80R3986 JPL-D

By: Flores 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 2001.059, 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 2. 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 3. Section 2001.102(b), Occupations Code, is amended to read as follows:

(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;

(6) [(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;

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

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

(9) [(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; and

(10) [(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.

SECTION 4. Section 2001.105(b), Occupations Code, is amended 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.

SECTION 5. 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) 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 6. 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 in which a person covered by Subdivision (1), (2), (3), or (4) or a person married or related in the first degree by consanguinity or affinity, as determined under Chapter 573, Government Code, to one of those persons has greater than a 10 percent proprietary, equitable, or credit interest or in which one of those persons is active or employed[;

[(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 7. 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)surrendered its original license; and

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

SECTION 8. Section 2001.313, Occupations Code, is amended by amending Subsection (d) and adding Subsection (h) to read as follows:

(d) Except as provided by Subsection (h), a [A] person who is not listed on the registry established by this section may not act as an operator, manager, cashier, usher, caller, or salesperson for a licensed authorized organization.

(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 for a period not to exceed 14 days if the person is awaiting the results of a background check by the commission. 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 this subsection.

SECTION 9. 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 10. 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 11. 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 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 12. 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 13. 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 14. 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 15. 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 16. The following provisions of Chapter 2001, Occupations Code, are repealed:

(1) Section 2001.002(10);

(2) Section 2001.152(c);

(3) Section 2001.406(c);

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

(5) Section 2001.417;

(6) Section 2001.457(d); and

(7) Section 2001.505(c).

SECTION 17. The Texas Lottery Commission shall adopt rules as required by Section 2001.451, Occupations Code, as amended by this Act, not later than April 1, 2008.

SECTION 18. (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 19. This Act takes effect October 1, 2007.