, as amended by this Act, the organization shall distribute the funds in excess of the organization's maximum operating capital allowed by Chapter 2001, Occupations Code, as amended by this Act, not later than:

(1) the first anniversary of the effective date of this Act if the excess amount is less than 200 percent of the maximum amount of operating capital;

(2) the second anniversary of the effective date of this Act if the excess amount is 200 percent or more but less than 300 percent of the maximum amount of operating capital; or

(3) the third anniversary of the effective date of this Act if the excess amount is 300 percent or more of the maximum amount of operating capital.

(b) The Texas Lottery Commission may waive the requirements of Subsection (a) of this section on application and a showing of good cause by a licensed authorized organization.

(c) This section expires January 1, 2011.

SECTION 38. This Act takes effect October 1, 2007.