80R10688 YDB-F
 
  By: Flores H.B. No. 3351
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the operation of video lottery games for this state to
  provide additional money to fund governmental programs; the
  creation, powers, and duties of the Texas Gaming and Boxing
  Commission; the powers and duties of the Texas Lottery Commission,
  the Texas Racing Commission, and the Texas Commission of Licensing
  and Regulation, and the regulation of casino gaming and other
  gambling activities in this state; making an appropriation;
  providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1.  AUTHORIZATION OF VIDEO LOTTERY
         SECTION 1.01.  Section 466.002, Government Code, is amended
  by amending Subdivisions (2) and (4)-(10) and adding Subdivisions
  (2-a), (5-a), and (11)-(35) to read as follows:
               (2)  "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-a)  "Director" means a [the] director employed by
  the executive director under Section 467.033 [of the division].
               (4)  "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.
               (5)  "Distribute," with respect to a video lottery
  terminal, an electronic computer component 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, including on Indian lands in this
  state, means the sale, lease, marketing, offer, or other
  disposition of any of those items.
               (5-a)  "Division" means the lottery division
  established by the commission under Chapter 467.
               (6)  "Electronic storage medium," with respect to video
  lottery, means the electronic medium on which the operation
  software for a game playable on a video lottery terminal is stored,
  in the form of erasable programmable read only memory, compact
  disc-read only memory, flash random access memory, or other
  technology medium the commission approves for use in a video
  lottery terminal.
               (7) [(4)]  "Executive director" means the executive
  director of the commission.
               (8)  "Gaming agreement" means an agreement authorized
  under Subchapter K between this state and a federally recognized
  Indian tribe under which this state allows the tribe to conduct
  limited gaming activities authorized under this chapter or
  applicable federal law.
               (9)  "House-banked game" means a game of chance:
                     (A)  in which the house plays as a participant;
                     (B)  in which the house competes against all
  players, collects from all losers, and pays all winners; and
                     (C)  that the house has an opportunity to win.
               (10)  "Indian lands" means land over which an Indian
  tribe exercises governmental power and:
                     (A)  that was held in trust by the United States on
  January 1, 1998, for the benefit of the Indian tribe or an
  individual member of the Indian tribe pursuant to the Restoration
  Acts (25 U.S.C. Section 731 and 25 U.S.C. Section 1300 et seq.); or
                     (B)  on which Class III gaming is permitted under
  the Indian Gaming Regulatory Act (18 U.S.C. Section 1166 et seq. and
  25 U.S.C. Section 2701 et seq.).
               (11)  "Institutional investor" means:
                     (A)  a state or federal government pension plan;
  or
                     (B)  any of the following that meets the
  requirements of a "qualified institutional buyer" as defined in
  Rule 144A, Securities Act of 1933 (15 U.S.C. Sections 77a-77aa),
  and the rules and regulations adopted under that rule by the United
  States Securities and Exchange Commission:
                           (i)  a bank as defined by Section 3(a)(6),
  Securities Exchange Act of 1934 (15 U.S.C. Sections 78a-78kk), and
  the rules and regulations adopted under that act by the United
  States Securities and Exchange Commission;
                           (ii)  an insurance company as defined by
  Section 2(a)(17), Investment Company Act of 1940 (15 U.S.C. Section
  80a-1 et seq.);
                           (iii)  an investment company registered
  under Section 8, Investment Company Act of 1940 (15 U.S.C. Section
  80a-1 et seq.);
                           (iv)  an employee benefit plan or pension
  fund subject to the Employee Retirement Income Security Act of 1974
  (29 U.S.C. Section 1001 et seq.), excluding an employee benefit
  plan or pension fund sponsored by a publicly traded corporation
  registered with the Securities and Exchange Commission;
                           (v)  a group composed entirely of persons
  specified by this subdivision; or
                           (vi)  any other person the commission
  recognizes as an institutional investor for reasons consistent with
  the policies expressed in this chapter.
               (12) [(5)]  "Lottery" means the state lottery
  established and operated in accordance with the Texas Constitution
  under this chapter and includes the operation of a state-controlled  
  and determined video lottery system [procedures operated by the
  state under this chapter through which prizes are awarded or
  distributed by chance among persons who have paid, or
  unconditionally agreed to pay, for a chance or other opportunity to
  receive a prize].
               (13) [(6)]  "Lottery game" means an activity conducted
  lawfully and in accordance with the Texas Constitution and this
  chapter that is controlled by this state as part of the lottery and
  through which prizes are awarded or distributed by chance to
  persons who have paid or unconditionally agreed to pay, or who
  otherwise participate in a game, for a chance or other opportunity
  to receive a prize [includes a lottery activity].
               (14) [(7)]  "Lottery operator" means a person selected
  under Section 466.014(b) to operate a lottery game.
               (15)  "Manufacture," with respect to a video lottery
  terminal, an electronic computer component 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, including on Indian lands in this
  state, means to design, assemble, fabricate, produce, program, or
  make modifications to any of those items.
               (16)  "Net terminal income" means the total amount of
  money paid to play video lottery games less the value of all credits
  redeemed for money, including any progressive prizes and bonuses,
  by the players of the video lottery games.  The costs associated
  with progressive prizes may not be deducted from the total amount of
  money paid to play the video lottery games for purposes of
  determining net terminal income.  Promotional prizes offered by a
  video lottery retailer or video lottery manager may not be deducted
  or otherwise considered credits redeemed for money by players for
  the purpose of determining net terminal income.
               (17)  "Pari-mutuel license holder" means a person
  licensed to conduct wagering on a greyhound race or a horse race
  under the Texas Racing Act (Article 179e, Vernon's Texas Civil
  Statutes).
               (18)  "Person" means, for purposes of video lottery
  operations, any natural person, corporation, association, trust,
  partnership, limited partnership, joint venture, subsidiary, or
  other entity, regardless of its form, structure, or nature.
               (19) [(8)]  "Player" means a person who contributes any
  part of the consideration for a ticket or to play a video lottery
  game under this chapter.
               (20)  "Racetrack" means a racetrack as defined by
  Section 1.03(25), Texas Racing Act (Article 179e, Vernon's Texas
  Civil Statutes), that is:
                     (A)  a class 1, class 2, or class 3 horse racetrack
  for which a pari-mutuel license was in effect on June 1, 2007, or
  for which a person by that date had applied for a pari-mutuel
  license to conduct horse racing as a class 1 or class 2 racetrack;
  or
                     (B)  a greyhound racetrack for which a pari-mutuel
  license was in effect on June 1, 2007, or for which a person by that
  date had applied and qualified for a pari-mutuel license to conduct
  greyhound racing.
               (21) [(9)]  "Sales agent" or "sales agency" means a
  person licensed under this chapter to sell tickets.
               (22)  "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 the play or operation
  of which, through the skill of the operator, by chance, or both, may
  deliver to the person playing or operating the machine, or entitle
  the person 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 used or
  authorized in connection with the play of bingo under Chapter 2001,
  Occupations Code.
               (23)  "Substantial interest holder" means any of the
  following that is not 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
  business 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 commission determines has the power or
  authority to:
                           (i)  control the activities of the applicant
  or license holder; or
                           (ii)  elect or select the executive
  director, the managers, the partners, or a majority of the board of
  directors of the applicant or license holder; and
                     (D)  any key personnel of a video lottery retailer
  or video lottery manager, including an executive director, officer,
  director, manager, member, partner, limited partner, executive,
  employee, or agent, who the commission determines has the power to
  exercise significant influence over decisions concerning any part
  of the applicant's or license holder's business operation.
               (24) [(10)]  "Ticket" means any tangible evidence
  issued to provide participation in a lottery game authorized by
  this chapter other than a video lottery game.
               (25)  "Video lottery central system" means the system
  of procedures and facilities operated and controlled by the
  commission that is designed to link together all video lottery
  terminals operated in this state, determines the outcome of all
  video lottery games, and allows the commission to continuously
  monitor the activity of each video lottery terminal and to disable
  any video lottery terminal in this state.
               (26)  "Video lottery central system provider" means a
  person that, under a contract with the commission, provides the
  video lottery central system.
               (27)  "Video lottery equipment" means:
                     (A)  a video lottery terminal;
                     (B)  equipment, a component, or a contrivance 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 promotional purposes;
                           (iii)  monitor video lottery terminal
  operations; and
                           (iv)  provide for the connection of video
  lottery terminals to the video lottery central system; or
                     (C)  any other communications technology or
  equipment necessary for the operation of a video lottery terminal.
               (28)  "Video lottery game" means an electronically
  simulated game displayed on a video lottery terminal the outcome of
  which is determined solely by chance based on a computer-generated
  random selection of winning combinations of symbols or numbers
  other than roulette, dice, or baccarat game themes associated with
  casino gambling, except that game themes displaying symbols that
  roll on drums to simulate a classic casino slot machine or themes of
  other card games and keno may be used.
               (29)  "Video lottery manager" means a person who:
                     (A)  is licensed by the commission under this
  chapter to manage a video lottery terminal establishment; or
                     (B)  provides management services for a video
  lottery terminal establishment on Indian lands for an Indian tribe
  that has entered into an agreement with the governor for the
  operation of video lottery games.
               (30)  "Video lottery retailer" means a person licensed
  to operate a video lottery terminal establishment at which video
  lottery games are conducted under Subchapter K.
               (31)  "Video lottery system" means the system
  authorized under Subchapter K and controlled and operated by the
  commission under which individuals play lottery games on video
  lottery terminals as authorized under that subchapter.
               (32)  "Video lottery terminal" means  an interactive
  electronic device that is capable of displaying video lottery
  games.
               (33)  "Video lottery terminal establishment" means
  premises at which the operation of video lottery terminals is
  authorized by the commission under this chapter in accordance with
  a license or a gaming agreement.
               (34)  "Video lottery terminal provider" means a person
  in the business of manufacturing or distributing video lottery
  terminals in this state.
               (35)  "Video lottery ticket" means the tangible
  evidence issued by a video lottery terminal to reflect winnings
  from the play of a video lottery game.
         SECTION 1.02.  Section 466.003, Government Code, is amended
  by amending Subsection (b) and adding Subsection (c) to read as
  follows:
         (b)  Any [A] contract or authorized agreement between the
  division and a lottery operator, the video lottery central system
  provider, a video lottery terminal provider, or a manufacturer or
  distributor of video lottery games under Section 466.014(b) must
  contain a provision allowing the contract or authorized agreement 
  to be terminated without penalty should the division be abolished
  unless another state agency is assigned to control and supervise
  all video lottery game activity as required by this chapter.
         (c)  Notwithstanding Subsection (a), if any gaming agreement
  that allows video lottery is in effect, the commission or another
  state agency designated by the legislature must operate, control,
  and supervise video lottery games as necessary to comply with a
  gaming agreement under this chapter.
         SECTION 1.03.  Section 466.004(a), Government Code, is
  amended to read as follows:
         (a)  A political subdivision of this state may not impose:
               (1)  a tax on the sale of a ticket;
               (2)  a tax on the payment of a prize under this chapter;
  [or]
               (3)  an ad valorem tax on tickets;
               (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 or a racetrack at which a
  video lottery terminal establishment is located unless
  specifically authorized by statute.
         SECTION 1.04.  Section 466.014, Government Code, is amended
  to read as follows:
         Sec. 466.014.  POWERS AND DUTIES OF COMMISSION AND EXECUTIVE
  DIRECTOR; CONTRACT AUTHORITY.  (a)  The commission and executive
  director have broad authority and shall exercise strict control and
  close supervision over [all] lottery games [conducted in this
  state] to promote and ensure integrity, security, honesty, and
  fairness in the operation and administration of the lottery.
         (b)  The executive director may contract with or employ a
  person to perform a function, activity, or service in connection
  with the operation of the lottery as prescribed by the executive
  director.  A contract relating to the operation of video lottery
  must be consistent with Subchapter K.  Except as provided by this
  subsection, a [A] person with whom the executive director contracts
  to operate a lottery game must be eligible for a sales agent license
  under Section 466.155.  A person with whom the executive director
  contracts to provide the video lottery central system must be
  eligible under the same standards as those applicable to the
  registration or approval by the commission of a video lottery
  terminal provider in accordance with Subchapter K.
         (c)  The executive director may award a contract for lottery
  supplies, equipment, or services, including a contract under
  Subsection (b), pending the completion of any investigation and
  licensing, registration, or other approval authorized or required 
  by this chapter.  A contract awarded under this subsection must
  include a provision permitting the executive director to terminate
  the contract without penalty if the investigation reveals that the
  person to whom the contract is awarded would not be eligible for a
  sales agent license under Section 466.155 or with regard to video
  lottery does not satisfy the applicable requirements for licensing,
  registration, or other approval under Subchapter K.
         (d)  In the acquisition or provision of facilities,
  supplies, equipment, materials, or services related to the
  implementation of video lottery, the commission must comply with
  procurement procedures prescribed under:
               (1)  Subtitle D, Title 10; and
               (2)  Section 466.101.
         SECTION 1.05.  Section 466.015(b), Government Code, is
  amended to read as follows:
         (b)  The commission shall adopt rules to the extent they are
  not inconsistent with Chapters 551 and 552 governing the:
               (1)  security for the lottery and the commission,
  including the development of an internal security plan;
               (2)  apportionment of the total revenues from the sale
  of tickets and from all other sources in the amounts provided by
  this chapter;
               (3)  enforcement of prohibitions on the sale of tickets
  to or by an individual younger than 21 [18] years of age; [and]
               (4)  enforcement of prohibitions on a person playing a
  lottery game by telephone; and
               (5)  enforcement of prohibitions provided by law on the
  sale of any purchase or play of a video lottery game.
         SECTION 1.06.  Section 466.017, Government Code, is amended
  to read as follows:
         Sec. 466.017.  AUDITS.  (a)  The commission [executive
  director] shall contract with the state auditor for the state
  auditor [provide for a certified public accountant] to conduct an
  independent audit of the commission's annual financial statements
  in accordance with the standards applicable to financial audits
  under the Government Auditing Standards (2003 Revision) issued by
  the Comptroller General of the United States [for each fiscal year
  of all accounts and transactions of the lottery]. [The certified
  public accountant may not have, as determined by the executive
  director, a significant financial interest in a sales agent,
  lottery vendor, or lottery operator. The certified public
  accountant shall present an audit report to the executive director,
  the commission, the governor, the comptroller, 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
  report must contain recommendations to enhance the earnings
  capability of the lottery and improve the efficiency of lottery
  operations. The state auditor may review the results of and working
  papers related to the audit.]
         (b)  The records of a [Each] lottery operator, sales agent,
  video lottery manager, video lottery retailer, video lottery
  terminal provider, or video lottery central system provider
  [operator's and sales agent's records] are subject to audit by the
  commission and the state auditor. For the purpose of carrying out
  this chapter, the executive director or state auditor may examine
  all books, records, papers, or other objects that the executive
  director 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 lottery operator, [or]
  sales agent, video lottery manager, video lottery retailer, video
  lottery terminal provider, or video lottery central system
  provider. The executive director or state auditor may conduct an
  examination at the principal office or any other office of the
  person subject to the audit [lottery operator or sales agent] or may
  require the person [lottery operator or sales agent] to produce the
  records at the office of the commission or state auditor. If a
  sales agent, 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 executive director may summarily
  suspend the license or certificate of registration of the sales
  agent, video lottery manager, video lottery retailer, or video
  lottery terminal provider under Section 466.160 or Subchapter K
  until the examination is completed as required. A video lottery
  manager, video lottery retailer, video lottery terminal provider,
  or video lottery central system provider that is audited as
  provided by this section is responsible for the costs incurred by
  the commission or auditor in conducting the audit.  Section
  321.013(h) does not apply to an audit of a lottery operator, [or]
  sales agent, video lottery manager, video lottery retailer, video
  lottery terminal provider, or video lottery central system
  provider.
         SECTION 1.07.  Section 466.018, Government Code, is amended
  to read as follows:
         Sec. 466.018.  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 by the
  commission or its employees, a sales agent, a lottery vendor, [or] a
  lottery operator, a video lottery manager, a video lottery
  retailer, a video lottery terminal provider, or a video lottery
  central system provider.
         SECTION 1.08.  Sections 466.020(c), (d), and (e), Government
  Code, are amended to read as follows:
         (c)  A security officer or investigator employed by the
  department of security or a peace officer who is working in
  conjunction with the commission or the Department of Public Safety
  in the enforcement of this chapter may:
               (1)  [,] without a search warrant, [may] search and
  seize a lottery vending machine, lottery computer terminal, video
  lottery terminal, or other lottery or gaming equipment that is
  located on premises for which a person holds a sales agent, video
  lottery retailer, or video lottery manager license issued under
  this chapter; or
               (2)  seize a lottery vending machine, lottery computer
  terminal, video lottery terminal, or other lottery or gaming
  equipment that is being used or is in the possession of any person
  in violation of this chapter.
         (d)  The Department of Public Safety or any other state or
  local law enforcement agency in this state, at the commission's
  request and in accordance with an interagency agreement, shall
  perform a full criminal background investigation of a prospective
  deputy or investigator of the department of security. The
  commission shall reimburse the agency [Department of Public Safety]
  for the actual costs of an investigation.
         (e)  At least once every two years, the executive director
  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 lottery security, including:
               (1)  lottery personnel security;
               (2)  sales agent security;
               (3)  lottery operator and vendor security;
               (4)  security against ticket counterfeiting and
  alteration and other means of fraudulent winning;
               (5)  security of lottery drawings;
               (6)  lottery computer, data communications, database,
  and systems security;
               (7)  lottery premises and warehouse security;
               (8)  security of distribution of tickets;
               (9)  security of validation and payment procedures;
               (10)  security involving unclaimed prizes;
               (11)  security aspects of each lottery game;
               (12)  security against the deliberate placement of
  winning tickets in lottery games that involve preprinted winning
  tickets by persons involved in the production, storage,
  transportation, or distribution of tickets; [and]
               (13)  security of video lottery retailers, video
  lottery managers, video lottery terminal providers, video lottery
  terminal establishments, and video lottery central system
  providers; and
               (14)  other security aspects of lottery operations,
  including video lottery game operations.
         SECTION 1.09.  Section 466.021(a), Government Code, is
  amended to read as follows:
         (a)  The executive director shall, every two years, employ an
  independent firm experienced in demographic analysis to conduct a
  demographic study of lottery players. The study must examine
  [include] the income, age, sex, race, education, and frequency of
  participation of players. The study must distinguish between
  players of traditional lottery games and video lottery games.
         SECTION 1.10.  Section 466.022, Government Code, is amended
  by amending Subsection (b) and adding Subsections (c), (d), and (e)
  to read as follows:
         (b)  In addition to commission records excepted from
  disclosure under Chapter 552, the following information is
  confidential and is exempt from disclosure:
               (1)  security plans and procedures of the commission
  designed to ensure the integrity and security of the operation of
  the lottery;
               (2)  information of a nature that is designed to ensure
  the integrity and security of the selection of winning tickets or
  numbers in the lottery, other than information describing the
  general procedures for selecting winning tickets or numbers; [and]
               (3)  the street address and telephone number of a prize
  winner, if the prize winner has not consented to the release of the
  information;
               (4)  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 commission
  plans and procedures intended to ensure the integrity and security
  of the operation of video lottery games; and
               (5)  information that pertains to an applicant's
  criminal record, antecedents, and background and is furnished to or
  obtained by the commission from any source, including information
  obtained by the commission under Section 411.108(d).
         (c)  Information that qualifies as confidential under
  Subsection (b)(4) or (5) may be disclosed wholly or partly only as
  necessary to administer this chapter or under a court order. The
  commission, subject to appropriate procedures, may disclose the
  information and data 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.
         (d)  For the annual report required under Section 466.016,
  the commission may disclose a compilation of statistical
  information that is otherwise confidential under Subsection (b)(4)
  if the compilation does not disclose the identity of an applicant,
  license or certificate 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 commission authorization.
         SECTION 1.11.  Section 466.024, Government Code, is amended
  to read as follows:
         Sec. 466.024.  PROHIBITED GAMES.  (a)  Except as provided by
  Chapter 2004, Occupations Code, the [The] executive director, [or]
  a lottery operator, a video lottery manager, a video lottery
  retailer, a video lottery terminal provider, or a video lottery
  central system provider 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)  Except as provided by Chapter 2001 or 2005, Occupations
  Code, the [The commission shall adopt rules prohibiting the]
  operation of any game using a video lottery machine, slot [or]
  machine, or other gambling device that is not connected to the video
  lottery central system and controlled and supervised by the
  commission is prohibited.
         (c)  In this section, "sports[:
               [(1)  "Sports] event" means a football, basketball,
  baseball, or similar game, or a horse or dog race on which
  pari-mutuel wagering is allowed.
               [(2)     "Video lottery machine" or "machine" means any
  electronic video game machine that, upon insertion of cash, is
  available to play or simulate the play of a video game, including
  video poker, keno, and blackjack, using a video display and
  microprocessors in which the player may receive free games or
  credits that can be redeemed for cash, coins, or tokens, or that
  directly dispenses cash, coins, or tokens.]
         SECTION 1.12.  Section 466.025, Government Code, is amended
  to read as follows:
         Sec. 466.025.  REPORTS OF TICKETS SOLD, NET TERMINAL INCOME,
  AND PRIZES AWARDED.  For each lottery game, other than a video
  lottery game, after the last date on which a prize may be claimed
  under Section 466.408(d), the director shall prepare a report that
  shows the total number of tickets sold and the number and amounts of
  prizes awarded in the game. The report must be available for public
  inspection.  For video lottery games, the director shall prepare a
  weekly report that shows net terminal income for the preceding
  week.
         SECTION 1.13.  Section 466.103(a), Government Code, is
  amended to read as follows:
         (a)  Except as provided by Subsection (b), the executive
  director may not award a contract for the purchase or lease of
  facilities, goods, or services related to lottery operations to a
  person who:
               (1)  would be denied a license as a sales agent under
  Section 466.155; or
               (2)  with regard to a contract for the purchase or lease
  of video lottery equipment:
                     (A)  is not a registered video lottery terminal
  provider if a certificate of registration is required; or
                     (B)  would be deemed unsuitable to be a video
  lottery terminal provider under Subchapter K.
         SECTION 1.14.  Section 466.110, Government Code, is amended
  to read as follows:
         Sec. 466.110.  PROHIBITED ADVERTISEMENTS.  The legislature
  intends that advertisements or promotions sponsored by the
  commission or the division for the lottery not be of a nature that
  unduly influences any person to purchase a lottery ticket or number
  or play a video lottery game.
         SECTION 1.15.  Section 466.151(b), Government Code, is
  amended to read as follows:
         (b)  The executive director may establish a provisional
  license or other classes of licenses necessary to regulate and
  administer the quantity and type of lottery games provided at each
  licensed location of a sales agent.
         SECTION 1.16.  Section 466.158(a), Government Code, is
  amended to read as follows:
         (a)  Unless suspended or revoked, a license issued under this
  subchapter expires on the date specified in the license, which may
  not be later than the second anniversary of its date of issuance.
         SECTION 1.17.  Section 466.201(a), Government Code, is
  amended to read as follows:
         (a)  The commission 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 sales agent or an applicant for a sales agent
  license;
               (2)  a person required to be named in a license
  application;
               (3)  a lottery operator, video lottery manager, video
  lottery retailer, video lottery terminal provider, or video lottery
  central system provider, or prospective lottery operator, video
  lottery manager, video lottery retailer, video lottery terminal
  provider, or video lottery central system provider;
               (4)  an employee of a lottery operator, video lottery
  manager, video lottery retailer, video lottery terminal provider,
  or video lottery central system provider or prospective lottery
  operator, 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 lottery
  operations;
               (5)  a person who manufactures or distributes lottery
  equipment or supplies, or a representative of a person who
  manufactures or distributes lottery equipment or supplies offered
  to the lottery;
               (6)  a person who has submitted a written bid or
  proposal to the commission in connection with the procurement of
  goods or services by the commission, if the amount of the bid or
  proposal exceeds $500;
               (7)  an employee or other person who works for or will
  work for a sales agent or an applicant for a sales agent license;
               (8)  a person who proposes to enter into or who has a
  contract with the commission to supply goods or services to the
  commission; or
               (9)  if a person described in Subdivisions (1) through
  (8) 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
  lottery-related activities;
                     (F)  shares or will share in the profits, other
  than stock dividends, of the person;
                     (G)  participates in managing the affairs of the
  person; or
                     (H)  is an employee of the person who is or will be
  involved in:
                           (i)  selling tickets; or
                           (ii)  handling money from the sale of
  tickets.
         SECTION 1.18.  Subchapter E, Chapter 466, Government Code,
  is amended by adding Section 466.206 to read as follows:
         Sec. 466.206.  CRIMINAL HISTORY INVESTIGATION FOR VIDEO
  LOTTERY.  (a)  Except as otherwise provided by this section,
  Sections 466.020 and 466.201, and Subchapter K, 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 commission rules adopted under Subchapter
  K, which shall consider a criminal history investigation conducted
  under the Texas Racing Act (Article 179e, Vernon's Texas Civil
  Statutes).
         (b)  The Department of Public Safety or a state or local law
  enforcement agency in this state, in accordance with an interagency
  agreement with the commission, shall provide any assistance
  requested by the commission in the administration and enforcement
  of this chapter, including conducting background investigations of
  a person seeking a license, certificate of registration, or other
  commission authorization required under Subchapter K or of any
  person required to be named in an application for a license,
  certificate of registration, or other commission authorization
  under that subchapter.
         (c)  This section does not limit the commission's right to
  obtain criminal history record information from any other local,
  state, or federal agency. The commission may enter into a
  confidentiality agreement with the agency as necessary and proper.
         (d)  Except as otherwise provided by Section 411.108(d) or
  another provision of this chapter, criminal history record
  information obtained by the commission under this section may be
  disclosed only:
               (1)  to another law enforcement agency to assist in or
  further an investigation related to the commission's operation and
  oversight of video lottery; or
               (2)  under a court order.
         SECTION 1.19.  Section 466.252, Government Code, is amended
  to read as follows:
         Sec. 466.252.  PLAYER [PURCHASE OF TICKET] AGREEMENT TO
  ABIDE BY RULES AND INSTRUCTIONS. (a)  By purchasing a ticket in a
  particular lottery game or participating as a player in a lottery
  game, a player agrees to abide by and be bound by the commission's
  rules and instructions, including the rules or instructions
  applicable to the particular lottery game involved. The player
  also acknowledges that the determination of whether the player is a
  valid winner is subject to:
               (1)  the commission's rules, instructions, and claims
  procedures, including those developed for the particular lottery
  game involved; [and]
               (2)  any validation tests established by the commission
  for the particular lottery game involved; and
               (3)  the limitations and other provisions prescribed by
  this chapter.
         (b)  If the lottery uses tickets, an abbreviated form of the
  rules or a reference to the rules may appear on the tickets.
         SECTION 1.20.  Section 466.3011, Government Code, is amended
  to read as follows:
         Sec. 466.3011.  VENUE.  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;
               (2)  an offense under the Penal Code, if the accused:
                     (A)  is a lottery operator, lottery vendor, sales
  agent, video lottery manager, video lottery retailer, video lottery
  terminal provider, video lottery central system provider, or
  employee of the division; and
                     (B)  is alleged to have committed the offense
  while engaged in lottery activities, including video lottery
  activities; or
               (3)  an offense that involves property consisting of or
  including lottery tickets under Title 7 or 11, Penal Code.
         SECTION 1.21.  Subchapter G, Chapter 466, Government Code,
  is amended by adding Section 466.3031 to read as follows:
         Sec. 466.3031.  UNAUTHORIZED OPERATION, USE, OR POSSESSION
  OF VIDEO LOTTERY TERMINAL.  (a)  A person may not operate, use, or
  possess a video lottery terminal unless the operation, use, or
  possession is expressly authorized by this chapter or other law.
         (b)  Except for 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 the video
  lottery central system or that does not generate revenue for this
  state, except funds retained by the commission to pay
  administrative costs.  An offense under this subsection is a felony
  of the third degree.
         (c)  Notwithstanding Subsection (b), a video lottery
  retailer, video lottery manager, or registered or approved video
  lottery terminal provider may store a video lottery terminal as
  authorized by the commission for a period not to exceed 120
  consecutive days, and the commission may possess video lottery
  terminals for study and evaluation.
         (d)  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, Occupations Code.
         SECTION 1.22.  Section 466.305(a), Government Code, is
  amended to read as follows:
         (a)  A sales agent, video lottery manager, or video lottery
  retailer, or an employee of a sales agent, video lottery manager, or
  video lottery retailer, commits an offense if the person
  intentionally or knowingly sells a ticket to another person or
  allows the person to play or conduct a game on a video lottery
  terminal by extending credit or lending money to the person to
  enable the person to purchase the ticket or play the game.
         SECTION 1.23.  The heading to Section 466.3051, Government
  Code, is amended to read as follows:
         Sec. 466.3051.  SALE OF TICKET OR LOTTERY GAME TO OR PURCHASE
  OF TICKET OR LOTTERY GAME BY PERSON YOUNGER THAN 21 [18] YEARS OF
  AGE.
         SECTION 1.24.  Section 466.3051, Government Code, is amended
  by amending Subsections (a), (b), (c), (d), and (e) and adding
  Subsection (a-1) to read as follows:
         (a)  A sales agent or an employee of a sales agent commits an
  offense if the person intentionally or knowingly sells or offers to
  sell a ticket to an individual that the person knows is younger than
  21 [18] years of age.
         (a-1)  A video lottery manager, a video lottery retailer, or
  an employee of a video lottery manager or video lottery retailer
  commits an offense if the person intentionally or knowingly allows
  a person younger than 21 years of age to play a video lottery game.
         (b)  An individual who is younger than 21 [18] years of age
  commits an offense if the individual:
               (1)  purchases a ticket;
               (2)  plays a video lottery game; or
               (3) [(2)]  falsely represents the individual to be 21 
  [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)  A person 21 [18] years of age or older may purchase a
  ticket to give as a gift to another person, including an individual
  younger than 21 [18] years of age.
         (d)  It is a defense to the application of Subsection (b)
  that the individual younger than 21 [18] years of age is
  participating in an inspection or investigation on behalf of the
  commission or other appropriate governmental entity regarding
  compliance with this section.
         (e)  An offense under Subsection (a) or (a-1) is a Class C
  misdemeanor.
         SECTION 1.25.  Section 466.3053, Government Code, is amended
  to read as follows:
         Sec. 466.3053.  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 purchases a ticket
  or 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.
         SECTION 1.26.  Section 466.306, Government Code, is amended
  to read as follows:
         Sec. 466.306.  FORGERY; ALTERATION OF TICKET.  (a)  A person
  commits an offense if the person intentionally or knowingly alters
  or forges a ticket or video lottery ticket.
         (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 ticket or video lottery ticket
  forged or altered is greater than $10,000, in which event the
  offense is a felony of the second degree.
         SECTION 1.27.  Section 466.309(a), Government Code, is
  amended to read as follows:
         (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.
         SECTION 1.28.  The heading to Section 466.317, Government
  Code, is amended to read as follows:
         Sec. 466.317.  PROHIBITION AGAINST SALE OF CERTAIN LOTTERY
  TICKETS OR OPERATION OF CERTAIN VIDEO LOTTERY SYSTEMS.
         SECTION 1.29.  Section 466.317, Government Code, is amended
  by adding Subsection (a-1) and amending Subsections (b) and (c) to
  read as follows:
         (a-1)  A person may not control or operate a video lottery
  system in this state except as provided by this chapter.
         (b)  The state may enter into a compact with another state or
  state government [or an Indian tribe or tribal government] to
  permit the sale of lottery tickets of this state in the state's[,
  tribe's,] or government's jurisdiction and to allow the sale of the
  state's[, tribe's,] or government's lottery tickets in this state.
         (c)  A person commits an offense if the person violates this
  section. An offense under this section is a felony of the third
  degree [Class A misdemeanor].
         SECTION 1.30.  Section 466.355, Government Code, is amended
  by amending Subsection (a) and adding Subsection (d) to read as
  follows:
         (a)  The state lottery account is a special account in the
  general revenue fund. The account consists of all revenue received
  from the sale of tickets, license and application fees under this
  chapter, other than Subchapter K [chapter], and all money credited
  to the account from any other fund or source under law. Interest
  earned by the state lottery account shall be deposited in the
  unobligated portion of the general revenue fund.
         (d)  Immediately after the comptroller makes the August
  transfer to the foundation school fund under Subsection (b)(4) and
  the transfer to the foundation school fund for the following
  September 15 under Subsection (c), the comptroller shall determine
  whether the total amount transferred to the foundation school fund
  from the state lottery fund in the current fiscal year is less than
  the total amount transferred to the foundation school fund from the
  state lottery account in the fiscal year ending August 31, 2007. If
  the comptroller determines that the total amount transferred to the
  foundation school fund in the current fiscal year is less than the
  total amount transferred in the fiscal year ending August 31, 2007,
  the comptroller not later than August 31 shall transfer to the
  foundation school fund from the state video lottery account in the
  general revenue fund an amount equal to the difference.
         SECTION 1.31.  Subchapter H, Chapter 466, Government Code,
  is amended by adding Section 466.360 to read as follows:
         Sec. 466.360.  VIDEO LOTTERY TERMINAL REVENUE.  Revenue
  generated from the operation of video lottery terminals is governed
  by Subchapter K and commission rules.
         SECTION 1.32.  Section 466.402, Government Code, is amended
  by adding Subsection (e) to read as follows:
         (e)  This section does not apply to the payment of prizes for
  video lottery games governed by Subchapter K.
         SECTION 1.33.  Section 466.409, Government Code, is amended
  to read as follows:
         Sec. 466.409.  TREATMENT OF PRIZE PAYABLE ON TICKET PURCHASE
  BY INELIGIBLE PERSON.  If an individual listed in Section 466.254
  purchases a ticket or claims or otherwise attempts to collect or
  receive a lottery prize or a share of a lottery prize or an
  individual younger than 21 [18] years of age directly purchases a
  ticket, the individual is not eligible to receive a prize or share
  of a prize, and the prize or share of a prize otherwise payable on
  the ticket is treated as an unclaimed prize as provided by Section
  466.408.
         SECTION 1.34.  Chapter 466, Government Code, is amended by
  adding Subchapter K to read as follows:
  SUBCHAPTER K. VIDEO LOTTERY
         Sec. 466.501.  LEGISLATIVE FINDINGS AND DECLARATIONS.  The
  legislature finds and declares the following:
               (1)  This state's public policy prohibiting gambling is
  subject only to limited exceptions provided by the Texas Racing Act
  (Article 179e, Vernon's Texas Civil Statutes) or enumerated in the
  Texas Constitution and approved by the voters.
               (2)  Any game that is a lottery cannot lawfully be
  operated in this state unless the game is excepted from the
  constitutional prohibition against lotteries. In 1991, the
  electorate approved a constitutional amendment authorizing the
  state to operate lotteries.  In 2007, the electorate approved a
  constitutional amendment allowing expansion of the existing state
  lottery through a state-controlled video lottery system allowing
  video lottery terminals connected to a state-controlled and
  determined video lottery central system to be placed at locations
  determined in accordance with law enacted by the legislature.
               (3)  The purpose and intent of this chapter is to carry
  out the intent of the voters as established by the approval of
  Section 47-a, Article III, Texas Constitution.
               (4)  The people of this state intend to allow only
  state-controlled video lottery games to be conducted in this state
  and only in locations licensed by this state to operate video
  lottery terminals or at locations on Indian lands under an
  agreement between this state and the appropriate Indian tribe.
               (5)  This state has the authority and responsibility to
  control the proliferation of gambling by:
                     (A)  limiting the total number of video lottery
  terminals permitted at authorized locations in this state;
                     (B)  limiting video lottery to licensed
  establishments;
                     (C)  extending strict and exclusive state
  oversight and supervision to all persons, locations, practices, and
  associations related to the operation of video lottery games; and
                     (D)  providing comprehensive law enforcement
  supervision of video lottery game activities.
               (6)  This state's ability to monitor and control the
  operation of all video lottery terminals 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 the video lottery system. In addition,
  providing for the state-controlled and determined system will
  defend against criminal infiltration of gambling operations.
               (7)  The video lottery games operated at video lottery
  terminal establishments under this chapter are controlled and
  determined by this state in a manner that allows this state to
  continuously monitor all video lottery terminals and to disable any
  video lottery terminal for the protection of the public and this
  state.
               (8)  Through the video lottery system this state will
  monitor the network of video lottery terminals to ensure maximum
  security unique to state-operated gambling. Except as may
  otherwise be required by federal law governing Indian lands, each
  operating video lottery terminal in this state will be connected to
  a video lottery central system.
               (9)  By limiting the operation of video lottery
  terminals to those connected to the state-controlled and determined
  video lottery system and to certain lands and 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. Limiting video lottery terminals to those
  controlled by this state and located at licensed establishments is
  reasonably designed to defend against the criminal infiltration of
  gambling operations and adverse impacts on communities statewide.
  By restricting video lottery terminals to limited locations and
  video lottery terminals controlled by this state that may be
  disabled by this state if necessary to protect the public, this
  chapter furthers the state's purpose of ensuring that such gambling
  activities are free from criminal and undesirable elements.
               (10)  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 games, including house-banked card games, or games in
  which winners are determined by the outcome of a sports contest that
  are prohibited under other state law.
               (11)  To effectuate the will of the voters, any video
  lottery games on lands of Indian tribes must be in strict compliance
  with state law, unless otherwise required by federal law, or in
  accordance with a gaming agreement negotiated with the governor and
  ratified by the legislature.
               (12)  This state has conferred a substantial economic
  benefit on federally recognized Indian tribes by allowing operation
  of video lottery terminals on lands held in trust by the Indian
  tribes and on Indian lands on which gaming is allowed under
  applicable federal law. Federally recognized Indian tribes have
  the exclusive right to operate video lottery terminals at locations
  on the Indian lands in this state without incurring the investment
  necessary to construct, maintain, and operate racetracks for live
  racing, and through revenue-sharing both the policy of
  self-governance for the tribes and this state's interests in
  generating additional revenue to fund governmental programs can be
  promoted.
               (13)  The public has an interest in video lottery game
  operations, and other gaming operations conducted under Section
  47-a, Article III, Texas Constitution, and this chapter represent
  an exception to the general policy of this state prohibiting
  wagering for private gain. Therefore, participation in a video
  lottery game by a holder of a license, certificate of registration,
  or approval under this chapter is considered a privilege
  conditioned on the proper and continued qualification of the holder
  and on the discharge of the affirmative responsibility of each
  holder to provide to the commission or other 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, the legislature intends this chapter to:
                     (A)  preclude the creation of any property right
  in any license, certificate of registration, or approval issued or
  granted by this state 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 certificate; and
                     (B)  require that participation in video lottery
  game operations be solely conditioned on the individual
  qualifications of persons seeking this privilege.
               (14)  Only video lottery terminals lawfully operated in
  connection with a video lottery system authorized by this
  subchapter may be lawfully operated on Indian lands under the
  Johnson Act (15 U.S.C. Section 1175).
         Sec. 466.502.  CONSTRUCTION; APPLICABILITY OF OTHER LAWS.  
  (a)  Nothing contained in this chapter may be construed to
  implicitly repeal or modify existing state laws with respect to
  gambling, except that the state lottery and video lottery terminals
  are not prohibited by another law if conducted as authorized under
  this subchapter.
         (b)  To the extent of any inconsistency between Chapter 2003
  and this subchapter or a commission rule governing video lottery
  terminals, this subchapter or the commission rule controls in all
  matters related to video lottery terminals, including hearings
  before the State Office of Administrative Hearings.
         (c)  Video lottery equipment operated under commission
  authority and this chapter is exempt from 15 U.S.C. Section 1172.
         Sec. 466.503.  AUTHORITY TO OPERATE VIDEO LOTTERY SYSTEM.  
  (a)  The commission may implement and operate a video lottery system
  and control the operation of video lottery terminals at video
  lottery terminal establishments in accordance with this chapter
  and, for a video lottery terminal establishment at a racetrack, the
  Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes).
  This chapter supersedes any conflicting or inconsistent provision
  of the Texas Racing Act.
         (b)  The commission 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. 466.504.  VIDEO LOTTERY GAMES; STATE OWNERSHIP AND
  PROPRIETARY INTEREST.  (a)  This state must own all video lottery
  games conducted through the video lottery system, regardless of
  ownership of the video lottery terminal on which the game is played.
  This state must possess a proprietary interest in:
               (1)  the main logic boards and any electronic storage
  medium used in video lottery equipment or games; and
               (2)  software consisting of computer programs,
  documentation, and other related materials necessary for the
  operation of the video lottery system.
         (b)  For purposes of this chapter, this state may acquire a
  proprietary interest in video lottery game software through:
               (1)  ownership of the software; or
               (2)  an exclusive product license agreement with a
  provider in which the provider retains copyrighted ownership of the
  software but the license granted to this state is nontransferable
  and authorizes this state to operate the software program, solely
  for the state's own use, on the video lottery central system and
  video lottery terminals connected to the video lottery central
  system.
         Sec. 466.505.  STATE CONTROL OF VIDEO LOTTERY SYSTEM.  (a)  
  The commission shall control and operate the video lottery system
  and the video lottery central system.
         (b)  The commission may disable a video lottery terminal if a
  video lottery retailer's or video lottery manager's license is
  revoked, surrendered, or summarily suspended under this
  subchapter.
         Sec. 466.506.  VIDEO LOTTERY CENTRAL SYSTEM.  (a)  The
  commission shall establish or cause to be established a video
  lottery central system to link all video lottery terminals in the
  video lottery system through which the commission has the exclusive
  and unilateral ability to:
               (1)  control and determine the outcome of all video
  lottery games;
               (2)  monitor activity of video lottery terminals and
  remotely disable video lottery terminals for the public safety,
  health, and welfare or the preservation of the integrity of the
  lottery; and
               (3)  provide the auditing and other information
  required by the commission.
         (b)  The video lottery central system must be a central
  determinant system that communicates lottery outcomes from a
  central determination computer to video lottery terminals in a
  manner prescribed by the commission.
         (c)  The commission shall provide to a registered video
  lottery terminal provider or an applicant applying for a
  certificate of 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
  commission's video lottery central system for the transmission of
  auditing information and for activation and disabling of video
  lottery terminals.
         (d)  The video lottery central system may not limit or
  preclude potential providers from providing the video lottery
  terminals, other than providers that fail to meet specifications
  established by the commission.
         (e)  The video lottery central system provider may not sell
  or distribute video lottery terminals in this state.
         (f)  The commission may contract with a video lottery central
  system provider to establish the video lottery central system.
         (g)  The commission may not contract with a person to provide
  the video lottery central system if within the preceding five years
  that person owned any interest in a racetrack or pari-mutuel
  license in this state.
         Sec. 466.507.  VIDEO LOTTERY TERMINAL PROVIDER:
  REGISTRATION OR APPROVAL REQUIRED.  (a)  A person may not
  manufacture or distribute video lottery equipment for use or play
  in this state unless the person is registered as a video lottery
  terminal provider or is otherwise approved by the commission to
  manufacture or distribute video lottery equipment in this state.
         (b)  A person who manufactures and distributes video lottery
  terminals must obtain a separate certificate of registration or
  commission approval for each of those activities.
         (c)  Unless suspended or revoked, the certificate of
  registration or approval expires on the date specified by the
  commission, which may not be later than the fifth anniversary of the
  date of issuance of the certificate or approval.  A person may renew
  an unexpired certificate of registration or approval by paying a
  renewal fee in the amount determined by the commission to cover the
  costs of administering the renewal application and complying with
  the requirements of this subchapter and commission rule.
         (d)  To be eligible for a certificate of registration or
  commission approval as required by this section, an applicant must
  satisfy all applicable requirements under this subchapter.
         Sec. 466.508. VIDEO LOTTERY TERMINAL PROVIDER: APPLICATION;
  CHANGE IN INFORMATION.  (a)  The commission shall adopt rules
  governing the registration or approval of video lottery terminal
  providers. The rules must require:
               (1)  the application and any other form or document
  submitted to the commission by or on behalf of the applicant to
  determine the applicant's qualification under this section to be
  sworn to or affirmed before an officer qualified to administer
  oaths; and
               (2)  the certificate of registration or approval to
  designate whether the provider is a manufacturer or distributor.
         (b)  An applicant seeking registration or approval as a video
  lottery terminal provider to manufacture and distribute video
  lottery terminals in this state may apply for both approvals or
  certificates of registration in a single application.
         (c)  An applicant for a video lottery terminal provider
  certificate of registration or approval 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 law other
  than the laws of this state, the applicant's irrevocable
  designation of the secretary of state as the applicant's resident
  agent for service of process and notice in accordance with the law
  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 to conduct gambling-related activities during
  the 10 years preceding the date of the filing of the application;
               (11)  a statement, including all related details,
  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; and
               (12)  a statement acknowledging that the applicant will
  make available for review at the time and place requested by the
  commission all records related to the ownership or operation of the
  business.
         (d)  The commission 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.
         (e)  The applicant must:
               (1)  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; and
               (2)  submit to an on-site review of the applicant's
  manufacturing equipment and process for each separate type of
  authorized video lottery equipment to ensure compliance with the
  requirements of this chapter and commission rules.
         (f)  Not later than the 10th day after the date of any change
  in the information submitted on or with the application form, the
  applicant shall notify the commission of the change, including a
  change that occurs after the certificate of registration or other
  commission approval has been granted.
         (g)  The applicant shall comply with all federal and state
  laws, local ordinances, and rules.
         Sec. 466.509.  VIDEO LOTTERY TERMINAL PROVIDER: APPLICATION
  AND CERTIFICATE OF REGISTRATION OR APPROVAL FEE.  (a)  An applicant
  seeking certificate of registration or approval or renewal of
  registration or approval as a video lottery terminal provider must
  pay a nonrefundable application fee in the amount of $100,000 and an
  annual fee due on each anniversary of initial registration or
  approval of $100,000.
         (b)  An applicant seeking registration or approval as both a
  manufacturer and distributor must pay a separate application and
  annual fee for each registration or approval.
         (c)  Application fees paid under this section shall be
  retained by the commission to defray costs incurred in the
  administration and enforcement of this chapter relating to the
  operation of video lottery terminals.
         Sec. 466.510.  VIDEO LOTTERY RETAILER OR VIDEO LOTTERY
  MANAGER LICENSE REQUIRED.  Except as provided by Chapter 2005,
  Occupations Code, or a gaming agreement, a person may not own or
  operate a video lottery terminal if the person does not satisfy the
  requirements of this subchapter and is not licensed by the
  commission to act as a video lottery retailer or video lottery
  manager.
         Sec. 466.511.  VIDEO LOTTERY RETAILER OR VIDEO LOTTERY
  MANAGER: APPLICATION AND QUALIFICATION.  (a)  An applicant for a
  video lottery retailer or video lottery manager license must apply
  to the commission under rules adopted by the commission, provide
  the information necessary to determine the applicant's eligibility
  for a license, and provide other information considered necessary
  by the commission.
         (b)  Except as provided by other law, an applicant for a
  video lottery retailer license must hold a valid racing license
  granted under the Texas Racing Act (Article 179e, Vernon's Texas
  Civil Statutes) and operate a racetrack as defined by Section
  466.002.
         (c)  An applicant for a video lottery manager license must:
               (1)  have a valid and executed contract with a
  racetrack that satisfies the requirements of Subsection (b) to act
  as a video lottery manager for the racetrack subject to licensing
  under this chapter; or
               (2)  demonstrate to the commission's satisfaction that
  the applicant seeks to act as a video lottery 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.
         (d)  Each 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
  subchapter to be involved in video lottery games in this state.
         (e)  An applicant for a video lottery retailer or video
  lottery manager license has the burden of proving qualification for
  a license by clear and convincing evidence.  In addition to
  satisfying minimum requirements established by commission rules,
  an applicant for a video lottery retailer or video lottery manager
  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, or do not create or enhance
  the dangers of unsuitable, unfair, or illegal practices, methods,
  and activities in the conduct of video lottery or in the carrying on
  of the business and financial arrangements incidental to video
  lottery;
               (3)  if applying for a new license, provide
  fingerprints for a criminal records evaluation by the Texas
  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 commission 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
  commission;
               (6)  demonstrate adequate financing for the operation
  of the facility at which the video lottery terminals will be
  operated from a source that meets the requirements of this
  subchapter and is adequate to support the successful performance of
  the duties and responsibilities of the license holder and disclose
  all financing or refinancing arrangements for the purchase, lease,
  or other acquisition of video lottery equipment in the degree of
  detail requested by the commission;
               (7)  when applying for a new license or renewing a
  license under this chapter, present evidence to the commission 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
  in the applicant meets all applicable qualifications under this
  subchapter;
               (9)  provide all information, including financial data
  and documents, consents, waivers, and any other materials,
  requested by the commission for purposes of determining
  qualifications for a license; and
               (10)  as part of its application, expressly waive any
  and all claims against the commission, this state, and a member,
  officer, employee, or authorized agent of the commission or this
  state for damages resulting from any background investigation,
  disclosure, or publication relating to an application for a video
  lottery retailer or video lottery manager license.
         (f)  An application or disclosure form and any other document
  submitted to the commission by or on behalf of the applicant for
  purposes of determining qualification for a video lottery retailer
  or video lottery manager license must be sworn to or affirmed before
  an officer qualified to administer oaths.
         (g)  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 video lottery retailer or
  video lottery manager license.
         (h)  An applicant for a license or renewal of a license as a
  video lottery retailer or video lottery manager shall notify the
  commission 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 commission 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.
         (i)  Except as otherwise provided by this subchapter, the
  commission shall deny an application for a license or shall suspend
  or revoke a license if the commission finds that the applicant would
  be subject to denial or revocation of a sales agent license under
  Section 466.155.
         Sec. 466.512.  VIDEO LOTTERY RETAILER OR VIDEO LOTTERY
  MANAGER: APPLICATION AND ANNUAL LICENSE FEES.  (a)  An applicant for
  a video lottery retailer or video lottery manager license must pay a
  nonrefundable application fee in the amount of:
               (1)  $500,000 for an applicant applying to operate a
  video lottery terminal establishment at a class 1 racetrack or a
  greyhound racetrack; or
               (2)  $200,000 for an applicant applying to operate a
  video lottery terminal establishment at a class 2 or class 3
  racetrack.
         (b)  A video lottery retailer or video lottery manager must
  pay an annual license fee due on each anniversary of initial
  licensing in the amount of:
               (1)  $50,000 for a license holder operating a video
  lottery terminal establishment at a class 1 racetrack or a
  greyhound racetrack; or
               (2)  $25,000 for a license holder operating a video
  lottery terminal establishment at a class 2 or class 3 racetrack.
         (c)  An application may not be processed until the applicant
  pays the application fee. If the application fee is not received by
  the 30th day after the date the commission notifies the applicant of
  the amount of the fee, the application is considered withdrawn and
  may not be considered by the commission.
         (d)  The commission shall set any additional application fee
  necessary to pay the costs of determining the applicant's
  eligibility, including costs to conduct all investigations
  necessary for processing the application. An investigation may not
  begin until the applicant has submitted all required fees to the
  commission. If additional fees are required by the commission
  during the course of the investigation or processing of the
  application and are not received by the commission by the 15th day
  after the date the commission notifies the applicant of the amount
  of the fees, the investigation and evaluation processes shall be
  suspended.
         (e)  The commission shall retain an application fee paid
  under this section to defray costs incurred in the administration
  and enforcement of this chapter relating to the operation of video
  lottery terminals.
         Sec. 466.513.  VIDEO LOTTERY RETAILER OR VIDEO LOTTERY
  MANAGER: EMPLOYEE INFORMATION.  (a)  A video lottery retailer or
  video lottery manager shall provide to the commission the name and
  address of each employee involved in the operation of video lottery
  games and the name and address of the providers of surety and
  insurance required by Section 466.559.
         (b)  Not later than the 10th day following the date of the
  change, a license holder must report to the commission any change in
  an officer, partner, director, key employee, substantial
  interest-holder, video lottery game operation employee, or owner
  and any change in a surety or insurance provider.
         Sec. 466.514.  VIDEO LOTTERY TERMINAL ESTABLISHMENT:
  REQUIREMENTS; LOCATION.  (a)  A video lottery retailer or video
  lottery manager may not operate video lottery terminals at any
  place that is not licensed as a video lottery terminal
  establishment.
         (b)  The commission by rule shall establish standards for
  video lottery terminal establishments to ensure that
  establishments are accessible, safe, comfortable, durable, and of
  sufficiently high-quality construction to promote investments in
  establishments and related facilities that foster lasting economic
  development and continuity in producing state revenue, and that
  protect the health and welfare of employees, patrons, and all state
  residents. The standards must include or incorporate high-quality
  commercial building standards, including safety, air-conditioning,
  heating, and electrical standards.
         (c)  An applicant for a video lottery terminal establishment
  license must:
               (1)  consent to the application of state laws with
  exclusive venue in Travis County, Texas, related to any action
  arising out of the operation of video lottery terminals;
               (2)  provide office space for at least one commission
  employee as required by commission rule; and
               (3)  provide free and unrestricted access to the
  establishment by the commission.
         (d)  An applicant for a video lottery terminal establishment
  license must provide the maps, surveys, site plans, architectural
  plans, and financial statements required by the commission and
  update the information at least annually if required by the
  commission.
         (e)  Notwithstanding Sections 466.155 and 466.511(i), the
  commission may not deny, suspend, or revoke a license under this
  subchapter based on the fact that a video lottery terminal
  establishment or a proposed video lottery terminal establishment is
  a location for which a person holds a wine and beer retailer's
  permit, mixed beverage permit, mixed beverage late hours permit,
  private club registration permit, or private club late hours
  permit, issued under Chapter 25, 28, 29, 32, or 33, Alcoholic
  Beverage Code.
         (f)  The commission may not issue a video lottery terminal
  establishment license to a racetrack if as of January 1, 2007, any
  part of the real property on which the licensed premises of the
  racetrack is located is less than one-half mile from any part of the
  real property on which a public school is located.
         Sec. 466.515.  LICENSE HOLDER AS SALES AGENT.  The holder of
  a video lottery retailer or video lottery manager license may
  operate as a sales agent for lottery tickets in accordance with this
  chapter.
         Sec. 466.516.  TERM OF LICENSE, REGISTRATION, OR APPROVAL;
  RENEWAL ELIGIBILITY.  (a)  Unless suspended or revoked, a license,
  certificate of registration, or approval issued under this
  subchapter expires:
               (1)  except as provided by Subdivision (2), on the date
  specified in the license, which may not be later than the fifth
  anniversary of the date of issuance; or
               (2)  for a video lottery retailer license held by a
  pari-mutuel license holder, on the date the person's pari-mutuel
  license expires.
         (b)  To be eligible for renewal of a license or certificate,
  an applicant must satisfy all applicable licensing, registration,
  or approval requirements under this subchapter, including payment
  of any renewal fee charged by the commission to cover costs of
  administering a renewal application.
         Sec. 466.517.  RULES FOR ADDITIONAL LICENSE QUALIFICATIONS.  
  The commission by rule may establish other license qualifications
  the commission determines are in the public interest and consistent
  with the declared policy of this state.
         Sec. 466.518.  APPLICATION AS REQUEST FOR CHARACTER
  DETERMINATION.  An application under this subchapter to receive or
  renew a license, certificate of registration, or approval 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.
         Sec. 466.519.  IMMUNITY FOR STATEMENT MADE IN PROCEEDING OR
  INVESTIGATION.  Any written or oral statement made in the course of
  an official commission proceeding or investigative activities
  related to an application for commission licensing, registration,
  or other approval under this subchapter, 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.
         Sec. 466.520.  SUITABILITY FINDING.  To promote the
  integrity and security of the lottery, the commission in its
  discretion 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,
  registration, or approval from the commission for the person's
  video lottery-related operations.
         Sec. 466.521.  SUMMARY SUSPENSION OF VIDEO LOTTERY RETAILER
  OR VIDEO LOTTERY MANAGER LICENSE; TERMINAL DISABLED.  (a)  The
  commission may summarily suspend the license of a video lottery
  retailer or video lottery manager without notice or hearing if the
  commission finds the action is necessary to maintain the integrity,
  security, honesty, or fairness of the operation or administration
  of the 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 commission rule;
               (2)  an event occurs that would render the license
  holder ineligible for a license under this subchapter;
               (3)  the license holder refuses to allow the
  commission, the commission's agents, or the state auditor, or their
  designees, to examine the license holder's books, records, papers,
  or other objects under Section 466.017; or
               (4)  the executive director learns the license holder
  failed to disclose information that would, if disclosed, render the
  video lottery retailer or video lottery manager ineligible for a
  license under this subchapter.
         (b)  A summary suspension under this section must comply with
  the notice and procedure requirements provided by Section 466.160.
         (c)  The commission may 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 commission discovers the license holder failed
  to deposit money received from video lottery terminal operation as
  required if the license is being summarily suspended under this
  section; or
               (3)  an act or omission occurs that, under commission
  rules, justifies the termination of video lottery terminal
  operations to:
                     (A)  protect the integrity of the lottery or the
  public health, welfare, or safety; or
                     (B)  prevent financial loss to this state.
         (d)  The commission shall immediately disable a video
  lottery terminal if necessary to protect the public health,
  welfare, or safety.
         Sec. 466.522.  LICENSING, REGISTRATION, SUITABILITY, AND
  REGULATORY APPROVAL AS REVOCABLE PERSONAL PRIVILEGES.  (a)  An
  applicant for a license, certificate of registration, suitability,
  or other affirmative regulatory approval under this subchapter does
  not have any right to the license, certificate of registration,
  suitability, or approval sought.
         (b)  Any license, certificate of registration, or
  suitability or other regulatory approval granted under this
  subchapter is a revocable privilege, and a holder of the privilege
  does not acquire any vested right in or under the privilege.
         (c)  The courts of this state do not have jurisdiction to
  review a decision to deny, limit, or condition the license,
  registration, suitability, or approval unless the judicial review
  is sought on the ground that the denial, limitation, or condition is
  based on a suspect classification, such as race, color, religion,
  sex, or national origin, in violation of the Equal Protection
  Clause of the Fourteenth Amendment to the United States
  Constitution. The state court must affirm the commission's action
  unless the violation is proven by clear and convincing evidence.  If
  a state court has jurisdiction over a claim under this section, then
  this state's sovereign immunity is waived only to the extent
  expressly provided by Section 466.572.
         (d)  A license, certificate of registration, suitability, or
  regulatory approval granted or renewed under this subchapter may
  not be transferred or assigned to another person, and a license,
  registration, suitability, or approval may not be pledged as
  collateral. The purchaser or successor of a person who has been
  granted a license, certificate of registration, suitability, or
  regulatory approval must independently qualify for a license,
  certificate, suitability, or approval required by this subchapter.
         (e)  The following acts void the license, certificate,
  suitability, or other regulatory approval of the holder unless
  approved in advance by the commission:
               (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 subchapter.
         Sec. 466.523.  CAPITAL INVESTMENTS AND IMPROVEMENT
  REQUIREMENTS FOR VIDEO LOTTERY TERMINAL ESTABLISHMENT.  (a)  A
  video lottery retailer or video lottery manager shall provide all
  necessary capital investments and required improvements at a video
  lottery terminal establishment operated by the retailer or manager.
         (b)  The commission may not issue a license for the operation
  of a video lottery terminal establishment at a class 2 racetrack
  that has not made at least $40 million in capital investments or
  improvements to new or existing facilities at the racetrack.
         Sec. 466.524.  LIST OF AUTHORIZED VIDEO LOTTERY PROVIDERS,
  GAMES, AND TERMINALS.  The commission 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
  subchapter.
         Sec. 466.525.  VIDEO LOTTERY TERMINAL: DISTRIBUTION AND
  COMMISSION APPROVAL.  (a)  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
  the commission.
         (b)  Only a video lottery terminal provider registered with
  or approved by the commission may apply for approval of a video
  lottery terminal or other video lottery equipment.
         (c)  Not later than the 10th day before the date of shipment
  to a location in this state, a video lottery terminal provider shall
  file a report with the commission 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.
         Sec. 466.526.  VIDEO LOTTERY TERMINAL: TESTING; REPORT.  (a)  
  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 the commission for the purpose of
  analyzing and testing the video lottery terminal or other video
  lottery equipment.
         (b)  The commission may require up to four working models of
  a video lottery terminal to be transported to a location designated
  by the commission for testing, examination, and analysis.  The
  video lottery terminal provider shall pay all the costs of testing,
  examination, analysis, and transportation of the models. The
  testing, examination, and analysis of video lottery terminals may
  require dismantling of the terminal, and some tests may result in
  damage or destruction to one or more electronic components of the
  model. The commission may require a video lottery terminal
  provider to provide specialized equipment or pay for an independent
  technical expert or laboratory to test the terminal.
         (c)  The video lottery terminal provider shall pay the cost
  of transporting up to four video lottery terminals to the
  headquarters of the commission or a location designated by the
  commission. The commission shall conduct an acceptance test to
  determine terminal functions and compatibility with the video
  lottery central system. At the expense of the video lottery
  terminal provider, the commission may contract with an independent
  technical expert or laboratory to determine compatibility and
  terminal functions. If the video lottery terminal fails the
  acceptance test conducted by the commission, the video lottery
  terminal provider shall make all modifications required by the
  commission before distribution in this state.
         (d)  After each test under this section has been completed,
  the commission shall provide the video lottery terminal provider
  with a report containing findings, conclusions, and pass or fail
  results. The report may contain recommendations for modifications
  to bring a video lottery terminal into compliance with this chapter
  and commission standards.
         (e)  Before approving a particular video lottery terminal
  model, the commission may require a field trial period not to exceed
  60 days for a licensed video lottery terminal establishment to test
  the terminal. During the trial period, modifications may not be
  made to the video lottery terminal model unless approved by the
  commission.
         Sec. 466.527.  VIDEO LOTTERY TERMINAL: INSTALLATION;
  MODIFICATION REQUEST.  (a)  A video lottery terminal provider is
  responsible for the assembly and installation of all video lottery
  terminals and other video lottery equipment.
         (b)  A video lottery terminal provider or a video lottery
  retailer or video lottery manager may not change the assembly or
  operational functions of a video lottery terminal authorized by the
  commission for placement in this state unless a request for
  modification of an existing video lottery terminal prototype is
  approved by the commission. 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.
         (c)  A video lottery terminal approved by the commission for
  placement at a video lottery terminal establishment must conform to
  the exact specifications of the video lottery terminal prototype
  tested and approved by the commission.
         Sec. 466.528.  VIDEO LOTTERY TERMINAL REMOVAL.  (a)  If any
  video lottery terminal that has not been approved by the commission
  is distributed by a video lottery terminal provider or operated by a
  video lottery retailer or video lottery manager or if an approved
  video lottery terminal malfunctions, the commission shall require
  the terminal to be removed from use and play.
         (b)  The commission may order that an unapproved terminal be
  seized and destroyed and that a malfunctioning terminal not
  repaired and returned to play within 30 days or as otherwise
  prescribed by the commission be disposed of in compliance with
  Section 466.531(b).
         (c)  The commission 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.
         Sec. 466.529.  VIDEO LOTTERY TERMINAL SPECIFICATIONS.  (a)  
  The commission shall adopt rules for approval of video lottery
  terminals, including requirements for video lottery game tickets,
  maximum and minimum payout, and maximum wagers.
         (b)  A commission-approved video lottery terminal must meet
  the following minimum specifications:
               (1)  the terminal must:
                     (A)  operate through a player's insertion of a
  coin, currency, voucher, or token into the 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 terminal to
  randomly select symbols or numbers;
                     (B)  allow 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
                     (C)  allow the player at any time to clear all game
  play credits and receive a video lottery ticket or other
  representation of credit entitling the player to receive the cash
  value of those credits;
               (2)  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 (4);
               (3)  the operation of each video lottery terminal may
  not be adversely affected by any static discharge or other
  electromagnetic interference;
               (4)  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 commission;
               (5)  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;
               (6)  communication equipment and devices must be
  installed to enable each video lottery terminal to communicate with
  the video lottery central system through the use of a
  communications protocol provided by the commission to each
  registered video lottery terminal provider, which must include
  information retrieval and programs to activate and disable the
  terminal; and
               (7)  a video lottery terminal may be operated only if
  connected to the video lottery central system, and play on the
  terminal may not be conducted unless the terminal is connected to
  the video lottery central system.
         (c)  The commission may reject any instructions for play
  required under Subsection (b)(5) that the commission determines to
  be incomplete, confusing, or misleading.
         Sec. 466.530.  VIDEO LOTTERY TERMINALS:  HOURS OF OPERATION;
  COMMUNICATION; LOCATION.  (a)  The hours of operation for video
  lottery terminals are subject to restrictions or other conditions
  provided by commission rules.
         (b)  The commission by rule may prescribe restrictions or
  conditions on the hours of video lottery terminal operations for
  purposes determined by the commission, including accounting for and
  collecting revenue generated by video lottery terminal operations
  and performing other operational services on the video lottery
  system.
         (c)  Communication between the video lottery central system
  and each video lottery terminal must be continuous and on a
  real-time basis as prescribed by the commission.
         (d)  Except as provided by a gaming agreement, placement or
  movement of video lottery terminals in a video lottery terminal
  establishment must be consistent with a commission-approved video
  lottery terminal establishment floor plan.
         Sec. 466.531.  VIDEO LOTTERY TERMINAL: TRANSPORT;
  DISPOSITION OF OBSOLETE TERMINAL.  (a)  The transportation and
  movement of video lottery terminals into or within this state is
  prohibited, except as permitted by this subchapter and approved by
  the commission.
         (b)  An obsolete video lottery terminal or a video lottery
  terminal that is no longer in operation must be promptly reported to
  the commission and, if taken out of use and play, must immediately
  be sold or otherwise transferred to a registered video lottery
  terminal provider or another person in a jurisdiction outside this
  state for use in that jurisdiction.
         Sec. 466.532.  VIDEO LOTTERY TERMINALS:  MAXIMUM NUMBER.  
  (a)  The commission by rule shall establish the maximum number of
  video lottery terminals that may be operated at each video lottery
  terminal establishment operated by a video lottery retailer or
  video lottery manager based on factors prescribed by commission
  rule, including demographics, to ensure that the number of permits
  to operate video lottery terminals requested by the retailer or
  manager is not detrimental to the public health, safety, welfare,
  and economic development of this state and will result in the
  optimization of revenue to fund state governmental programs.
         (b)  The commission shall determine the number of video
  lottery terminals that may be operated by an Indian tribe in
  connection with the tribe's video lottery system in accordance with
  the applicable gaming agreement entered into pursuant to this
  chapter and the criteria prescribed by Subsection (a).
         Sec. 466.533.  REGISTRATION OF VIDEO LOTTERY TERMINALS. (a)
  A video lottery retailer or video lottery manager may not operate or
  display a video lottery terminal for play in this state unless the
  terminal is annually registered with the commission in accordance
  with this section and the certificate of registration is affixed to
  the terminal.
         (b)  To obtain a certificate of registration under this
  section, a person must:
               (1)  file with the commission a registration
  application on a form prescribed by the commission; and
               (2)  pay a $1,000 registration fee to the commission
  for each video lottery terminal that is the subject of the
  application.
         (c)  Chapter 2153, Occupations Code, does not apply to a
  video lottery terminal.
         Sec. 466.534.  LICENSE AND REGISTRATION INVESTIGATIVE TRUST
  FUND.  (a)  The investigative trust fund is created as a trust fund
  to pay all expenses incurred by the commission related to oversight
  investigations of applicants for a license, certificate of
  registration, or approval and of license, certificate, or approval
  holders.
         (b)  The commission shall determine the amount initially
  deposited and the amount maintained in the fund by each applicant or
  license, certificate, or approval holder and shall administer the
  money in the fund as a revolving fund available to the commission.
         (c)  If the commission does not receive the initial deposit
  required by Subsection (b) before the 30th day following the date
  the commission notifies the applicant or license, registration, or
  approval holder of the initial deposit amount, the commission may
  not issue or renew the license, certificate, or approval.  The
  investigative trust fund is in the state treasury and is held in
  trust with the comptroller's treasury operations division.
         (d)  Expenses may be advanced from the investigative fund,
  and expenditures may be made from the fund without regard to any
  other state law regarding travel expenses of state employees.
         (e)  The commission at least quarterly shall provide each
  applicant or license, certificate, or approval holder a written
  accounting of the costs and charges incurred in oversight
  investigations for that applicant or holder. An applicant or a
  license, certificate, or approval holder shall deposit money not
  later than the 10th day after receipt of the accounting to maintain
  the fund balance required by the commission.
         (f)  If an applicant for a license, certificate of
  registration, or approval is not licensed, registered, or approved,
  or if a license, registration, or approval is not renewed, the
  commission shall refund to the applicant or holder any balance in
  the fund paid by the applicant or holder not offset by costs
  incurred in an investigation for that applicant or holder.
         Sec. 466.535.  CONSENT TO COMMISSION DETERMINATION.  (a)  An
  application for a license, certificate of registration, finding of
  suitability, or other approval under this chapter constitutes a
  request to the commission 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.
         (b)  By filing an application with the commission, the
  applicant specifically consents to the commission's decision at the
  commission's election when the application, after filing, becomes
  moot for any reason other than death.
         Sec. 466.536.  ABSOLUTE AUTHORITY OF COMMISSION.  To protect
  the integrity of the lottery or the public health, welfare, or
  safety, or to prevent financial loss to this state, the commission
  has full and absolute power and authority to:
               (1)  deny any application or limit, condition,
  restrict, revoke, or suspend any license, certificate of
  registration, or finding of suitability or approval; and
               (2)  fine any person licensed, registered, found
  suitable, or approved for any cause deemed reasonable by the
  commission.
         Sec. 466.537.  WAIVER OF REQUIREMENTS.  (a)  The commission
  may waive, either selectively or by general rule, one or more of the
  requirements of Sections 466.508 and 466.511 if the commission
  makes a written finding that the waiver is consistent with the
  policy of this state, the public health, safety, and welfare, and
  the integrity of the lottery.
         (b)  The commission may waive any requirement under this
  chapter for a finding of suitability of an institutional investor
  that is a substantial interest holder with respect to the
  beneficial ownership of the voting securities of a publicly traded
  corporation if the institutional investor holds the securities for
  investment purposes only and applies for a waiver in compliance
  with Section 466.538 and commission rules.
         (c)  An institutional investor is not eligible for the
  waiver, except as otherwise provided by Subsection (f), if the
  institutional investor beneficially owns, directly or indirectly,
  more than 15 percent of the voting securities and if any of the
  voting securities were acquired other than through a debt
  restructuring.
         (d)  Voting securities acquired before a debt restructuring
  and retained after a debt restructuring or as a result of an
  exchange, exercise, or conversion after a debt restructuring, or
  any securities issued to the institutional investor through a debt
  restructuring, are considered to have been acquired through a debt
  restructuring.
         (e)  A waiver granted under Subsection (b) is effective only
  as long as the institutional investor's direct or indirect
  beneficial ownership interest in the voting securities meets the
  limitations set forth in this section, and if the institutional
  investor's interest exceeds the limitation at any time, the
  investor is subject to the suitability findings required under this
  subchapter.
         (f)  An institutional investor that has been granted a waiver
  under Subsection (b) may beneficially own more than 15 percent, but
  not more than 19 percent, of the voting securities of a publicly
  traded corporation registered with or licensed by the commission
  only:
               (1)  if the additional ownership results from a stock
  repurchase program conducted by the publicly traded corporation;
  and
               (2)  on the conditions that:
                     (A)  the institutional investor does not purchase
  or otherwise acquire any additional voting securities of the
  publicly traded corporation that would result in an increase in the
  institutional investor's ownership percentage; and
                     (B)  the institutional investor reduces its
  ownership percentage of the publicly traded corporation to 15
  percent or less before the first anniversary of the date the
  institutional investor receives constructive notice that it
  exceeded the 15 percent threshold, based on any public filing by the
  corporation with the United States Securities and Exchange
  Commission.
         (g)  The one-year period under Subsection (f)(2)(B) may be
  extended for a reasonable time on commission approval.
         (h)  An institutional investor may not be considered to hold
  voting securities of a publicly traded corporation for investment
  purposes only unless the voting securities were acquired and are
  held in the ordinary course of business as an institutional
  investor and not for the purpose of causing, directly or
  indirectly, the election of a majority of the members of the board
  of directors, any change in the corporate charter, bylaws,
  management, policies, or operations of the corporation registered
  with or licensed by the commission or any of its gaming affiliates,
  or any other action which the commission finds to be inconsistent
  with investment purposes only. The following activities may not be
  considered to be inconsistent with holding voting securities for
  investment purposes only:
               (1)  voting, directly or indirectly through the
  delivery of a proxy furnished by the board of directors, on all
  matters voted on by the holders of the voting securities;
               (2)  serving as a member of any committee of creditors
  or security holders formed in connection with a debt restructuring;
               (3)  nominating any candidate for election or
  appointment to the board of directors in connection with a debt
  restructuring;
               (4)  accepting appointment or election as a member of
  the board of directors in connection with a debt restructuring and
  serving in that capacity until the conclusion of the member's term;
               (5)  making financial and other inquiries of management
  of the type normally made by securities analysts for information
  purposes and not to cause a change in management, policies, or
  operations; or
               (6)  any other activity the commission determines to be
  consistent with the investment intent.
         (i)  For purposes of this section, "debt restructuring"
  means:
               (1)  a proceeding under the United States Bankruptcy
  Code; or
               (2)  any out-of-court reorganization of a person that
  is insolvent or generally unable to pay the person's debts as they
  become due.
         Sec. 466.538.  WAIVER APPLICATION REQUIREMENTS.  An
  application for a waiver under Section 466.537(b) must include:
               (1)  a description of the institutional investor's
  business and a statement as to why the institutional investor meets
  the definition of an institutional investor set forth in this
  chapter;
               (2)  a certification, made under oath and penalty of
  perjury, that:
                     (A)  states that the voting securities were
  acquired and are held for investment purposes only in accordance
  with Section 466.537;
                     (B)  provides that the applicant agrees to be
  bound by and comply with this chapter and the rules adopted under
  this chapter, to be subject to the jurisdiction of the courts of
  this state, and to consent to this state as the choice of forum in
  the event any dispute, question, or controversy arises regarding
  the application or any waiver granted under Section 466.537(b); and
                     (C)  includes a statement by the signatory
  explaining the basis of the signatory's authority to sign the
  certification and bind the institutional investor to its terms;
               (3)  a description of all actions, if any, taken or
  expected to be taken by the institutional investor related to the
  activities described in Section 466.537(f);
               (4)  the names, addresses, telephone numbers, dates of
  birth, and social security numbers of:
                     (A)  the officers and directors of the
  institutional investor or the officers' and directors' equivalents;
  and
                     (B)  the persons that have direct control over the
  institutional investor's holdings of voting securities of the
  publicly traded corporation registered with or licensed by the
  commission;
               (5)  the name, address, telephone number, date of
  birth, and social security number or federal tax identification
  number of each person who has the power to direct or control the
  institutional investor's exercise of its voting rights as a holder
  of voting securities of the publicly traded corporation registered
  with or licensed by the commission;
               (6)  the name of each person that beneficially owns
  more than five percent of the institutional investor's voting
  securities or other equivalent;
               (7)  a list of the institutional investor's affiliates;
               (8)  a list of all securities of the publicly traded
  corporation registered with or licensed by the commission that are
  or were beneficially owned by the institutional investor or its
  affiliates in the preceding year, including a description of the
  securities, the amount of the securities, and the date of
  acquisition or sale of the securities;
               (9)  a list of all regulatory agencies with which the
  institutional investor or any affiliate that beneficially owns
  voting securities of the publicly traded corporation registered
  with or licensed by the commission files periodic reports, and the
  name, address, and telephone number of the person, if known, to
  contact at each agency regarding the institutional investor;
               (10)  a disclosure of all criminal or regulatory
  sanctions imposed during the preceding 10 years and of any
  administrative or court proceedings filed by any regulatory agency
  during the preceding five years against the institutional investor,
  its affiliates, any current officer or director, or any former
  officer or director whose tenure ended within the preceding 12
  months, except that for a former officer or director, the
  information need be provided only to the extent that it relates to
  actions arising out of or during the person's tenure with the
  institutional investor or its affiliates;
               (11)  a copy of the institutional investor's most
  recent Schedule 13D or 13G and any amendments to that schedule filed
  with the United States Securities and Exchange Commission
  concerning any voting securities of the publicly traded corporation
  registered with or licensed by the commission;
               (12)  a copy of any filing made under the Securities
  Exchange Act of 1934 (15 U.S.C. Section 78a et seq.) with respect to
  the acquisition or proposed acquisition of voting securities of the
  publicly traded corporation registered with or licensed by the
  commission; and
               (13)  any additional information the commission may
  request.
         Sec. 466.539.  CHANGE IN INVESTMENT FOLLOWING WAIVER;
  NOTICE.  (a)  An institutional investor that has been granted a
  waiver of a finding of suitability under Section 466.537 and that
  subsequently intends not to hold the investor's voting securities
  of the publicly traded corporation for investment purposes only or
  that intends to take any action inconsistent with the investor's
  prior intent shall, not later than the second business day after the
  date of the decision, deliver notice to the commission in writing of
  the change in the investor's investment intent. The commission may
  then take any action the commission considers appropriate.
         (b)  If the commission finds that an institutional investor
  has failed to comply with this chapter or should be subject to a
  finding of suitability to protect the public interest, the
  commission may require the institutional investor to apply for a
  finding of suitability.
         (c)  Any publicly traded corporation registered with or
  licensed by the commission shall immediately notify the commission
  of any information about, fact concerning, or actions of an
  institutional investor holding any of its voting securities that
  may materially affect the institutional investor's eligibility to
  hold a waiver under Section 466.537.
         Sec. 466.540.  EFFECT OF DENIAL OF LICENSE OR REGISTRATION.  
  (a)  A person whose application for a license or certificate of
  registration has been denied may not have any interest in or
  association with a video lottery retailer or video lottery manager
  or any other business conducted in connection with video lottery
  without prior approval of the commission.
         (b)  Any contract related to the operation of video lottery
  terminals in this state between a person holding a license or
  certificate of registration and a person denied a license or
  registration must be terminated immediately. If the person denied
  a license or certificate has previously been granted a temporary
  license or certificate, the temporary license or certificate
  expires immediately on denial of the permanent license or
  certificate.
         (c)  Except as otherwise authorized by the commission, a
  person denied a license or certificate of registration may not
  reapply for any license or certificate before the second
  anniversary of the date of the denial.
         Sec. 466.541.  PRACTICE BY VIDEO LOTTERY RETAILER OR VIDEO
  LOTTERY MANAGER.  A video lottery retailer or video lottery manager
  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 down-time;
               (5)  install, post, and display prominently any
  material required by the commission;
               (6)  prohibit illegal gambling and any related
  paraphernalia;
               (7)  except as otherwise provided by this chapter, at
  all times prohibit money lending or other extensions of credit at
  the video lottery terminal establishment;
               (8)  supervise employees and activities to ensure
  compliance with all commission rules and this chapter;
               (9)  maintain continuous camera coverage of all aspects
  of video lottery game operations, including video lottery
  terminals; and
               (10)  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
  commission.
         Sec. 466.542.  RACETRACK REQUIREMENTS.  (a)  Except as
  provided by other law or this section, a video lottery retailer at
  all times must hold a valid pari-mutuel wagering license.  The
  commission may allow a video lottery retailer whose pari-mutuel
  wagering license has lapsed or been revoked, suspended, or
  surrendered to reapply for a license in order to operate the video
  lottery terminal establishment or by rule may establish a period
  not to exceed two years during which time the video lottery terminal
  establishment may be operated pending acquisition by a person
  qualified and licensed under this chapter to operate video lottery
  terminals.
         (b)  If a video lottery retailer is not licensed as required
  by Subsection (a) before the second anniversary of the date a
  license lapses or is revoked, suspended, or surrendered or a new
  video lottery manager or video lottery retailer is not licensed and
  authorized to operate the facility before the second anniversary,
  the racetrack shall permanently lose eligibility under this chapter
  to operate video lottery terminals.
         (c)  Subject to the commission's discretion, a video lottery
  retailer may continue to operate the video lottery terminal
  establishment after the second anniversary of the date a license
  lapses or is revoked, suspended, or surrendered only to satisfy the
  establishment's existing outstanding debt attributable to video
  lottery operation.
         Sec. 466.543.  PRIZE RULES.  The commission shall adopt
  rules governing:
               (1)  the amount a player may be charged to play each
  video lottery game; and
               (2)  the prizes and credits that may be awarded to the
  player of a video lottery game.
         Sec. 466.544.  VIDEO LOTTERY CENTRAL SYSTEM:  COMMUNICATION
  TECHNOLOGY.  The video lottery central system provider shall pay
  for the installation and operation of commission-approved
  communication technology to provide real-time communication
  between each video lottery terminal and the video lottery central
  system.
         Sec. 466.545.  RESPONSIBILITY FOR VIDEO LOTTERY GAME
  OPERATIONS.  (a)  A video lottery retailer or a video lottery
  manager, if applicable, is responsible for the management of video
  lottery game operations, including:
               (1)  the validation and payment of prizes; and
               (2)  the management of cashiers, food and beverage
  workers, floor workers, security personnel, the security system,
  building completion, janitorial services, landscaping design, and
  maintenance.
         (b)  Nothing in Subsection (a) limits the authority of the
  commission, the Department of Public Safety, or another law
  enforcement agency to administer and enforce this chapter as
  related to video lottery.
         (c)  In addition to other requirements under this chapter
  relating to video lottery, a video lottery retailer or a video
  lottery manager 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 at all times 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 video lottery
  retailer or video lottery manager and in the sight of video cameras
  as required under this subchapter;
               (5)  ensure that video lottery terminals are placed and
  remain placed in the specific locations in the video lottery
  terminal establishment that are consistent with the retailer's or
  manager's commission-approved floor plan;
               (6)  monitor video lottery terminals to prevent a
  person who is under 21 years of age or who is visibly intoxicated
  from placing a wager;
               (7)  refuse to accept a credit card payment from a
  player for the exchange or purchase of video lottery game credits or
  for an advance of coins, currency, vouchers, or tokens to be used by
  a player to play video lottery games, refuse to extend credit, in
  any manner, to a player that enables the player to play a video
  lottery game, and ensure that any person doing business at the video
  lottery terminal establishment, including a person operating or
  managing an auxiliary service such as a restaurant, refuses to
  accept a credit card payment or to extend credit in a manner
  prohibited by this subdivision, except that:
                     (A)  a license holder may cash a check for a player
  if the license holder exercises reasonable caution cashing the
  check and does not cash checks for any player in an amount exceeding
  $1,000 in any 24-hour period; and
                     (B)  an automated teller machine may be located at
  a video lottery terminal establishment in compliance with the Texas
  Racing Act (Article 179e, Vernon's Texas Civil Statutes) or an
  effective gaming agreement;
               (8)  pay all credits won by a player on presentment of a
  valid winning video lottery game ticket;
               (9)  conduct only the video lottery game advertising
  and promotional activities consistent with criteria prescribed by
  the commission, which must prohibit undue influence, offensive
  language, and anything that would affect the integrity of video
  lottery operation;
               (10)  install, post, and display prominently at the
  licensed location redemption information and other informational
  or promotional materials as required by the commission;
               (11)  maintain general liability insurance coverage
  for the video lottery terminal establishment and all video lottery
  terminals in the amounts required by the commission;
               (12)  assume liability for money lost or stolen from
  any video lottery terminal; and
               (13)  annually submit an audited financial statement to
  the commission in a format approved by the commission.
         Sec. 466.546.  TECHNICAL STANDARDS FOR VIDEO LOTTERY
  EQUIPMENT.  The commission by rule shall establish minimum
  technical standards for video lottery equipment that may be
  operated in this state.
         Sec. 466.547.  INCIDENT REPORTS.  (a)  A video lottery
  retailer or video lottery manager shall record all unusual
  occurrences related to gaming activity in a video lottery terminal
  establishment operated by the retailer or manager.
         (b)  A video lottery retailer or video lottery manager shall
  assign each incident, without regard to materiality, a sequential
  number and, at a minimum, provide the following information in a
  permanent record prepared in accordance with commission 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 retailer or video lottery manager who investigated
  the incident.
         Sec. 466.548.  EXCLUSION OF PERSONS.  (a)  The commission
  shall compile a list of persons that a video lottery retailer or
  video lottery manager 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.
         (b)  A video lottery retailer or video lottery manager shall
  employ the retailer's or manager's best efforts to exclude such
  persons from entry into the establishment.
         (c)  A video lottery retailer or video lottery manager may
  exclude a person for any reason not related to the person's race,
  sex, national origin, physical disability, or religion.
         (d)  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 the list compiled by the commission under
  Subsection (a).
         (e)  All video lottery game employees shall receive training
  in identifying players with a compulsive playing problem and shall
  be instructed to ask the players to leave the establishment. Signs
  and other materials shall be readily available to direct compulsive
  players to agencies that offer appropriate counseling.
         Sec. 466.549.  REPORT ON LITIGATION.  (a)  A video lottery
  retailer or video lottery manager shall report to the commission
  any litigation relating to the retailer's or manager's video
  lottery terminal establishment, including a criminal proceeding, a
  proceeding involving an issue related to racing activities that
  impact video lottery operations, or a matter related to character
  or reputation relevant to a person's suitability under this
  subchapter.
         (b)  The report required under Subsection (a) must be filed
  not later than the fifth day after acquiring knowledge of the
  litigation.
         Sec. 466.550.  COMMISSION APPROVAL REQUIRED FOR PROCEDURES
  AND ADMINISTRATIVE AND ACCOUNTING CONTROLS.  (a)  The commission's
  approval is required for:
               (1)  all internal procedures and administrative and
  accounting controls of a video lottery retailer or video lottery
  manager; and
               (2)  all internal procedures and administrative and
  accounting controls of a video lottery terminal provider that
  relate to the manufacturing and distribution of video lottery
  terminals to be used in this state.
         (b)  The commission by rule shall establish general
  accounting and auditing requirements and internal control
  standards for video lottery retailers and video lottery managers.
         Sec. 466.551.  FINANCIAL AND OPERATING INFORMATION.  A video
  lottery retailer or video lottery manager shall submit financial
  and operating information and statistical data to the commission in
  a format approved by the commission in order for the financial
  operating position of the retailer or manager and performance and
  trends of the video lottery game industry in this state to be
  evaluated.
         Sec. 466.552.  VIDEO LOTTERY TERMINAL EVENTS.  A video
  lottery retailer or video lottery manager shall keep a database of
  video lottery terminal events. The commission by rule shall
  determine what constitutes a video lottery terminal event for
  purposes of this section.
         Sec. 466.553.  EMPLOYEE REPORTING.  (a)  On or before the
  15th day of each month, a video lottery retailer or video lottery
  manager shall submit to the commission an employee report for the
  video lottery terminal establishment operated by the retailer or
  manager. For each employee of the retailer or manager, the report
  must provide 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 under commission order or in accordance with
  Section 466.022(c).
         (c)  The commission may conduct criminal history
  investigations for employees of video lottery retailers and video
  lottery managers.
         (d)  The commission may prohibit an employee from performing
  any act relating to video lottery terminals if the commission finds
  that an employee has:
               (1)  committed, attempted, or conspired to commit any
  act prohibited by this chapter;
               (2)  concealed or refused to disclose any material fact
  in any commission investigation;
               (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
  commission approval is required after commission approval was
  denied for a reason involving personal unsuitability or after
  failing to apply for a license or approval on commission request;
               (6)  been prohibited under color of governmental
  authority from being present on the premises of any gaming
  establishment or any establishment where pari-mutuel wagering is
  conducted for any reason relating to improper gambling activity or
  for any illegal act;
               (7)  wilfully defied any legislative investigative
  committee or other officially constituted body acting on behalf of
  the United States or any state, county, or municipality that sought
  to investigate alleged or potential crimes relating to gaming,
  corruption of public officials, or any organized criminal
  activities; or
               (8)  been convicted of any felony or any crime
  involving moral turpitude.
         (e)  The commission may prohibit an employee from performing
  any act relating to video lottery terminals based on a revocation or
  suspension of any gaming or wagering license, permit, or approval
  or for any other reason the commission 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.
         (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,
  independent contractor, or lobbyist for the advocacy of the
  adoption or amendment of a law related to gaming or lottery
  activities or the furtherance of gaming or lottery activities in
  any jurisdiction or as otherwise specified by commission rule.
         Sec. 466.554.  REPORT OF VIOLATIONS.  A person who holds a
  license or certificate of registration under this subchapter shall
  immediately report a violation or suspected violation of this
  chapter or a rule adopted under this chapter by any license or
  certificate holder, by an employee of a license or certificate
  holder, or by any person on the premises of a video lottery terminal
  establishment, whether or not associated with the license or
  certificate holder.
         Sec. 466.555.  SECURITY.  (a)  In addition to the security
  provisions applicable under Section 466.020, a video lottery
  retailer or video lottery manager shall:
               (1)  continuously monitor all video lottery terminals
  through the use of a closed-circuit television system that records
  activity for a continuous 24-hour period, retain all videotapes or
  other media used to store video images for at least 30 days, and
  make the tapes or media available to the commission on request;
               (2)  submit for commission approval a security plan and
  a floor plan of the area where video lottery terminals are operated
  showing video lottery terminal locations and security camera mount
  locations; and
               (3)  employ at least the minimum number of private
  security personnel the commission 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 commission or the Department
  of Public Safety or other law enforcement personnel may be present
  at a video lottery terminal establishment at any time.
         (d)  The commission may adopt rules to impose additional
  surveillance and security requirements related to video lottery
  terminal establishments and the operation of video lottery
  terminals.
         Sec. 466.556.  VIDEO LOTTERY TERMINAL ESTABLISHMENT:
  COMMISSION RIGHT TO ENTER.  The commission or the commission's
  representative, after displaying appropriate identification and
  credentials, has the free and unrestricted right to:
               (1)  enter the premises of a video lottery terminal
  establishment;
               (2)  enter any other locations involved in operation or
  support of video lottery games at all times to examine the systems;
  and
               (3)  inspect and copy the records of a video lottery
  retailer or video lottery manager pertaining to the operation of
  video lottery games.
         Sec. 466.557.  APPOINTMENT OF SUPERVISOR.  (a)  The
  commission by rule may provide for the appointment of a supervisor
  to manage and operate a video lottery terminal establishment at the
  direction of the commission and perform any act that a video lottery
  retailer or video lottery manager is entitled to perform in the
  event that:
               (1)  a video lottery retailer license or other license
  required for operation of the establishment is revoked or
  suspended, lapses, or is surrendered;
               (2)  a video lottery terminal establishment has been
  conveyed or transferred to a secured party receiver or trustee who
  does not hold the licenses necessary to operate the establishment;
  or
               (3)  any other event occurs that causes the
  establishment to cease the operation of video lottery terminals.
         (b)  The rules may allow the commission to:
               (1)  take any action or adopt any procedure necessary
  to operate a video lottery terminal establishment pending the
  licensing of a video lottery retailer, video lottery manager, the
  video lottery establishment, or a successor on the transfer or sale
  of the establishment or property; and
               (2)  if necessary to continue the operation of the
  video lottery establishment, sell the establishment to a person
  that holds or has applied for the licenses required to operate the
  establishment under this subchapter and make appropriate
  distributions of the proceeds of the sale.
         Sec. 466.558.  OFFENSE: CONVEYANCE OF VIDEO LOTTERY TERMINAL
  ESTABLISHMENT PROPERTY.  (a)  A person commits an offense if during
  the pendency of any proceeding before the commission that may
  result in the appointment of a supervisor or during the period of
  supervision the person:
               (1)  sells, leases, or otherwise conveys for less than
  full market value or pledges as security any property of a video
  lottery terminal establishment; or
               (2)  removes from this state or secretes from the
  commission or the supervisor any property, money, books, or records
  of the video lottery terminal establishment, including evidences of
  debts owed to the establishment.
         (b)  An offense under Subsection (a) is a felony of the third
  degree.
         Sec. 466.559.  INDEMNIFICATION, INSURANCE, AND BONDING
  REQUIREMENTS.  (a)  A license or certificate holder shall indemnify
  and hold harmless this state, the commission, and all officers and
  employees of this state and the commission from any and all claims
  which may be asserted against a license or certificate holder, the
  commission, this state, and the members, officers, employees, and
  authorized agents of this state or the commission arising from the
  license or certificate holder's participation in the video lottery
  system authorized under this chapter.
         (b)  Surety and insurance required under this subchapter
  shall be issued by companies or financial institutions financially
  rated "A" or better as rated by A.M. Best Company or other rating
  organization designated by the commission and duly licensed,
  admitted, and authorized to conduct business in this state, or by
  other surety approved by the commission.
         (c)  The commission shall be named as the obligee in each
  required surety and as an additional insured in each required
  insurance contract.
         (d)  A video lottery retailer or video lottery manager may
  not be self-insured with regard to video lottery terminal
  operations under this section.
         (e)  The commission by rule shall establish minimum
  insurance coverage requirements for a video lottery retailer, video
  lottery manager, or video lottery terminal provider, including:
               (1)  insurance for performance;
               (2)  insurance against losses caused by fraudulent or
  dishonest acts by an officer or employee of a video lottery
  retailer, video lottery manager, or video lottery terminal
  provider;
               (3)  general liability insurance;
               (4)  property insurance;
               (5)  liability insurance for drivers and vehicles
  employed by a video lottery retailer or video lottery manager; and
               (6)  crime insurance for the location.
         Sec. 466.560.  LIABILITY FOR CREDIT AWARDED OR DENIED;
  PLAYER DISPUTE.  This state and the commission 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 players.
         Sec. 466.561.  STATE VIDEO LOTTERY ACCOUNT.  (a)  The
  commission shall deposit money received under this subchapter to
  the 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 by this state from the operation of video
  lottery terminals.  Except as otherwise provided by this
  subchapter, money in the account may be used solely to fund state
  governmental programs and the administration of the video lottery
  system.
         (b)  Not more than two percent of the net terminal income
  received by this state under Section 466.562 may be used to defray
  expenses incurred in administering this chapter related to video
  lottery games, including expenses incurred to operate the video
  lottery central system.
         Sec. 466.562.  ALLOCATION OF NET TERMINAL INCOME; TRANSFER
  OF MONEY.  (a)  Net terminal income derived from the operation of
  video lottery games in this state is allocated as follows:
               (1)  net terminal income generated from the operation
  of video lottery terminals at a video lottery terminal
  establishment shall be distributed 65 percent to the establishment
  and 35 percent to this state; and
               (2)  net terminal income generated from the operation
  of video lottery terminals on Indian lands under a gaming agreement
  authorized under this subchapter shall be distributed in accordance
  with the gaming agreement.
         (b)  The amount of $10 million of the net terminal income
  received by this state under Subsection (a)(1) in each fiscal year
  shall be transferred in equal monthly installments to the Texas
  Racing Commission to fund a compulsive gambling program established
  by the racing commission.
         (c)  The amount of $10 million of the net terminal income
  received by this state under Subsection (a)(1) in each fiscal year
  shall be transferred in equal monthly installments to the criminal
  justice planning fund for use by the criminal justice division of
  the governor's office to assist in the prosecution of offenses
  under Chapter 47, Penal Code.
         (c-1)  Except as otherwise provided by Subsection (c-2):
               (1)  one-quarter of one percent of the net terminal
  income received by this state under Subsection (a)(1) shall be
  allocated to the municipality in which the video lottery terminal
  establishment is located; and
               (2)  one-quarter of one percent of the net terminal
  income received by this state under Subsection (a)(1) shall be
  allocated to the county in which the video lottery terminal
  establishment is located.
         (c-2)  If a video lottery terminal establishment is located
  in an unincorporated area, one-half of one percent of the net
  terminal income received by this state under Subsection (a)(1)
  shall be allocated to the county in which the establishment is
  located.
         (c-3)  Two percent of the net terminal income received by
  this state under Subsections (a) and (b) shall be transferred to the
  performance horse development fund, administered by the Texas
  Racing Commission to fund a broad spectrum of the horse industry
  outside the racing industry and to develop the agriculture industry
  in this state.  Money from the fund is allocated annually as
  follows:
               (1)  40 percent of the fund to American Quarter Horse
  Association sanctioned events;
               (2)  20 percent to National Cutting Horse Association
  sanctioned events;
               (3)  20 percent to American Paint Horse Association
  sanctioned events; and
               (4)  20 percent to the Department of Agriculture to
  promote the agricultural industry in this state.
         (d)  The commission shall require a video lottery retailer or
  video lottery manager to establish a separate electronic funds
  transfer account for depositing money from video lottery terminal
  operations, making payments to the commission or its designee, and
  receiving payments from the commission or its designee.
         (e)  A video lottery retailer or video lottery manager may
  not make payments to the commission in cash.  As authorized by the
  commission, a video lottery retailer or video lottery manager may
  make payments to the commission by cashier's check.
         (f)  The commission at least daily shall transfer this
  state's share of net terminal income of a video lottery retailer or
  video lottery manager to the commission through the electronic
  transfer of the money.
         (g)  The commission by rule shall establish the procedures
  for:
               (1)  depositing money from video lottery terminal
  operations into electronic funds transfer accounts; and
               (2)  handling money from video lottery terminal
  operations.
         (h)  Unless otherwise directed by the commission, 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 commission on dates established by the
  commission.  On a license holder's failure to maintain this
  balance, the commission may 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
  commission.
         (i)  In the commission's sole discretion, rather than
  disable a license holder's video lottery terminals, the commission
  may elect to impose a fine on a license holder in an amount
  determined by the commission not to exceed $250,000 for each
  violation. 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 commission may disable the license holder's
  video lottery terminals or use any other means for collection as
  provided by the penalty chart established by the commission.
         (j)  A video lottery retailer or video lottery manager 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 video lottery retailer or video lottery
  manager, the commission may not make any credit adjustments. Any
  accounting discrepancies which cannot otherwise be resolved shall
  be resolved in favor of the commission.
         (k)  A video lottery retailer and video lottery manager shall
  remit payment as directed by the commission if the electronic
  transfer of money is not operational or the commission notifies the
  license holder that other remittance is required. The license
  holder shall report this state's share of net terminal income, and
  remit the amount generated from the terminals during the reporting
  period.
         Sec. 466.563.  COMMISSION EXAMINATION OF FINANCIAL RECORDS.  
  The commission may examine all accounts, bank accounts, financial
  statements, and records in the possession or control of a person
  licensed under this subchapter or in which the license holder has an
  interest.  The license holder must 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
  commission.
         Sec. 466.564.  FINANCIAL INFORMATION REQUIRED.  (a)  A video
  lottery retailer or video lottery manager shall furnish to the
  commission all information and bank authorizations required to
  facilitate the timely transfer of money to the commission.
         (b)  A video lottery retailer or video lottery manager must
  provide the commission 30 days' advance notice of any proposed
  account changes in information and bank authorizations to assure
  the uninterrupted electronic transfer of money.
         (c)  The commission is not responsible for any interruption
  or delays in the transfer of money. The video lottery retailer or
  video lottery manager is responsible for any interruption or delay
  in the transfer of money.
         Sec. 466.565.  DEDUCTIONS FROM VIDEO LOTTERY PROCEEDS AT
  RACETRACKS. (a)  The pari-mutuel license holder that owns or
  operates a racetrack at which video lottery games are conducted
  under this subchapter and the officially recognized horsemen's
  organization representing the horsemen at the racetrack or the
  state breed registry representing the greyhound breeders at the
  racetrack may enter into a written agreement to allocate a
  percentage of net terminal income to be used for purses at that
  racetrack.
         (b)  Unless otherwise agreed to under Subsection (a) by the
  pari-mutuel license holder that owns or operates a horse racetrack
  at which video lottery games are conducted under this subchapter
  and the officially recognized horsemen's organization representing
  the horsemen at the racetrack, the license holder shall allocate a
  percentage determined by the Texas Racing Commission of the net
  terminal income generated from the operation of video lottery
  terminals at the racetrack to purses.  The percentage must be
  sufficient to ensure the purses at the racetrack are nationally
  competitive, and may not be less than 6.5 percent of the net
  terminal income generated from the operation of video lottery
  terminals at the racetrack.
         (c)  Unless otherwise agreed to under Subsection (a) by the
  pari-mutuel license holder that owns or operates a greyhound
  racetrack at which video lottery games are conducted under this
  subchapter and the state breed registry representing the greyhound
  breeders at the racetrack, the license holder shall allocate a
  percentage determined by the Texas Racing Commission of the net
  terminal income generated from the operation of video lottery
  terminals at the racetrack to purses.  The percentage must be
  sufficient to ensure the purses at the racetrack are nationally
  competitive, and may not be less than 6.5 percent of the net
  terminal income generated from the operation of video lottery
  terminals at the racetrack.
         (d)  The Texas Racing Commission shall adopt rules to
  administer this section.  A matter considered by the racing
  commission under this section is a contested case under Chapter
  2001, Government Code, and requires a public hearing.
         (e)  A state breed registry that receives net terminal income
  under this section may allocate up to 50 percent of the amount
  received for Texas breeder awards.
         Sec. 466.566.  LIABILITY OF VIDEO LOTTERY RETAILER AND VIDEO
  LOTTERY MANAGER.  (a)  A video lottery retailer, video lottery
  manager, or both, are liable to the commission for the state's share
  of net terminal income reported by the video lottery central
  system.
         (b)  Net terminal income received by the video lottery
  retailer or video lottery manager is held in trust for the benefit
  of this state before delivery of the state's share to the commission
  or electronic transfer to the state treasury, and the video lottery
  retailer or video lottery manager, or both, are liable to the
  commission for the full amount of the money held in trust.
         (c)  If the video lottery retailer or video lottery manager
  is not an individual, each officer, director, or owner of the video
  lottery retailer or video lottery manager is personally liable to
  the commission for the full amount of the money held in trust,
  except that shareholders of a publicly held corporation are liable
  in an amount not to exceed the value of their equity investment.
         Sec. 466.567.  PRIZE PAYMENT AND REDEMPTION.  (a)  Payment of
  prizes is the sole and exclusive responsibility of the video
  lottery retailer or video lottery manager. A prize may not be paid
  by the commission or this state except as otherwise authorized.
         (b)  Nothing in this subchapter limits the ability of a video
  lottery retailer or video lottery manager to provide promotional
  prizes, including wide area progressive networks, in addition to
  prize payouts regulated by the commission.
         (c)  A video lottery ticket must be redeemed not later than
  the 180th day 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 this state.
         (d)  The commission 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. 466.568.  REVOCATION OF LICENSE, CERTIFICATE OF
  REGISTRATION, OR OTHER REGULATORY APPROVAL.  (a)  The commission
  shall revoke or suspend a license, certificate of registration, or
  other regulatory approval issued under this subchapter if the
  holder of the license, certificate, or approval at any time fails to
  meet the eligibility requirements set forth in this subchapter.
         (b)  Failure to timely remit revenue generated by video
  lottery terminals to the commission 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 subchapter as a condition of any license, certificate of
  registration, or other approval issued under this subchapter may be
  grounds for suspension or revocation, or both, of a license,
  certificate, or other approval issued under this subchapter.
         Sec. 466.569.  DISCIPLINARY HEARING.  (a)  Before the
  commission revokes or suspends a video lottery terminal provider's
  certificate of registration or video lottery retailer's or video
  lottery manager's license, or imposes monetary penalties for a
  violation of this subchapter, the commission shall provide written
  notification to the license or certificate 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
  certificate 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 commission'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 commission not later than the
  20th day after the date notice is delivered personally or is mailed.
         (d)  If the commission receives a timely request under
  Subsection (c), the commission shall provide the person with an
  opportunity for a hearing as soon as practicable. If the commission
  does not receive a timely request under Subsection (c), the
  commission may impose the penalty, revoke or suspend a license or
  certificate of registration, or sustain the revocation or
  suspension without a hearing.
         (e)  Except as provided by Subsection (f) the hearing must be
  held not earlier than the 11th day after the date the written
  request is submitted to the commission.
         (f)  The commission may provide that a revocation or
  suspension takes effect on receipt of notice under Subsection (a)
  if the commission finds that the action is necessary to prevent or
  remedy a threat to public health, safety, or welfare. The
  commission by rule shall establish a nonexclusive list of
  violations that present a threat to the public health, safety, or
  welfare.
         (g)  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 commission receives the request for hearing
  under this section. 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 certificate holder or
  on a finding of good cause by the commission or administrative law
  judge.
         (h)  To prevail in a post-deprivation administrative hearing
  under this section, the license or certificate 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 commission or
  referred to the State Office of Administrative Hearings.
         (i)  The administrative record created by the hearing
  conducted by the State Office of Administrative Hearings shall be
  provided to the commission for review and determination on the
  revocation or suspension.
         (j)  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 commission'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 this state incurred in bringing the proceeding.
         (k)  The commission 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 section shall be paid to the commission.
         Sec. 466.570.  JUDICIAL REVIEW OF REVOCATION, SUSPENSION, OR
  PENALTY IMPOSITION.  (a)  A person aggrieved by a final decision of
  the commission to revoke or suspend a certificate of registration
  or license or to impose any monetary penalty may obtain judicial
  review before a district court in Travis County.
         (b)  The judicial review must be instituted by serving on the
  commission and filing a petition not later than the 20th day after
  the effective date of the final decision and must identify the order
  appealed from and the grounds or reason why the petitioner contends
  the decision of the commission should be reversed or modified.
         (c)  The review must be conducted by the court sitting
  without jury, and must not be a trial de novo but is confined to the
  record on review. The reviewing court may only affirm the decision,
  remand the case for further proceedings, or reverse the decision if
  the substantial rights of the petitioner have been violated.
         (d)  If any court of competent jurisdiction concludes on
  judicial review limited to the administrative record before the
  commission and subject to the substantial evidence standard that
  the deprivation or penalty was unwarranted or otherwise unlawful,
  the sole remedy available is invalidation of the penalty or
  reinstatement of the license or certificate of registration and the
  continued distribution, manufacture, or operation of video lottery
  terminals.
         (e)  The commission, this state, or the members, officers,
  employees, and authorized agents of either are not under any
  circumstances subject to monetary damages, attorney's fees, or
  court costs resulting from the penalty or license or certificate
  revocation.
         Sec. 466.571.  LICENSE OR CERTIFICATE OF REGISTRATION:  
  AGREEMENT TO WAIVE ENFORCEABILITY.  A license or certificate holder
  by virtue of accepting the license or certificate agrees that the
  privilege of holding a license or certificate under this subchapter
  is conditioned on the holder's agreement to Sections
  466.568-466.570 and waives any right to challenge or otherwise
  appeal the enforceability of those sections.
         Sec. 466.572.  LIMITED WAIVER OF SOVEREIGN IMMUNITY; NO
  LIABILITY OF STATE FOR ENFORCEMENT.  (a)  This state does not waive
  its sovereign immunity by negotiating gaming agreements with Indian
  tribes or other persons for the operation of video lottery
  terminals or other lottery games under this chapter. An actor or
  agent for this state may not waive this 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 with jurisdiction in the county
  where the Indian lands are located, or if the federal court lacks
  jurisdiction, to the jurisdiction of a district court in Travis
  County, solely for the purpose of resolving disputes arising from a
  gaming agreement authorized under this subchapter 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, provided, however, that application of
  the rules may not be construed as a waiver of sovereign immunity.
         (c)  All financial obligations of the commission are payable
  solely out of the income, revenues, and receipts of the commission
  and are subject to statutory restrictions and appropriations.
         (d)  This state and the commission are not liable if
  performance by the commission is compromised or terminated by acts
  or omissions of the legislature or the state or federal judiciary.
         (e)  This state and the commission are not liable related to
  any enforcement of this chapter.
         Sec. 466.573.  ABSOLUTE PRIVILEGE OF REQUIRED
  COMMUNICATIONS AND DOCUMENTS.  (a)  Any communication, document, or
  record of a video lottery central system provider, video lottery
  terminal provider, video lottery retailer, or video lottery
  manager, an applicant, or a license or certificate holder or holder
  of a regulatory approval that is made or transmitted to the
  commission or any of its employees to comply with any law, including
  a rule of the commission, to comply with a subpoena issued by the
  commission, or to assist the commission or its 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 a communication, document, or record provided under
  Subsection (a) contains any information that is privileged under
  state law, that privilege is not waived or lost because the
  communication, document, or record is disclosed to the commission
  or any commission employees.
         (c)  The commission shall maintain all privileged
  information, communications, documents, and records in a secure
  place as determined in the commission's sole discretion that is
  accessible only to commission members and authorized commission
  employees.
         Sec. 466.574.  INTELLECTUAL PROPERTY RIGHTS OF COMMISSION.  
  The legislature finds and declares that the commission has the
  right to establish ownership of intellectual property rights for
  all lottery products, including video lottery terminals and related
  video lottery equipment.
         Sec. 466.575.  MODEL GAMING AGREEMENT.  (a)  The governor
  shall execute, on behalf of this state, a gaming agreement with the
  Ysleta del Sur Pueblo Indian tribe, the Alabama-Coushatta Indian
  tribe, or the Kickapoo Traditional Tribe of Texas containing the
  terms set forth in Subsection (b), as a ministerial act, without
  preconditions, not later than the 30th day after the date the
  governor receives a request from the tribe, accompanied by or in the
  form of a duly enacted resolution of the tribe's governing body, to
  enter into the gaming agreement.
         (b)  A gaming agreement executed under Subsection (a) must be
  in the form and contain the provisions as follows:
  GAMING AGREEMENT GOVERNING
  VIDEO LOTTERY TERMINAL OPERATIONS
  Between the [Name of Tribe]
  and the STATE OF TEXAS
         This agreement is made and entered into by and between the
  [Name of Tribe], a federally recognized Indian Tribe ("Tribe"), and
  the State of Texas ("State"), with respect to the operation of video
  lottery terminals (as defined by Section 466.002, Texas Government
  Code) on the Tribe's Indian lands (as defined by Chapter 466, Texas
  Government Code).
         SECTION 1.0.  TITLE.
         Sec. 1.1.  This document shall be referred to as "The [Name
  of Tribe] and State of Texas gaming agreement."
         SECTION 2.0.  PURPOSES AND OBJECTIVES.
         Sec. 2.1.  The terms of this agreement are designed and
  intended to:
         (a)  evidence the good will and cooperation of  the Tribe and 
  State in fostering a mutually respectful government-to-government
  relationship that will serve the mutual interests of the parties;
         (b)  develop and implement a means of regulating limited
  Class III gaming on the Tribe's Indian lands to ensure fair and
  honest operation in accordance with the applicable federal and
  state law, and, through that regulated limited Class III gaming,
  enable the Tribe to develop self-sufficiency, promote tribal
  economic development, and generate jobs and revenues to support the
  Tribe's government and governmental services and programs; and
         (c)  ensure fair operation of video lottery games and
  minimize the possibilities of corruption and infiltration by
  criminal influences; promote ethical practices in conjunction with
  that gaming, through the licensing and control of persons employed
  in, or providing goods and services to, the Tribe's video lottery
  operation and protecting against the presence or participation of
  persons whose criminal backgrounds, reputations, character, or
  associations make the persons unsuitable for participation in
  gaming, thereby maintaining a high level of integrity in government
  gaming.
         SECTION 3.0.  DEFINITIONS.
         As used in this agreement, all terms have the meaning
  assigned by Section 466.002, Texas Government Code, unless
  otherwise specified:
         Sec. 3.1.  "Class III gaming" means the forms of Class III
  gaming defined in 25 U.S.C. Section 2703(8) and by regulations of
  the National Indian Gaming Commission.
         Sec. 3.2.  "Financial source" means any person providing
  financing, directly or indirectly, to the Tribe's video lottery
  terminal establishment or operation of video lottery terminals
  authorized under this gaming agreement.
         Sec. 3.3.  "Gaming activities" means the limited Class III
  gaming activities authorized under this gaming agreement.
         Sec. 3.4.  "Gaming employee" means any person who:
         (a)  operates, maintains, repairs, or assists in any gaming
  activities, or is in any way responsible for supervising the gaming
  activities or persons who conduct, operate, account for, or
  supervise the gaming activities;
         (b)  is in a category under applicable federal or tribal
  gaming law requiring licensing;
         (c)  is an employee of the Tribal Compliance Agency with
  access to confidential information; or
         (d)  is a person whose employment duties require or authorize
  access to areas of the video lottery terminal establishment that
  are not open to the public.
         Sec. 3.5.  "Gaming ordinance" means a tribal ordinance or
  resolution authorizing the conduct of Class III Gaming Activities
  on the Tribe's Indian lands and approved under IGRA or other
  applicable federal law.
         Sec. 3.6.  "IGRA" means the Indian Gaming Regulatory Act of
  1988 (18 U.S.C. Sec. 1166 et seq. and 25 U.S.C. Sec. 2701 et seq.),
  any amendments to the act, and all regulations promulgated under
  the act.
         Sec. 3.7.  "Key employee" means any person employed by the
  Tribe as chief operating or executive officer, chief financial
  officer, chief of security, or manager of a video lottery terminal
  establishment or operations of video lottery terminals, or any
  other person who may directly influence the management of a video
  lottery terminal establishment or the operation of video lottery
  terminals.
         Sec. 3.8.  "NIGC" means the National Indian Gaming
  Commission.
         Sec. 3.9.  "Patron" means any person who is on the premises
  of a video lottery terminal establishment, for the purpose of
  playing a video lottery game authorized by this gaming agreement.
         Sec. 3.10.  "Principal" means, with respect to any entity,
  the entity's sole proprietor or any partner, trustee, beneficiary,
  or shareholder holding 10 percent or more of the entity's
  beneficial or controlling ownership, either directly or
  indirectly, or more than 10 percent of the voting stock of a
  publicly traded corporation, or any officer, director, principal
  management employee, or key employee of the entity.
         Sec. 3.11.  "Restoration Act" means the Ysleta del Sur
  Pueblo and Alabama and Coushatta Indian Tribes of Texas Restoration
  Act (25 U.S.C. Section 731 et seq. and 25 U.S.C. Section 1300g et
  seq.).
         Sec. 3.12.  "State" means the State of Texas or an authorized
  official or agency of the state.
         Sec. 3.13.  "Texas regulatory commission" means the state
  agency that regulates video lottery games in Texas under Chapter
  466, Texas Government Code.
         Sec. 3.14.  "Transfer agreement" means a written agreement
  authorizing the transfer of video lottery terminal operating rights
  between the Tribe and another Indian tribe.
         Sec. 3.15.  "Transfer notice" means a written notice that
  the Tribe must provide to the Texas regulatory commission of the
  Tribe's intent to acquire or transfer video lottery terminal
  operating rights pursuant to a transfer agreement.
         Sec. 3.16.  "Tribal chairperson" means the person duly
  elected or selected under the Tribe's organic documents, customs,
  or traditions to serve as the primary spokesperson for the Tribe.
         Sec. 3.17.  "Tribal Compliance Agency" ("TCA") means the
  Tribal governmental agency that has the authority to carry out the
  Tribe's regulatory and oversight responsibilities under this
  gaming agreement. Unless and until otherwise designated by the
  Tribe, the TCA shall be the [Name of Tribe] Gaming Commission. A
  gaming employee may not be a member or employee of the TCA. The
  Tribe has the ultimate responsibility for ensuring that the TCA
  fulfills its responsibilities under this gaming agreement. The
  members of the TCA are subject to background investigations and
  shall be licensed to the extent required by any applicable Tribal or
  federal law and in accordance with this gaming agreement. The Tribe
  shall ensure that all TCA officers and agents are qualified for the
  position and receive ongoing training to obtain and maintain skills
  sufficient to carry out their responsibilities in accordance with
  industry standards.
         Sec. 3.18.  "Tribal law enforcement agency" means a police
  or security force established and maintained by the Tribe under the
  Tribe's powers of self-government to carry out law enforcement
  duties at or in connection with a video lottery terminal
  establishment.
         Sec. 3.19.  "Tribal gaming license" means any license issued
  by the TCA as required by and in compliance with this agreement.
         Sec. 3.20.  "Tribe" means [Name of Tribe], a federally
  recognized Indian tribe.
         Sec. 3.21.  "Video lottery terminal establishment" means any
  premises at which the operation of video lottery terminals is
  authorized under this gaming agreement.
         SECTION 4.0.  RECITALS.
         Sec. 4.1.  This agreement governs all operations of video
  lottery terminals as defined by Section 466.002, Texas Government
  Code, on the Tribe's Indian lands.
         Sec. 4.2.  A principal goal of Federal Indian policy is to
  promote tribal economic development and tribal self-sufficiency.
  The State and the Tribe find the goal to be consistent with
  applicable federal law, state public policy, and the public health,
  safety, and welfare to regulate video lottery terminals on Indian
  lands in accordance with this gaming agreement.
         Sec. 4.3.  The Tribe is a federally recognized Indian tribe
  possessing sovereign powers and rights of self-government. The
  Tribe's governing body has authorized the officials of the Tribe to
  enter into contracts and agreements of every description, including
  this gaming agreement, with the State.
         Sec. 4.4.  The Tribe exercises governmental authority within
  the [name of Reservation] (the "Reservation"), which for purposes
  of this gaming agreement means those lands within the current
  boundaries of the Reservation and any other Indian lands over which
  the Tribe exercises governmental authority.
         Sec. 4.5.  The State of Texas is a state of the United States
  of America possessing the sovereign powers and rights of a state.
  The State has a legitimate sovereign interest in regulating the
  growth of Class III gaming activities in Texas. Mindful of that
  interest, the State of Texas, pursuant to Chapter 466, Texas
  Government Code, authorized certain gaming agreements with Indian
  tribal governments in the State of Texas to permit the operation of
  video lottery terminals on Indian lands. It is the general policy
  of the State to prohibit commercial gambling throughout the state.
  The exceptions to this prohibition are limited under Texas law to
  specified types of gaming and to limited locations that meet
  specific criteria. Any gaming not expressly authorized is
  prohibited.
         Sec. 4.6.  The parties recognize that this agreement
  provides the Tribe substantial benefits that create a unique
  opportunity for the Tribe to operate video lottery terminals in an
  economic environment of limited competition from gaming on
  non-Indian lands in Texas, with the operation of video lottery
  games on non-Indian lands restricted to licensed racetracks in
  existence in 2007 or racetracks for which a license application was
  filed on or before June 1, 2007, and to a limited number of licensed
  tourist destinations in locations that provide the Tribe with a
  substantial exclusive territory for its video lottery terminal
  operations. The parties are mindful that this unique environment
  is of economic value to the Tribe. In consideration for the
  substantial rights enjoyed by the Tribe, and in further
  consideration for the State's willingness to enter into this gaming
  agreement and allow the Tribe the opportunity to operate video
  lottery terminals connected to the State's video lottery system,
  the Tribe has agreed to provide to the State, on a
  sovereign-to-sovereign basis, a portion of revenue generated by
  video lottery terminals on Indian lands and to collect and remit to
  the comptroller State sales and use taxes and State taxes on motor
  fuels, alcoholic beverages, cigarettes and tobacco products, and
  hotel occupancy generated at a video lottery terminal
  establishment.  The requirement to collect and remit these State
  taxes does not apply to an item sold to or used or consumed by a
  Tribe member.
         Sec. 4.7.  The Tribe desires to offer the play of video
  lottery terminals, as a means of generating revenue for the support
  of tribal governmental programs, such as health care, housing,
  sewer and water projects, police, corrections, fire, judicial
  services, highway and bridge construction, general assistance for
  tribal elders, day care for the children, economic development,
  educational opportunities, and other typical and valuable
  governmental services and programs for tribal members.
         Sec. 4.8.  The State recognizes that the positive effects of
  this gaming agreement may extend beyond the Tribe's lands to the
  Tribe's neighbors and surrounding communities and will generally
  benefit all of Texas. These positive effects and benefits may
  include not only those described in Section 4.7, but also may
  include increased tourism and related economic development
  activities that, through the Tribe's revenue sharing with the
  State, will generate additional funds for state governmental
  programs.
         Sec. 4.9.  The Tribe and the State jointly wish to protect
  their citizens from any criminal involvement in the gaming
  operations regulated under this gaming agreement.
         Sec. 4.10.  Nothing in this agreement shall supplant the
  role or duties of the Texas Department of Public Safety under state
  law. The Texas Racing Commission and the Texas Comptroller of
  Public Accounts do not have any role in regulation or oversight of
  gaming activities conducted by a Tribe.
         Sec. 4.11.  The terms of this gaming agreement strictly
  define and limit the relationship of the parties. Nothing in this
  gaming agreement shall be construed to create or imply a joint
  venture, partnership, principal/agent, or any other relationship
  between the parties.
         SECTION 5.0.  CLASS III GAMING AUTHORIZED AND PERMITTED.
         Sec. 5.1.  The Tribe is hereby authorized and permitted to
  engage only in the Class III gaming activities expressly referred
  to in Section 6.0 and may not engage in Class III gaming that is not
  expressly authorized in that section. Nothing in this agreement
  shall be construed to allow Internet gaming.
         SECTION 6.0.  AUTHORIZATION OF VIDEO LOTTERY TERMINALS.
         Sec. 6.1.  Authorized and Permitted Class III Gaming. The
  Tribe is hereby authorized and permitted to operate the following
  Class III gaming under the terms and conditions set forth in this
  agreement.
         Sec. 6.2.  The Tribe and State agree that the Tribe is
  authorized to operate video lottery terminals only in accordance
  with this gaming agreement. However, nothing in this agreement
  limits any right of the Kickapoo Traditional Tribe of Texas to
  operate any game that is a Class II game under IGRA, and Class II
  games are not subject to the exclusivity payments required under
  this gaming agreement.
         Sec. 6.2.1.  Operation of Video Lottery Terminals. Video
  lottery terminals must be operated in connection with the video
  lottery system and at all times be connected through communication
  technology or other video lottery equipment controlled by the State
  to a State controlled and operated video lottery central system.
  The Tribe may enter into a management gaming agreement for a third
  party video lottery manager, or the Tribe may act as its own video
  lottery manager.
         (a)  Third Party Video Lottery Manager. If the Tribe enters
  into a management gaming agreement for a third party video lottery
  manager, the manager must be licensed under Subchapter K, Chapter
  466, Texas Government Code, and all video lottery operations shall
  be subject to and in strict compliance with that subchapter. Any
  video lottery manager conducting business on Indian lands shall
  indemnify and hold harmless the State and the Texas regulatory
  commission and all officers and employees of both from any and all
  claims which may be asserted against a license holder, the
  commission, the State, and the members, officers, employees, and
  authorized agents of either, arising from the license holder's
  participation in the video lottery system authorized under the
  gaming agreement.
         (b)  Tribe as Video Lottery Manager. If the Tribe elects to
  manage video lottery terminal operations, then Sections 7.0 through
  14.0 of this agreement govern the procurement and operation of the
  video lottery terminals on the Indian lands of the Tribe.
         Sec. 6.3.  In order to remain eligible to operate video
  lottery terminals under this gaming agreement, the Tribe must
  strictly comply with all requirements of the gaming agreement,
  timely file all reports required by this gaming agreement, and
  timely remit all payments to the State required under this gaming
  agreement or applicable state law, including the taxes collected as
  provided by Section 4.6.
         Sec. 6.4.  Regardless of ownership of video lottery
  terminals, the State owns all video lottery games.
         SECTION 7.0.  PROCUREMENT OF VIDEO LOTTERY TERMINALS.
         Sec. 7.1.  All video lottery terminals shall be procured
  only from a video lottery terminal provider registered with the
  Texas regulatory commission under Subchapter K, Chapter 466, Texas
  Government Code. The Tribe may not enter into, or continue to make
  payments pursuant to, any contract or agreement for the provision
  of video lottery equipment with any person who is not registered by
  the commission as a video lottery terminal provider under
  Subchapter K, Chapter 466, Texas Government Code. Any agreement
  between the Tribe and a video lottery terminal provider shall be
  deemed to include a provision for the agreement's termination
  without further liability on the part of the Tribe, except for the
  bona fide repayment of all outstanding sums, exclusive of interest,
  owed as of, or payment for services or materials received up to, the
  date of termination, on revocation or nonrenewal of the video
  lottery terminal provider's registration.
         Sec. 7.2.  The Texas regulatory commission shall provide the
  Tribe a list of registered video lottery terminal providers,
  commission approved video lottery games, and commission approved
  video lottery terminals. The Tribe may not operate a video lottery
  terminal that has not been authorized by the commission.
         Sec. 7.3.  The Tribe shall file with the Texas regulatory
  commission any order placed for video lottery terminals
  simultaneously with the submission of the order to a
  commission-approved video lottery terminal provider.
         Sec. 7.4.  The Tribe or the video lottery manager shall
  provide all necessary capital investments and required
  improvements at a video lottery terminal establishment.
         SECTION 8.0.  LICENSING.
         Sec. 8.1.  Gaming Ordinance and Regulations. All video
  lottery operations conducted under this agreement, at a minimum,
  shall comply with all terms and conditions of this gaming
  agreement, a Gaming Ordinance adopted by the Tribe and approved in
  accordance with this agreement and any applicable federal law, and
  with all rules, regulations, procedures, specifications, and
  standards adopted by the TCA. All licensing related to the
  operation of video lottery terminals shall be conditioned on an
  agreement by the license holder to indemnify and hold harmless the
  State and the Texas regulatory commission and all officers and
  employees of both from any and all claims which may be asserted
  against a license holder, the commission, the State and the
  members, officers, employees, and authorized agents of either
  arising from the license or registration holder's participation in
  the video lottery system authorized under this agreement.
         Sec. 8.2.  Tribal Ownership and Regulation of Gaming
  Operation.  Except as otherwise provided by this agreement, the
  Tribe shall have the sole proprietary interest in the video lottery
  terminal establishment and video lottery terminals. This provision
  may not be construed to prevent the Tribe from granting security
  interests or other financial accommodations to secured parties,
  lenders or others, or to prevent the Tribe from entering into leases
  or financing agreements or a gaming management agreement with a
  video lottery manager.
         Sec. 8.3.  Government-to-Government Cooperation.  The
  parties intend that the licensing process provided for in this
  gaming agreement shall involve joint cooperation between the TCA
  and the Texas regulatory commission, as described in this
  agreement.
         Sec. 8.4.  Video Lottery Terminal Establishment. (a)  A
  video lottery terminal establishment authorized by this agreement
  shall be operated by a licensed video lottery manager or the Tribe
  and licensed by the TCA in conformity with the requirements of this
  gaming agreement, the Tribal Gaming Ordinance, and any applicable
  federal law.  The license shall be reviewed and renewed, if
  appropriate, every two years.  The Tribe shall promptly certify in
  writing to the Texas regulatory commission each time the license is
  renewed.  The certification must be posted in a conspicuous and
  public place in the video lottery terminal establishment at all
  times.
         (b)  In order to protect the health and safety of all video
  lottery terminal establishment patrons, guests, and employees, all
  video lottery terminal establishments of the Tribe constructed
  after the effective date of this gaming agreement, and all
  expansions or modifications to a site facility for a video lottery
  terminal establishment in existence as of the effective date of
  this gaming agreement, shall meet or exceed the building and safety
  codes of the Tribe. As a condition for engaging in that
  construction, expansion, modification, or renovation, the Tribe
  shall amend the Tribe's existing building and safety codes if
  necessary, or enact such codes if there are none, so that the codes
  meet the standards of the building and safety codes of any county in
  which the video lottery terminal establishment is located,
  including all uniform fire, plumbing, electrical, mechanical, and
  related codes in effect on the date this agreement takes effect.
  Nothing in this agreement shall be deemed to confer jurisdiction on
  any county or the State with respect to any reference to such
  building and safety codes.  Any construction, expansion, or
  modification must also comply with the federal Americans with
  Disabilities Act of 1990 (42 U.S.C. Sec. 12101 et seq.), as amended.
         (c)  The TCA shall issue a video lottery terminal
  establishment a certificate of occupancy prior to occupancy if it
  was not used for any lawful gaming prior to the effective date of
  this gaming agreement, or, if it was so used, within one year after
  the effective date.  The certificate shall be reviewed for
  continuing compliance once every two years.  Inspections by
  qualified building and safety experts shall be conducted under the
  direction of the TCA as the basis for issuing any certificate
  hereunder.  The TCA shall determine and certify that, as to new
  construction or new use for gaming activities, the video lottery
  terminal establishment meets the Tribe's building and safety code,
  or, as to facilities or portions of facilities that were used for
  the Tribe's gaming before this gaming agreement, that the video
  lottery terminal establishment or portions of the establishment do
  not endanger the health or safety of occupants or the integrity of
  the video lottery system.  The Tribe may not offer video lottery
  gaming in a video lottery terminal establishment that is
  constructed or maintained in a manner that endangers the health or
  safety of occupants or the integrity of the video lottery system.
         (d)  The State shall designate an agent or agents to be given
  reasonable notice of each inspection by the TCA's experts, and
  State agents may participate in any such inspection.  The Tribe
  agrees to correct any video lottery terminal establishment
  condition noted in an inspection that does not meet the standards
  set forth in Subsections (b) and (c).  The TCA and the State's
  designated agent or agents shall exchange any reports of an
  inspection within 10 days after completion of the report, and the
  reports shall be separately and simultaneously forwarded by both
  agencies to the Tribal chairperson.  On certification by the TCA's
  experts that a video lottery terminal establishment meets
  applicable standards, the TCA shall forward the experts'
  certification to the State within 10 days of issuance.  If the
  State's agent objects to that certification, the Tribe shall make a
  good faith effort to address the State's concerns, but if the State
  does not withdraw its objection, the matter will be resolved in
  accordance with the dispute resolution provisions of this gaming
  agreement.
         Sec. 8.5.  Suitability Standard Regarding Tribal Gaming
  Licenses. In reviewing an application for a tribal gaming license,
  and in addition to any standards set forth in the Tribal gaming
  ordinance, the TCA shall consider whether issuance of the license
  is inimical to public health, safety, or welfare, and whether
  issuance of the license will undermine public trust that the
  Tribe's operation of video lottery terminals, or tribal government
  gaming generally, is free from criminal and dishonest elements and
  would be conducted honestly.  A license may not be issued unless,
  based on all information and documents submitted, the TCA is
  satisfied that the applicant, in addition to any other criteria in
  any applicable federal law is all of the following:
         (a)  a person of good character, honesty, and integrity;
         (b)  a person whose prior activities, criminal record (if
  any), reputation, habits, and associations do not pose a threat to
  the security and integrity of the lottery or to the public interest
  of the State or to the effective operation and control of the
  lottery, or create or enhance the dangers of unsuitable, unfair, or
  illegal practices, methods, or activities in the conduct of the
  lottery, or in the carrying on of the business and financial
  arrangements incidental to the conduct of the lottery; and
         (c)  a person who in all other respects is qualified to be
  licensed as provided in this gaming agreement, any applicable
  federal law, the Tribal Gaming Ordinance, and any other criteria
  adopted by the TCA or the Tribe.  An applicant may not be found
  unsuitable solely on the ground that the applicant was an employee
  of a tribal gaming operation in Texas that was conducted before the
  effective date of this gaming agreement. Employment in an
  unauthorized gaming operation in Texas subsequent to the effective
  date of this agreement, however, shall impose a presumption of
  unsuitability.
         Sec. 8.6.  Gaming Employees.  (a)  Every gaming employee
  shall obtain, and thereafter maintain current, a valid tribal
  gaming license, which shall be subject to biennial renewal,
  provided that in accordance with Section 8.8.2, a person may be
  employed on a temporary or conditional basis pending completion of
  the licensing process.
         (b)  Without the concurrence of the Texas regulatory
  commission, the Tribe may not employ or continue to employ any
  person whose application to the commission for a registration,
  license, determination of suitability, or other regulatory
  approval, or for a renewal of a registration, license,
  determination of suitability, or other regulatory approval, has
  been denied or has expired without renewal.
         Sec. 8.7.  Financial Sources.  Any person providing
  financing, directly or indirectly, to the Tribe's video lottery
  terminal establishment or operation of video lottery terminals must
  be licensed by the TCA before receipt of that financing, provided
  that any person who is providing financing at the time of the
  execution of this gaming agreement must be licensed by the TCA
  within 90 days of such execution. The TCA shall review licenses at
  least every two years for continuing compliance. In connection
  with the review, the TCA shall require the Financial Source to
  update all information provided in the previous application. Any
  agreement between the Tribe and a Financial Source is deemed to
  include a provision for its termination without further liability
  on the part of the Tribe, except for the bona fide repayment of all
  outstanding sums, exclusive of interest, owed as of the date of
  termination, on revocation or nonrenewal of the Financial Source's
  license by the TCA based on a determination of unsuitability by the
  Texas regulatory commission.  The Tribe may not enter into, or
  continue to make payments pursuant to any contract or agreement for
  the provision of financing with any person whose application to the
  commission for a determination of suitability has been denied or
  has expired without renewal. A video lottery terminal provider who
  provides financing exclusively in connection with the sale or lease
  of video lottery equipment obtained from that video lottery
  terminal provider may be registered solely in accordance with the
  commission's registration procedures for video lottery terminal
  providers.  The TCA may, in its discretion, exclude from the
  licensing requirements of this section, financing provided by:
               (1)  a federally regulated or state regulated bank,
  savings and loan, or other federally regulated or state regulated
  lending institution;
               (2)  any agency of the federal, state, or local
  government; or
               (3)  any investor who, alone or in conjunction with
  others, holds less than 10 percent of any outstanding indebtedness
  evidenced by bonds issued by the Tribe.
         Sec. 8.8.  Processing License Applications. Each applicant
  for a tribal gaming license shall submit the completed application
  on forms prescribed by the TCA and approved by the Texas regulatory
  commission, along with the required information and an application
  fee, to the TCA in accordance with the rules and regulations of that
  agency.  The parties agree that for purposes of this agreement, the
  standards set forth under federal law with regard to information
  required for Tribal gaming operation applications shall govern.
  Accordingly, at a minimum, the TCA shall require submission and
  consideration of all information required under federal law,
  including 25 C.F.R. Section 556.4, for licensing primary management
  officials and key employees.  For applicants who are business
  entities, the licensing provisions apply to the entity and:
         (a)  each officer and director;
         (b)  each principal management employee, including any chief
  executive officer, chief financial officer, chief operating
  officer, and general manager;
         (c)  each owner or partner, if an unincorporated business;
         (d)  each shareholder who owns more than 10 percent of the
  shares of the corporation, if a corporation; and
         (e)  each person or entity, other than a financial
  institution the TCA has determined does not require a license under
  the preceding section, that, alone or in combination with others,
  has provided financing in connection with any video lottery
  equipment or video lottery terminal establishment under this gaming
  agreement, if that person or entity provided more than five percent
  of:
               (1)  the start-up capital;
               (2)  the operating capital over a 12-month period; or
               (3)  a combination thereof.
         For purposes of this section, if any commonality of the
  characteristics identified in Subsections (a)-(e) exist between
  any two or more entities, the entities may be deemed to be a single
  entity.  Nothing herein precludes the Tribe or TCA from requiring
  more stringent licensing requirements.
         Sec. 8.8.1.  Background Investigations of Applicants.  (a)  
  The TCA shall conduct or cause to be conducted all necessary
  background investigations reasonably required to determine that
  the applicant is qualified for a tribal gaming license under the
  standards set forth in this gaming agreement, and to fulfill all
  requirements for licensing under any applicable federal law, the
  Tribal Gaming Ordinance, and this gaming agreement.  The TCA may not
  issue any license other than a temporary license until a
  determination is made that the qualifications have been met.
         (b)  Instead of completing its own background investigation,
  and to the extent that doing so does not conflict with or violate
  any applicable federal law or the Tribal Gaming Ordinance, the TCA
  may contract with the Texas regulatory commission or an independent
  contractor approved by the commission for the conduct of background
  investigations.  An applicant for a tribal gaming license must
  provide releases to the commission to make available to the TCA
  background information regarding the applicant.  The commission
  shall cooperate in furnishing to the TCA that information, unless
  doing so would violate any agreement the commission has with a
  source of the information other than the applicant, or would impair
  or impede a criminal investigation, or unless the TCA cannot
  provide sufficient safeguards to assure the commission that the
  information will remain confidential.
         Sec. 8.8.2.  Temporary Licensing of Employees.  
  Notwithstanding any contrary provision in this gaming agreement,
  the TCA may issue a temporary license and may impose specific
  conditions on the license pending completion of the applicant's
  background investigation as the TCA in its sole discretion shall
  determine, if:
         (a)  the applicant for a tribal gaming license has completed
  a license application in a manner satisfactory to the TCA; and
         (b)  the TCA has conducted a preliminary background
  investigation, and the investigation or other information held by
  the TCA does not indicate:
               (1)  that the applicant has a criminal history that
  could pose a threat to the security and integrity of the lottery or
  to the public interest of the State or the effective operation and
  control of the lottery, or create or enhance the dangers of
  unsuitable, unfair, or illegal practices, methods, or activities in
  the conduct of the lottery, or in the carrying on of the business
  and financial arrangements incidental thereto;
               (2)  other information in the applicant's background
  that would either disqualify the applicant from obtaining a license
  or cause a reasonable person to investigate further before issuing
  a license; or
               (3)  that the applicant is otherwise unsuitable for
  licensing.
         (c)  The TCA may require special fees to issue or maintain a
  temporary license.
         (d)  A temporary license shall remain in effect until
  suspended or revoked, or until a final determination is made on the
  application.  At any time after issuance of a temporary license, the
  TCA may suspend or revoke the temporary license in accordance with
  Sections 8.9.1 or 8.9.5, and the Texas regulatory commission may
  request suspension or revocation in accordance with Section 8.9.
         (e)  For purposes of this agreement, the parties agree that
  the standards set forth in 25 C.F.R. Part 558 govern licensing and
  investigations required under the provisions of this agreement.
  Nothing in this agreement shall be construed to relieve the Tribe of
  any obligation under this agreement to comply with the standards
  set forth in 25 C.F.R. Part 558.
         Sec. 8.9.  Tribal Gaming License Issuance.  (a)  On
  completion of the necessary background investigation, the TCA may
  issue a tribal gaming license on a conditional or unconditional
  basis.  Nothing herein shall create a property or other right of an
  applicant in an opportunity to be licensed, or in a license itself,
  both of which shall be considered to be privileges granted to the
  applicant in the sole discretion of the TCA subject to oversight by
  the Texas regulatory commission as provided herein. Any license,
  registration, suitability, qualification issued, or other
  regulatory approval granted pursuant to or in compliance with this
  gaming agreement is a revocable privilege, and a holder does not
  acquire any vested right therein or thereunder.
         (b)  State and Tribal courts shall have no jurisdiction to
  review decisions to deny, limit, or condition a license,
  registration, suitability, qualification, or request for approval
  unless the judicial review is sought on the ground that such a
  denial, limitation, or condition is proven by clear and convincing
  evidence to be based on a suspect classification such as race,
  color, religion, gender, or national origin, protected under the
  Equal Protection Clause of the United States Constitution.
         Sec. 8.9.1.  Denial, Suspension, or Revocation of Licenses.  
  (a)  The TCA may deny any application for a tribal gaming license
  and may revoke any license issued if the TCA determines the
  application is incomplete or deficient or if the applicant is
  determined to be unsuitable or otherwise unqualified for the gaming
  license.  Pending consideration of revocation, the TCA may
  summarily suspend a license in accordance with Section 8.9.5.  All
  rights to notice and hearing shall be governed by tribal law.  The
  TCA shall notify the applicant in writing of the tribal law
  provisions and of the intent to suspend or revoke the license.
         (b)  On receipt of notice that the Texas regulatory
  commission has determined a person would be unsuitable for
  licensure in a video lottery terminal establishment or related to
  video lottery terminal operations subject to the jurisdiction of
  the commission, the TCA shall promptly revoke any license issued to
  the person.
         Sec. 8.9.2.  Renewal of Licenses; Extensions; Further
  Investigation. The term of a tribal gaming license may not exceed
  five years, and application for renewal of a license must be made
  before the license's expiration.  An applicant for renewal of a
  license must provide updated material as requested, on the
  appropriate renewal forms, but, at the discretion of the TCA, may
  not be required to resubmit historical data previously submitted or
  that is otherwise available to the TCA.  At the discretion of the
  TCA, an additional background investigation may be required at any
  time if the TCA determines the need for further information
  concerning the applicant's continuing suitability or eligibility
  for a license.  Before renewing a license, the TCA shall deliver to
  the Texas regulatory commission copies of all information and
  documents received in connection with the application for renewal.
         Sec. 8.9.3.  Identification Cards. The TCA shall require
  all persons who are required to be licensed to wear, in plain view
  at all times while in the video lottery terminal establishment,
  identification badges issued by the TCA.  Identification badges
  must include a photograph and an identification number that is
  adequate to enable TCA agents to readily identify the person and
  determine the validity and date of expiration of the license.
         Sec. 8.9.4.  Fees for Tribal Gaming License.  The fees for
  all tribal gaming licenses shall be set by the TCA.
         Sec. 8.9.5.  Summary Suspension of Tribal Gaming License.  
  The TCA may summarily suspend a tribal gaming license if the TCA
  determines that the continued licensing of the person or entity
  could constitute a threat to the public health or safety or may
  violate the TCA's licensing or other standards or any provision of
  applicable federal or state law or of this agreement.  Any right to
  notice or hearing in regard to the suspension are governed by tribal
  law provided the law is not inconsistent with any provision of this
  agreement.
         Sec. 8.9.6.  State Certification Process.  (a)  On receipt of
  a completed tribal gaming license application and a determination
  by the TCA that it intends to issue the earlier of a temporary or
  permanent license, the TCA shall transmit to the Texas regulatory
  commission a notice of intent to license the applicant, together
  with all of the following:
               (1)  a copy of all tribal license application materials
  and information received by the TCA from the applicant;
               (2)  an original set of fingerprint cards;
               (3)  a current photograph; and
               (4)  except to the extent waived by the commission, the
  releases of information, waivers, and other completed and executed
  forms obtained by the TCA.
         (b)  Except for an applicant for licensing as a non-key
  gaming employee, the TCA shall require the applicant to file an
  application with the Texas regulatory commission, before issuance
  of a temporary or permanent tribal gaming license, for a
  determination of suitability for licensure under Subchapter K,
  Chapter 466, Texas Government Code. Investigation and disposition
  of that application is governed entirely by State law, and the
  commission shall determine whether the applicant would be found
  suitable for licensure in a video lottery terminal establishment or
  in relation to video lottery terminal operations at a video lottery
  terminal establishment subject to the commission's jurisdiction.  
  Additional information may be required by the commission to assist
  in a background investigation, provided that the commission
  requirement is no greater than that which may be required of
  applicants for a video lottery retailer license in connection with
  video lottery operations at a video lottery terminal establishment
  under Subchapter K, Chapter 466, Texas Government Code. A
  determination of suitability is valid for the term of the tribal
  license held by the applicant, and the TCA shall require a license
  holder to apply for renewal of a determination of suitability at the
  time the license holder applies for renewal of a tribal gaming
  license.  The commission and the TCA, together with tribal gaming
  agencies under other gaming agreements, shall cooperate in
  developing standard licensing forms for tribal gaming license
  applicants, on a statewide basis, that reduce or eliminate
  duplicative or excessive paperwork, and the forms and procedures
  must take into account the Tribe's requirements under any
  applicable federal law and the expense thereof.
         (c)  Background Investigations of Applicants.  On receipt of
  completed license application information from the TCA, the Texas
  regulatory commission may conduct a background investigation
  pursuant to state law to determine whether the applicant would be
  suitable to be licensed for association with a video lottery
  terminal establishment or operation subject to the jurisdiction of
  the commission.  If further investigation is required to supplement
  the investigation conducted by the TCA, the applicant will be
  required to pay an application fee charged by the commission in an
  amount that reimburses the commission for actual costs incurred,
  provided that in requesting any deposit, the commission shall take
  into consideration reports of the background investigation already
  conducted by the TCA and the NIGC, if any.  Failure to pay the
  application fee or deposit may be grounds for denial of the
  application by the commission.  The commission and TCA shall
  cooperate in sharing as much background information as possible to
  maximize investigative efficiency and thoroughness and to minimize
  investigative costs.  On completion of the necessary background
  investigation or other verification of suitability, the commission
  shall issue a notice to the TCA certifying the State has determined
  that the applicant would be suitable or that the applicant would be
  unsuitable for licensure in a video lottery terminal establishment
  subject to the jurisdiction of the commission and, if unsuitable,
  stating the reasons for unsuitability.
         (d)  The Tribe, on a monthly basis, shall provide the Texas
  regulatory commission with the name, badge identification number,
  and job descriptions of all non-key gaming employees.
         (e)  The Tribe shall, at all times, have a list of key
  employees on file with the Texas regulatory commission and shall
  advise the commission of any change to the list not later than the
  10th day following the date of the change.
         (f)  Before denying an application for a determination of
  suitability, the Texas regulatory commission shall notify the TCA
  and afford the Tribe an opportunity to be heard.  The courts of the
  State and the Tribe shall have no jurisdiction to review decisions
  to deny, limit, or condition a license, registration, suitability,
  qualification, or request for approval unless the denial,
  limitation, or condition is proven by clear and convincing evidence
  to be based on a suspect classification such as race, color,
  religion, sex, or national origin, protected under the Equal
  Protection Clause of the United States Constitution. Under these
  circumstances, any requirement for tribal court exhaustion is
  hereby waived by the Tribe.
         Sec. 8.9.7.  State Assessment for Costs of Oversight.  (a)  
  The State shall make annually an assessment sufficient to
  compensate the State for actual costs of oversight of the operation
  of video lottery terminals pursuant to this gaming agreement.
         (b)  Annually, on or before August 1 beginning with the first
  such date following the implementation of video lottery operations
  under this gaming agreement, the State shall render to the TCA a
  statement of the total cost of oversight and any law enforcement for
  the preceding fiscal year ending July 31 together with proposed
  assessments for the forthcoming fiscal year based on the preceding
  fiscal year cost. In the first year of the effective date of this
  gaming agreement, however, the assessment must be prospective and
  based on a pro rata allocation of costs if this gaming agreement
  becomes operative in the course of a fiscal year and must be
  established following consultation with the TCA. On September 1,
  annually, the State, after receiving any objections to the proposed
  assessments and making such changes or adjustments as may be
  indicated, shall provide a written notice that assesses the Tribe
  for the costs of the oversight and any necessary law enforcement.
  Annually, the Tribe shall pay one-third of the assessment within 20
  days of the receipt of the written notice and shall pay the
  remaining two-thirds of the assessment in two equal payments on
  January 1 and April 1. The payments must be deposited with the
  Texas regulatory commission in a video lottery account established
  solely for funds related to video lottery terminals operated by the
  Tribe.
         (c)  In the event that the total assessment paid by the Tribe
  during any fiscal year of the State exceeds the actual costs of the
  oversight and any necessary law enforcement during that fiscal
  year, the State shall adjust the assessment for the succeeding
  fiscal year in the amount necessary to offset such excess
  assessment. If the Tribe is aggrieved because of any failure by the
  State to make such an adjustment, any claim for such an adjustment
  must be presented in the appeal of the assessment as provided in
  Section 8.9.8.
         Sec. 8.9.8.  Procedure for Appeal of Assessments or Payments
  Made to the State.  If the Tribe is aggrieved because of any
  assessment levied or payment made to the State as required by this
  gaming agreement, the Tribe, not later than the 30th day following
  the date provided for the payment, may appeal an assessment or
  payment to the Texas regulatory commission.  If the Tribe is
  aggrieved by the commission's decision, it may invoke the dispute
  resolution provisions of this agreement provided that the Tribe
  must prove by clear and convincing evidence that any collection or
  assessment of payment to the State was inappropriate.
         Sec. 8.9.9.  Collection and Distribution of Revenue.  (a)  
  The Tribe shall establish separate electronic funds transfer
  accounts for the purposes of depositing money from video lottery
  terminal operations, making payments to the Texas regulatory
  commission, and receiving payments from the commission.
         (b)  The State's share of net terminal income of the Tribe's
  video lottery terminal operations shall be transferred to the Texas
  regulatory commission through the electronic transfer of funds
  daily by the commission.  The commission shall establish the
  procedures for depositing money from video lottery terminal
  operations into electronic funds transfer accounts and the
  procedures for the handling of money from video lottery terminal
  operations.  The State's share of net terminal income from video
  lottery terminal operations shall be held in trust for the State.
         (c)  Unless directed otherwise by the Texas regulatory
  commission, the Tribe shall maintain in its account the State's
  share of the net terminal income from the operation of video lottery
  terminals, to be electronically transferred by the commission.  On
  the Tribe's failure to maintain this balance, the commission may
  disable all of the Tribe'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, Texas Tax Code.  The interest shall begin to accrue
  on the date payment is due to the commission.  In the commission's
  sole discretion, rather than disable the Tribe's video lottery
  terminals, the commission may elect to impose contract penalties in
  an amount to be determined by the commission not to exceed $250,000
  for each violation.  If the Tribe fails to remedy the violation,
  including payment of any amounts due to the State, within 10 days,
  the commission may disable the Tribe's video lottery terminals or
  use any other means for collection agreed to by the Tribe instead of
  disabling the Tribe's video lottery terminals.
         (d)  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 Texas
  regulatory commission may not make any credit adjustments.  Any
  accounting discrepancies which cannot be resolved shall be resolved
  in favor of the commission.
         (e)  Tribes shall remit payment as directed by the Texas
  regulatory commission if the electronic transfer of funds is not
  operational or the commission notifies the Tribe that remittance by
  this method is required. The Tribe shall report the State's share
  of net terminal income, and remit the amount as generated from its
  terminals during the reporting period.
         (f)  The Tribe agrees to furnish to the Texas regulatory
  commission all information and bank authorizations required to
  facilitate the timely transfer of money to the commission. The
  Tribe agrees to provide the commission 30 days' advance notice of
  any proposed account changes in order to assure the uninterrupted
  electronic transfer of funds. However, in no event shall the
  commission be responsible for any interruption or delays in
  transferring of funds. Rather, the Tribe shall be responsible for
  any interruption or delay in transferring of funds.
         SECTION 9.0.  RULES AND REGULATIONS; MINIMUM REQUIREMENTS
  FOR OPERATIONS.
         Sec. 9.1.  Regulations.  The Tribe shall promulgate any
  rules and regulations necessary to implement this gaming agreement,
  which at a minimum shall expressly include or incorporate by
  reference all requirements of this gaming agreement. Nothing in
  this gaming agreement shall be construed to affect the Tribe's
  right to amend its rules and regulations, provided that any such
  amendment shall be in conformity with this gaming agreement. The
  Texas regulatory commission may propose additional rules and
  regulations related to implementation of this gaming agreement to
  the TCA at any time, and the TCA shall give good faith consideration
  to such suggestions and shall notify the commission of its response
  or action with respect thereto.
         Sec. 9.2.  Compliance; Internal Control Standards.  All
  video lottery operations shall comply with, and all video lottery
  games approved under the procedures set forth in this gaming
  agreement shall be operated in accordance with the requirements set
  forth in this gaming agreement and applicable state law. The
  parties agree that for purposes of this agreement, the standards
  set forth in 25 C.F.R. Part 542 shall govern minimum requirements
  for tribal internal control standards. Accordingly, the Tribe
  agrees that all tribal video lottery operations shall comply with
  tribal internal control standards that provide a level of control
  equal to or exceeding that provided by the standards set forth in 25
  C.F.R. Part 542.
         Sec. 9.3.  Records.  (a)  In addition to other records
  required to be maintained herein, the Tribe shall maintain in
  permanent written or electronic form the following records related
  to implementation of this gaming agreement:
               (1)  a log recording all surveillance activities of the
  video lottery terminal establishment, including surveillance
  records kept in the normal course of operations and in accordance
  with industry standards; provided, notwithstanding anything to the
  contrary herein, surveillance records may, at the discretion of the
  Tribe, be destroyed if no incident has been reported within one year
  following the date the records were made;
               (2)  payout from the conduct of all video lottery
  games;
               (3)  maintenance logs for all video lottery gaming
  equipment used by the video lottery terminal establishment;
               (4)  security logs as kept in the normal course of
  conducting and maintaining security at the video lottery terminal
  establishment, which at a minimum must conform to industry
  practices for such reports;
               (5)  books and records on video lottery terminals, as
  described more particularly in Section 9.4, which shall be
  maintained in accordance with generally accepted accounting
  principles (GAAP) and the standards set forth in Section 9.4; and
               (6)  all documents generated in accordance with this
  gaming agreement.
         (b)  The Tribe shall make the records maintained under
  Subsection (a) of this section available for inspection by the
  Texas regulatory commission for not less than four years from the
  date the records are generated.
         (c)  The security logs required under Subsection (a) of this
  section must document any unusual or nonstandard activities,
  occurrences, or events at or related to the video lottery terminal
  establishment or in connection with the video lottery terminal
  operations. Each incident, without regard to materiality, shall be
  assigned a sequential number for each such report. At a minimum,
  the security logs shall consist of the following information, which
  shall be recorded in a reasonable fashion noting:
               (1)  the assigned number of the incident;
               (2)  the date of the incident;
               (3)  the time of the incident;
               (4)  the location of the incident;
               (5)  the nature of the incident;
               (6)  the identity, including identification
  information, of any persons involved in the incident and any known
  witnesses to the incident; and
               (7)  the Tribal compliance officer making the report
  and any other persons contributing to its preparation.
         Sec. 9.4.  ACCOUNTING.
         Sec. 9.4.1.  Accounting Records Required.  The Tribe agrees
  with regard to any video lottery terminal operations, to keep
  accurate, complete, legible, and permanent records of all
  transactions pertaining to revenue for six years. If the Tribe
  keeps permanent records in a computerized or microfiche fashion, it
  shall provide the Texas regulatory commission, on request, with a
  detailed index to the microfiche or computer records that is
  indexed by date.
         Sec. 9.4.2.  Accounting Systems.  The Tribe agrees with
  regard to all video lottery terminal operations, to keep general
  accounting records on a double entry system of accounting,
  maintaining detailed, supporting, and subsidiary records,
  including:
         (a)  detailed records that identify the revenues, expenses,
  assets, liabilities, and equity of the video lottery terminal
  establishment and operations;
         (b)  records required by the Tribe's Minimum Internal
  Control System;
         (c)  journal entries prepared by the Tribe and its
  independent accountant; and
         (d)  any other records that the TCA may require.
         Sec. 9.4.3.  Net Terminal Income and Expenses.  The Tribe
  agrees with regard to all video lottery terminal operations, to
  create and maintain records sufficiently accurate to reflect the
  net terminal income and expenses of the video lottery terminal
  establishment and operation of video lottery terminals.
         Sec. 9.4.4.  Financial Statements.  (a)  The Tribe agrees to
  prepare financial statements covering all financial activities of
  the video lottery terminal establishment and operation of video
  lottery terminals for a business year. The statements required by
  this subsection must be presented on a comparative basis.
         (b)  If the Tribe changes its business year, it must prepare
  and submit audited or reviewed financial statements to the Texas
  regulatory commission covering the "stub" period from the end of
  the previous business year to the beginning of the new business year
  not later than 120 days after the end of the stub period or
  incorporate the financial results of the stub period in the
  statements for the new business year.
         Sec. 9.5.  Audits.  The parties agree that for purposes of
  this agreement, the standards set forth in 25 C.F.R. Section 571.12
  govern audits required under this agreement. The TCA shall ensure
  that an annual independent financial audit of the Tribe's conduct
  of video lottery games subject to this gaming agreement and of the
  video lottery terminal establishment is secured. The audit shall,
  at a minimum, examine revenues and expenses in connection with the
  operation of video lottery terminals in accordance with generally
  accepted auditing standards and shall include those matters
  necessary to verify the determination of net terminal income and
  the basis of the payments made to the State pursuant to this gaming
  agreement.
         (a)  The auditor selected by the TCA shall be a firm of known
  and demonstrable experience, expertise, and stature in conducting
  audits of this kind and scope and shall be approved by the Texas
  regulatory commission.
         (b)  The audit shall be concluded within five months
  following the close of each calendar year, provided that extensions
  may be requested by the Tribe and may not be refused by the State if
  the circumstances justifying the extension request are beyond the
  Tribe's control. An extension, however, may not extend the
  conclusion of an audit required by this gaming agreement to more
  than 12 months following the close of the relevant calendar year.
         (c)  The audit of the operation of video lottery terminals
  may be conducted as part of or in conjunction with the audit of the
  video lottery terminal establishment, but if so conducted shall be
  separately stated for the reporting purposes required herein.
         (d)  The audit shall conform to generally accepted auditing
  standards. As part of the audit report, the auditor shall certify
  to the TCA that, in the course of the audit, the auditor did not
  discover any matters within the scope of the audit which were
  determined or believed to be in violation of any provision of this
  gaming agreement. If the auditor discovers matters determined or
  believed to be in violation of any provision of this gaming
  agreement, the auditor shall immediately notify the Texas
  regulatory commission of the alleged violation and the basis for
  the auditor's conclusion.
         (e)  The Tribe shall assume all costs in connection with the
  audit.
         (f)  The audit report for the conduct of video lottery games
  shall be submitted to the Texas regulatory commission within 30
  days of completion. The auditor's work papers concerning video
  lottery games shall be made available to the commission on request.
         (g)  Representatives of the Texas regulatory commission may,
  on request, meet with the auditors to discuss the work papers, the
  audit, or any matters in connection therewith; provided such
  discussions are limited to video lottery information and pursue
  legitimate state video lottery interests.
         Sec. 9.6. Security.  (a)  All video lottery terminals shall
  be continuously monitored through the use of a closed circuit
  television system that records all activity for a continuous
  24-hour period. All videotapes or other media used to store video
  images shall be retained for a period of at least 30 days.
         (b)  Access to video lottery terminal locations shall be
  restricted to persons legally entitled by age under State law to
  play video lottery games.
         (c)  The Tribe must submit for approval by the Texas
  regulatory commission a security plan and a floor plan of the area
  or areas where video lottery terminals are to be operated showing
  video lottery terminal locations and security camera mount
  locations. This commission approved security plan shall be subject
  to review by the commission which may require revision of the plan
  on a biennial basis.
         (d)  Security personnel shall be present during all hours of
  operation at each video lottery terminal establishment. The Tribe
  shall employ at least the number of security personnel the Texas
  regulatory commission 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.
         (e)  The communication technology used in connection with
  video lottery operations must meet accepted industry standards for
  security sufficient to minimize the possibility of any third party
  intercepting any data transmitted to or from the video lottery
  terminals.
         Sec. 9.7.  Exclusion of Persons.  The Tribe's rules and
  regulations shall require at a minimum the exclusion of persons
  based on their prior conduct at the video lottery terminal
  establishment or who, because of their criminal history or
  association with criminal offenders, pose a threat to the integrity
  of the conduct of video lottery games or may be playing video
  lottery games compulsively.
         (a)  The TCA shall establish a list of the persons to be
  excluded from any video lottery terminal establishment under this
  provision.
         (b)  The Tribe shall employ its best efforts to exclude
  persons on such list from entry into its video lottery terminal
  establishment.
         (c)  Patrons who believe they may be playing video lottery
  games on a compulsive basis may request that their names be placed
  on the list. All gaming employees shall receive training on
  identifying players who have a problem with compulsive playing and
  shall be instructed to ask them to leave. Signs and other materials
  shall be readily available to direct such compulsive players to
  agencies where they may receive counseling. Notwithstanding any
  other provision of this agreement, the TCA's list of self-excluded
  persons shall not be open to public inspection.
         (d)  The Tribe or video lottery manager also may exclude any
  other person for any reason not related to that person's race, sex,
  national origin, physical disability, or religion.
         Sec. 9.8.  Sale of Alcoholic Beverages. The sale and service
  of alcoholic beverages in a video lottery terminal establishment
  shall be in compliance with state, federal, and tribal law in regard
  to the licensing and sale of such beverages.
         Sec. 9.9.  Age Restrictions.  (a)  No person under the age of
  21 may be allowed to play video lottery games or be allowed to
  operate, or obtain a prize from or in connection with the operation
  of, any video lottery game, directly or indirectly. If during the
  term of this agreement, the State amends its law to allow play of
  video lottery terminals by persons under the age of 21, the Tribe
  may amend tribal law to reduce the lawful gaming age under this
  agreement to correspond to the lawful gaming age under state law.
         (b)  No person under the age of 21 may be employed as a gaming
  employee unless the employment would be allowed under state law.
         (c)  No person under the age of 21 may be employed in the
  service of alcoholic beverages at any video lottery terminal
  establishment, unless such employment would be allowed under state
  law.
         Sec. 9.10.  Destruction of Records.  Books, records, and
  other materials documenting the operation of video lottery
  terminals may be destroyed only in accordance with rules and
  regulations adopted by the TCA, which at a minimum shall provide as
  follows:
         (a)  material that might be utilized in connection with a
  prize claim, including incident reports, surveillance records,
  statements, and the like, shall be maintained at least 180 days
  beyond the time which a claim can be made under this gaming
  agreement or, if a prize claim is made, beyond the final disposition
  of such claim; and
         (b)  except as otherwise provided in Section 9.3(a)(1), all
  books and records with respect to the operation of video lottery
  terminals or the operation of the video lottery terminal
  establishment, including all interim and final financial and audit
  reports and materials related thereto which have been generated in
  the ordinary course of business, shall be maintained for the
  minimum period of four years.
         Sec. 9.11.  Location.  The Tribe may establish facilities
  for and operate video lottery terminals only on its Indian lands.
  The Tribe shall notify the Texas regulatory commission of any
  potential new video lottery terminal establishment following the
  effective date of this gaming agreement. Nothing herein shall be
  construed as expanding or otherwise altering the term "Indian
  lands," as that term is defined by Chapter 466, Texas Government
  Code.
         Sec. 9.12.  Placement and Movement of Video Lottery
  Terminals.  Placement and movement of video lottery terminals
  within a video lottery terminal establishment must be consistent
  with a video lottery terminal floor plan approved by the Texas
  regulatory commission.
         Sec. 9.13.  Monitoring of Operation of Video Lottery
  Terminals.  All terminals connected to the video lottery system
  will be continuously monitored by the Texas regulatory commission
  and disabled, when, in the commission's discretion, a problem
  arises threatening the public health, safety or welfare, or
  financial loss to the State, or jeopardizing the integrity of the
  video lottery.  Circumstances justifying termination include
  malfunction of a video lottery terminal or any game displayed on a
  video lottery terminal, misuse of any video lottery terminal or
  video lottery game, or a material breach by the Tribe in the
  operating requirements or a material provision of this agreement.
         Sec. 9.14.  Wager Limitations.  The TCA shall set the maximum
  wager authorized for any single play of a video lottery terminal
  consistent with any maximum wager set by rule of the Texas
  regulatory commission. During the term of this agreement, the
  wager limitation set forth in this section shall be automatically
  increased without the need to amend this agreement on each two-year
  anniversary of the effective date to an amount equal to the wager
  limitation multiplied by the CPI adjustment rate, rounded up to the
  next whole dollar.
         Sec. 9.15.  Prizes. (a)  Payment of prizes shall be the sole
  and exclusive responsibility of the Tribe or video lottery manager.
  No prizes shall be paid by the Texas regulatory commission or the
  State except as otherwise authorized. Video lottery tickets shall
  be redeemable only for a period of 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 shall be treated as net terminal income.
  The Tribe agrees to enact rules consistent with this provision and
  authorized by the commission, governing use and redemption of
  prizes and credits recorded on electronic player account records,
  such as players' club cards and smart cards.
         (b)  Nothing herein shall limit the ability of the Tribe or
  video lottery manager to provide promotional prizes, including wide
  area progressive networks, in addition to prize payouts regulated
  by the commission.
         Sec. 9.16.  Patron Disputes.  (a)  The State and the Texas
  regulatory commission shall not be liable for any video lottery
  terminal malfunction or error by the Tribe or video lottery manager
  that causes credit to be wrongfully awarded or denied to players.
  Any disputes arising between players and the Tribe or video lottery
  manager shall be resolved:
               (1)  if the fair market value of the prize is less than
  $1,000, in accordance with commission approved written policies of
  the TCA with no relief available from the commission or the State;
  or
               (2)  if the fair market value of the prize is $1,000 or
  more, by the commission in its sole discretion pursuant to rules
  established by the commission.
         (b)  No court of this state or of the Tribe shall have
  jurisdiction to review the decision of the commission resolving a
  dispute between players and the Tribe or a video lottery manager.
         Sec. 9.17.  Transfer of Gaming Device Operating Rights.
  During the term of this agreement, the Tribe may enter into a
  transfer agreement with one or more federally recognized Indian
  tribes with Indian lands in this state to acquire or transfer video
  lottery terminal operating rights on Indian lands. The Tribe's
  acquisition or transfer of video lottery terminal operating rights
  is subject to the following conditions:
         (a)  Gaming Agreement. Each Indian tribe that is a party to a
  transfer agreement must have a valid and effective gaming agreement
  with the State that contains a provision substantially similar to
  the provision herein permitting transfers of the Indian tribe's
  video lottery terminal operating rights.
         (b)  Forbearance Agreement. If the Tribe enters into a
  transfer agreement to transfer some or all of its video lottery
  terminal operating rights, the Tribe also shall execute a
  forbearance agreement with the State. The forbearance agreement
  shall include a waiver of all rights of the Tribe to put into play or
  operate the number of video lottery terminal operating rights
  transferred during the term of the transfer agreement.
         (c)  The Tribe must be operating video lottery terminals at
  least equal to its current video lottery terminal allocation
  before, or simultaneously with, the Tribe acquiring the right to
  operate additional video lottery terminals by a transfer agreement.
  The Tribe is not required to utilize any video lottery terminal
  operating rights it acquires, or to utilize them before acquiring
  additional video lottery terminal operating rights.
         (d)  The Tribe shall not at any time simultaneously acquire
  video lottery terminal operating rights and transfer video lottery
  terminal operating rights pursuant to transfer agreements.
         Sec. 9.17.1.  Transfer Agreements. The transfer of video
  lottery terminal operating rights may be made pursuant to a
  transfer agreement between two Indian tribes. A transfer agreement
  must include the following provisions:
         (a)  the number of video lottery terminal operating rights
  transferred and acquired;
         (b)  the duration of the transfer agreement;
         (c)  the consideration to be paid by the Indian tribe
  acquiring the video lottery terminal operating rights to the Indian
  tribe transferring the video lottery terminal operating rights and
  the method of payment;
         (d)  the dispute resolution and enforcement procedures,
  including a provision for the State to receive notice of any such
  proceedings; and
         (e)  a procedure to provide quarterly notice to the Texas
  regulatory commission of payments made and received, and to provide
  timely notice to the commission of disputes, revocation, amendment,
  and termination.
         Sec. 9.17.2.  Transfer Notice. At least 30 days before the
  execution of a transfer agreement the Tribe shall send to the Texas
  regulatory commission a transfer notice of intent to acquire or
  transfer video lottery terminal operating rights. The transfer
  notice shall include a copy of the proposed transfer agreement, the
  proposed forbearance agreement, and a copy of the tribal resolution
  authorizing the acquisition or transfer.
         Sec. 9.17.3.  Texas Regulatory Commission Denial of
  Transfer. (a)  The Texas regulatory commission may deny a transfer
  as set forth in a transfer notice only if:
               (1)  the proposed transfer violates the conditions set
  forth in this agreement; or
               (2)  the proposed transfer agreement does not contain
  the minimum requirements listed in this agreement.
         (b)  The commission's denial of a proposed transfer must be
  in writing, must include the specific reasons for the denial
  (including copies of all documentation relied upon by the
  commission to the extent allowed by state law), and must be received
  by the Tribe within 60 days of the commission's receipt of the
  transfer notice. If the Tribe disputes the commission's denial of a
  proposed transfer, the Tribe shall have the right to have the
  dispute resolved pursuant to the dispute resolution process
  provided in Section 15.0 herein.
         Sec. 9.17.4.  Effective Date of Transfer.  If the Tribe does
  not receive a notice of denial of the transfer from the Texas
  regulatory commission within the period specified in Section
  9.17.3, the proposed transfer agreement shall become effective on
  the later of the 61st day following the commission's receipt of the
  transfer notice or the date set forth in the transfer agreement.
         Sec. 9.17.5.  Use of Brokers.  The Tribe shall not contract
  with any person to act as a broker in connection with a transfer
  agreement. No person shall be paid a percentage fee or a commission
  as a result of a transfer agreement, nor shall any person receive a
  share of any financial interest in the transfer agreement or the
  proceeds generated by the transfer agreement. Any person acting as
  a broker in connection with a transfer agreement is providing
  gaming services.
         Sec. 9.17.6.  Revenue from Transfer Agreements.  The Tribe
  agrees that all proceeds received by the Tribe as a transferor under
  a transfer agreement shall be used for the governmental purposes
  permitted under this agreement for revenue generated by video
  lottery terminal operations. The Tribe shall include the proceeds
  in an annual audit and shall make available to the State that
  portion of the audit addressing proceeds from transfer agreements.
         Sec. 9.17.7.  Agreed Upon Procedures Report.  The Tribe
  agrees to provide to the Texas regulatory commission, either
  separately or with the other party to the transfer agreement, an
  agreed upon procedures report from an independent certified public
  accountant. The procedures to be examined and reported upon are
  whether payments made under the transfer agreement were made in the
  proper amount, made at the proper time, and deposited in an account
  of the Indian tribe transferring the video lottery terminal
  operating rights.
         Sec. 9.17.8.  State Payment.  Proceeds received by the Tribe
  as a transferor under a transfer agreement from the transfer of
  video lottery terminal operating rights are not subject to any
  payment to the State under this agreement or otherwise.
         Sec. 9.17.9.  Access to Records Regarding Transfer
  Agreements.  The Texas regulatory commission shall have access to
  all records of the Tribe directly relating to transfer agreements
  and forbearance agreements.
         Sec. 9.18.  Supervision of Patrons.  The Tribe agrees to
  ensure that gaming employees, at all times, monitor video lottery
  terminals to prevent access to or play by persons who are under the
  age of 21 years or who are visibly intoxicated.
         Sec. 9.19.  Hours of Operation.  The Tribe may establish by
  ordinance or regulation the permissible hours and days of operation
  of video lottery terminal operations; provided, however, that with
  respect to the sale of liquor, the Tribe agrees to adopt and comply
  with standards at least as restrictive as any applicable state
  liquor laws at all video lottery terminal establishments.
         Sec. 9.20.  Automatic Teller Machines.  The Tribe agrees to
  adopt and comply with a Tribal ordinance establishing responsible
  restrictions on the provision of financial services at video
  lottery terminal establishments. At a minimum, the ordinance shall
  prohibit:
         (a)  locating an automatic teller machine ("ATM") adjacent
  to, or in proximity to, any video lottery terminal, however, an ATM
  may be installed in a video lottery terminal establishment,
  provided that the Tribe adopts and complies with an ordinance
  establishing standards no less restrictive than any state and
  federal law governing installation of ATMs within a gaming
  facility;
         (b)  locating in a video lottery terminal establishment an
  ATM that accepts electronic benefit transfer cards issued pursuant
  to a state or federal program that is intended to provide for needy
  families or individuals; and
         (c)  accepting checks or other noncash items issued pursuant
  to a state or federal program that is intended to provide for needy
  families or individuals.
         Sec. 9.21.  Advertising.  Advertisements or promotions must
  comply with guidelines established by the TCA that are consistent
  with criteria established by the Texas regulatory commission.
         Sec. 9.22.  Remedies and Penalties for Unlawful Gaming.  
  Operation or possession of any gaming devices not expressly
  authorized under this gaming agreement or Texas law (excluding any
  Class II gaming authorized under applicable federal law) shall be
  considered a material breach of the gaming agreement and justify
  termination of the agreement. Under those circumstances, the State
  may bring an action in state court and shall be entitled to an
  injunction prohibiting the continued operation of any unlawful
  gaming activity upon a showing by a preponderance of evidence that
  the breach has occurred. In any such proceeding, it is the finding
  of the legislature that irreparable injury and inadequate remedy at
  law shall be presumed once the State has demonstrated the violation
  has occurred. If the State does not seek an injunction for such a
  material breach of the gaming agreement, the Tribe agrees to pay a
  contract penalty of $10,000 per day for every day the violation or
  breach continues. If the breach or violation is not cured within 30
  days, the State shall bring an action to enjoin the unlawful conduct
  and may disable all video lottery terminals operated by the Tribe or
  operated by a video lottery manager on the Indian lands of the
  Tribe.
         SECTION 10.0.  ENFORCEMENT OF GAMING AGREEMENT PROVISIONS.
         Sec. 10.1.  The Tribe and TCA shall be responsible for
  regulating activities pursuant to this gaming agreement. As part
  of its responsibilities, the Tribe shall:
         (a)  take reasonable measures to assure the physical safety
  of video lottery terminal establishment patrons and personnel,
  prevent illegal activity at the video lottery terminal
  establishment, and protect any rights of patrons under the Indian
  Civil Rights Act of 1968 (25 U.S.C. Sections 1301-1303);
         (b)  promptly notify appropriate law enforcement authorities
  of persons who may be involved in illegal acts in accordance with
  applicable tribal, federal, and state law;
         (c)  assure that the construction and maintenance of the
  video lottery terminal establishment meets or exceeds federal and
  Tribal standards for comparable buildings and minimum standards
  under this gaming agreement; and
         (d)  prepare adequate emergency access and preparedness
  plans to ensure the health and safety of all video lottery terminal
  establishment patrons. On finalization of the emergency access and
  preparedness plans, the TCA or the Tribe shall forward copies of the
  plans to the Texas regulatory commission.
         Sec. 10.2.  Members and employees of the TCA shall be
  licensed in accordance with the provisions of this agreement. All
  licenses for members and employees of the TCA shall be issued
  according to the same standards and terms applicable to video
  lottery terminal establishment employees. The TCA shall employ
  qualified compliance officers under the authority of the TCA. The
  compliance officers shall be independent of the video lottery
  terminal establishment, and shall be supervised by and accountable
  only to the TCA. A TCA compliance officer shall be available to the
  video lottery terminal establishment during all hours of operation
  on reasonable notice, and shall have immediate access to any and all
  areas of the video lottery terminal establishment for the purpose
  of ensuring compliance with the provisions of this gaming
  agreement. The TCA shall investigate any suspected or reported
  violation of this gaming agreement and shall require the correction
  of the violation. The TCA shall prepare and retain in its files a
  timely written report of each investigation and any action taken in
  response to the investigation, and shall forward copies of the
  report to the Texas regulatory commission within 15 days of the date
  of the filing. Any such violations shall be reported immediately to
  the TCA, and the TCA shall immediately forward the same to the
  commission. In addition, the TCA shall promptly report to the
  commission any such violations that it independently discovers.
         Sec. 10.3.  In order to develop and foster a positive and
  effective relationship in the enforcement of the provisions of this
  gaming agreement, representatives of the TCA and the Texas
  regulatory commission shall meet at least annually to review past
  practices and examine methods to improve the regulatory scheme
  created by this gaming agreement. The meetings shall take place at
  a location mutually agreed to by the TCA and the commission. The
  commission, before or during such meetings, shall disclose to the
  TCA any concerns, suspected activities, or pending matters
  reasonably believed to possibly constitute violations of this
  gaming agreement by any person, organization, or entity, if such
  disclosure will not compromise the interest sought to be protected.
         Sec. 10.4.  Financial Obligations of the Texas Regulatory
  Commission.  Any financial obligation of the Texas regulatory
  commission or of the State, under this gaming agreement or arising
  from the operation of the video lottery on the Tribe's Indian lands,
  shall be payable solely out of the income, revenues, and receipts of
  the commission resulting from the operation of video lottery
  terminals on Indian lands of the Tribe.
         Sec. 10.5.  Penalties and Remedies for Noncompliance.  (a)  
  Failure to timely remit revenue generated by video lottery
  terminals to the Texas regulatory commission or any sales tax or
  other fee owed to the State or to timely file any report or
  information required under this gaming agreement or by applicable
  federal or state law shall constitute a material breach of this
  gaming agreement. After receiving at least 24 hours written notice
  from the commission and an additional 48 hours for the opportunity
  to remedy the breach or otherwise correct the violation, the Tribe
  shall be subject to contract penalties in the amount of $10,000 per
  day for the breach. If the breach is not cured within 30 days, the
  commission shall disable all video lottery terminals operated by
  the Tribe.
         (b)  If the Tribe is in material breach of this agreement and
  the Texas regulatory commission exercises its right to disable all
  video lottery terminals operated by the Tribe, the commission shall
  have the right to enter the premises of any video lottery terminal
  establishment on the Tribe's Indian lands and remove any video
  lottery games or other video lottery equipment owned by the State.
         Sec. 10.6.  No Liability of the State Related to
  Enforcement. The State and the Texas regulatory commission are not
  liable for any enforcement of the provisions of this gaming
  agreement.
         SECTION 11.0.  STATE MONITORING OF GAMING AGREEMENT.
         Sec. 11.1.  (a)  The Texas regulatory commission shall,
  pursuant to the provisions of this gaming agreement, have the
  authority to monitor the conduct of video lottery games to ensure
  video lottery games are conducted in compliance with the provisions
  of this gaming agreement. In order to properly monitor the conduct
  of video lottery games, in addition to the State's operation and
  control of the central system and video lottery system, agents of
  the commission shall have reasonable access to all areas of the
  video lottery terminal establishment related to the conduct of
  video lottery games as provided herein:
               (1)  the commission shall have access to the video
  lottery terminal establishment only during the video lottery
  terminal establishment's normal operating hours; provided that to
  the extent such inspections are limited to areas of the video
  lottery terminal establishment where the public is normally
  allowed, commission agents may inspect the video lottery terminal
  establishment without giving prior notice to the Tribe;
               (2)  any suspected or claimed violations of this gaming
  agreement or of law shall be directed in writing to the TCA;
  commission agents may not interfere with the functioning of the
  video lottery terminal establishment unless the public safety,
  welfare, or financial loss to the State, or integrity of the state
  lottery so requires; and
               (3)  before entering any nonpublic area of the video
  lottery terminal establishment, commission agents must provide
  proper photographic identification to the TCA.
         (b)  A TCA agent shall accompany a commission agent in
  nonpublic areas of the video lottery terminal establishment. A
  one-hour notice by the commission to the TCA may be required to
  assure that a TCA officer is available to accompany commission
  agents at all times.
         Sec. 11.2.  Subject to the provisions herein, agents of the
  Texas regulatory commission shall have the right to review and copy
  documents or other records related to the operation of video
  lottery terminals. The review and copying of those records shall be
  during normal business hours or hours otherwise at the Tribe's
  discretion. However, the commission may not copy those portions of
  any records related to the Tribe's operation of video lottery
  terminals that contain business or marketing strategies or other
  proprietary and confidential information, including customer
  lists, business plans, marketing studies, and customer
  demographics or profiles. No records of the Tribe related to its
  conduct of video lottery games or copies thereof shall be released
  to the public by the State. All such records shall be deemed
  confidential records owned by the Tribe and are not subject to
  public disclosure by the State.
         Sec. 11.3.  At the completion of any commission inspection
  or investigation, the Texas regulatory commission shall forward a
  written report thereof to the TCA. The TCA shall be apprised on a
  timely basis of all pertinent, nonconfidential information
  regarding any violation of federal, or state laws, rules or
  regulations, or this gaming agreement. Nothing herein prevents the
  commission from contacting Tribal or federal law enforcement
  authorities concerning suspected criminal wrongdoing involving the
  TCA. The TCA may interview commission agents and inspectors upon
  reasonable notice and examine work papers in the same fashion that
  commission agents and inspectors may examine auditors' notes and
  make auditor inquiry unless providing such information to the TCA
  will compromise the interests sought to be protected.
         Sec. 11.4.  Nothing in this gaming agreement shall be deemed
  to authorize the State to regulate the Tribe's government,
  including the TCA, or to interfere in any way with the Tribe's
  selection of its governmental officers, including members of the
  TCA. The Texas regulatory commission and the Tribe, however, on
  request of the Tribe, shall jointly employ, at the Tribe's expense,
  an independent firm to perform on behalf of the commission the
  duties set forth in Sections 11.2 and 11.3.
         SECTION 12.0.  JURISDICTION.
         Sec. 12.1.  Except as expressly provided herein, this gaming
  agreement shall not alter tribal, federal, or state civil
  adjudicatory or criminal jurisdiction.
         Sec. 12.2.  The Tribe expressly consents to the State's
  jurisdiction to enforce the terms of this gaming agreement
  including any request for judicial injunctive relief to prohibit
  unlawful gaming activities.
         SECTION 13.0.  PUBLIC AND WORKPLACE HEALTH, SAFETY, AND
  LIABILITY.
         Sec. 13.1.  The Tribe will not conduct any gaming activity in
  a manner that endangers the public health, safety, or welfare.
         Sec. 13.2.  For the purposes of this gaming agreement, the
  Tribe agrees to:
         (a)  adopt and comply with standards at least as stringent as
  state public health standards for food and beverage handling at any
  video lottery terminal establishment.  The Tribe will allow
  inspection of food and beverage services at any video lottery
  terminal establishment by state or county health inspectors, during
  normal hours of operation, to assess compliance with these
  standards, unless inspections are routinely made by an agency of
  the United States government to ensure compliance with equivalent
  standards of the United States Public Health Service.  Nothing
  herein shall be construed as submission of the Tribe to the
  jurisdiction of those state or county health inspectors, but any
  alleged violations of the standards shall be treated as alleged
  violations of the gaming agreement;
         (b)  adopt and comply with standards at least as stringent as
  federal water quality and safe drinking water standards applicable
  in Texas at any video lottery terminal establishment.  The Tribe
  will allow for inspection and testing of water quality at any video
  lottery terminal establishment by state or county health
  inspectors, as applicable, during normal hours of operation, to
  assess compliance with these standards, unless inspections and
  testing are made by an agency of the United States pursuant to, or
  by the Tribe under express authorization of, federal law, to ensure
  compliance with federal water quality and safe drinking water
  standards.  Nothing herein shall be construed as submission of the
  Tribe to the jurisdiction of those state or county health
  inspectors, but any alleged violations of the standards shall be
  treated as alleged violations of this gaming agreement;
         (c)  comply with the building and safety standards set forth
  in Section 8.4 of this agreement;
         (d)  carry not less than $1 million in public liability
  insurance for patron claims. The Tribe herein provides reasonable
  assurance that such claims will be promptly and fairly adjudicated,
  and that legitimate claims will be paid; provided that nothing
  herein requires the Tribe to agree to liability for punitive
  damages or attorneys' fees. On or before the effective date of this
  gaming agreement or not less than 30 days before the commencement of
  operation of video lottery terminals under this gaming agreement,
  whichever is later, the Tribe shall adopt and make available to
  patrons a tort liability ordinance setting forth the terms and
  conditions, if any, under which the Tribe waives immunity to suit
  for money damages resulting from intentional or negligent injuries
  to person or property at the video lottery terminal establishment
  or in connection with the Tribe's operation of video lottery
  terminals. The tort liability ordinance shall include procedures
  for processing any claims for such money damages. Nothing in this
  section shall require the Tribe to waive its immunity to suit except
  to the extent of the policy limits set out in this subsection.  Any
  insurance policy provided in compliance with the terms of this
  subsection shall provide that the policy provider shall not raise
  the Tribe's sovereign immunity as a defense or otherwise to avoid
  payment of a claim under this subsection;
         (e)  adopt and comply with standards at least as stringent as
  federal workplace and occupational health and safety standards at
  any video lottery terminal establishment. The Tribe will allow for
  inspection of video lottery terminal establishment workplaces by
  state inspectors, during normal hours of operation, to assess
  compliance with these standards, unless inspections are regularly
  made by an agency of the United States government to ensure
  compliance with federal workplace and occupational health and
  safety standards.  Nothing herein shall be construed as submission
  of the Tribe to the jurisdiction of those state inspectors, but any
  alleged violations of the standards shall be treated as alleged
  violations of this gaming agreement;
         (f)  comply with tribal codes and any applicable federal law
  regarding public health and safety;
         (g)  adopt and comply with standards at least as stringent as
  federal laws and state laws forbidding employers generally from
  discriminating in the employment of persons to work for the Tribe in
  relation to its operation of video lottery terminals or in the video
  lottery terminal establishment on the basis of race, color,
  religion, national origin, gender, sexual orientation, age, or
  disability. However, nothing herein shall preclude the Tribe from
  giving a preference in employment to Indians, pursuant to a duly
  adopted tribal ordinance;
         (h)  adopt and comply with standards that are at least as
  stringent as state laws prohibiting a video lottery manager or any
  employee thereof from cashing any check drawn against a federal,
  state, county, or city fund, including social security,
  unemployment insurance, disability payments, or public assistance
  payments;
         (i)  adopt and comply with standards that are at least as
  stringent as state laws governing the extension of credit to, the
  cashing of checks for, and other financial transactions with
  patrons calculated to protect players from problem and pathological
  gambling; and
         (j)  adopt and comply with the provisions of the Bank Secrecy
  Act (31 U.S.C. Sections 5311-5314), as amended, and all reporting
  requirements of the Internal Revenue Service, insofar as such
  provisions and reporting requirements are applicable to gaming
  facilities.
         Sec. 13.2.1.  The Tribe agrees to adopt and, not later than
  30 days after the effective date of this gaming agreement, make
  available on request the standards described in Sections
  13.2(a)-(c) and (e)-(j) to which the Tribe is held with regard to
  operation of video lottery terminals. In the absence of a
  promulgated tribal standard in respect to a matter identified in
  those subsections, or the express adoption of an applicable federal
  statute or regulation instead of a tribal standard in respect to any
  such matter, an applicable state statute or regulation shall be
  deemed to have been adopted by the Tribe as the applicable standard.
         Sec. 13.3.  Participation in State Statutory Programs
  Related to Employment.  (a)  Instead of allowing the Tribe to
  participate in the state statutory workers' compensation system for
  employees of a video lottery terminal establishment or otherwise
  engaged in the operation of video lottery terminals, the Tribe may
  create and maintain a system that provides redress for employee
  work-related injuries through requiring insurance or
  self-insurance.  The system must include a scope of coverage,
  availability of an independent medical examination, right to
  notice, hearings before an independent tribunal, a means of
  enforcement against the employer, and benefits comparable to those
  mandated for comparable employees under state law.  Not later than
  the effective date of this gaming agreement, or 60 days before the
  commencement of video lottery terminal operations under this gaming
  agreement, the Tribe will advise the State of its election to
  participate in the statutory workers' compensation system or,
  alternatively, will forward to the State all relevant ordinances
  that have been adopted and all other documents establishing the
  system and demonstrating that the system is fully operational and
  compliant with the comparability standard set forth in this
  subsection.  The parties agree that independent contractors doing
  business with the Tribe must comply with all state workers'
  compensation laws and obligations.
         (b)  The Tribe agrees to participate in the State's program
  for providing unemployment compensation benefits and unemployment
  compensation disability benefits with respect to employees of the
  video lottery terminal establishment, and the Tribe consents to the
  jurisdiction of the state agencies charged with the enforcement of
  that code and of the courts of the State for purposes of
  enforcement.
         (c)  As a matter of comity, with respect to persons employed
  at the video lottery terminal establishment in capacities otherwise
  related to the operation of video lottery terminals, other than
  members of the Tribe, the Tribe shall withhold all taxes due to the
  State as provided by Texas law, and shall forward the amounts as
  provided by State law.
         Sec. 13.4.  Emergency Service Accessibility.  The Tribe
  shall make reasonable provisions for adequate emergency fire,
  medical, and related relief and disaster services for patrons and
  employees of the video lottery terminal establishment.
         Sec. 13.5.  The Tribe agrees to prohibit the intentional,
  knowing, or reckless possession of a firearm, illegal knife, club,
  explosive weapon, machine gun, firearm silencer, knuckles,
  armor-piercing ammunition, a chemical dispensing device, or a zip
  gun, as those terms are defined in Section 46.01, Texas Penal Code,
  at all times in the video lottery terminal establishment. The
  defenses that apply to the prohibition of possession of those
  weapons on the premises of a racetrack under Section 46.03, Texas
  Penal Code, shall also apply to the prohibition of possession of the
  weapons in video lottery terminal establishments. In addition,
  Tribal security or Tribal law enforcement personnel, shall be
  allowed to possess firearms and clubs at a video lottery terminal
  establishment as authorized by Tribal law.
         Sec. 13.6.  Tribal Law Enforcement Plan.  The Tribe agrees to
  implement a written tribal law enforcement services plan that
  provides a comprehensive and effective means to address criminal
  and undesirable activity at the video lottery terminal
  establishment. The plan shall provide that sufficient tribal law
  enforcement resources are available 24 hours a day, seven days a
  week to protect the public health, safety, and welfare at the video
  lottery terminal establishment. To accommodate investigations and
  intelligence sharing, the Tribe will provide that a police officer
  holding a current Texas police officer standards and training
  certification is employed by the Tribe and assigned to handle video
  lottery terminal related matters when they arise. Intelligence
  liaisons will be established at the tribal police department or TCA
  and also at the Texas regulatory commission. There will be federal,
  tribal, and state cooperation in task force investigations. The
  commission's intelligence unit will gather, coordinate,
  centralize, and disseminate accurate and current intelligence
  information pertaining to criminal and undesirable activity that
  may threaten patrons, employees, and assets of a video lottery
  terminal establishment or the video lottery system. The State and
  the Tribe will coordinate the use of resources, authority, and
  personnel of the State and the Tribe for the shared goal of
  preventing and prosecuting criminal or undesirable activity by
  players, employees, or businesses in connection with tribal video
  lottery terminal operations.
         Sec. 13.7.  Annual Statement of Compliance Regarding Use of
  Revenue.  The Tribe agrees to submit to the Texas regulatory
  commission an annual statement of compliance regarding the use of
  its share of revenue generated from video lottery terminal
  operations and a copy of a current tribal ordinance requiring that
  revenue generated from video lottery terminal operations be used
  exclusively for the establishment and improvement of governmental
  services and programs.
         SECTION 14.0.  EXCLUSIVITY AND FEES.
         Sec. 14.1.  The parties acknowledge and recognize that this
  gaming agreement provides the Tribe territorial exclusivity
  through the permitted operation of video lottery terminals without
  requiring construction or operation of a racetrack for live horse
  or dog racing. This territorial exclusivity and the additional
  benefits to the Tribe are of substantial benefit to the Tribe and,
  consistent with Federal Indian policy, provide special
  opportunities for tribal economic opportunity through gaming
  within the external boundaries of Texas. In consideration thereof,
  as long as the State does not after the effective date of this
  gaming agreement authorize a person to operate video lottery
  terminals or any additional form of gaming that would be considered
  a lottery or gift enterprise under Section 47(a), Article III,
  Texas Constitution, without the Tribe's written consent within the
  exclusive territory designated by this gaming agreement for the
  operation of video lottery games by the Tribe, the Tribe agrees to
  pay the fees described in this section.
         (a)  The Tribe covenants and agrees to pay to the State a fee
  derived from net terminal income calculated as set forth in
  Subsection (b). The fee shall be deducted from the daily deposit of
  funds into the State's account from the video lottery terminal
  operations prior to the State's transfer of funds back to the Tribe
  for such operations.
         (b)  The fee shall be 10 percent of all net terminal income
  received by the Tribe in a calendar year.
         Sec. 14.2.  Start-Up Assessment.  On the effective date of
  this gaming agreement, the Tribe shall deposit with the Texas
  regulatory commission a Start-Up Assessment in the sum of $10,000.
  The purpose of the Start-Up Assessment shall be to assist the State
  in initiating its administrative and oversight responsibilities
  hereunder, and shall be a one-time payment to the State for such
  purposes.
         Sec. 14.3.  Nothing in this gaming agreement shall be deemed
  to authorize the State to impose any tax, fee, charge, or assessment
  on the Tribe or the video lottery terminal establishment except as
  expressly authorized pursuant to this gaming agreement under
  Sections 4.6 and 13.3(c). To the extent that the Tribe is required
  under federal law to report prizes awarded, the Tribe agrees to copy
  such reports to the Texas regulatory commission. Any state sales
  tax on the sale of goods and services to non-Indians at video
  lottery terminal establishments shall be conclusively presumed to
  be a direct tax on the retail consumer, pre-collected for the
  purpose of convenience and facility.
         Sec. 14.4.  In consideration for the covenants and
  agreements contained herein, the State agrees that it will not,
  during the term of this gaming agreement, allow the nontribal
  operation of any video lottery games or other gaming that would be
  considered a lottery or gift enterprise under Section 47(a),
  Article III, Texas Constitution, without the Tribe's written
  consent within ______ [limitation on state video lottery or other
  new lottery gaming in exclusive Indian video lottery territory].
  The state recognizes the importance of this provision to the Tribe
  and agrees, in the event of a breach of this provision by the State,
  to require any nontribal entity that operates any such games within
  the prohibited territory to remit to the State not less than 50
  percent of any revenue from those games. The State further agrees
  to remit that revenue at least quarterly to Eligible Tribes, as
  liquidated damages. For purposes of this part, "Eligible Tribes"
  shall mean those tribes that have entered into a gaming agreement
  with the State under Section 466.575, Texas Government Code, and
  are operating gaming pursuant to the gaming agreement within ______
  [description of exclusive territory for tribal video lottery].
  Such liquidated damages shall be allocated pro rata to the Eligible
  Tribes based on the number of video lottery terminals operated by
  each Eligible Tribe in the period when those revenues were
  generated.
         SECTION 15.0.  DISPUTE RESOLUTION.
         Sec. 15.1.  Voluntary Resolution; Reference to Other Means
  of Resolution.  In recognition of the government-to-government
  relationship of the Tribe and the State, the parties shall make
  their best efforts to resolve disputes that occur under this gaming
  agreement by good faith negotiations whenever possible.  Therefore,
  without prejudice to the right of either party to seek injunctive
  relief or specific relief provided in this agreement against the
  other when circumstances are deemed to require immediate relief,
  the parties hereby establish a threshold requirement that disputes
  between the Tribe and the State first be subjected to a process of
  meeting and conferring in good faith in order to foster a spirit of
  cooperation and efficiency in the administration and monitoring of
  performance and compliance by each other with the terms,
  provisions, and conditions of this gaming agreement, as follows:
         (a)  either party shall give the other, as soon as possible
  after the event giving rise to the concern, a written notice setting
  forth, with specificity, the issues to be resolved;
         (b)  the parties shall meet and confer in a good faith
  attempt to resolve the dispute through negotiation not later than
  10 days after receipt of the notice, unless both parties agree in
  writing to an extension of time;
         (c)  if the dispute is not resolved to the satisfaction of
  the parties within 30 days after the first meeting, then either
  party may seek to have the dispute resolved by an arbitrator in
  accordance with this section; and
         (d)  disagreements that are not otherwise resolved by
  arbitration or other mutually acceptable means as provided herein
  may be resolved in the United States District Court with
  jurisdiction over the location or planned location of the Tribe's
  video lottery terminal establishment or, if the federal courts lack
  jurisdiction, in a state district court in Travis County.  The
  disputes to be submitted to court action are limited to claims of
  breach or violation of this gaming agreement or failure to
  negotiate in good faith as required by the terms of this gaming
  agreement.  The parties agree that, except in the case of imminent
  threat to the public health, safety, or welfare or the integrity of
  the lottery, reasonable efforts will be made to explore alternative
  dispute resolution avenues prior to resorting to judicial process.
         Sec.  15.2.  Arbitration Rules.  Arbitration shall be
  conducted in accordance with the policies and procedures of the
  Commercial Arbitration Rules of the American Arbitration
  Association, provided that application of these rules shall not be
  construed to waive the State's sovereign immunity to an extent
  greater than otherwise authorized herein. Arbitration shall be
  held at such location as the parties may agree.  Each side shall
  bear its own costs, attorneys' fees, and one-half the costs and
  expenses of the American Arbitration Association and the
  arbitrator, unless the arbitrator rules otherwise.  Only one
  neutral arbitrator may be named, unless the Tribe or the State
  objects, in which case a panel of three arbitrators (one of whom is
  selected by each party) will be named.  The decision of the
  arbitrator or arbitrators shall be in writing, shall give reasons
  for the decision, and shall be binding. Judgment on the award may be
  entered in any federal or state court having jurisdiction thereof.
         Sec. 15.3.  Limited Waiver of Sovereign Immunity.  (a)  In
  the event that a dispute is to be resolved in federal court or a
  state court of competent jurisdiction as provided in this section,
  the State and the Tribe expressly consent to be sued therein and
  waive any immunity therefrom that they may have provided that:
               (1)  the dispute is limited solely to issues arising
  under this gaming agreement;
               (2)  neither side makes any claim for monetary damages
  (that is, only injunctive, specific performance, including
  enforcement of a provision of this gaming agreement requiring
  payment of money to one or another of the parties, or declaratory
  relief is sought); and
               (3)  no person or entity other than the Tribe and the
  State is party to the action, unless failure to join a third party
  would deprive the court of jurisdiction, provided that nothing
  herein shall be construed to constitute a waiver of the sovereign
  immunity of either the Tribe or the State in respect to any such
  third party.
         (b)  In the event of intervention by any additional party
  into any such action without the consent of the Tribe and the State,
  the waivers of either the Tribe or the State provided for herein may
  be revoked, unless joinder is required to preserve the court's
  jurisdiction, provided that nothing herein shall be construed to
  constitute a waiver of the sovereign immunity of either the Tribe or
  the State in respect to any such third party.
         (c)  The waivers and consents provided for under this section
  shall extend to civil actions authorized by this gaming agreement,
  such as actions to compel arbitration, any arbitration proceeding
  herein, any action to confirm or enforce any judgment or
  arbitration award as provided herein, and any appellate proceedings
  emanating from a matter in which an immunity waiver has been
  granted.  Except as stated herein or elsewhere in this gaming
  agreement, no other waivers or consents to be sued, either express
  or implied, are granted by either party.
         (d)  The State only waives sovereign immunity to the extent
  authorized by Section 466.572, Texas Government Code.
         SECTION 16.0.  CONSTRUCTION OF GAMING AGREEMENT; FEDERAL
  APPROVAL.
         Sec. 16.1.  Each provision, section, and subsection of this
  gaming agreement shall stand separate and independent of every
  other provision, section, or subsection. In the event that a
  federal district court or a state court of competent jurisdiction
  as provided in this agreement shall find any provision, section, or
  subsection of this gaming agreement to be invalid, the remaining
  provisions, sections, and subsections of this gaming agreement
  shall remain in full force and effect, unless the invalidated
  provision, section, or subsection is material. It is a material
  provision of this gaming agreement that Class III gaming be limited
  to that expressly authorized under this gaming agreement, and
  Subchapter K, Chapter 466, Texas Government Code. If any final and
  nonappealable judicial determination authorizes or requires the
  State to authorize that any Class III gaming be operated by the
  Tribe other than video lottery terminals connected to the video
  lottery system or to a government operated video lottery system
  structured identically to that expressly authorized under
  Subchapter K, Chapter 466, Texas Government Code, if so required by
  federal law, then this gaming agreement shall be null and void for
  all purposes.
         Sec. 16.2.  Each party hereto agrees to defend the validity
  of this gaming agreement and the legislation in which it is
  embodied.
         Sec. 16.3.  The parties shall cooperate in seeking approval
  of this gaming agreement from an appropriate federal agency if so
  required by federal law.
         SECTION 17.0.  NOTICES.
         All notices required under this gaming agreement shall be
  given by certified mail, return receipt requested, commercial
  overnight courier service, or personal delivery, to the following
  persons:
         Governor
         Chair, State-Tribal Relations Committee
         Attorney General
         [Principal Chief, Governor or Chair]
         [Name of Tribe]
         [Address]
         With copies to: _______________________
         SECTION 18.0.  DURATION, NEGOTIATION, AND TERMINATION.
         Sec. 18.1.  This gaming agreement shall become effective on
  the last date of the satisfaction of the following requirements:
         (a)  due execution on behalf of the Tribe, including
  obtaining all tribal resolutions and completing other tribal
  procedures as may be necessary to render the Tribe's execution
  effective including a final and nonappealable decision of a tribal
  court of competent jurisdiction that the Tribe's execution of this
  gaming agreement is effective and that all parts and provisions of
  the gaming agreement are enforceable by and against the Tribe as set
  forth herein;
         (b)  any federal regulatory approval required under federal
  law and, if so required, publication in the Federal Register or
  satisfaction of any other requirement of federal law; and
         (c)  payment of the Start-up Assessment provided for in
  Section 14.2 of this gaming agreement.
         Sec. 18.2.  This gaming agreement shall have an initial term
  of 10 years from the effective date, renewable for an additional 10
  years; provided that the Tribe and the State, acting through its
  Governor, may renegotiate the terms of this gaming agreement after
  the initial term.  The Tribe's noncompliance with any operational,
  reporting, or other requirements under this gaming agreement shall
  justify termination of operation of video lottery terminals on the
  Tribe's Indian lands.  The Tribe shall be entitled to notice and a
  hearing on the compliance issue as set forth under Chapter 466,
  Texas Government Code, and accompanying rules of the Texas
  regulatory commission.  If the Tribe does not remedy the
  noncompliance issue within 180 days of the termination or 60 days
  after a final decision of the commission that the Tribe is out of
  compliance, then this gaming agreement shall terminate without
  penalty against the commission or the State.
         Sec. 18.3.  This gaming agreement shall remain in full force
  and effect until the sooner of expiration of the term, termination
  as provided herein, or termination by mutual consent of the
  parties.  In addition to the remedies set forth above, either party
  may bring an action in federal court, after providing a 60-day
  written notice of an opportunity to cure any alleged breach of this
  gaming agreement, for a declaration that the other party has
  materially breached this gaming agreement.  On issuance of such a
  declaration, the complaining party may unilaterally terminate this
  gaming agreement on service of written notice on the other party.  
  In the event a federal court determines that it lacks jurisdiction
  over such an action, the action may be brought in the district court
  for the county in which the Tribe's video lottery terminal
  establishment is located.  The parties expressly waive their
  immunity to suit for purposes of an action under this subsection,
  subject to the qualifications stated herein.  Nothing in this
  provision shall be construed to limit other remedies available to
  and contract penalties enforceable by the Texas regulatory
  commission, as expressly provided herein, in the event of the
  Tribe's material breach.  The Tribe and the State recognize and
  agree that the narrow and enumerated provisions for such immediate
  remedies and enforcement by the State are necessary to protect the
  public health, safety, and welfare and the integrity of the video
  lottery.
         SECTION 19.0.  AMENDMENTS; RENEGOTIATIONS.
         Sec. 19.1.  The terms and conditions of this gaming
  agreement may be amended at any time by the mutual and written
  agreement of both parties.
         Sec. 19.2.  This gaming agreement is subject to
  renegotiation in the event the Tribe wishes to engage in forms of
  Class III gaming other than those games authorized herein and
  requests renegotiation for that purpose, provided that no such
  renegotiation may be sought for 24 months following the effective
  date of this gaming agreement.
         SECTION 20.0.  AUTHORITY TO EXECUTE.
         This gaming agreement, as an enactment of the State
  Legislature, is deemed approved by the State.  On valid execution by
  the Tribe and the Governor of the State, no further action by the
  State or any state official is necessary for this gaming agreement
  to take effect on any necessary approval by any federal agency as
  required by applicable federal law, including publication in the
  Federal Register, if required.  The undersigned tribal official or
  officials represent that the official or officials are duly
  authorized and have the authority to execute this gaming agreement
  on behalf of the Tribe for whom the official or officials are
  signing.
  APPROVED:
  [Name of Tribe]
  _________________________Date:__________
  [CHIEF EXECUTIVE OFFICER]
  State of Texas
  _________________________Date:__________
  Governor of Texas
         Sec. 466.576.  NEGOTIATION FOR DIFFERENT GAMING AGREEMENT
  TERMS.  (a)  Nothing in this subchapter may be construed to limit
  the ability of a federally recognized Indian tribe to request that a
  gaming agreement be negotiated with this state on terms that are
  different from those set forth in the gaming agreement under
  Section 466.575, or the ability of this state to engage in
  negotiations and to reach agreement under any applicable federal
  law.
         (b)  In offering to enter into a gaming agreement with Indian
  tribes in this state under Section 466.575(b), and, except for
  assessments by this state as provided in that section of the amounts
  necessary to defray state costs of regulating activities as
  provided under the gaming agreement, nothing in this chapter may be
  construed to mean that:
               (1)  this state is imposing any tax, fee, charge, or
  other assessment on an Indian tribe or on any other person or entity
  authorized by an Indian tribe as a condition to engaging in a Class
  III activity; or
               (2)  this state is refusing to enter into gaming
  agreement negotiations based on the lack of authority of this state
  or a political subdivision of this state to impose the tax, fee,
  charge, or other assessment.
         (c)  If any federally recognized tribe with jurisdiction
  over Indian lands in this state requests that the governor enter
  into negotiations for a gaming agreement under federal law
  applicable to the tribe, including the Indian Gaming Regulatory Act
  (18 U.S.C. Section 1166 and 25 U.S.C. Section 2701 et seq.), on
  terms different than those prescribed in the gaming agreement in
  Section 466.575(b), the governor shall enter into those
  negotiations under the federal law applicable to the tribe and
  without preconditions and is authorized to reach agreement and
  execute the agreement on behalf of this state, provided that the
  gaming agreement does not expand the scope of gaming expressly
  authorized under this chapter and entitles the tribe only to
  operate video lottery terminals in strict compliance with state
  law, unless otherwise required by applicable federal law, and
  provided that the gaming agreement includes the following
  provisions:
               (1)  a provision prescribing that the tribe is
  authorized and allowed to engage only in the Class III gaming
  activities expressly referred to in the gaming agreement or
  authorized under Texas law and may not engage in Class III gaming
  that is not expressly authorized in the gaming agreement or under
  Texas law;
               (2)  a provision prescribing that any operation or
  possession by the tribe of any gaming devices not expressly
  authorized under the gaming agreement or other Texas law, excluding
  any Class II gaming authorized under applicable federal law, shall
  be considered a material breach of the gaming agreement and justify
  termination of the agreement and this state may bring an action in
  federal court or, in the event the federal court declines
  jurisdiction, in state court and shall be entitled to an injunction
  prohibiting the continued operation of any unlawful gaming activity
  on the tribal lands on a showing by a preponderance of evidence that
  the breach has occurred;
               (3)  a provision waiving state and tribal sovereign
  immunity for purposes of operation of video lottery terminals and
  enforcement of the gaming agreement, provided that this state may
  not waive sovereign immunity except to the extent expressly
  permitted under Section 466.572;
               (4)  a provision establishing minimum internal control
  standards at least as restrictive as those provided under this
  subchapter and any standards set forth under applicable federal
  law;
               (5)  a provision requiring any video lottery manager
  doing business on Indian lands to indemnify and hold harmless the
  commission, this state, and the members, officers, employees, and
  authorized agents of the commission and this state from any and all
  claims which may be asserted against a license or certificate
  holder, the commission, this state, or the employees arising from
  the license or certificate holder's participation in the video
  lottery system authorized under the gaming agreement;
               (6)  a provision requiring the tribe to pay all
  regulatory costs incurred by this state in relation to the
  operation of video lottery terminals on the Indian lands of the
  tribe to assure compliance with all federal and state law and all
  provisions of the agreement;
               (7)  a provision recognizing the substantial benefit of
  the exclusivity or other substantial benefits afforded to the tribe
  under the agreement and providing for the sharing of net terminal
  revenue between the tribe and this state as payment for the
  exclusivity or other substantial benefit;
               (8)  a provision establishing investigative and
  licensing standards at least as restrictive as those provided under
  this subchapter and under any applicable federal law;
               (9)  a provision requiring video lottery terminals and
  facilities operating the video lottery terminals authorized under
  the gaming agreement to be owned by the tribe;
               (10)  a provision requiring the video lottery games
  authorized by the gaming agreement to be licensed by the tribe in
  conformity with the requirements of the agreement, the Tribal
  Gaming Ordinance, and any applicable federal law every five years
  and the tribe shall review and renew the license, if appropriate,
  and provide to the commission verification that this requirement
  has been satisfied;
               (11)  a provision requiring the licensing of all video
  lottery employees and any person extending financing, directly or
  indirectly, to the tribe's video lottery operation before extending
  that financing, provided that any person who is extending financing
  at the time of the execution of the agreement must be licensed by
  the tribe not later than the 90th day after the date of execution,
  and the provision may allow the tribe, in its discretion, to exclude
  from the licensing requirements of this section financing provided
  by:
                     (A)  a federally regulated or state-regulated
  bank, savings and loan, or other federally or state-regulated
  lending institution;
                     (B)  any federal, state, or local government
  agency; or
                     (C)  any investor who, alone or in conjunction
  with others, holds less than 10 percent of any outstanding
  indebtedness evidenced by bonds issued by the tribe;
               (12)  a provision allowing the commission, under the
  provisions of the gaming agreement, to monitor the conduct of video
  lottery games to ensure that the video lottery games are conducted
  in compliance with the provisions of the agreement, and granting
  the Department of Public Safety and agents of the commission
  reasonable access to all areas of the facility related to the
  conduct of video lottery games in order to properly monitor the
  conduct of video lottery games;
               (13)  a provision specifying jurisdiction of tribal,
  state, and federal courts with regard to matters arising from the
  gaming agreement or the operation of video lottery terminals, or
  both, as authorized by the agreement and consistent with Section
  466.572;
               (14)  a provision requiring the tribe to adopt and
  comply with standards at least as stringent as state public health
  standards for food and beverage handling at any facilities where
  video lottery terminals are operated;
               (15)  a provision requiring the tribe to adopt and
  comply with standards at least as stringent as federal water
  quality and safe drinking water standards applicable in this state
  at any facilities where video lottery terminals are operated, and
  requiring the tribe to allow for inspection and testing of water
  quality by state or county health inspectors, as applicable, during
  normal hours of operation, to assess compliance with these
  standards, unless inspections and testing are made by an agency of
  the United States pursuant to or by the tribe under express
  authorization of federal law to ensure compliance with federal
  water quality and safe drinking water standards;
               (16)  a provision requiring the tribe to carry at least
  $5 million in public liability insurance for patron claims and
  providing reasonable assurance that the claims will be promptly and
  fairly adjudicated and that legitimate claims will be paid;
               (17)  a provision requiring the tribe to adopt and
  comply with standards at least as stringent as federal workplace
  and occupational health and safety standards for any facilities
  where video lottery terminals are operated, and requiring the tribe
  to allow for inspection of the workplaces by state inspectors
  during normal hours of operation to assess compliance with these
  standards, unless inspections are regularly made by an agency of
  the United States government to ensure compliance with federal
  workplace and occupational health and safety standards;
               (18)  a provision requiring the tribe to adopt and
  comply with standards at least as stringent as federal laws and
  state laws forbidding employers generally from discriminating in
  the employment of persons to work for the facility operating video
  lottery terminals on the basis of race, color, religion, national
  origin, gender, sexual orientation, age, or disability, provided
  that nothing in the provision precludes the tribe from giving a
  preference in employment to tribe members, pursuant to a duly
  adopted tribal ordinance;
               (19)  a provision requiring the tribe to adopt and
  comply with standards that are at least as stringent as state laws
  prohibiting the use of proceeds of a check issued as a payment under
  the financial assistance program under Chapter 31, Human Resources
  Code, or a food stamp coupon issued under the food stamp program
  administered under Chapter 33, Human Resources Code, for gaming or
  other wagering;
               (20)  a provision requiring the tribe to adopt and
  comply with standards at least as stringent as state laws governing
  the extension of credit to, the cashing of checks for, and other
  financial transactions with patrons calculated to protect players
  from problem and compulsive gambling;
               (21)  a provision requiring the tribe to participate in
  state statutory programs related to employment in video lottery
  terminal operations or instead of participation in this state
  workers' compensation system, allowing the tribe to create and
  maintain a system that provides redress for employee work-related
  injuries through requiring insurance or self-insurance that
  includes a scope of coverage, availability of an independent
  medical examination, right to notice, hearings before an
  independent tribunal, a means of enforcement against the employer,
  and benefits comparable to those mandated for comparable employees
  under state law;
               (22)  a provision requiring the tribe to make
  reasonable provisions for adequate emergency fire, medical, and
  related relief and disaster services for patrons and employees of
  the video lottery terminal operations;
               (23)  a provision:
                     (A)  requiring the tribe to prohibit the
  intentional, knowing, or reckless possession of a firearm, illegal
  knife, club, explosive weapon, machine gun, firearm silencer,
  knuckles, armor-piercing ammunition, a chemical dispensing device,
  or a zip gun, as those terms are defined in Section 46.01, Penal
  Code, at all times in the video lottery terminal establishment;
                     (B)  requiring the defenses that apply to the
  possession of weapons on the premises of a racetrack under Section
  46.03, Penal Code, to apply to possession of the weapons in a video
  lottery terminal establishment; and
                     (C)  requiring tribal security or tribal law
  enforcement personnel to be allowed to possess firearms and clubs
  at a video lottery terminal establishment as authorized by tribal
  law;
               (24)  a provision requiring the tribe to agree that on
  or before the effective date of the agreement, or not less than 90
  days before the commencement of any project constructed to serve as
  the site of video lottery terminals, the tribe shall adopt an
  ordinance providing for the preparation, circulation, and
  consideration by the tribe of environmental impact reports
  concerning potential off-reservation environmental impacts of the
  construction to be commenced on or after the effective date of the
  agreement;
               (25)  a provision requiring the tribe to agree to
  establish separate electronic funds transfer accounts for the
  purposes of depositing money from video lottery terminal
  operations, making payments to the commission, and receiving
  payments from the commission, which must prohibit the tribe from
  making payments to the commission in cash, but as authorized by the
  commission may allow a tribe to make payments to the commission by
  cashier's check;
               (26)  a provision requiring the tribe to adopt and
  comply with the Bank Secrecy Act (31 U.S.C. Sections 5311-5314), as
  amended, and all reporting requirements of the Internal Revenue
  Service, insofar as the provisions and reporting requirements are
  applicable to gaming facilities; and
               (27)  a provision requiring the tribe to collect and
  remit to the comptroller state sales and use taxes and state taxes
  on motor fuels, alcoholic beverages, cigarettes and tobacco
  products, and hotel occupancy generated at a video lottery terminal
  establishment, other than on an item sold to or used or consumed by
  a tribe member.
         (d)  The legislature finds that, in any proceeding described
  by Subsection (c)(2), irreparable injury and inadequate remedy at
  law shall be presumed once this state has demonstrated that the
  violation has occurred.  If this state does not seek an injunction
  for such a material breach of the gaming agreement, the tribe agrees
  to pay a contract penalty of $10,000 per day for every day the
  violation or breach continues.  If the violation or breach is not
  cured within 10 days, this state may bring an action to enjoin the
  unlawful conduct.
         Sec. 466.577.  IMPLEMENTATION OF GAMING AGREEMENT.  The
  governor shall execute any documents necessary to implement a
  gaming agreement authorized under this subchapter.
         Sec. 466.578.  INCORPORATION INTO STATE LAW.  The model
  gaming agreement set out in Section 466.575(b) is hereby
  incorporated into state law, and the operation of video lottery
  terminals authorized under the agreement is expressly authorized as
  a matter of state law for any Indian tribe entering into the gaming
  agreement in accordance with this subchapter.
         Sec. 466.579.  REGULATORY MONEY RECEIVED UNDER GAMING
  AGREEMENT.  All money received by the commission under a gaming
  agreement for regulatory costs incurred relative to tribal
  operations of video lottery terminals shall be deposited to the
  credit of the state video lottery account to defray expenses of the
  commission incurred in the oversight, compliance with, and
  enforcement of video lottery terminal operations conducted
  pursuant to a gaming agreement.
         Sec. 466.580.  INJUNCTION; CIVIL PENALTY.  (a)  If the
  commission, the appropriate governing body for an Indian tribe, or
  the attorney general has reason to believe that this chapter has
  been or is about to be violated, the attorney general may petition a
  court for appropriate injunctive relief to restrain the violation.  
  Filing of the petition does not waive applicable sovereign
  immunity.
         (b)  Venue for an action by this state seeking injunctive
  relief is in a district court in Travis County.
         (c)  If the court finds that this chapter has been knowingly
  violated, the court shall order all proceeds from any illegal
  gambling to be forfeited to the appropriate governing body as a
  civil penalty.
         (d)  The remedies provided herein are not exclusive.  The
  commission may suspend or revoke a license, impose an
  administrative penalty, or seek injunctive or civil penalties or
  both, depending on the severity of the violation.
         SECTION 1.35.  Section 467.001, Government Code, is amended
  by amending Subdivision (9) and adding Subdivision (12) to read as
  follows:
               (9)  "Person that has a significant financial interest
  in the lottery" means:
                     (A)  a person or a board member, officer, trustee,
  or general partner of a person that manufactures, distributes,
  sells, or produces lottery equipment, video lottery equipment,
  video lottery games, video lottery central systems, supplies,
  services, or advertising;
                     (B)  an employee of a video lottery terminal
  provider, video lottery central system provider, or person that
  manufactures, distributes, sells, or produces lottery equipment, 
  supplies, services, or advertising or video lottery equipment or
  games and that employee is directly involved in the manufacturing,
  distribution, selling, or production of lottery equipment,
  supplies, services, or advertising or video lottery equipment or
  games;
                     (C)  a person or a board member, officer, trustee,
  or general partner of a person that has made a bid to operate the
  lottery in the preceding two years or that intends to make a bid to
  operate the lottery or an employee of the person if the employee is
  directly involved in making the bid; or
                     (D)  a sales agent, video lottery retailer, video
  lottery manager, video lottery terminal provider, or video lottery
  central system provider.
               (12)  "Video lottery central system," "video lottery
  equipment," "video lottery game," "video lottery manager," "video
  lottery retailer," and "video lottery terminal provider" have the
  meanings assigned by Section 466.002.
         SECTION 1.36.  Section 467.031, Government Code, is amended
  to read as follows:
         Sec. 467.031.  DIVISIONS.  The commission shall establish
  separate divisions to oversee bingo and the state lottery.  The
  commission shall create a division to oversee the video lottery
  system and delegate responsibilities in the administration of
  Chapter 466 to the executive director, the director of the
  appropriate division, and the division's staff; provided, however,
  that the commission may not delegate the following actions:
               (1)  a final determination in any application or
  request for licensing or registration under Chapter 466;
               (2)  a final determination in any proceeding involving
  the suspension or revocation of a certificate of registration or
  license under Chapter 466;
               (3)  a final determination that Chapter 466 has been
  violated; or
               (4)  a final determination or imposition of an
  assessment of fines or penalties under a law administered by the
  commission.
         SECTION 1.37.  Section 467.035(a), Government Code, is
  amended to read as follows:
         (a)  The commission may not employ or continue to employ a
  person who owns a financial interest in:
               (1)  a bingo commercial lessor, bingo distributor, or
  bingo manufacturer; or
               (2)  a lottery sales agency, [or] a lottery operator, a
  video lottery retailer, a video lottery manager, a video lottery
  terminal provider, a video lottery central system provider, or a
  manufacturer of video lottery games.
         SECTION 1.38.  Section 411.108, Government Code, is amended
  by adding Subsection (d) to read as follows:
         (d)  The Texas Lottery Commission or a successor agency may
  obtain from the department, subject to an interagency agreement
  entered into under Section 466.020(d) or 466.206, criminal history
  record information maintained by the department that relates to any
  natural person, corporation, association, trust, partnership,
  limited partnership, joint venture, government, subsidiary, or
  other entity, regardless of its form, structure, or nature that the
  commission has the authority to investigate under Chapter 466 as
  related to the commission's operation and oversight of video
  lottery. Criminal history record information obtained by the
  commission under this subsection may be released or disclosed only
  as provided in Sections 466.022(c) and 466.206.
         SECTION 1.39.  Article 6, Texas Racing Act (Article 179e,
  Vernon's Texas Civil Statutes), is amended by adding Section 6.20
  to read as follows:
         Sec. 6.20.  LIVE RACING REQUIREMENT. (a) Except as provided
  by Subsections (b) and (c) of this section, a person who holds a
  class 1 or class 2 racetrack license for a racetrack that is a video
  lottery terminal establishment under Subchapter K, Chapter 466,
  Government Code, shall conduct the greater of:
               (1)  for each breed, not less than the number of live
  racing days conducted by the racetrack for that breed in 2002; or
               (2)  for quarter horses and thoroughbreds, not less
  than 50 live race days or 500 live races.
         (b)  A class 2 racetrack that has not previously conducted
  live racing and that becomes licensed as a video lottery terminal
  establishment under Subchapter K, Chapter 466, Government Code,
  shall conduct live racing not later than the second anniversary of
  the date the license is issued under that subchapter.
         (c)  A person who holds a class 1 or class 2 racetrack license
  may conduct fewer live racing days than required by Subsection (a)
  of this section if the racetrack, the affected breed registry, and
  the recognized horsemen's organization enter into a written
  agreement to conduct fewer races.
         (d)  A greyhound racetrack that is a video lottery terminal
  establishment under Subchapter K, Chapter 466, Government Code,
  shall offer for pari-mutuel wagering not less than 420 live
  greyhound racing performances in each calendar year, unless
  otherwise agreed to in writing by the racetrack and the official
  state greyhound breed registry.  For purposes of this subsection,
  "greyhound racing performance" means the consecutive running of not
  fewer than 12 greyhound races.
         SECTION 1.40.  Section 16.18, Texas Racing Act (Article
  179e, Vernon's Texas Civil Statutes), is amended by adding
  Subsection (d) to read as follows:
         (d)  This section does not apply to a county in which is
  located a racetrack that is authorized to operate video lottery
  terminals under Subchapter K, Chapter 466, Government Code.
         SECTION 1.41.  The Legislature finds and declares the
  following:
               (1)  This state is facing a crisis in providing funding
  for state governmental programs. Contingent on the approval of the
  voters, in order to generate additional revenue to fund state
  governmental programs, a limited and narrow exception to the
  constitutional prohibition on lotteries has been proposed to
  authorize a state-controlled and state-operated video lottery
  system in accordance with this article.
               (2)  In light of the financial needs of the state and
  the need to fund state governmental programs, in the event the
  voters approve this limited state-controlled and state-operated
  video lottery system, the Texas Lottery Commission must be
  authorized to commence operation of the video lottery system in
  accordance with this article at the earliest possible date,
  consistent with the intent of the voters and legislative directive.
               (3)  The implementation of the video lottery system
  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 critical financial need constitutes an
  imminent peril to the public welfare, requiring the adoption of
  rules and authorization for the Texas Lottery Commission to conduct
  certain limited pre-implementation activities related to the
  establishment of the video lottery system to promote and ensure the
  integrity, security, honesty, and fairness of the operation and
  administration of the video lottery system.
               (5)  In order to commence operation of the video
  lottery system at the earliest possible date and to maintain the
  integrity of state-controlled and state-operated video lottery
  established by this article, the Texas Lottery Commission may
  conduct limited pre-implementation acts before the constitutional
  amendment proposed by the 80th Legislature, Regular Session, 2007,
  to authorize the state to operate video lottery games is submitted
  to the voters for approval.
         SECTION 1.42.  (a)  As soon as practicable after the
  constitutional amendment to authorize the state to operate video
  lottery games proposed by the 80th Legislature, Regular Session,
  2007, is approved by the voters and becomes effective, the Texas
  Lottery Commission or the Texas Gaming and Boxing Commission, as
  applicable, shall adopt the rules necessary to implement video
  lottery in accordance with Subchapter K, Chapter 466, Government
  Code, as added by this Act.
         (b)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission may expend
  money from the commission's appropriation for the 2008-2009 state
  fiscal biennium for purposes of conducting pre-implementation
  activities to establish the state video lottery system in
  accordance with Subchapter K, Chapter 466, Government Code, as
  added by this Act. Notwithstanding Section 466.355, Government
  Code, the money authorized to be expended under this section may be
  withdrawn from the state lottery account to fund the establishment
  of the state video lottery system.
         (c)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission may develop
  and approve forms for applications for licensing and registration
  required under Subchapter K, Chapter 466, Government Code, as added
  by this Act.
         (d)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission may accept
  pre-implementation applications for video lottery retailers and
  video lottery managers under Subchapter K, Chapter 466, Government
  Code, as added by this Act. On receipt of a complete application,
  completion of all investigations, and submittal of the
  nonrefundable investigatory fees the commission requires
  consistent with Subchapter K, Chapter 466, Government Code, as
  added by this Act, the commission may make preliminary findings of
  suitability for an applicant and location of a video lottery
  terminal establishment. If the commission determines that all the
  requirements under Subchapter K, Chapter 466, Government Code, have
  been satisfied, the commission may issue a letter advising the
  applicant of the status of approval of the application pending
  approval by the voters of the proposed constitutional amendment to
  authorize the state video lottery system. If the commission
  determines that any requirements under Subchapter K, Chapter 466,
  Government Code, have not been satisfied, the commission may
  request additional information or conduct further investigations
  the commission considers necessary and may issue a letter advising
  the applicant of the status of the application.
         (e)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission may request
  and receive information related to applications for licensing and
  registration under Subchapter K, Chapter 466, Government Code, as
  added by this Act.  An applicant's failure to comply with any
  requests made by the Texas Lottery Commission under this subsection
  may be considered grounds for denial of an application.
         (f)  The Texas Lottery Commission may not issue any license,
  certificate of registration, or temporary license related to the
  state video lottery system under Subchapter K, Chapter 466,
  Government Code, as added by this Act, unless and until the
  constitutional amendment authorizing the state to operate video
  lottery games is approved by the voters and becomes effective.
         (g)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission may conduct
  investigations and collect investigative fees related to
  information requested and received for pre-implementation
  applications under this section and necessary for the commission's
  evaluation and determination of an application for any licensing,
  registration, or commission approval required under Subchapter K,
  Chapter 466, Government Code, as added by this Act.
         (h)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission 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
  466.508, Government Code, as added by this Act, except that the
  application fee required under Section 466.509(a), Government
  Code, as added by this Act, is not due until the applicant files an
  application for registration under Subchapter K, Chapter 466,
  Government Code, as added by this Act.  A preregistration
  application must be accompanied by a nonrefundable deposit to the
  Texas Lottery Commission in the amount of $25,000. A
  preregistration applicant shall submit additional money not later
  than the 10th day after the date the applicant receives notice from
  the commission that it has incurred actual costs for the
  preregistration investigation in excess of the initial deposit
  required under this subsection. If the commission does not receive
  the additional money from the applicant on or before the 15th day
  after the date the applicant receives the commission's notice, the
  commission shall suspend the application until the money is
  received by the commission. Any deposit or other nonrefundable
  money provided under this subsection shall be credited toward an
  application fee required under Section 466.509(a), Government
  Code, as added by this Act.
         (i)  The Texas Lottery Commission may not register any video
  lottery terminal providers unless and until the constitutional
  amendment authorizing the state to operate video lottery games is
  approved by the voters and becomes effective.
         (j)  Notwithstanding Section 466.509, Government Code, as
  added by this Act, a video lottery terminal provider that has been
  preregistered by the Texas Lottery Commission in accordance with
  this section, a video lottery central system provider, or a
  manufacturer of video lottery games, under a contract with the
  commission, 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 commission's
  consideration.
         (k)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission may negotiate
  contracts with preregistered video lottery terminal providers. The
  commission 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 a video lottery central system, video
  lottery terminals, and video lottery games for the commission's
  consideration.
         (l)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission may negotiate
  and enter contracts as necessary to establish the video lottery
  system.
         (m)  Before the proposed constitutional amendment is
  submitted to the voters, the Texas Lottery Commission may employ
  additional full-time equivalent employees to administer this Act
  and establish the video lottery system.
         SECTION 1.43.  Sections 1.01 through 1.40 of this article
  take effect on the date the amendment adding Section 47-a, Article
  III, Texas Constitution, authorizing the operation of video lottery
  games at racetracks, on certain Indian lands, and at 12 tourist
  destination locations, and authorizing casino gaming at 12 tourist
  destination locations, at racetracks, and on Indian lands proposed
  by the 80th Legislature, Regular Session, 2007, becomes effective.  
  Sections 1.41 and 1.42 of this article 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 1.41 and 1.42 of this
  article and this section take effect on the 91st day after the last
  day of the legislative session.  Sections 1.41 and 1.42(m) of this
  article expire March 1, 2008.
  ARTICLE 2.  ESTABLISHMENT OF TEXAS GAMING AND BOXING COMMISSION AND
  AUTHORIZATION OF CASINO GAMING
         SECTION 2.01.  Subtitle A, Title 13, Occupations Code, is
  amended by adding Chapters 2004 and 2005 to read as follows:
  CHAPTER 2004. TEXAS GAMING AND BOXING COMMISSION
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2004.001.  DEFINITIONS.  In this chapter:
               (1)  "Commission" means the Texas Gaming and Boxing
  Commission.
               (2)  "Commission member" means a member of the
  commission.
               (3)  "Executive director" means the executive director
  of the commission.
               (4)  "Person that has a significant financial interest
  in the lottery or in gaming regulated under Chapter 2005" means:
                     (A)  a person or a board member, officer, trustee,
  or general partner of:
                           (i)  a person licensed or required to be
  licensed under Chapter 2005; or
                           (ii)  a person that manufactures,
  distributes, sells, or produces lottery equipment, video lottery
  equipment, casino-associated equipment, video lottery games, video
  lottery central systems, supplies, services, or advertising;
                     (B)  an employee of:
                           (i)  a person licensed or required to be
  licensed under Chapter 2005 and that employee is directly involved
  in casino operations or gaming; or
                           (ii)  a video lottery terminal provider,
  video lottery central system provider, or person that manufactures,
  distributes, sells, or produces lottery equipment, 
  casino-associated equipment, supplies, services, or advertising or
  video lottery equipment or games and that employee is directly
  involved in the manufacturing, distribution, selling, or
  production of lottery equipment, supplies, services, or
  advertising or video lottery equipment or games;
                     (C)  a person or a board member, officer, trustee,
  or general partner of a person that has made a bid to operate the
  lottery in the preceding two years or that intends to make a bid to
  operate the lottery or an employee of the person if the employee is
  directly involved in making the bid; or
                     (D)  a person licensed under Chapter 2005, a sales
  agent, video lottery retailer, video lottery manager, video lottery
  terminal provider, or video lottery central system provider.
               (5)  "Video lottery central system," "video lottery
  equipment," "video lottery game," "video lottery manager," "video
  lottery retailer," and "video lottery terminal provider" have the
  meanings assigned by Section 466.002.
         Sec. 2004.002.  APPLICATION OF SUNSET ACT.  (a)  The Texas
  Gaming and Boxing Commission is subject to Chapter 325, Government
  Code (Texas Sunset Act).  Unless continued in existence as provided
  by that chapter, the commission is abolished and this chapter
  expires September 1, 2019.
         (b)  On the date the commission is abolished under Subsection
  (a), the following statutes are repealed:
               (1)  Chapter 2001;
               (2)  Chapter 2005;
               (3)  Chapter 2052;
               (4)  Chapter 466, Government Code; and
               (5)  the Texas Racing Act (Article 179e, Vernon's Texas
  Civil Statutes).
         Sec. 2004.003.  REFERENCES TO LICENSE INCLUDE CERTIFICATE OF
  REGISTRATION OR OTHER APPROVAL.  Except as expressly provided by
  this chapter, other law, or commission rule, a reference in this
  chapter to a license applies to a certificate of registration,
  finding of suitability, or prior approval under this chapter, other
  law, or commission rule.
  [Sections 2004.004-2004.050 reserved for expansion]
  SUBCHAPTER B. TEXAS GAMING AND BOXING COMMISSION
         Sec. 2004.051.  COMMISSION; MEMBERSHIP.  (a) The Texas
  Gaming and Boxing Commission is composed of seven members. Six
  members shall be appointed by the governor with the advice and
  consent of the senate. The chairman of the Public Safety Commission
  is an ex officio voting member of the commission.
         (b)  Appointments to the commission shall be made without
  regard to the race, color, disability, sex, religion, age, or
  national origin of the appointee.
         Sec. 2004.052.  QUALIFICATIONS OF COMMISSION MEMBERS.  (a)
  To be eligible for appointment to the commission, a person:
               (1)  must be a citizen of the United States;
               (2)  must have resided in this state for the two years
  preceding the date of the person's appointment;
               (3)  must submit a financial statement that contains
  the information required by Chapter 572, Government Code;
               (4)  may not own a financial or other interest in a
  person engaged in the conduct of gaming or the provision of casino
  services, or in a security issued by that person, or be related
  within the second degree by affinity or the third degree by
  consanguinity, as determined under Chapter 573, Government Code, to
  an individual who owns such a financial or other interest or
  security;
               (5)  may not be an applicant for or holder of a license,
  certificate of registration, or approval under a law administered
  by the commission or hold an equity interest or creditor interest in
  an owner license holder requiring qualification under Section
  2005.061; and
               (6)  may not be a member of the governing body of a
  political subdivision of this state.
         (b)  A person holding an elective office or an officer or
  official of a political party is not eligible for appointment to the
  commission.
         (c)  A person is not eligible for appointment as a member of
  the commission if the person or the person's spouse:
               (1)  is registered, certified, or licensed by an
  occupational regulatory agency in the field of gaming;
               (2)  is employed by or participates in the management
  of a business entity or other organization regulated by the
  commission or receiving funds from the commission;
               (3)  owns or controls, directly or indirectly, more
  than a 10 percent interest in a business entity or other
  organization regulated by the commission or receiving funds from
  the commission; or
               (4)  uses or receives a substantial amount of tangible
  goods, services, or money from the commission, other than
  compensation or reimbursement authorized by law for commission
  membership, attendance, or expenses.
         Sec. 2004.053.  MEMBERSHIP AND EMPLOYEE RESTRICTIONS. (a)
  In this section, "Texas trade association" means a cooperative and
  voluntarily joined association of business or professional
  competitors in this state designed to assist its members and its
  industry or profession in dealing with mutual business or
  professional problems and in promoting their common interest.
         (b)  A person may not be a member of the commission or an
  employee of the commission employed in a "bona fide executive,
  administrative, or professional capacity," as that phrase is used
  for purposes of establishing an exemption to the overtime
  provisions of the federal Fair Labor Standards Act of 1938 (29
  U.S.C. Section 201 et seq.) if:
               (1)  the person is an officer, employee, manager, or
  paid consultant of a Texas trade association in the field of gaming;
  or
               (2)  the person's spouse is an officer, manager, or paid
  consultant of a Texas trade association in the field of gaming.
         (c)  A person may not be a member of the commission or act as
  general counsel to the commission if the person is required to
  register as a lobbyist under Chapter 305, Government Code, because
  of the person's activities for compensation on behalf of a
  profession related to the operation of the commission.
         Sec. 2004.054.  TERMS; VACANCIES. (a) Appointed members of
  the commission serve staggered six-year terms. The terms of two
  members expire on February 1 of each odd-numbered year.
         (b)  A vacancy in an appointive position on the commission
  shall be filled by appointment of the governor with the advice and
  consent of the senate.
         Sec. 2004.055.  PRESIDING OFFICER. The governor shall
  designate a member of the commission as presiding officer of the
  commission to serve in that capacity at the pleasure of the
  governor.
         Sec. 2004.056.  MEETINGS; OFFICIAL RECORD.  (a) The
  commission shall meet not less than six times each year.
         (b)  The commission may meet at other times at the call of the
  presiding officer or as provided by commission rule.
         (c)  The commission shall keep an official record of all
  commission meetings and proceedings.
         Sec. 2004.057.  GROUNDS FOR REMOVAL. (a) It is a ground for
  removal from the commission that a member:
               (1)  does not have at the time of taking office the
  qualifications required by Section 2004.052;
               (2)  does not maintain during service on the commission
  the qualifications required by Section 2004.052;
               (3)  is ineligible for membership under Section
  2004.053;
               (4)  cannot, because of illness or disability,
  discharge the member's duties for a substantial part of the member's
  term; or
               (5)  is absent from more than half of the regularly
  scheduled commission meetings that the member is eligible to attend
  during a calendar year without an excuse approved by a majority vote
  of the commission.
         (b)  The validity of an action of the commission is not
  affected by the fact that it is taken when a ground for removal of a
  commission member exists.
         (c)  If the executive director has knowledge that a potential
  ground for removal of a commission member exists, the executive
  director shall notify the presiding officer of the commission of
  the potential ground. The presiding officer shall then notify the
  governor and the attorney general that a potential ground for
  removal exists. If the potential ground for removal involves the
  presiding officer, the executive director shall notify the next
  highest officer of the commission, who shall notify the governor
  and the attorney general that a potential ground for removal
  exists.
         Sec. 2004.058.  TRAINING. (a) A person who is appointed to
  and qualifies for office as a member of the commission may not vote,
  deliberate, or be counted as a member in attendance at a meeting of
  the commission until the person completes a training program that
  complies with this section.
         (b)  The training program must provide the person with
  information regarding:
               (1)  this chapter and the other laws administered by
  the commission and the commission's programs, functions, rules, and
  budget;
               (2)  the results of the most recent formal audit of the
  commission;
               (3)  the requirements of laws relating to open
  meetings, public information, administrative procedure, and
  conflict of interest; and
               (4)  any applicable ethics policies adopted by the
  commission or the Texas Ethics Commission.
         (c)  A person appointed to the commission is entitled to
  reimbursement, as provided by the General Appropriations Act, for
  travel expenses incurred in attending the training program
  regardless of whether the attendance at the program occurs before
  or after the person qualifies for office.
         Sec. 2004.059.  QUALIFICATIONS AND STANDARDS OF CONDUCT
  INFORMATION. The executive director or the executive director's
  designee shall provide to members of the commission, as often as
  necessary, information regarding their:
               (1)  qualifications for office under this chapter; and
               (2)  responsibilities under applicable laws relating
  to standards of conduct for state officers.
         Sec. 2004.060.  BOND.  (a) Before assuming the duties of
  office, an appointed member of the commission must execute a bond in
  the amount of $25,000 payable to the state and conditioned on the
  member's faithful performance of the member's duties of office.
         (b)  The bond must be approved by the governor.
         (c)  The cost of the bond shall be paid by the commission.
         Sec. 2004.061.  PROHIBITION OF CERTAIN ACTIVITIES.  (a) An
  appointed member of the commission may not:
               (1)  use the member's official authority to affect the
  result of an election or nomination for public office; or
               (2)  directly or indirectly coerce, attempt to coerce,
  command, or advise a person to pay, lend, or contribute anything of
  value to another person for political purposes.
         (b)  A commission member or the spouse of a commission member
  may not solicit or accept employment from a license, certificate of
  registration, or approval holder under a law administered by the
  commission or from an applicant for such a license, certificate, or
  approval before the second anniversary of the date the commission
  member's service on the commission ends.
         (c)  A person who violates this section commits an offense.  
  An offense under this subsection is a Class B misdemeanor.
         Sec. 2004.062.  APPLICATION OF FINANCIAL DISCLOSURE LAW.  
  For purposes of Chapter 572, Government Code, a member of the
  commission, the executive director, and the division directors are
  appointed officers of a major state agency.
         Sec. 2004.063.  PER DIEM; EXPENSES.  (a)  Each appointed
  member of the commission is entitled to:
               (1)  a per diem in an amount prescribed by
  appropriation for each day spent in performing the duties of the
  member; and
               (2)  reimbursement for actual and necessary expenses
  incurred in performing those duties.
         (b)  Reimbursement for expenses under this section is
  subject to any applicable limitation in the General Appropriations
  Act.
         (c)  The ex officio member is entitled to reimbursement for
  expenses from that member's agency as provided by law for expenses
  incurred in the performance of that member's other official duties.
         Sec. 2004.064.  EXECUTIVE DIRECTOR.  (a) The commission
  shall appoint an executive director, who serves at the pleasure of
  the commission.
         (b)  A person holding an elective office or an officer or
  official of a political party is not eligible for appointment as
  executive director.
         (c)  The executive director must have five or more years of
  responsible administrative experience in public or business
  administration or possess broad management skills.
         (d)  The executive director may not pursue any other business
  or occupation or hold any other office for profit.
         (e)  The executive director must meet all eligibility
  requirements relating to members of the commission, except the
  requirement for prior residency in this state.
         (f)  The executive director is entitled to an annual salary
  and other compensation specified by the commission.
         (g)  The executive director may not, before the second
  anniversary of the date the director's service to the commission
  ends, acquire a direct or indirect interest in or be employed by a
  person licensed or registered by the commission in connection with
  the conduct of gaming or the provision of casino services in this
  state.
         Sec. 2004.065.  OFFICES.  The commission shall maintain its
  primary office in Travis County and may maintain other offices
  determined to be necessary by the commission.
         Sec. 2004.066.  AUTHORITY TO SUE OR BE SUED.  (a) The
  commission may sue and be sued.
         (b)  Service of process in a suit against the commission may
  be secured by serving the executive director.
         (c)  A suit against the commission must be brought in Travis
  County.
         Sec. 2004.067.  AUDIT.  The transactions of the commission
  are subject to audit by the state auditor under Chapter 321,
  Government Code.
         Sec. 2004.068.  ACCESS TO CRIMINAL HISTORY RECORDS.  (a)  
  The governor shall 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
  relating to an individual the governor intends to appoint to the
  commission.
         (b)  The commission shall 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 relating to an individual the commission intends to employ.
  [Sections 2004.069-2004.100 reserved for expansion]
  SUBCHAPTER C. POWERS AND DUTIES OF COMMISSION
         Sec. 2004.101.  GENERAL POWERS.  (a)  The commission has
  broad authority and shall exercise strict control and close
  supervision over all activities authorized and conducted in this
  state under a law administered by the commission, including:
               (1)  Chapter 2001;
               (2)  this chapter;
               (3)  Chapter 2005;
               (4)  Chapter 2052;
               (5)  Chapter 466, Government Code; and
               (6)  the Texas Racing Act (Article 179e, Vernon's Texas
  Civil Statutes).
         (b)  The commission shall ensure that all casino games and
  other gaming activities subject to the oversight or regulatory
  authority of the commission are conducted fairly and in compliance
  with the law.
         (c)  The commission also has the powers and duties granted
  under:
               (1)  Chapter 2001;
               (2)  Chapter 2005;
               (3)  Chapter 2052;
               (4)  Chapter 466, Government Code; and
               (5)  the Texas Racing Act (Article 179e, Vernon's Texas
  Civil Statutes).
         (d)  All aspects of this chapter and the other laws
  administered by the commission, including those relating to
  licensing, qualification, execution, and enforcement, shall be
  administered by the executive director and the commission for the
  protection of the public and in the public interest.
         (e)  In the acquisition or provision of facilities,
  supplies, equipment, materials, or services related to the
  implementation of casino gaming under Chapter 2005, the commission
  must comply with procurement procedures prescribed under:
               (1)  Subtitle D, Title 10, Government Code; and
               (2)  other law applicable to state agencies generally.
         (f)  The commission and the executive director have full
  power and authority to hold hearings, and in connection to the
  hearings, to issue subpoenas, to compel the attendance of witnesses
  at any place in this state, to administer oaths, and to require
  testimony under oath. Any process or notice relating to a hearing
  may be served in the manner provided for service of process and
  notices in civil actions. The commission and the executive
  director may pay transportation and other expenses of witnesses as
  they consider reasonable.
         (g)  The executive director and the executive director's
  authorized employees may:
               (1)  inspect and examine a premises where gaming is
  conducted or equipment or supplies, including a gaming device, or
  associated equipment is manufactured, assembled, produced,
  programmed, sold, leased, marketed, distributed, repaired, or
  modified for use in gaming;
               (2)  for good cause, seize and remove from a premises
  and impound equipment or supplies for the purpose of examination
  and inspection; and
               (3)  demand access to, inspect, examine, photocopy, or
  audit papers, books, and records of applicants and license and
  certificate holders, on their premises or elsewhere as practicable,
  in the presence of the license or certificate holder or the license
  or certificate holder's agent, reporting the gross income produced
  by a gaming business, verification of the gross income, and other
  matters affecting the enforcement of this chapter.
         (h)  For the purpose of conducting audits after the cessation
  of gaming by a license or certificate holder, a former license
  holder shall furnish, on demand of the executive director or the
  executive director's authorized employees, books, papers, and
  records as necessary to conduct the audits. The former license or
  certificate holder shall maintain all books, papers, and records
  necessary for audits for three years after the date of the surrender
  or revocation of the license or certificate and is responsible for
  the costs incurred by the commission in the conduct of an audit
  under this section. If the former license or certificate holder
  seeks judicial review of a deficiency determination or files a
  petition for a redetermination, the former license or certificate
  holder must maintain all books, papers, and records until a final
  order is entered on the determination.
         Sec. 2004.102.  RULEMAKING AUTHORITY.  (a) The commission
  shall adopt rules the commission considers necessary or desirable
  for the public interest in carrying out the policy and provisions of
  this chapter and the other laws administered by the commission.
         (b)  The rules shall set out:
               (1)  the method and form of application that an
  applicant for a license or certificate of registration under
  Chapter 2005 must follow and complete before consideration of an
  application by the commission;
               (2)  the information to be furnished by an applicant or
  license or certificate holder under Chapter 2005 concerning
  antecedents, habits, character, associates, criminal record,
  business activities, and financial affairs;
               (3)  the criteria to be used in the award, revocation,
  and suspension of licenses or certificates under Chapter 2005;
               (4)  the information to be furnished by a license or
  certificate holder under Chapter 2005 relating to the holder's
  employees;
               (5)  the manner and procedure of hearings conducted by
  the commission or a hearing examiner of the commission;
               (6)  the payment of fees or costs an applicant or
  license or certificate holder under Chapter 2005 must pay;
               (7)  the procedures for the issuance of temporary
  licenses and certificates and temporary qualification to hold
  equity interests and creditor interests in owner license and
  certificate holders under Chapter 2005;
               (8)  the manner and method of collection and payment of
  fees and the issuance of licenses and certificates;
               (9)  the definition of "unsuitable method of
  operation";
               (10)  the conditions under which the nonpayment of a
  gambling debt by a license or certificate holder constitutes
  grounds for disciplinary action;
               (11)  the manner of approval of new games and gaming
  devices and the method to determine whether the gaming device is a
  video lottery terminal that must comply with Subchapter K, Chapter
  466, Government Code;
               (12)  access to confidential information obtained
  under this chapter, Chapter 2005, or other law and means to ensure
  that the confidentiality of the information is maintained and
  protected;
               (13)  financial reporting and internal control
  requirements for license or certificate holders;
               (14)  the manner in which winnings, compensation from
  games and gaming devices, and gross gaming revenue must be computed
  and reported by an owner license or certificate holder under
  Chapter 2005;
               (15)  requirements for the annual audit of the
  financial statements of a license or certificate holder;
               (16)  requirements for periodic financial reports from
  each license or certificate holder consistent with standards and
  intervals prescribed by the commission;
               (17)  the procedures to be followed by a license or
  certificate holder for excluding a person from a casino; and
               (18)  the procedures for exempting or waiving
  institutional investors from the licensing or registration
  requirements for shareholders of publicly traded corporations.
         Sec. 2004.103.  AUTHORITY OF EXECUTIVE DIRECTOR.  (a)  With
  commission approval, the executive director may create executive
  positions as the director considers necessary to implement the
  provisions of this chapter, Chapter 2005, and any other law
  administered by the commission.
         (b)  The executive director shall employ directors in the
  areas of audit, investigation, and enforcement. The audit director
  must be a certified public accountant, have five or more years of
  progressively responsible experience in general accounting, and
  have a comprehensive knowledge of the principles and practices of
  corporate finance or must possess qualifications of an expert in
  the field of corporate finance and auditing, general finance,
  gaming, and economics. Other directors must possess five or more
  years of training and experience in the fields of investigation,
  law enforcement, law, or gaming.
         (c)  The executive director may investigate, for the purpose
  of prosecution, a suspected criminal violation of this chapter or
  another law administered by the commission. For the purpose of the
  administration and enforcement of this chapter or another law
  administered by the commission, the executive director and
  employees designated by the executive director may be commissioned
  as peace officers.
         (d)  The executive director, to further the objectives and
  purposes of this chapter or another law administered by the
  commission, may:
               (1)  direct and supervise all administrative actions of
  the commission;
               (2)  bring legal action in the name and on behalf of the
  commission;
               (3)  make, execute, and effect an agreement or contract
  authorized by the commission;
               (4)  employ the services of persons considered
  necessary for consultation or investigation and set the salaries of
  or contract for the services of legal, professional, technical, and
  operational personnel and consultants, except that outside legal
  assistance may be retained only with the approval of the attorney
  general;
               (5)  acquire furnishings, equipment, supplies,
  stationery, books, and all other things the executive director
  considers necessary or desirable in carrying out the executive
  director's functions; and
               (6)  perform other duties the executive director may
  consider necessary to effect the purposes of this chapter or
  another law administered by the commission.
         (e)  Except as otherwise provided in this chapter, the costs
  of administration incurred by the executive director shall be paid
  in the same manner as other claims against the state are paid.
         Sec. 2004.104.  OFFICE OF HEARING EXAMINERS.  (a) The
  commission shall create an office of hearing examiners to assist
  the commission in carrying out its powers and duties.
         (b)  The office of hearing examiners shall:
               (1)  hold hearings under the authority of the
  commission on matters relating to the commission's administration
  of this chapter or another law administered by the commission as the
  commission orders; and
               (2)  report after hearing in the manner prescribed by
  the commission.
         (c)  The commission shall refer any contested case arising
  under this chapter or another law administered by the commission to
  the office of hearing examiners.
         (d)  The office of hearing examiners is independent of the
  executive director and is under the exclusive control of the
  commission.
         (e)  The office of hearing examiners is under the direction
  of a chief hearing examiner appointed by the commission.
         (f)  The commission may authorize the chief hearing examiner
  to delegate to one or more hearing examiners the authority to hold
  any hearing called by the chief hearing examiner.
         (g)  The chief hearing examiner and all assistant hearing
  examiners employed by the office of hearing examiners must be
  attorneys licensed to practice law in this state.
         (h)  The chief hearing examiner and all assistant hearing
  examiners may administer oaths, receive evidence, and issue
  subpoenas to compel the attendance of witnesses and the production
  of papers and documents in all matters delegated by the commission.
         (i)  The chief hearing examiner and all assistant hearing
  examiners are entitled to an annual salary and other compensation
  specified by the commission.
         (j)  The office of hearing examiners may contract for
  additional services it considers necessary to carry out its powers.
         Sec. 2004.105.  JUDICIAL REVIEW IN CONTESTED CASES.  A final
  ruling of the commission in a contested case is subject to judicial
  review under Chapter 2001, Government Code.  Judicial review is
  under the substantial evidence rule.
         Sec. 2004.106.  RECORDS.  (a) The executive director shall
  maintain a file of all applications for licenses, registrations, or
  approvals under Chapter 2005 or another law administered by the
  commission, together with a record of all action taken with respect
  to the applications.
         (b)  The commission and the executive director may maintain
  other records they consider desirable.
         (c)  The information made confidential by this subsection
  may be revealed, wholly or partly, only in the course of the
  necessary administration of this chapter or other law administered
  by the commission, under Section 2005.452, or on the order of a
  court of competent jurisdiction, except that the executive director
  or the commission may disclose the information to an authorized
  agent of any agency of the United States, another state, or a
  political subdivision of this state authorized under commission
  rules. Notice of the content of any information furnished or
  released under this subsection may be given to any affected
  applicant or license, certificate of registration, or approval
  holder as prescribed by commission rule. The following information
  is confidential:
               (1)  information requested by the commission or the
  executive director to be furnished to either of them under this
  chapter, Chapter 2005, or another law administered by the
  commission or that may otherwise be obtained relating to the
  finances, earnings, or revenue of an applicant or license,
  registration, or approval holder;
               (2)  information pertaining to an applicant's criminal
  record, antecedents, and background that has been furnished to or
  obtained by the commission or the executive director from any
  source;
               (3)  information provided to the commission or the
  executive director or a commission employee by a governmental
  agency or an informer or on the assurance that the information will
  be held in confidence and treated as confidential; and
               (4)  information obtained by the executive director or
  the commission from a license, certificate, or approval holder,
  including a casino service license holder, relating to the
  manufacturing, modification, or repair of gaming devices.
         Sec. 2004.107.  REPRESENTATION BY ATTORNEY GENERAL.  (a)
  The attorney general shall represent the commission and the
  executive director in any proceeding to which the commission or the
  executive director is a party under this chapter or another law
  administered by the commission or in any suit filed against the
  commission or executive director.
         (b)  The office of the attorney general on request shall
  advise the commission and the executive director in all other
  matters, including representing the commission when the commission
  acts in its official capacity.
         Sec. 2004.108.  RULES RESTRICTING ADVERTISING OR
  COMPETITIVE BIDDING. (a) The commission may not adopt rules
  restricting advertising or competitive bidding by a person
  regulated by the commission except to prohibit false, misleading,
  or deceptive practices by that person.
         (b)  The commission may not include in its rules to prohibit
  false, misleading, or deceptive practices by a person regulated by
  the commission a rule that:
               (1)  restricts the use of any advertising medium;
               (2)  restricts the person's personal appearance or the
  use of the person's voice in an advertisement;
               (3)  relates to the size or duration of an
  advertisement by the person; or
               (4)  restricts the use of a trade name in advertising by
  the person.
         Sec. 2004.109.  RULES ON CONSEQUENCES OF CRIMINAL
  CONVICTION.  (a)  The commission shall adopt rules necessary to
  comply with Chapter 53.
         (b)  In its rules under this section, the commission shall
  list the specific offenses for which a conviction would constitute
  grounds for the commission to take action under Section 53.021.
         Sec. 2004.110.  SUBPOENA. (a) The commission may request
  and, if necessary, compel by subpoena:
               (1)  the attendance of a witness for examination under
  oath; and
               (2)  the production for inspection and copying of
  records and other evidence relevant to the investigation of an
  alleged violation of this chapter or another law administered by
  the commission.
         (b)  If a person fails to comply with a subpoena issued under
  this section, the commission, acting through the attorney general,
  may file suit to enforce the subpoena in a district court in Travis
  County or in the county in which a hearing conducted by the
  commission may be held.
         (c)  The court shall order a person to comply with the
  subpoena if the court determines that good cause exists for issuing
  the subpoena.
         Sec. 2004.111.  USE OF TECHNOLOGY. The commission shall
  implement a policy requiring the commission to use appropriate
  technological solutions to improve the commission's ability to
  perform its functions. The policy must ensure that the public is
  able to interact with the commission on the Internet.
         Sec. 2004.112.  NEGOTIATED RULEMAKING AND ALTERNATIVE
  DISPUTE RESOLUTION POLICY. (a) The commission shall develop and
  implement a policy to encourage the use of:
               (1)  negotiated rulemaking procedures under Chapter
  2008, Government Code, for the adoption of commission rules; and
               (2)  appropriate alternative dispute resolution
  procedures under Chapter 2009, Government Code, to assist in the
  resolution of internal and external disputes under the commission's
  jurisdiction.
         (b)  The commission's procedures relating to alternative
  dispute resolution must conform, to the extent possible, to any
  model guidelines issued by the State Office of Administrative
  Hearings for the use of alternative dispute resolution by state
  agencies.
         (c)  The commission shall designate a trained person to:
               (1)  coordinate the implementation of the policy
  adopted under Subsection (a);
               (2)  serve as a resource for any training needed to
  implement the procedures for negotiated rulemaking or alternative
  dispute resolution; and
               (3)  collect data concerning the effectiveness of those
  procedures, as implemented by the commission.
         Sec. 2004.113.  COMMITTEES. The commission may appoint
  committees that it considers necessary to carry out its duties.
         Sec. 2004.114.  ANNUAL REPORT. (a) The commission shall
  file annually with the governor and the presiding officer of each
  house of the legislature a complete and detailed written report
  accounting for all money received and disbursed by the commission
  during the preceding fiscal year.
         (b)  The annual report must be in the form and be reported in
  the time provided by the General Appropriations Act.
         Sec. 2004.115.  GAMING AGREEMENT WITH INDIAN TRIBE.  As
  authorized by Section 47(h), Article III, Texas Constitution, the
  commission or governor may enter into a gaming agreement with an
  Indian tribe for the operation of casinos by the Indian tribe on
  tribal land.
         Sec. 2004.116.  GIFT OR POLITICAL CONTRIBUTION TO OFFICER OR
  EMPLOYEE.  (a)  A commission member, the executive director, or an
  employee of the commission may not intentionally or knowingly
  accept a gift or political contribution from:
               (1)  a person that has a significant financial interest
  in the lottery or in gaming regulated under Chapter 2005, or in any
  other activity regulated under another law administered by the
  commission;
               (2)  a person related in the first degree of
  consanguinity or affinity to a person that has a significant
  financial interest in the lottery or in gaming regulated under
  Chapter 2005, or in any other activity regulated under another law
  administered by the commission;
               (3)  a person that owns more than a 10 percent interest
  in another person that has a significant financial interest in the
  lottery or in gaming regulated under Chapter 2005, or in any other
  activity regulated under another law administered by the
  commission;
               (4)  a political committee that is directly
  established, administered, or controlled wholly or partly by a
  person that has a significant financial interest in the lottery or
  in gaming regulated under Chapter 2005, or in any other activity
  regulated under another law administered by the commission; or
               (5)  a person who, within the two years preceding the
  date of the gift or contribution, won a lottery prize exceeding $600
  in amount or value.
         (b)  A person may not make a gift or political contribution
  to a person known by the actor to be a commission member, the
  executive director, or an employee of the commission, if the actor:
               (1)  is a person that has a significant financial
  interest in the lottery or in gaming regulated under Chapter 2005,
  or in any other activity regulated under another law administered
  by the commission;
               (2)  is related in the first degree of consanguinity or
  affinity to a person that has a significant financial interest in
  the lottery or in gaming regulated under Chapter 2005, or in any
  other activity regulated under another law administered by the
  commission;
               (3)  owns more than a 10 percent interest in another
  person that has a significant financial interest in the lottery or
  in gaming regulated under Chapter 2005, or in any other activity
  regulated under another law administered by the commission;
               (4)  is a political committee that is directly
  established, administered, or controlled wholly or partly by a
  person that has a significant financial interest in the lottery or
  in gaming regulated under Chapter 2005, or in any other activity
  regulated under another law administered by the commission; or
               (5)  within the two years preceding the date of the gift
  or contribution, won a lottery prize exceeding $600 in amount or
  value.
         (c)  A person commits an offense if the person violates this
  section. An offense under this section is a Class A misdemeanor.
         Sec. 2004.117.  DIVISIONS.  (a)  The commission shall
  establish separate divisions to oversee and regulate:
               (1)  bingo;
               (2)  the state lottery;
               (3)  video lottery;
               (4)  combative sports and boxing;
               (5)  casino gaming; and
               (6)  pari-mutuel racing.
         (b)  To facilitate the operations of the commission or a
  division of the commission, the commission or executive director
  may delegate to a division or a division director a specific power
  or duty given to the commission or executive director under this
  chapter or other law.
         (c)  A division director shall, at the request of the
  executive commissioner, assist in the development of rules and
  policies for the operation and provision of a division of the
  commission. The division director:
               (1)  acts on behalf of the executive director in
  performing the delegated function; and
               (2)  reports to the executive director regarding the
  delegated function and any matter affecting commission programs and
  operations.
         (d)  The commission shall delegate responsibilities in the
  administration of Chapter 466, Government Code, to the executive
  director, the director of the appropriate division, and the
  division's staff; provided, however, that the commission may not
  delegate the following actions:
               (1)  a final determination in any application or
  request for licensing or registration under Chapter 466;
               (2)  a final determination in any proceeding involving
  the suspension or revocation of a certificate of registration or
  license under Chapter 466;
               (3)  a final determination that Chapter 466 has been
  violated; or
               (4)  a final determination or imposition of an
  assessment of fines or penalties under a law administered by the
  commission.
         Sec. 2004.118.  RESTRICTIONS ON EMPLOYMENT.  (a)  The
  commission may not employ or continue to employ a person who owns a
  financial interest in:
               (1)  a bingo commercial lessor, bingo distributor, or
  bingo manufacturer;
               (2)  a lottery sales agency or a lottery operator;
               (3)  any video lottery activity regulated under
  Subchapter K, Chapter 466, Government Code, or a person licensed,
  registered, or approved under that subchapter;
               (4)  any gaming activity regulated under this chapter
  or Chapter 2005 or a person licensed under Chapter 2005;
               (5)  combative sports regulated under Chapter 2052; or
               (6)  pari-mutuel wagering regulated under the Texas
  Racing Act (Article 179e, Vernon's Texas Civil Statutes).
         (b)  The commission may not employ or continue to employ a
  person who is a spouse, child, brother, sister, or parent residing
  as a member of the same household in the principal place of
  residence of a person who is subject to a disqualification
  prescribed by Subsection (a).
         (c)  In employing the executive director and other
  employees, the commission shall strive to reflect the diversity of
  the population of the state as regards race, color, handicap, sex,
  religion, age, and national origin.
  [Sections 2004.119-2004.150 reserved for expansion]
  SUBCHAPTER D. PUBLIC PARTICIPATION AND COMPLAINT PROCEDURES
         Sec. 2004.151.  PUBLIC INTEREST INFORMATION. (a)  The
  commission shall prepare and disseminate consumer information that
  describes the regulatory functions of the commission and the
  procedures by which consumer complaints are filed with and resolved
  by the commission.
         (b)  The commission shall make the information available to
  the public and appropriate state agencies.
         Sec. 2004.152.  COMPLAINTS. (a)  The commission by rule
  shall establish methods by which consumers and service recipients
  are notified of the name, mailing address, and telephone number of
  the commission for the purpose of directing complaints to the
  commission. The commission may provide for that notice:
               (1)  on each form, application, or written contract for
  services of a person regulated under a law administered by the
  commission;
               (2)  on a sign prominently displayed in the place of
  business of each person regulated under a law administered by the
  commission; or
               (3)  in a bill for service provided by a person
  regulated under a law administered by the commission.
         (b)  The commission shall list with its regular telephone
  number any toll-free telephone number established under other state
  law that may be called to present a complaint about a person
  regulated under a law administered by the commission.
         Sec. 2004.153.  RECORDS OF COMPLAINTS. (a) The commission
  shall maintain a system to promptly and efficiently act on
  complaints filed with the commission. The commission shall
  maintain:
               (1)  information about the parties to the complaint and
  the subject matter of the complaint;
               (2)  a summary of the results of the review or
  investigation of the complaint; and
               (3)  information about the disposition of the
  complaint.
         (b)  The commission shall make information available
  describing its procedures for complaint investigation and
  resolution.
         (c)  The commission shall periodically notify the parties of
  the status of the complaint until final disposition of the
  complaint.
         Sec. 2004.154.  GENERAL RULES REGARDING COMPLAINT
  INVESTIGATION AND DISPOSITION. The commission shall adopt rules
  concerning the investigation of a complaint filed with the
  commission. The rules must:
               (1)  distinguish between categories of complaints;
               (2)  ensure that complaints are not dismissed without
  appropriate consideration;
               (3)  require that the commission be advised of a
  complaint that is dismissed and that a letter be sent to the person
  who filed the complaint explaining the action taken on the
  dismissed complaint;
               (4)  ensure that the person who files a complaint has an
  opportunity to explain the allegations made in the complaint; and
               (5)  prescribe guidelines concerning the categories of
  complaints that require the use of a private investigator and the
  procedures for the commission to obtain the services of a private
  investigator.
         Sec. 2004.155.  DISPOSITION OF COMPLAINT. (a) The
  commission shall:
               (1)  dispose of each complaint in a timely manner; and
               (2)  establish a schedule for conducting each phase of
  a complaint that is under the control of the commission not later
  than the 30th day after the date the commission receives the
  complaint.
         (b)  Each party shall be notified of the projected time
  requirements for pursuing the complaint. The commission shall
  notify each party to the complaint of any change in the schedule
  established under Subsection (a)(2) not later than the seventh day
  after the date the change is made.
         (c)  The executive director shall notify the commission of a
  complaint that is not resolved within the time prescribed by the
  commission for resolving the complaint.
         Sec. 2004.156.  PUBLIC PARTICIPATION. (a) The commission
  shall develop and implement policies that provide the public with a
  reasonable opportunity to appear before the commission and to speak
  on any issue under the commission's jurisdiction.
         (b)  The commission shall prepare and maintain a written plan
  that describes how a person who does not speak English may be
  provided reasonable access to the commission's programs.
         Sec. 2004.157.  INFORMAL SETTLEMENT CONFERENCE. The
  commission shall establish guidelines for an informal settlement
  conference related to a complaint filed with the commission.
  CHAPTER 2005. CASINO GAMBLING
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2005.001.  PUBLIC POLICY.  (a) All casino gaming that
  is conducted in this state and that is authorized by law shall be
  regulated and licensed under this chapter, unless the legislature
  or federal law specifically provides otherwise.
         (b)  The legislature hereby finds, and declares it to be the
  public policy of this state, that:
               (1)  the development of regulated limited casino gaming
  in the state will benefit the general welfare of the people of this
  state by enhancing investment, development, and tourism in this
  state, resulting in new jobs and additional revenues to the state;
               (2)  the conduct of regulated casino gaming in a
  limited number of casinos will not harm the people of this state;
               (3)  the regulation of gaming in this state is
  important to ensure that gaming is:
                     (A)  conducted honestly and competitively; and
                     (B)  free from criminal and corruptive elements;
               (4)  public confidence and trust can be maintained only
  by strict regulation of all persons, locations, practices,
  associations, and activities related to the conduct of gaming and
  the casino service industry;
               (5)  persons owning any direct or indirect material
  interest in a casino should be licensed and controlled to protect
  the public health, safety, morals, good order, and general welfare
  of the people of this state;
               (6)  certain operators and employees of casinos should
  be regulated, licensed, and controlled to accomplish and promote
  these public policies while protecting the public health, safety,
  morals, good order, and general welfare of the people of this state;
               (7)  certain persons engaging in the casino service
  industry should be regulated, licensed, and controlled to
  accomplish and promote these public policies while protecting the
  public health, safety, morals, good order, and general welfare of
  the people of this state; and
               (8)  it is the intent of this chapter, where possible,
  to use the resources, goods, labor, and services of the people of
  this state in the operation and construction of casinos and
  casino-related amenities to the extent allowable by law.
         Sec. 2005.002.  DEFINITIONS.  In this chapter:
               (1)  "Affiliate" means a person who, directly or
  indirectly through one or more intermediaries, controls, is
  controlled by, or is under common control with another person. A
  person is considered to control a company if the person
  beneficially owns more than a five percent equity interest in the
  company under the beneficial ownership rules adopted by the
  commission.
               (2)  "Applicant" means a person who has applied for a
  license or for a qualification to hold an equity interest or
  creditor interest in an owner license holder or who has applied for
  the approval of any act or transaction for which approval is
  required or allowed under this chapter.
               (3)  "Associated equipment" means any equipment or
  mechanical, electromechanical, or electronic contrivance,
  component, or machine used in connection with gaming or with any
  game that would not otherwise be classified as a gaming device,
  including dice, playing cards, equipment affecting the proper
  reporting of gross gaming revenue, and devices for weighing or
  counting money.
               (4)  "Casino" means a facility at which gambling games
  are conducted for profit that are not authorized by a law other than
  this chapter.
               (5)  "Casino operator" means a person, other than the
  owner license holder, who contractually agrees to provide
  operational and managerial services for the operation of a casino
  on behalf of the owner license holder in return for receiving a
  payment based in whole or part on profits or receipts from the
  casino.
               (6)  "Casino service" means the provision of goods or
  services, including security service and gaming schools, to a
  person holding an owner's or operator's license under this chapter,
  other than a service requiring a provider's license.
               (7)  "Commission" means the Texas Gaming and Boxing
  Commission.
               (8)  "Company" means a corporation, partnership,
  limited partnership, trust, association, joint stock company,
  joint venture, limited liability company, or other form of business
  organization, but does not include a sole proprietorship or natural
  person.
               (9)  "Creditor interest" means a right or claim of any
  character against a person for the payment of money borrowed,
  whether secured or unsecured, matured or unmatured, liquidated or
  absolute, fixed or contingent, and includes an obligation based on
  the person's profits or receipts.
               (10)  "Director" means a member of the board of
  directors of a corporation and a person performing similar
  functions with respect to a company other than a corporation.
               (11)  "Distributor" means a person in the business of
  distributing gaming devices used for gambling games.
               (12)  "Equity interest" means a proprietary interest,
  right, or claim allowing the holder either to vote with respect to
  matters of organizational governance or to participate in the
  profits and residual assets of a company, including common and
  preferred stock in a corporation, a general or limited partnership
  interest in a partnership, a similar interest in any other form of
  business organization, and a warrant, right, or similar interest
  convertible into, or to subscribe for, a proprietary right or
  claim, with or without the payment of additional consideration.
               (13)  "Executive director" means the executive
  director of the commission.
               (14)  "Family" means, with respect to a natural person,
  any other natural person related to the person within the second
  degree by affinity or the third degree by consanguinity, as
  determined under Subchapter B, Chapter 573, Government Code.
               (15)  "Game" or "gambling game":
                     (A)  means any game or similar activity that
  involves the making of a bet, as defined by Section 47.01, Penal
  Code, for consideration, and includes:
                           (i)  a banking or percentage game played
  with cards, dice, or a mechanical, electromechanical, or electronic
  device or machine for money, property, checks, credit, or a
  representative of value, including roulette, keno, twenty-one,
  blackjack, craps, poker, chuck-a-luck (dai shu), wheel of fortune,
  chemin de fer, baccarat, pai gow, and any other game or device
  approved by the commission;
                           (ii)  simulcast wagering on pari-mutuel
  greyhound or horse racing;
                           (iii)  the maintenance of a race book; and
                           (iv)  any other method of effecting a wager
  approved by the commission; and
                     (B)  does not include:
                           (i)  bingo, as authorized by Chapter 2001;
                           (ii)  charitable raffles, as authorized by
  Chapter 2002; or
                           (iii)  the state lottery or video lottery
  games conducted under Chapter 466, Government Code.
               (16)  "Gaming" or "gambling" means to deal, operate,
  carry on, conduct, maintain, or expose for play a game in a casino.
               (17)  "Gaming device" means a mechanical,
  electromechanical, or electronic contrivance, component, or
  machine used in connection with gaming or a game that affects the
  result of a wager by determining win or loss. The term includes a
  system for processing information that can alter the normal
  criteria of random selection, affect the operation of a game, or
  determine the outcome of a game.
               (18)  "Gaming employee":
                     (A)  means an individual directly involved in the
  operation or conduct of gaming in a casino performing a service in a
  capacity that the commission finds appropriate for occupational
  licensing under Section 2005.102 and includes:
                           (i)  a boxman, a cashier, change personnel,
  counting room personnel, a dealer, a floor person, a host empowered
  to extend credit or complimentary services, a keno runner, a keno
  writer, a machine mechanic, or security personnel;
                           (ii)  a shift or pit boss or a supervisor or
  manager involved in gaming activities;
                           (iii)  accounting or internal auditing
  personnel directly involved in recordkeeping or the examination of
  records generated from gaming activities; and
                           (iv)  a junketeer or other independent agent
  whose compensation is based on how much a patron wagers or loses or
  who is paid per patron more than the price of admission; and
                     (B)  does not include bartenders, cocktail
  waitresses, or other individuals engaged exclusively in preparing
  or serving food or beverages or individuals providing nominal,
  complimentary, or maintenance services.
               (19)  "Gross gaming revenue":
                     (A)  means the total of the following, less the
  total of all cash paid out as losses to patrons and those amounts
  paid to purchase annuities to fund losses paid to patrons by
  independent financial institutions:
                           (i)  cash received by an owner license
  holder as winnings;
                           (ii)  cash received by an owner license
  holder in payment for credit extended by the owner license holder to
  a patron for the purposes of gaming; and
                           (iii)  compensation received by an owner
  license holder for conducting any game in which the owner license
  holder is not a party to a wager; and
                     (B)  does not include:
                           (i)  counterfeit money or tokens;
                           (ii)  coins of other countries that are
  received in gaming devices;
                           (iii)  cash taken in fraudulent acts
  perpetrated against an owner license holder for which the license
  holder is not reimbursed;
                           (iv)  cash received as entry fees for
  contests or tournaments in which the patrons compete for prizes; or
                           (v)  compensation received by an owner
  license holder for the operation of video lottery games.
               (20)  "Hearing examiner" means a person authorized by
  the commission to conduct hearings.
               (21)  "Institutional investor" means a person, other
  than a state or federal pension plan, that meets the requirements of
  a "qualified institutional buyer" as defined in Section 144A,
  Securities Act of 1933 (17 C.F.R. Section 230.144A), as amended,
  and is:
                     (A)  a bank as defined in Section 3(a)(6),
  Securities Exchange Act of 1934 (15 U.S.C. Section 78c), as
  amended;
                     (B)  an insurance company as defined in Section
  2(a)(17), Investment Company Act of 1940 (15 U.S.C. Section 80a-2),
  as amended;
                     (C)  an investment company registered under
  Section 8, Investment Company Act of 1940 (15 U.S.C. Section
  80a-8), as amended;
                     (D)  an investment adviser registered under
  Section 203, Investment Advisers Act of 1940 (15 U.S.C. Section
  80b-3), as amended;
                     (E)  a collective trust fund as defined by Section
  3(c)(11), Investment Company Act of 1940 (15 U.S.C. Section 80a-3),
  as amended;
                     (F)  an employee benefit plan or pension fund that
  is subject to the Employee Retirement Income Security Act of 1974
  (29 U.S.C. Section 1001 et seq.), as amended, excluding an employee
  benefit plan or pension fund sponsored by a publicly traded
  corporation registered with the commission;
                     (G)  a state or federal government pension plan;
                     (H)  a group composed entirely of persons
  specified in Paragraphs (A)-(F); or
                     (I)  such other persons as the commission may
  determine for reasons consistent with the policies expressed in
  Section 2005.001.
               (22)  "Key executive" means a corporation's directors
  and executive officers, a partnership's general partners, a trust's
  trustee, a joint venture's managing venturers, and each person
  possessing similar responsibilities and authorities in any other
  form of business organization.
               (23)  "Manufacturer" means a person in the business of
  manufacturing gaming devices used for gambling games.
               (24)  "Negotiable instrument" means a writing that
  evidences a transaction between a natural person and an owner
  license holder at the time of the transaction whose gaming chips,
  tokens, or currency are exchanged for the instrument and includes a
  writing taken in consolidation, redemption, or payment of a prior
  instrument.
               (25)  "Principal manager" means a person who, as
  determined under the rules of the commission, holds or exercises
  managerial, supervisory, or policy-making authority over the
  management or operation of a gaming activity or casino service that
  in the judgment of the commission warrants the occupational
  licensing as a principal manager for the protection of the public
  interest. "Principal manager" includes a key executive of a
  license holder that is a company and each person controlling a
  license holder that is a company.
               (26)  "Project commitment" means, with respect to an
  application for an owner's license for a proposed casino, the total
  cost of constructing and furnishing the casino and any related
  hotel and entertainment, retail, and parking facilities, including
  the cost of acquiring and preparing the underlying real estate, the
  cost of obtaining requisite permits and approvals, the cost of
  acquiring and installing gaming devices and associated equipment,
  and fees for professional services and financing.
               (27)  "Publicly traded company":
                     (A)  means a company that:
                           (i)  has one or more classes of securities
  registered under Section 12, Securities Exchange Act of 1934 (15
  U.S.C. Section 78l), as amended; or
                           (ii)  is an issuer subject to Section 15(d),
  Securities Exchange Act of 1934 (15 U.S.C. Section 78o), as
  amended; and
                     (B)  does not include a company or other legal
  entity that has securities registered or is considered to be an
  issuer solely because it guaranteed a security issued by an
  affiliate under a public offering or is considered to be a co-issuer
  of a public offering of securities under 17 C.F.R. Section 230.140.
               (28)  "Race book" means wagers accepted on the outcome
  of an event held at a greyhound or horse racetrack that uses the
  pari-mutuel system of wagering.
               (29)  "Video lottery game," "video lottery retailer," 
  and "video lottery terminal" have the meanings assigned by Section
  466.002, Government Code.
         Sec. 2005.003.  EXEMPTION FROM FEDERAL STATUTES.  (a) Under
  Section 2, 64 Stat. 1134 (15 U.S.C. Section 1172), as amended, this
  state declares that this state is exempt from that section.
         (b)  All shipments of gaming devices into this state, the
  registering, recording, and labeling of which has been performed by
  the supplier under Sections 3 and 4 of the act of the Congress of the
  United States entitled "An act to prohibit transportation of
  gambling devices in interstate and foreign commerce," approved
  January 2, 1951, Chapter 1194, 64 Stat. 1134, designated as 15
  U.S.C. Sections 1171-1178, are legal shipments of the devices into
  this state.
  [Sections 2005.004-2005.050 reserved for expansion]
  SUBCHAPTER B. CASINO OWNER'S LICENSE
         Sec. 2005.051.  OWNER'S LICENSE; GAMING AUTHORIZED.  (a)
  Gaming may lawfully be conducted at a casino operating under an
  owner's license.
         (b)  A person may not conduct gaming or own an equity
  interest in a casino that conducts gaming in this state for which an
  owner's license is not in effect.
         (c)  A separate owner's license must be obtained for each
  casino at which gaming is conducted.
         (d)  An owner's license entitles the license holder to
  operate video lottery terminals at the casino in the same manner as
  a video lottery retailer may operate video lottery terminals at a
  video lottery terminal establishment under Subchapter K, Chapter
  466, Government Code. The casino owner must comply with all
  requirements, other than licensing requirements, for the operation
  of video lottery terminals under Subchapter K, Chapter 466,
  Government Code, except as otherwise provided by commission rule.
  Gaming may not be conducted at a casino using a slot machine or
  similar device, including any electronic device that determines the
  outcome of a game, unless the machine or device is a video lottery
  terminal.
         Sec. 2005.052.  ALLOCATION OF OWNER'S LICENSES. (a) Except
  as otherwise provided by Subsections (b) and (d), the commission
  may not award more than 12 owner's licenses in this state that are
  in effect at the same time. The commission shall award licenses to
  qualified applicants to operate casinos in each of the following
  counties as follows:
               (1)  one license in Bexar County;
               (2)  one license in Cameron County;
               (3)  one license in Dallas County;
               (4)  one license in El Paso County;
               (5)  one license in Galveston County;
               (6)  one license in Harris County;
               (7)  one license in Hidalgo County;
               (8)  one license in Jefferson County;
               (9)  one license in Nueces County;
               (10)  two licenses in Tarrant County; and
               (11)  one license in Travis County.
         (b)  In addition to the owner's licenses issued under the
  other provisions of this section, the commission may issue an
  owner's license to a pari-mutuel license holder that operates a
  class 1 or class 2 horse racetrack or a greyhound racetrack under
  the Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes)
  for which a pari-mutuel license was in effect on June 1, 2007, or
  for which a person had applied by that date for a pari-mutuel
  license to operate a class 1 or class 2 horse racetrack under that
  Act.
         (c)  A license under Subsection (b) authorizes the license
  holder to operate a casino on premises located at the racetrack.
         (d)  In addition to the owner's licenses issued under the
  other provisions of this section, the commission may issue an
  owner's license to a federally recognized Indian tribe that is
  authorized to operate video lottery games under Subchapter K,
  Chapter 466, Government Code.  A license under this subsection
  authorizes the tribe to operate one casino on Indian land as defined
  by Section 466.002, Government Code.
         (e)  An owner's license issued by the commission under
  Subsection (d) to an Indian tribe constitutes an agreement between
  this state and the tribe for purposes of the Indian Gaming
  Regulatory Act (25 U.S.C. Section 2701 et seq.).
         (f)  The commission may not issue an owner's license under
  Subsection (a) or (b) to operate a casino in a county in which
  gaming is being conducted under the Indian Gaming Regulatory Act
  (25 U.S.C. Section 2701 et seq.) as of January 1, 2008.
         (g)  In awarding licenses under Subsection (a), the
  commission shall consider, in addition to the other suitability
  criteria described in this chapter, the ability of the proposed
  casino facility to attract interstate or international tourism and
  to develop substantial new employment.
         (h)  For purposes of determining the location of a casino, a
  casino is considered to be located in the municipality in which the
  main public entrance to the casino is located or, if the main public
  entrance is located outside a municipality, in the county in which
  the entrance is located.
         (i)  A person may not beneficially own, directly or
  indirectly, an equity interest of more than five percent of the
  total equity interest in more than three owner license holders.
         (j)  A person may not operate, either under an owner's
  license or under an operator's license, more than three casinos.
         (k)  The issuance of an owner's license under this section is
  subject to the applicant's satisfaction of all application,
  applicant eligibility, suitability, and other criteria applicable
  to applicants under this section, except those relating to
  requisite economic impact under Section 2005.056. Except as
  otherwise provided in this chapter, all provisions of this chapter
  apply equally to license holders under this section.
         (l)  Notwithstanding anything to the contrary in the Texas
  Racing Act (Article 179e, Vernon's Texas Civil Statutes), all
  matters relating to owner's licenses issued under Subsection (b),
  including licensing, manner of operation, and enforcement, are
  regulated exclusively by the commission.
         (m)  Except as to simulcast common pool wagering conducted in
  a casino and except as otherwise authorized by the commission, the
  casino operations and financial records of an owner license holder
  under Subsection (b) shall be kept separate from the racing
  operations and records of the license holder.
         (n)  The commission shall adopt rules requiring the
  continued common ownership of a casino licensed under Subsection
  (c) and the racetrack associated with the casino.
         (o)  An Indian tribe to which Subsection (d) applies may, in
  lieu of an owner's license, operate a casino on Indian land
  described by Subsection (d) under an agreement with this state.  The
  agreement is governed by Sections 466.576 and 466.577, Government
  Code, except that the commission by rule may modify the provisions
  of Section 466.576 to make those provisions applicable to casino
  gaming.
         Sec. 2005.053.  APPLICATION.  (a) An application for an
  owner's license shall be made according to commission rule and
  shall contain the information the commission requires to determine
  the suitability and eligibility of the applicant, the eligibility
  of the proposed location, and the economic impact of the overall
  casino project.
         (b)  In addition to any other information the commission may
  require, an application must include the following information
  concerning the feasibility of the overall casino project:
               (1)  evidence that the applicant possesses, or has the
  right to acquire, sufficient real property on which the proposed
  casino will be located in order to allow the applicant's
  construction and operation of the casino project substantially as
  proposed;
               (2)  evidence that the applicant possesses, or
  reasonably expects to obtain, all state, county, and municipal
  permits and approvals necessary for the construction and operation
  of the proposed casino within the time periods prescribed in this
  chapter;
               (3)  evidence that the applicant possesses, or
  reasonably expects to obtain, all funds or financing necessary to
  construct and operate the applicant's proposed casino within the
  time periods prescribed in this chapter; and
               (4)  evidence that the applicant is prepared to begin
  construction of its proposed casino promptly on receiving an
  owner's license and to proceed with the construction of the casino
  without unnecessary delay.
         (c)  An applicant may apply for more than one owner's license
  relating to more than one casino, but must submit a separate
  application for each casino for which an owner's license is sought.
         (d)  An application for an owner's license must be
  accompanied by the nonrefundable application fee set out in Section
  2005.251.
         (e)  For a license to be issued under Section 2005.052(a) or
  (b) for a county, the commission shall establish a license
  application period of not less than 60 days.  If the commission does
  not award the license to an applicant that applied within the
  period, the commission shall establish another license application
  period for that license.
         Sec. 2005.054.  APPLICATION NOT CONSIDERED FILED.  An
  application is not considered filed for purposes of this subchapter
  that does not include the information prescribed by Section
  2005.053(b) or that is not accompanied by the prescribed
  application fee.
         Sec. 2005.055.  LICENSE AWARD CONSIDERATIONS.  (a) The
  commission shall determine the initial and continuing suitability
  of each applicant for or holder of an owner's license based on
  suitability criteria the commission adopts to ensure that all owner
  license holders are of good character, honesty, integrity, and
  financial stability, that an owner license holder has sufficient
  business probity, competence, and experience in gaming, and that an
  owner license holder is otherwise qualified to be licensed.
         (b)  The commission shall give due consideration to the
  protection of the public health, safety, morals, and general
  welfare of the people of this state and for the reputation of the
  state's gaming industry.
         (c)  The burden of proving suitability to receive or hold an
  owner's license is on the applicant or license holder.
         (d)  In considering the initial and continuing suitability
  of an applicant for or holder of an owner's license, the commission
  may consider the suitability of:
               (1)  each person holding an equity interest or creditor
  interest in the applicant or holder;
               (2)  each person holding, or proposed to receive, an
  operator's license, occupational license, or manufacturer's or
  distributor's license employed by or doing business with the
  applicant or holder; and
               (3)  each affiliate of the applicant or holder.
         (e)  An applicant for or holder of an owner's license may not
  receive or hold an owner's license if the person:
               (1)  has ever been convicted of a felony under the laws
  of this state, any other state, or the United States;
               (2)  has ever been convicted of a gambling or gaming
  violation under the laws of this state or any other state;
               (3)  has ever knowingly or intentionally submitted an
  application for a license under this chapter that contained false
  information;
               (4)  served as a principal manager for a person
  described by Subdivision (1), (2), or (3);
               (5)  retains or employs another person described by
  Subdivision (1), (2), or (3);
               (6)  beneficially owns any material equity interest or
  creditor interest in the applicant or holder and is a person
  described by Subdivision (1), (2), or (3);
               (7)  holds a manufacturer's or distributor's license or
  casino service license;
               (8)  is a member of the commission; or
               (9)  is a member of the judiciary or an elected official
  of this state.
         (f)  The commission may adopt rules providing for a person's
  reciprocal determination of suitability to hold an owner's license
  based on:
               (1)  a determination of suitability to own and operate
  a casino in any other jurisdiction the commission considers
  reasonable in light of the purpose of this chapter; or
               (2)  the person's ownership of a greyhound or class 1
  horse racing facility under the Texas Racing Act (Article 179e,
  Vernon's Texas Civil Statutes).
         Sec. 2005.056.  ECONOMIC IMPACT ANALYSIS.  (a) In
  determining whether or, in the case of multiple applicants
  competing for one owner's license to operate a casino within a
  county, to whom to award an owner's license, the commission shall
  consider the following factors:
               (1)  the relative prospective revenues to be collected
  by the state from the conduct of gaming at the casino and the
  overall economic impact of each competing applicant's proposed
  casino and associated facilities;
               (2)  the relative number of residents of this state who
  would be employed in an applicant's proposed casino and any
  proposed associated hotel and nongaming businesses and the relative
  extent of the applicant's good faith plan to recruit, train, and
  promote a workforce that reflects the diverse populations of this
  state in all employment classifications;
               (3)  the relative extent to which an applicant's
  proposed casino and any proposed associated hotel and nongaming
  businesses could be reasonably expected to encourage interstate
  tourism to this state;
               (4)  the relative extent to which the scope, design,
  location, and construction of the applicant's casino and any
  associated hotel and nongaming businesses could be reasonably
  expected to contribute to developing a first-class gaming industry
  in this state; and
               (5)  the applicant's experience in conducting licensed
  gaming operations and the applicant's financial ability to promptly
  construct and adequately maintain the casino sought to be licensed,
  including the experience of partners of the applicant, of
  affiliated companies of the applicant or its partners, of key
  personnel of the applicant or its partners, and of operating
  companies under contract with the applicant.
         (b)  To ensure that a requisite level of economic development
  benefiting the people of this state accompanies each casino for
  which an owner's license is granted, the commission shall require
  an applicant, as a condition to receiving and holding an owner's
  license, to commit to provide new investment in conjunction with
  the casino.
         (c)  The commission may not award an owner's license under
  Section 2005.052(a) to operate a casino unless the casino project
  meets the major economic development qualifications established by
  this subsection.  To qualify for an owner's license, the applicant
  must demonstrate that the casino project will incur total land and
  development costs of not less than $400 million, or, for a casino
  located in a county bordering on the Gulf of Mexico to be operated
  under a license issued under Section 2005.052(a), $250 million.  
  The commission shall revoke an owner's license for which the
  required amount of land and development costs are not invested as
  stated in the license application.
         Sec. 2005.058.  REVIEW OF APPLICATION.  (a) The commission
  shall issue an order approving or denying an application for an
  owner's license not more than six months after the date of the
  filing of the application.
         (b)  The commission may adopt rules for awarding temporary or
  interim licensing the commission finds necessary to administer this
  chapter.
         Sec. 2005.059.  TRANSFERABILITY.  (a)  An owner's license is
  not transferable and applies only to the specific site identified
  in the license.
         (b)  Except as provided by Section 2005.062, an owner license
  holder that sells, transfers, assigns, or otherwise conveys any
  interest in the owner's license or the casino owned or managed by
  the license holder before casino operations begin at the casino or
  before the fifth anniversary of the commencement of casino
  operations shall remit to this state a transfer fee equal to 51
  percent of the sales, transfer, assignment, or other conveyance
  price received by the license holder.
         Sec. 2005.060.  DENIAL AND REVOCATION.  (a) The commission
  may deny an application or revoke an owner's license for a
  reasonable cause.
         (b)  If the commission determines it has reasonable grounds
  to believe that an owner license holder may be unsuitable to
  continue to hold an owner's license, the commission shall conduct
  an investigation and hearing under Section 2005.451 and may, based
  on its determination, suspend, limit, or revoke the license. On
  suspension or revocation of an owner's license, the former license
  holder must immediately cease all gaming.
         (c)  If an owner's license holder fails to begin construction
  of a casino within one year after the receipt of the owner's
  license, or fails to begin gaming operations within three years
  after the receipt of the license, the license is forfeited, unless
  the commission, for good cause, has previously granted an
  appropriate extension of time.
         (d)  The right to receive and hold an owner's license is a
  revocable privilege, and not a right or property under the United
  States Constitution or the Texas Constitution. An applicant for or
  holder of an owner's license does not have a vested interest or
  right in a license granted under this chapter.
         Sec. 2005.061.  REGISTRATION OF INTEREST IN LICENSE.  (a)
  Except as provided by Subsection (b), a person who directly or
  indirectly owns an equity or creditor interest in an applicant for
  or holder of an owner's license shall register and qualify with the
  commission under commission rules and shall provide information the
  commission finds necessary to determine the suitability and
  eligibility of the person to retain the interest.
         (b)  The following persons are not required to register or
  qualify under this section:
               (1)  a key employee of the owner license holder that is
  required to apply for an occupational license under Section
  2005.102;
               (2)  an institutional investor;
               (3)  a person that beneficially owns five percent or
  less of the total equity or creditor interest of the owner license
  holder; and
               (4)  any other group or class of persons that the
  commission by rule exempts from registration or qualification.
         (c)  A registration filed under this section must be
  accompanied by the application fee set out in Section 2005.251.
         Sec. 2005.062.  TRANSFERABILITY OF INTEREST.  (a) Except as
  provided by this subsection, an owner license holder may not issue
  an equity or creditor interest to a person without the commission's
  determination of the qualification of the proposed subscriber or
  purchaser to hold the interest. An owner license holder that is a
  publicly held company may issue equity or creditor interests of
  five percent or less of its equity or creditor interest to any
  person without the consent of the commission.
         (b)  A person beneficially owning more than five percent of
  the equity or creditor interest of an owner license holder may not
  transfer any portion of the interest in the license holder to any
  person without the commission's determination of the qualification
  of the proposed transferee to hold the interest.
         (c)  A subscriber or proposed transferee of an interest by an
  owner license holder shall provide the commission with information
  the commission considers necessary to determine the qualification
  of the person. The commission, not later than 60 days after the
  date of the application, shall determine the qualification of a
  subscriber or proposed transferee and approve or deny the issuance
  or transfer.
         Sec. 2005.063.  DETERMINATION OF QUALIFICATION.  (a) The
  commission shall determine the qualification of a person to acquire
  or continue to hold an equity or creditor interest in an applicant
  for or holder of an owner's license based on the qualification
  requirements the commission adopts for the protection of the public
  interest to ensure that the persons holding securities issued by
  license holders are of good character, honesty, integrity, and
  financial stability, and are otherwise qualified to hold the
  interest.
         (b)  The burden of proving qualification to acquire or hold
  an equity or creditor interest in a license holder is on the person
  acquiring or holding the interest.
         (c)  A person is unsuitable to acquire or retain an equity or
  creditor interest in an applicant for or holder of an owner's
  license if the person would be unsuitable to receive an owner's
  license under Section 2005.055(e).
         (d)  If the commission has reasonable grounds to believe that
  a person holding an equity or creditor interest in an applicant for
  or holder of an owner's license may be unqualified to retain
  interest, the commission shall conduct an investigation and hearing
  under Section 2005.451 and may, based on its determination, issue
  an unsuitability finding and divestiture order to the holder of the
  interest and the issuer of the interest. On receipt of a
  divestiture order, the person holding the interest shall tender its
  entire interest for purchase to the issuer or a third party on terms
  the commission approves.
         (e)  If the commission issues an unsuitability finding and
  divestiture order to a holder of an equity interest or creditor
  interest, the person subject to the order may not:
               (1)  receive, directly or indirectly, a dividend,
  interest, payment, or distribution of any kind relating to the
  security that is the subject of the order; or
               (2)  exercise, directly or indirectly, any voting power
  or other right with respect to the security to which the order
  relates.
         (f)  A person subject to an order may receive payment for the
  sale of the person's interest on terms the commission approves.
  [Sections 2005.064-2005.100 reserved for expansion]
  SUBCHAPTER C. OPERATOR'S AND OCCUPATIONAL LICENSES
         Sec. 2005.101.  OPERATOR'S LICENSE.  (a) A person may not
  provide services as a casino operator without holding an operator's
  license.
         (b)  A casino operator must hold a separate license for each
  casino that the casino operator operates unless the operator is
  also the owner of the premises and holds an owner's license for the
  premises.
         Sec. 2005.102.  OCCUPATIONAL LICENSE.  (a) A person may not
  be employed as a gaming employee without holding an occupational
  license.
         (b)  A holder of an owner's or operator's license is not
  required to obtain an occupational license to provide services as a
  gaming employee in the casino to which the license relates.
         (c)  An owner must at all times have not less than one
  occupational license holder designated as a key employee having
  responsibility over all gaming activities who shall be available at
  the casino at all times when gaming is conducted on the license
  holder's premises.
         (d)  A gaming employee designated or determined to be a key
  employee by the commission shall be issued an occupational license
  designated as a key employee occupational license. In determining
  whether an employee is a key employee, the commission is not
  restricted by the title of the job performed by the employee but may
  consider the functions and responsibilities of the employee in
  making decisions.
         (e)  A person employed in the field of gaming as a gaming
  employee shall obtain an occupational license designated as a
  support occupational license.  A person required to hold a support
  occupational license may not be a gaming employee of or assist the
  owner or operator license holder until the employee obtains a
  support occupational license. A person licensed as a key employee
  does not need to obtain a support occupational license.
         Sec. 2005.103.  APPLICATION.  (a) Application for an
  operator's license or an occupational license shall be made in
  compliance with commission rules and must contain information the
  commission finds necessary to determine the suitability and
  eligibility of the applicant to function as a casino operator or to
  be employed or retained as a gaming employee.
         (b)  An application for an operator's license or an
  occupational license must be accompanied by the required
  application fee.
         (c)  The commission may issue a temporary operator's license
  and a temporary occupational license.
         Sec. 2005.104.  RESIDENCY.  A person is eligible to apply for
  and hold an operator's license or occupational license without
  regard to the residency of the applicant.
         Sec. 2005.105.  DETERMINATION OF SUITABILITY.  (a) The
  commission shall determine the suitability of an applicant for or
  holder of an operator's license or occupational license based on
  suitability criteria the commission adopts in order to ensure that
  a license holder:
               (1)  is of good character, honesty, and integrity;
               (2)  has sufficient business probity, competence, and
  training or experience in the gaming industry to perform the
  function contemplated; and
               (3)  is otherwise qualified to be licensed.
         (b)  The burden of proving suitability to receive and hold an
  operator's license or occupational license is on the applicant or
  license holder.
         (c)  In considering the suitability of a company applying for
  or holding an operator's license or occupational license to receive
  and continue to hold the license, the commission shall consider the
  suitability of each principal manager and each holder of an equity
  interest and creditor interest of the company to individually
  receive and hold an occupational license based on the suitability
  standards that apply to the applicants for the license generally.
         (d)  A person may not be found suitable to receive or hold an
  operator's license or occupational license if that person would be
  found unsuitable to hold an owner's license under Section
  2005.055(e), except that an applicant for an operator's license or
  occupational license who has been convicted of a felony may be found
  suitable if the person is found to be adequately rehabilitated
  under the rehabilitation requirements adopted by the commission,
  and the applicant or license holder is otherwise suitable for
  licensing.
         Sec. 2005.106.  DENIAL OR REVOCATION OF LICENSE.  (a) The
  commission may deny an application for or revoke an operator's
  license or occupational license for any reasonable cause.
         (b)  If the commission determines that it has reasonable
  grounds to believe that a license holder may be unsuitable to
  continue to hold the license, giving due consideration to the
  protection of the health, safety, morals, and general welfare of
  this state and to the reputation of the state's gaming industry, the
  commission shall conduct an investigation and hearing provided in
  Section 2005.451 and may, based on its determination, suspend,
  limit, or revoke any license.
         (c)  On the suspension or revocation of a license, the
  license holder shall cease the provision of all services in any
  capacity requiring a license under Section 2005.101 or 2005.102.
         (d)  A holder of an occupational license that has been
  revoked or suspended may not:
               (1)  receive, directly or indirectly, any
  compensation, consideration, or payment of any kind relating to the
  conduct of gaming in any capacity requiring a license under Section
  2005.101 or 2005.102, other than the payment for services rendered
  before the suspension or revocation; or
               (2)  serve or function in a capacity that would require
  a license under Section 2005.101 or 2005.102.
         (e)  The receipt and holding of a license is a privilege and
  is not a right or property under the United States Constitution or
  the Texas Constitution. An applicant for or holder of an operator's
  license or occupational license does not have a vested interest or
  right in a license granted under this chapter.
  [Sections 2005.107-2005.150 reserved for expansion]
  SUBCHAPTER D.  MANUFACTURER'S, DISTRIBUTOR'S, AND OTHER
  SERVICE PROVIDERS' LICENSES
         Sec. 2005.151.  MANUFACTURER'S OR DISTRIBUTOR'S LICENSE.  
  (a) A person may not engage in any segment of the gambling games or
  gaming devices manufacturing or distribution industry in this state
  for which a manufacturer's or distributor's license is required
  under this section without obtaining a manufacturer's or
  distributor's license covering that activity.  A person must obtain
  a separate manufacturer's license and a distributor's license to
  manufacture and distribute gambling games or gaming devices in this
  state.
         (b)  The commission shall adopt rules identifying segments
  of the manufacturing and distribution industry directly involved in
  the design, manufacture, assembly, production, programming, sale,
  lease, marketing, distribution, repair, or modification of
  gambling games or gaming devices or component parts of gambling
  games or gaming devices that the commission finds appropriate for
  licensing under this section.
         (c)  A manufacturer's or distributor's license is personal to
  the license holder and allows the license holder to do business with
  any casino.
         Sec. 2005.152.  CASINO SERVICE LICENSE.  (a) A person may
  not engage in any segment of the casino service industry that
  requires a license without obtaining a casino service license.
         (b)  The commission shall adopt rules identifying segments
  of the casino service industry directly involved with providing
  gaming-related services, equipment, and supplies that the
  commission finds appropriate for licensing.
         (c)  A person is required to obtain a casino service license
  if the person:
               (1)  operates, conducts, or maintains a gaming-related
  business in a casino; or
               (2)  furnishes goods, property, or services to a casino
  in exchange for:
                     (A)  a payment based upon a percentage of the
  earnings, profits, or receipts from the casino; or
                     (B)  a payment the commission finds to be grossly
  disproportionate to the value of the goods, property, or service
  provided.
         (d)  A utility company, a municipality, or another political
  subdivision is not required to obtain a casino service license
  under this section.
         (e)  A casino service license is personal to the license
  holder and allows the license holder to do business with any casino.
         Sec. 2005.153.  APPLICATION.  (a) Application for a
  manufacturer's or distributor's license or casino service license
  shall be made in compliance with commission rules and shall contain
  information the commission finds necessary to determine the
  suitability and eligibility of the applicant.
         (b)  An application for a manufacturer's or distributor's
  license or casino service license must be accompanied by the
  required application fee.
         Sec. 2005.154.  DETERMINATION OF SUITABILITY.  (a) In
  considering the suitability of a company applying for or holding a
  manufacturer's or distributor's license or casino service license
  to receive and continue to hold the license, the commission shall
  consider the suitability of each principal manager and each holder
  of an equity interest and creditor interest in the company
  applicant to individually receive and hold a manufacturer's or
  distributor's license or casino service license based on the
  suitability standards that apply to the company applicant. A
  person may not be found suitable to receive or hold a manufacturer's
  or distributor's license or casino service license if that person
  would be found unsuitable to hold an owner's license under Section
  2005.055(e).
         (b)  If the commission determines that it has reasonable
  grounds to believe that a license holder is unsuitable to hold a
  manufacturer's or distributor's license or casino service license,
  the commission shall conduct an investigation and hearing under
  Section 2005.451 and may, based on its determination, suspend,
  limit, or revoke a license.
         (c)  On suspension or revocation of a license, the license
  holder must cease the performance of manufacturing or distribution
  activity or casino service requiring a license under this chapter.
  After the revocation or suspension of the license, the affected
  license holder may not receive, directly or indirectly,
  compensation, consideration, or payment of any kind relating to
  manufacturing or distribution activity or provision of casino
  services in any capacity requiring a license under this chapter,
  other than the payment for goods or services provided before the
  suspension or revocation.
         (d)  An owner or casino operator who has entered into a lease
  with a manufacturer or distributor license holder or casino
  services license holder whose license has been revoked or suspended
  may continue to make payments on the lease based upon its original
  terms and conditions without modification or may accelerate the
  lease and pay it off, at the sole option of the owner or operator.
         (e)  The burden of proving suitability to receive and hold a
  manufacturer's or distributor's license or casino service license
  is on the applicant or license holder.
  [Sections 2005.155-2005.200 reserved for expansion]
  SUBCHAPTER E. LICENSE RENEWAL
         Sec. 2005.201.  TERMS; RENEWAL; TEMPORARY LICENSE.  (a)
  Before the issuance of a license, the commission may issue a
  temporary license for six months or less and may renew the temporary
  license as many times as the commission finds appropriate on the
  payment of the fee and execution of the bond, if required.
         (b)  The commission may issue a temporary license only to a
  person it believes will be determined to be qualified based on:
               (1)  the commission's review of the background
  investigations conducted by other state agencies or other United
  States jurisdictions with gaming activities; and
               (2)  the commission's determination that there is
  nothing in those background investigations of the applicant that
  would cause the applicant not to qualify for a license in this
  state.
         (c)  An original or renewal license expires on the first
  anniversary of the date it is issued.
         (d)  The fee for an owner's, operator's, occupational,
  manufacturer's, or casino service license is in the amount
  established by Section 2005.252 and must be paid annually. A
  license holder may renew an unexpired license annually by meeting
  the licensing requirements of the commission and by paying the
  annual fee.
  [Sections 2005.202-2005.250 reserved for expansion]
  SUBCHAPTER F.  APPLICATION, LICENSE, AND OTHER FEES
         Sec. 2005.251.  APPLICATION FEES.  (a) An applicant for an
  owner's license, other than a license under Section 2005.052(b),
  pursuant to an application submitted before January 1, 2008, must
  pay an application fee of $750,000 for the application not later
  than the date established by commission rule. The fees shall be
  deposited in the casino gaming fund.  An applicant for an owner's
  license under Section 2005.052(b) pursuant to an application filed
  before January 1, 2008, must pay an application fee of $550,000 for
  the application not later than the date established by commission
  rule.
         (b)  An application during the first two years after the
  effective date of this chapter must be filed on a date determined by
  commission rule.
         (c)  Before January 1, 2008, an applicant may not apply for
  an owner's license for a site in a county unless the application fee
  for a license in that county was paid during the period established
  by commission rule in accordance with Subsection (a).
         (d)  An applicant for an owner's license, other than a
  license under Section 2005.052(b), pursuant to an application filed
  on or after the date prescribed by Subsection (a) must pay an
  application fee of $800,000 for the application not later than the
  date established by commission rule.  An applicant for an owner's
  license under Section 2005.052(b) must pay an application fee of
  $600,000 for the application not later than the date established by
  commission rule.
         (e)  An applicant for a manufacturer's or distributor's
  license must pay an application fee of $100,000.
         (f)  An applicant for an operator's license must pay an
  application fee of $50,000.
         (g)  An applicant for a casino service license must pay an
  application fee of $100.
         (h)  A person registering and applying to qualify to hold an
  equity interest or creditor interest in a license holder must pay an
  application fee of $100.
         (i)  An individual applying for an occupational license must
  pay an application fee of $100.
         (j)  All application fees must be in the form of a money order
  or cashier's check and be payable to the Texas Gaming and Boxing
  Commission.  Application fees are nonrefundable.
         (k)  Application fees shall be applied toward the cost of
  investigating applicants' suitability for licensing or
  qualification under this chapter. Any costs of investigation
  incurred in excess of the application fee shall be paid by the
  applicant.
         Sec. 2005.252.  LICENSE FEES.  (a) A holder of an owner's
  license must pay an annual license fee of $100,000.
         (b)  A holder of a manufacturer's or distributor's license
  must pay an annual license fee of $100,000.
         (c)  A casino operator holding an operator's license must pay
  an annual license fee of $50,000.
         (d)  A holder of a casino service license must pay an annual
  license fee of $100.
         (e)  A holder of an equity interest or creditor interest in
  any license holder that is required to qualify with the commission
  must pay an annual fee of $100.
         (f)  A holder of an occupational license must pay an annual
  license fee of $100.
         Sec. 2005.253.  POKER TABLE FEE.  A casino operator shall pay
  to the commission an annual fee of $1,000 for each poker gaming
  table the operator has in operation at a casino.
  [Sections 2005.254-2005.300 reserved for expansion]
  SUBCHAPTER G.  CASINO GAMING FUND
         Sec. 2005.301.  TEXAS CASINO GAMING FUND.  (a) The Texas
  casino gaming fund is a special fund in the state treasury.
         (b)  All application fees, investigation fees, and license
  fees collected by the commission or on the commission's behalf
  shall be deposited to the credit of the Texas casino gaming fund.
         (c)  The Texas casino gaming fund may be used only for the
  operation of the commission and the administration of this chapter.
  However, if the money in the fund exceeds the amount necessary for
  the operation of the commission and the administration of this
  chapter, the legislature may transfer any excess amount to the
  general revenue fund.
         (d)  All proceeds from the gaming tax imposed by Section
  2005.351 that are allocated to the state shall be deposited to the
  credit of the general revenue fund.
         (e)  The operation of the commission and the administration
  of this chapter shall be supported by fees generated under this
  chapter and by a portion of the gaming taxes imposed by Section
  2005.351. The operation of the commission may never be a charge
  against the general revenues of this state except to the extent
  those revenues are raised by taxes or fees imposed on gaming
  activities.
  [Sections 2005.302-2005.350 reserved for expansion]
  SUBCHAPTER H.  TAXES
         Sec. 2005.351.  GAMING TAX; ALLOCATION OF TAX.  (a) There is
  imposed on each holder of an owner's license a gaming tax in an
  amount equal to 35 percent of the gross gaming revenue of the casino
  operated under the license, excluding the amount of revenue
  generated from the operation of video lottery terminals and
  allocated as provided by Section 2005.3511. The tax shall be
  computed and paid on a monthly basis as required by commission rule.
         (b)  Six-sevenths of the tax imposed by this section is
  allocated to the general revenue fund.
         (c)  Except as provided by Subsection (e), the remaining
  one-seventh of the tax imposed by this section is allocated as
  follows:
               (1)  one-third to the municipality in which the casino
  to which the license relates is located;
               (2)  one-third to the county in which the casino to
  which the license relates is located; and
               (3)  the remainder to a special purse account to be
  distributed to the pari-mutuel license holders who hold an owner's
  license under this chapter in proportion to the total amount of
  wagers made in the preceding year at each racetrack.
         (d)  The amount received by a pari-mutuel license holder that
  operates a horse racetrack shall be allocated to the applicable
  horse breeds in accordance with a gaming agreement or commission
  determination for the racetrack under Section 6.095, Texas Racing
  Act (Article 179e, Vernon's Texas Civil Statutes).
         (e)  If a casino is located in an unincorporated area,
  two-thirds of the remaining one-seventh of the tax imposed by this
  section is allocated to the county in which the casino to which the
  license relates is located.
         (f)  One-tenth of one percent of the gaming tax revenue
  allocated to general revenue under Subsection (b) shall be
  allocated to the commission for a compulsive gambling program to be
  established by the commission.
         (g)  The gaming taxes imposed by this section are due and
  payable on or before the 20th day of the month following the month
  in which the taxes are imposed.
         (h)  If the amount of gaming taxes required to be reported
  and paid under this section is later determined to be greater or
  less than the amount actually reported and paid by the license
  holder, the commission shall:
               (1)  assess and collect the additional gaming taxes
  determined to be due with interest until paid; or
               (2)  refund any overpayment, with interest, to the
  license holder.
         (i)  Interest must be computed, until paid, at the rate of
  one percent per month from the first day of the first month
  following either the due date of the additional gaming taxes or the
  date of overpayment.
         Sec. 2005.3511.  ALLOCATION OF NET TERMINAL INCOME.  Net
  terminal income derived from the operation of video lottery
  terminals at casinos shall be distributed as provided by Section
  466.562(a)(1), Government Code.
         Sec. 2005.352.  DETERMINATION OF GROSS GAMING REVENUE.  (a)
  In calculating gross gaming revenue, a prize, premium, drawing,
  benefit, or ticket that is redeemable for money, merchandise, or
  other promotional allowance, except money or tokens paid at face
  value directly to a patron as the result of a specific wager and the
  amount of cash paid to purchase an annuity to fund winnings, may not
  be deducted as a loss from winnings at any game.
         (b)  Cash or the value of noncash prizes awarded to patrons
  in a contest or tournament are not losses for purposes of
  determining gross gaming revenue.
         Sec. 2005.353.  REFUND OF OVERPAYMENT.  (a) Gaming taxes
  that are erroneously collected may be refunded, on approval of the
  commission, as other claims against the state are paid.
         (b)  Not later than the 90th day after the date of the mailing
  of the notice of the commission's action on a claim for refund filed
  under this chapter, the claimant may bring an action against the
  commission on the grounds stated in the claim in any court of
  competent jurisdiction for the recovery of any part of the amount of
  the claim that has been disallowed.
         (c)  Failure to bring an action within the time specified by
  Subsection (b) constitutes a waiver of any demand against the state
  on account of alleged overpayments.
         (d)  If the commission fails to mail its notice of action on a
  claim within six months after the date the claim is filed, the
  claimant may consider the claim disallowed and bring an action
  against the commission on the grounds set forth in the claim for the
  recovery of any part of the amount claimed as an overpayment.
         (e)  In a case where a refund is granted, interest is allowed
  at the rates provided in Subtitle B, Title 2, Tax Code.
         (f)  A claim for refund of gaming taxes paid in excess of the
  amount required to be reported and paid must be filed not later than
  two years after the date of overpayment.
         Sec. 2005.354.  DETERMINATION OF DEFICIENCY.  (a) If an
  owner license holder fails to make a report of the gaming taxes as
  required by this chapter, or if the executive director is not
  satisfied with the report of the gaming taxes required to be paid to
  the state under this chapter by an owner license holder, the
  executive director may compute and determine the amount required to
  be paid on the basis of:
               (1)  the facts contained in the report, if any;
               (2)  an audit conducted by the executive director;
               (3)  an estimate of the amount of taxes due under this
  chapter;
               (4)  any information in the commission's possession or
  that may come in the executive director's possession; or
               (5)  any combination of the methods described by
  Subdivisions (1)-(4).
         (b)  In making a determination, the commission may offset
  overpayments and interest due against underpayments and interest or
  penalties due for the period of the audit.
         (c)  The executive director shall give prompt written notice
  of a determination of a deficiency under this section to the owner
  license holder. Except in the case of fraud or intent to evade the
  payment of the gaming tax fee imposed by this chapter, a notice of a
  determination of a deficiency must be mailed not later than two
  years after the last day of the calendar month following the
  applicable reporting period in which the deficiency occurred or not
  later than two years after the report is filed by the owner license
  holder, whichever is later.
         (d)  If the reasons for the deficiency are not apparent, the
  executive director shall include an explanation of those reasons in
  the notice of a determination of a deficiency.
         (e)  If overpayments and interest exceed underpayments,
  penalties, and interest, the excess payment shall be refunded to
  the owner license holder.
         Sec. 2005.355.  PETITION FOR REVIEW.  (a) An owner license
  holder against whom a determination is made under Section 2005.354
  may petition the commission for a redetermination not later than
  the 30th day after the date of the service of notice of the
  determination. If a petition for redetermination satisfying the
  requirements of Subsection (c) is not filed within the 30-day
  period, the determination becomes final.
         (b)  If a petition for redetermination satisfying the
  requirements of Subsection (c) is filed within the 30-day period,
  the commission shall reconsider the determination and, if the
  petitioner requests, shall grant a hearing.
         (c)  A petition for redetermination must:
               (1)  specify the contested portions of the
  determination of deficiency;
               (2)  specify the grounds for redetermination;
               (3)  state whether a hearing is requested; and
               (4)  be accompanied by payment in full of the
  uncontested portion of the determination, including any interest
  and penalties.
         (d)  An order or decision of the commission on a petition for
  redetermination is final 10 days after the date of service on the
  petitioner.
         (e)  A petitioner against whom an order or decision of the
  commission becomes final may, not later than the 60th day after the
  date the decision is final, petition for judicial review in the
  manner provided by Chapter 2001, Government Code. The executive
  director may not petition for judicial review.
         Sec. 2005.356.  FEES AND TAXES.  (a)  A county, municipality,
  or other political subdivision of this state may not impose a
  license fee on a person licensed to conduct gaming under this
  chapter. This section does not prohibit the imposition of
  generally applicable taxes or of fees for standard municipal
  services.
         (b)  A county, municipality, or other political subdivision
  of this state may not offer or grant any tax abatement, tax credit,
  tax subsidy, tax exemption, or any other form of public incentive to
  assist, develop, or aide in the establishment or operation of a
  casino or casino gaming under this chapter.
         (c)  A building or property owned by a county, municipality,
  or political subdivision of this state in which casino gaming is
  operated is subject to all property taxes as if the building or
  property were not owned by a state or local government.
         Sec. 2005.357.  REGISTRATION OF GAMING DEVICES AND VIDEO
  LOTTERY TERMINALS. (a) An owner or operator of a casino may not
  operate a gaming device for use in a gambling game or a video
  lottery terminal unless the device or terminal is annually
  registered with the commission in accordance with this section and
  the registration certificate is affixed to the device or terminal.
         (b)  To obtain a registration certificate under this
  section, a person must:
               (1)  file with the commission a registration
  application on a form prescribed by the commission; and
               (2)  pay a $1,000 registration fee to the commission
  for each gaming device or video lottery terminal that is the subject
  of the application.
         (c)  Chapter 2153 does not apply to a gaming device or video
  lottery terminal.
         Sec. 2005.358.  TAX ADMINISTRATION.  (a) The commission
  shall perform all functions incident to the administration,
  collection, enforcement, and operation of a fee or tax imposed
  under this chapter. The commission may adopt rules and prescribe
  forms for the administration, collection, and enforcement of a fee
  or tax and for the reporting of a fee or tax.
         (b)  Except as modified by this chapter, Subtitle B, Title 2,
  Tax Code, applies to the administration, collection, and
  enforcement of a tax imposed under this chapter. For purposes of
  the application of Subtitle B, Title 2, Tax Code, to a tax imposed
  under this chapter, the powers and duties assigned to the
  comptroller under that subtitle are assigned to the commission.
  [Sections 2005.359-2005.400 reserved for expansion]
  SUBCHAPTER I.  REGULATION OF CASINO OPERATIONS
         Sec. 2005.401.  REGULATION OF CASINO OPERATIONS.  (a) The
  commission shall adopt rules applicable to the operation of casinos
  as the commission finds necessary for the protection of the health,
  safety, morals, and general welfare of this state and for the
  reputation of the state's gaming industry.
         (b)  Casinos are entitled to operate 24 hours a day, seven
  days a week.  A license holder may elect other hours of operation.
         (c)  The commission may not authorize a casino to conduct
  wagering on the outcome of a sports event or sports activity other
  than greyhound or horse racing.
         Sec. 2005.402.  USE OF CHIPS OR TOKENS.  All gaming must be
  conducted with chips or tokens approved by the commission or with
  the legal tender of the United States.
         Sec. 2005.403.  REPORTING REQUIREMENTS.  (a) An owner
  license holder shall keep the license holder's books and records in
  a manner that clearly shows the total amount of gross gaming revenue
  and other revenues received.
         (b)  The books and records kept by an owner license holder
  relating to gaming operations are not public records and the
  publication and dissemination of the materials by the commission is
  prohibited. The commission may publish and disseminate gaming
  revenues of each owner license holder at a frequency and in the
  level of detail as it considers appropriate.
         (c)  An owner license holder shall file a report of each
  change of the corporate officers and directors with the commission.
  The commission shall, not later than the 90th day after the date of
  the change, approve or disapprove the change. During the 90-day
  period, the officer or director is entitled to exercise the powers
  of the office to which the officer or director was elected or
  appointed.
         (d)  An owner license holder shall report to the executive
  director in writing a change in company employees who have been
  designated as key employees.
         (e)  The commission may require that a company furnish the
  commission with a copy of its federal income tax return not later
  than the 30th day after the date the return is filed with the
  federal government.
         Sec. 2005.404.  EXCLUSION OF PERSONS.  (a) The commission by
  rule shall provide for the establishment of a list of persons who
  are to be excluded or ejected from a casino. The list may include a
  person whose presence in a casino the commission determines poses a
  threat to the interests of this state, to licensed gaming, or to
  both interests.
         (b)  In making a determination under this section, the
  commission may consider any:
               (1)  prior conviction of a crime that is a felony in
  this state or under the laws of the United States or a crime
  involving moral turpitude or a violation of the gaming laws of a
  state; or
               (2)  violation of or conspiracy to violate the
  provisions of this chapter relating to:
                     (A)  the failure to disclose an interest in a
  gaming establishment for which the person must obtain a license;
                     (B)  wilful evasion of a fee or a tax;
                     (C)  notorious or unsavory reputation that would
  adversely affect public confidence and trust that the gaming
  industry is free from criminal or corruptive elements; or
                     (D)  a written order of a governmental agency that
  authorizes the exclusion or ejection of the person from an
  establishment where gaming or pari-mutuel wagering is conducted.
         Sec. 2005.405.  INTERNAL AUDIT AND CONTROL SYSTEMS.  (a) An
  owner license holder shall adopt an internal control system that
  provides for:
               (1)  the safeguarding of its assets and revenues,
  especially the recording of cash and evidences of indebtedness; and
               (2)  the provision of reliable records, accounts, and
  reports of transactions, operations, and events, including reports
  to the executive director and the commission.
         (b)  The internal control system must be designed to
  reasonably ensure that:
               (1)  assets are safeguarded;
               (2)  financial records are accurate and reliable;
               (3)  transactions are performed only in accordance with
  management's general or specific authorization;
               (4)  transactions are recorded adequately to permit
  proper reporting of gaming revenue and of fees and taxes and to
  maintain accountability for assets;
               (5)  access to assets is permitted only in accordance
  with management's specific authorization;
               (6)  recorded accountability for assets is compared
  with actual assets at reasonable intervals and appropriate action
  is taken with respect to any discrepancies; and
               (7)  functions, duties, and responsibilities are
  appropriately segregated and performed in accordance with sound
  practices by competent, qualified personnel.
         (c)  An owner license holder and an applicant for an owner's
  license shall describe, in a manner approved or required by the
  executive director, the license holder's or applicant's
  administrative and accounting procedures in detail in a written
  system of internal control. An owner license holder and applicant
  for an owner's license shall submit a copy of the license holder's
  or applicant's written system to the executive director. A written
  system must include:
               (1)  an organizational chart depicting appropriate
  segregation of functions and responsibilities;
               (2)  a description of the duties and responsibilities
  of each position shown on the organizational chart;
               (3)  a detailed, narrative description of the
  administrative and accounting procedures designed to satisfy the
  requirements of Section 2005.403(a);
               (4)  a written statement signed by the license holder's
  chief financial officer and either the license holder's chief
  executive officer or an owner license holder attesting that the
  system satisfies the requirements of this section;
               (5)  if the written system is submitted by an
  applicant, a letter from an independent certified public accountant
  stating that the applicant's written system has been reviewed by
  the certified public accountant and complies with the requirements
  of this section; and
               (6)  other items the executive director may require.
         (d)  The commission shall adopt minimum standards for
  internal control procedures.
         Sec. 2005.406.  AGE REQUIREMENTS.  A person under the age of
  21 years may not:
               (1)  play, be allowed to play, place wagers, or collect
  winnings, personally or through an agent, from any gaming
  authorized under this chapter; or
               (2)  be employed as a gaming employee.
         Sec. 2005.407.  ACCEPTANCE OF NEGOTIABLE INSTRUMENTS.  (a)
  A negotiable instrument evidencing a gaming transaction may be
  enforced by legal process.
         (b)  A license holder may accept an incomplete negotiable
  instrument that is signed by a patron and states the amount of the
  debt. The license holder may complete the instrument as is
  necessary for the instrument to be presented for payment.
         (c)  A license holder:
               (1)  may not accept a negotiable instrument that is
  incomplete, except as authorized by Subsection (b); and
               (2)  may accept a negotiable instrument that is payable
  to an affiliate or may complete a negotiable instrument in the name
  of an affiliate as payee if the negotiable instrument otherwise
  complies with this section and the records of the affiliate
  pertaining to the negotiable instrument are made available to the
  executive director on request.
         (d)  This section does not prohibit the establishment of an
  account by a deposit of cash, recognized traveler's check, or any
  other instrument that is equivalent to cash.
         (e)  Any person, license holder, or the agents or employees
  of the person or license holder who violate this section are subject
  only to the penalties provided in the provisions of this chapter
  relating to disciplinary actions. The failure of a person to comply
  with this section or the rules of the commission does not invalidate
  a negotiable instrument or affect the ability to enforce the
  negotiable instrument or the transaction that the negotiable
  instrument represents.
         Sec. 2005.408.  GAMING DEBTS.  (a) Except as otherwise
  provided by this chapter, gaming debts not evidenced by a
  negotiable instrument are void and unenforceable and do not give
  rise to any administrative or civil cause of action.
         (b)  A claim by a patron of a license holder for payment of a
  gaming debt not evidenced by a negotiable instrument may be
  resolved by the executive director under commission rules.
         (c)  The executive director shall send a copy of the
  director's ruling by first class mail to the attorneys of record and
  shall keep an appropriate copy of the mailing. If a party is not
  represented by an attorney of record, the executive director shall
  send a copy of the ruling by first class mail to the party and shall
  keep an appropriate record of the mailing.
         (d)  A party or attorney of record notified by mail under
  this section is presumed to have been notified on the date on which
  the notice is mailed.
         (e)  A party aggrieved by the executive director's ruling is
  entitled to have the claim resolved by the commission in a contested
  case if the party files a written complaint with the commission
  challenging the executive director's decision not later than the
  20th day after the date on which the party or the party's attorney
  of record is notified by mail.
         Sec. 2005.409.  QUESTIONING AND DETENTION OF PERSONS.  (a)
  An owner license holder or the license holder's officer, employee,
  or agent may question any person on the license holder's premises
  suspected of engaging in any conduct that constitutes an offense
  under this chapter, including under Section 2005.511. The owner
  license holder or the license holder's officer, employee, or agent
  is not criminally or civilly liable:
               (1)  as a result of the questioning; or
               (2)  for reporting the person suspected of the
  violation to the executive director or law enforcement authorities.
         (b)  An owner license holder or the license holder's officer,
  employee, or agent who has reasonable cause to believe a person has
  engaged in conduct that constitutes an offense under this chapter
  while present on the license holder's premises may take that person
  into custody and detain the person on the premises in a reasonable
  manner and for a reasonable length of time. The taking into custody
  and detention does not render the license holder or the license
  holder's officer, employee, or agent criminally or civilly liable
  unless it is established by clear and convincing evidence that the
  taking into custody and detention are unreasonable under all the
  circumstances.
         (c)  An owner license holder or the license holder's officer,
  employee, or agent is not entitled to the immunity from liability
  provided by Subsection (a) or (b) unless there is displayed in a
  conspicuous place in the license holder's casino a notice in
  bold-faced type, clearly legible, and in substantially this form:
         A CASINO LICENSE HOLDER OR AN OFFICER, EMPLOYEE, OR
  AGENT OF THE CASINO OWNER WHO HAS A REASONABLE CAUSE TO
  BELIEVE THAT A PERSON HAS ENGAGED IN CONDUCT THAT
  CONSTITUTES AN OFFENSE UNDER CHAPTER 2005, OCCUPATIONS
  CODE, ON THE PREMISES OF THE CASINO MAY QUESTION OR
  DETAIN THAT PERSON.
  [Sections 2005.410-2005.450 reserved for expansion]
  SUBCHAPTER J.  ENFORCEMENT
         Sec. 2005.451.  ENFORCEMENT.  (a) The executive director
  shall conduct an appropriate investigation to:
               (1)  determine whether there has been a violation of
  this chapter or of a commission rule;
               (2)  determine facts, conditions, practices, or
  matters that the director considers necessary or proper to aid in
  the enforcement of a law or rule;
               (3)  aid in adopting rules;
               (4)  secure information as a basis for recommending
  legislation relating to this chapter; and
               (5)  determine whether a license holder is able to meet
  the license holder's financial obligations, including all
  financial obligations imposed by this chapter, as they become due.
         (b)  If after an investigation the executive director is
  satisfied that a license, registration, finding of suitability, or
  prior approval by the commission of a transaction for which
  approval was required or permitted under this chapter should be
  limited, conditioned, suspended, or revoked, or that a fine should
  be levied, the executive director shall initiate a hearing by
  filing a complaint with the commission and transmit a summary of
  evidence that bears on the matter and the transcript of testimony at
  an investigative hearing conducted by or on behalf of the executive
  director regarding the license holder. The complaint must be a
  written statement of charges that must set forth in ordinary and
  concise language the acts or omission with which the respondent is
  charged. The complaint must specify the statute or rule that the
  respondent is alleged to have violated. A complaint must contain a
  factual allegation and shall not consist merely of charges raised
  on the language of the statute or rule. On the filing of the
  complaint, the executive director shall serve a copy of the
  complaint on the respondent either personally or by registered or
  certified mail at the respondent's address on file with the
  executive director.
         (c)  Except as provided by Section 2005.355, the respondent
  must answer not later than the 30th day after the date of the
  service of the complaint.
         (d)  On receipt of the complaint of the executive director,
  the commission shall review all matter presented in support and
  shall appoint a hearing examiner to conduct further proceedings.
         (e)  The hearing examiner shall conduct proceedings under
  Chapter 2001, Government Code. After the proceedings, the hearing
  examiner may recommend that the commission take any appropriate
  action, including revocation, suspension, limitation or
  conditioning of a license, or imposition of a fine not to exceed
  $5,000 for each violation.
         (f)  The commission shall review the recommendation. The
  commission may remand the case to the hearing examiner for the
  presentation of additional evidence on a showing of good cause as to
  why the evidence could not have been presented at the previous
  hearing.
         (g)  The commission shall accept, reject, or modify the
  recommendation.
         (h)  If the commission limits, conditions, suspends, or
  revokes a license or imposes a fine, or limits, conditions,
  suspends, or revokes a registration, finding of suitability, or
  prior approval, the commission shall issue its written order.
         (i)  A limitation, condition, revocation, suspension, or
  fine imposed is effective until reversed following judicial review,
  except that the commission may stay its order pending a rehearing or
  judicial review on terms and conditions as it considers proper.
         (j)  Judicial review of an order or decision of the
  commission may be had under Chapter 2001, Government Code.  
  Judicial review is under the substantial evidence rule.
         Sec. 2005.452.  PRIVILEGED DOCUMENTS.  (a) A communication
  or document of an applicant or license holder that is required by
  law or commission rule or by a subpoena issued by the commission and
  that is to be made or transmitted to the commission or the executive
  director is privileged and does not impose liability for defamation
  or constitute a ground for recovery in a civil action.
         (b)  If a document or communication contains information
  that is privileged, the privilege is not waived or lost because the
  document or communication is disclosed to the commission or the
  executive director.
         (c)  Notwithstanding the powers granted to the commission
  and the executive director by this chapter:
               (1)  the commission and the executive director may not
  release or disclose privileged information, documents, or
  communications provided by an applicant and required by a lawful
  court order after timely notice of the proceedings has been given to
  the applicant or license holder without the prior written consent
  of the applicant or license holder;
               (2)  the commission and the executive director shall
  maintain all privileged information, documents, and communications
  in a secure place accessible only to members of the commission and
  the executive director; and
               (3)  the commission shall adopt procedures to protect
  the privileged nature of information, documents, and
  communications provided by an applicant or license holder.
         Sec. 2005.453.  RELEASE OF CONFIDENTIAL INFORMATION.  An
  application to a court for an order requiring the commission or the
  executive director to release any information declared by law to be
  confidential shall be made only on a motion in writing delivered not
  later than the 10th day before the date of application to the
  commission, the attorney general, and all persons who may be
  affected by the entry of the order. Copies of the motion and all
  papers filed in support of it shall be served with the notice by
  delivering a copy in person or by certified mail to the last known
  address of the person to be served.
         Sec. 2005.454.  EMERGENCY ORDERS.  (a) The commission may
  issue an emergency order for suspension, limitation, or
  conditioning of a license, registration, finding of suitability, or
  work permit or may issue an emergency order requiring a casino to
  prohibit an individual license holder from entering the premises of
  the casino or to not pay the license holder any remuneration for
  services or any profits, income, or accruals on the license
  holder's investment in the casino.
         (b)  An emergency order may be issued only if the commission
  determines that:
               (1)  a license holder has wilfully failed to report,
  pay, or truthfully account for a fee imposed under this chapter or
  wilfully attempted in any manner to evade or defeat a fee or
  payment;
               (2)  a license holder or gaming employee has cheated at
  a gambling game; or
               (3)  the action is necessary for the immediate
  preservation of the public peace, health, safety, morals, good
  order, or general welfare.
         (c)  The emergency order must state the grounds on which it
  is issued, including a statement of facts constituting the alleged
  emergency necessitating the action.
         (d)  An emergency order may be issued only with the approval
  of and under the signature of four or more members of the
  commission.
         (e)  An emergency order is effective immediately on issuance
  and service on the license holder or resident agent of the license
  holder, gaming employee, or, in cases involving registration or
  findings of suitability, on issuance and service on the person or
  entity involved or resident agent of the entity involved. An
  emergency order may suspend, limit, condition, or take other action
  in relation to the license of one or more persons in an operation
  without affecting other individual license holders or the casino.
  An emergency order remains effective until further order of the
  commission or final disposition of the case.
         (f)  Not later than the fifth day after the date of issuance
  of an emergency order, the executive director shall file a
  complaint and serve it on the person or entity involved. The person
  or entity against whom the emergency order has been issued and
  served is entitled to a hearing before the commission and to
  judicial review of the decision and order of the commission under
  Chapter 2001, Government Code.  Judicial review is under the
  substantial evidence rule.
         Sec. 2005.455.  INJUNCTIVE RELIEF. (a) The commission may
  commence an action in its own name for an injunction to restrain a
  violation of this chapter. An action under this section is in
  addition to any other action authorized by law.
         (b)  The attorney general or the appropriate county or
  district attorney shall represent the commission in an action under
  this section.
         Sec. 2005.456.  CEASE AND DESIST ORDER. (a) If it appears
  to the commission that a person who is not licensed under this
  chapter is violating this chapter, a rule adopted under this
  chapter, or another state statute or rule relating to gaming, the
  commission after notice and opportunity for a hearing may issue a
  cease and desist order prohibiting the person from engaging in the
  activity.
         (b)  A violation of an order under this section constitutes
  grounds for imposing a fine under this chapter.
  [Sections 2005.457-2005.500 reserved for expansion]
  SUBCHAPTER K.  PENALTIES AND OFFENSES
         Sec. 2005.501.  FAILURE TO PAY FEES.  (a) License fees and
  other fees required by this chapter must be paid to the commission
  on or before the dates provided by law for each fee.
         (b)  A person failing to timely pay a fee or tax when due
  shall pay in addition a penalty of not less than $50 or 25 percent of
  the amount due, whichever is the greater. The penalty may not
  exceed $1,000 if the fee or tax is less than 10 days late and may not
  exceed $5,000 under any circumstances. The penalty shall be
  collected as are other charges, license fees, and penalties under
  this chapter.
         Sec. 2005.502.  FAILURE TO REPORT, PAY, OR ACCOUNT FOR FEE OR
  TAX.  (a) A person commits an offense if the person wilfully fails
  to report, pay, or truthfully account for a fee or tax imposed under
  this chapter or wilfully attempts in any manner to evade or defeat a
  fee or tax.
         (b)  An offense under this section is a Class A misdemeanor.
         Sec. 2005.503.  FRAUD.  (a) A person commits an offense if
  the person knowingly:
               (1)  alters or misrepresents the outcome of a game or
  other event on which wagers have been made after the outcome is made
  sure but before it is revealed to the players;
               (2)  places, increases, or decreases a bet or
  determines the course of play after acquiring knowledge, not
  available to all players, of the outcome of the game or an event
  that affects the outcome of the game or that is the subject of the
  bet or aids anyone in acquiring such knowledge for the purpose of
  placing, increasing, or decreasing a bet or determining the course
  of play contingent on that event or outcome;
               (3)  claims, collects, or takes, or attempts to claim,
  collect, or take, money or anything of value in or from a gambling
  game, with intent to defraud, without having made a wager
  contingent on the game, or claims, collects, or takes an amount
  greater than the amount won;
               (4)  entices or induces another to go to a place where a
  gambling game is being conducted or operated in violation of this
  chapter, with the intent that the other person play or participate
  in that gambling game;
               (5)  places or increases a bet after acquiring
  knowledge of the outcome of the game or other event that is the
  subject of the bet, including past posting and pressing bets;
               (6)  reduces the amount wagered or cancels the bet
  after acquiring knowledge of the outcome of the game or other event
  that is the subject of the bet, including pinching bets; or
               (7)  manipulates, with the intent to cheat, a component
  of a gaming device in a manner contrary to the designed and normal
  operational purpose for the component with knowledge that the
  manipulation affects the outcome of the game or with knowledge of an
  event that affects the outcome of the game.
         (b)  An offense under this section is a felony of the third
  degree.
         Sec. 2005.504.  USE OF PROHIBITED DEVICES.  (a) A person
  commits an offense if the person, at a casino, uses or possesses
  with the intent to use a device, other than those customarily used
  in the conduct of gaming to assist in:
               (1)  projecting the outcome of the game;
               (2)  keeping track of the cards played;
               (3)  analyzing the probability of the occurrence of an
  event relating to the game; or
               (4)  analyzing the strategy for playing or betting to
  be used in the game.
         (b)  An offense under this section is a felony of the third
  degree.
         Sec. 2005.505.  USE OF COUNTERFEIT OR UNAUTHORIZED TOKEN,
  CHIP, OR COIN.  (a) A person commits an offense if the person
  knowingly uses counterfeit chips or tokens in a gambling game.
         (b)  A person commits an offense if the person, in playing
  any gambling game designed to receive, be played with, or be
  operated by chips or tokens approved by the executive director or by
  lawful coin of the United States of America:
               (1)  knowingly uses a chip, token, or coin other than
  chips or tokens approved by the commission or lawful coin of the
  United States of America, or uses a coin not of the same
  denomination as the coin intended to be used in that gambling game;
  or
               (2)  uses any device or means to violate the provisions
  of this chapter.
         (c)  A person, other than an authorized employee of an owner
  license holder acting in furtherance of the person's employment,
  commits an offense if the person knowingly has on the person's body
  or in the person's possession on or off the premises of a casino a
  device intended to be used to violate the provisions of this
  chapter.
         (d)  A person, other than an authorized employee of an owner
  license holder acting in furtherance of the person's employment,
  commits an offense if the person knowingly has on the person's body
  or in the person's possession on or off the premises of a casino a
  key or device known to have been designed for the purpose of and
  suitable for opening, entering, or affecting the operation of a
  gambling game, a drop box, or an electronic or mechanical device
  connected to the game or box or for removing money or other contents
  from the game or box.
         (e)  A person commits an offense if the person knowingly
  possesses paraphernalia for manufacturing slugs for use in gaming
  devices. In this subsection, "paraphernalia for manufacturing
  slugs" means the equipment, products, and materials that are
  intended for use or designed for use in manufacturing, producing,
  fabricating, preparing, testing, analyzing, packaging, storing, or
  concealing a counterfeit facsimile of the chips or tokens approved
  by the executive director or a lawful coin of the United States, the
  use of which is an offense under Subsection (b). The term includes:
               (1)  lead or lead alloys;
               (2)  molds, forms, or similar equipment capable of
  producing a likeness of a gaming token or United States coin;
               (3)  melting pots or other receptacles;
               (4)  torches; and
               (5)  tongs, trimming tools, or other similar equipment.
         (f)  Possession of more than one of the devices, equipment,
  products, or materials described in this section permits a
  rebuttable inference that the possessor intended to use them for
  cheating.
         (g)  An offense under this section is a felony of the third
  degree.
         Sec. 2005.506.  CHEATING.  (a) A person commits an offense
  if the person knowingly cheats at any gambling game.
         (b)  An offense under this section is a state jail felony.
         Sec. 2005.507.  POSSESSION OF UNLAWFUL DEVICES.  (a) A
  person commits an offense if the person knowingly possesses any
  gaming device that has been manufactured, sold, or distributed in
  violation of this chapter.
         (b)  An offense under this section is a Class A misdemeanor.
         Sec. 2005.508.  UNLAWFUL MANUFACTURE, SALE, OR DISTRIBUTION
  OF GAMING EQUIPMENT.  (a) A person commits an offense if the person
  manufactures, sells, or distributes cards, chips, dice, a game, or
  a device intended to be used to violate a provision of this chapter.
         (b)  A person commits an offense if the person marks, alters,
  or otherwise modifies any associated equipment or gaming device in
  a manner that:
               (1)  affects the result of a wager by determining win or
  loss; or
               (2)  alters the normal criteria of random selection
  that affect the operation of a game or determine the outcome of a
  game.
         (c)  A person commits an offense if the person instructs
  another person in cheating or in the use of a device for cheating at
  any game authorized to be conducted at a casino, with the knowledge
  or intent that the information or use may be employed to violate a
  provision of this chapter.
         (d)  An offense under this section is a felony of the third
  degree.
         Sec. 2005.509.  REPORTING PENALTIES.  (a) A person commits
  an offense if the person, in a license application, in a book or
  record required to be maintained by this chapter or a rule adopted
  under this chapter, or in a report required to be submitted by this
  chapter or a rule adopted under this chapter:
               (1)  makes a statement or entry that the person knows to
  be false or misleading; or
               (2)  knowingly fails to maintain or make an entry the
  person knows is required to be maintained or made.
         (b)  A person commits an offense if the person knowingly
  refuses to produce for inspection by the executive director a book,
  record, or document required to be maintained or made by this
  chapter or a rule adopted under this chapter.
         (c)  An offense under this section is a Class A misdemeanor.
         Sec. 2005.510.  GAMING BY MINORS.  (a) A person commits an
  offense if the person knowingly permits an individual that the
  person knows is younger than 21 years of age to place a wager at a
  casino.
         (b)  An individual younger than 21 years of age commits an
  offense if the individual participates in gaming at a casino.
         (c)  An offense under this section is a Class C misdemeanor.
         Sec. 2005.511.  GENERAL PENALTY.  (a) A person commits an
  offense if the person knowingly or wilfully violates, attempts to
  violate, or conspires to violate a provision of this chapter
  specifying a prohibited act.
         (b)  Unless another penalty is specified for the offense, an
  offense under this section is a Class A misdemeanor.
         SECTION 2.02.  Section 47.01, Penal Code, is amended by
  amending Subdivisions (4) and (9) and adding Subdivision (10) to
  read as follows:
               (4)  "Gambling device" means any device:
                     (A)  on which a game or other activity can be
  played or conducted for consideration; and
                     (B)  that is designed, constructed, adapted, or
  maintained to afford a user of the device an opportunity to obtain a
  thing of value based solely or partially on chance [electronic,
  electromechanical, or mechanical contrivance not excluded under
  Paragraph (B) that for a consideration affords the player an
  opportunity to obtain anything of value, the award of which is
  determined solely or partially by chance, even though accompanied
  by some skill, whether or not the prize is automatically paid by the
  contrivance. The term:
                     [(A)     includes, but is not limited to, gambling
  device versions of bingo, keno, blackjack, lottery, roulette, video
  poker, or similar electronic, electromechanical, or mechanical
  games, or facsimiles thereof, that operate by chance or partially
  so, that as a result of the play or operation of the game award
  credits or free games, and that record the number of free games or
  credits so awarded and the cancellation or removal of the free games
  or credits; and
                     [(B)     does not include any electronic,
  electromechanical, or mechanical contrivance designed, made, and
  adapted solely for bona fide amusement purposes if the contrivance
  rewards the player exclusively with noncash merchandise prizes,
  toys, or novelties, or a representation of value redeemable for
  those items, that have a wholesale value available from a single
  play of the game or device of not more than 10 times the amount
  charged to play the game or device once or $5, whichever is less].
               (9)  "Thing of value" means any property, money, right,
  privilege, or other benefit, including a representation of value
  redeemable for any property, money, right, privilege, or other
  benefit [but does not include an unrecorded and immediate right of
  replay not exchangeable for value].
               (10)  "Device" includes all or part of an operable or
  inoperable mechanical, electronic, or electromechanical
  contrivance, machine, or apparatus.
         SECTION 2.03.  Section 47.02(c), Penal Code, is amended to
  read as follows:
         (c)  It is a defense to prosecution under this section that
  the actor reasonably believed that the conduct:
               (1)  was permitted under Chapter 2001, Occupations
  Code;
               (2)  was permitted under Chapter 2002, Occupations
  Code;
               (3)  consisted entirely of participation in the state
  lottery or video lottery authorized by the State Lottery Act
  (Chapter 466, Government Code);
               (4)  was permitted under the Texas Racing Act (Article
  179e, Vernon's Texas Civil Statutes); [or]
               (5)  consisted entirely of participation in a drawing
  for the opportunity to participate in a hunting, fishing, or other
  recreational event conducted by the Parks and Wildlife Department;
  or
               (6)  was permitted under Chapter 2005, Occupations
  Code.
         SECTION 2.04.  Sections 47.06(e) and (f), Penal Code, are
  amended to read as follows:
         (e)  An offense under this section is a felony of the third
  degree [Class A misdemeanor].
         (f)  It is a defense to prosecution under Subsection (a) or
  (c) that the person owned, manufactured, transferred, or possessed
  the gambling device, equipment, or paraphernalia for the sole
  purpose of shipping it:
               (1)  to a casino licensed under Chapter 2005,
  Occupations Code, for casino gaming; or
               (2)  to another jurisdiction where the possession or
  use of the device, equipment, or paraphernalia was legal.
         SECTION 2.05.  Section 47.09(a), Penal Code, is amended to
  read as follows:
         (a)  It is a defense to prosecution under this chapter that
  the conduct:
               (1)  was authorized under:
                     (A)  Chapter 2001, Occupations Code (Bingo
  Enabling Act);
                     (B)  Chapter 2002, Occupations Code (Charitable
  Raffle Enabling Act); [or]
                     (C)  the Texas Racing Act (Article 179e, Vernon's
  Texas Civil Statutes); or
                     (D)  Chapter 2005, Occupations Code;
               (2)  consisted entirely of participation in the state
  lottery or video lottery authorized by Chapter 466, Government
  Code; or
               (3)  was a necessary incident to the operation of the
  state lottery or video lottery and was directly or indirectly
  authorized by[:
                     [(A)]  Chapter 466, Government Code[;
                     [(B)     the lottery division of the Texas Lottery
  Commission;
                     [(C)  the Texas Lottery Commission; or
                     [(D)     the director of the lottery division of the
  Texas Lottery Commission].
         SECTION 2.06.  Chapter 47, Penal Code, is amended by adding
  Section 47.091 to read as follows:
         Sec. 47.091.  DEFENSES FOR CERTAIN AMUSEMENT DEVICES.  (a)  
  It is a defense to prosecution under Section 47.02 that the conduct
  consists entirely of the use of a gambling device in which:
               (1)  skill is the predominate requirement for the user
  to win or be awarded a thing of value; and
               (2)  the user may not win or be awarded a thing of value
  for playing or using the device other than:
                     (A)  noncash merchandise available only on the
  premises where the device is located; or
                     (B)  a ticket, coupon, or other representation of
  value redeemable only on the premises where the device is located
  for noncash merchandise.
         (b)  For purposes of Subsection (a)(2):
               (1)  the noncash merchandise or representation of value
  redeemable for noncash merchandise that may be won or awarded for a
  single play of a game or activity on the device may not have a
  wholesale value of more than 10 times the amount charged for a
  single play or $5, whichever is less; and
               (2)  an item of noncash merchandise that may be won or
  awarded for playing or using the device or for which a person may
  redeem one or more tickets, coupons, or other representations of
  value won or awarded for playing or using the device may not have a
  wholesale value of more than $50.
         (c)  It is a defense to prosecution under Section 47.02 that:
               (1)  the conduct consists entirely of the use of a
  gambling device for which the user of the device may win or be
  awarded only the opportunity to continue playing the game or
  conducting an activity on the device; and
               (2)  the opportunity to continue is not exchangeable
  for another thing of value.
         (d)  It is a defense to prosecution under Section 47.03,
  47.04, or 47.06 that the conduct consists of or is a necessary
  incident to offering, using, or maintaining one or more gambling
  devices used exclusively for conduct for which Subsection (a) or
  (c) provides a defense to a person using the device, including the
  manufacturing, transporting, storing, or repairing of such a
  device.
         (e)  In this section, "noncash merchandise" does not
  include:
               (1)  cash;
               (2)  an item of cash  equivalent, including a check,
  money order, cashier's check, or traveler's check; or
               (3)  a gift certificate, gift card, coupon, voucher, or
  other item that entitles the bearer to receive money or any other
  thing of value at a location other than the premises where the
  gambling device is located.
         SECTION 2.07.  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 gambling
  device with the authorization of the Texas Lottery Commission or
  the Texas Gaming and Boxing Commission under Chapter 466,
  Government Code, or of the Texas Gaming and Boxing Commission under
  Chapter 2005, Occupations Code.
         SECTION 2.08.  Section 11.05, Texas Racing Act (Article
  179e, Vernon's Texas Civil Statutes), is amended to read as
  follows:
         Sec. 11.05.  UNLAWFUL WAGERING.  A person shall not wager on
  the result of a greyhound race or horse race in this state except as
  permitted by this Act or by Chapter 2005, Occupations Code.
         SECTION 2.09.  All funds in the Texas casino gaming fund are
  appropriated to the Texas Gaming and Boxing Commission for the
  operation of the commission and the administration of Chapter 2005,
  Occupations Code, as added by Section 2.01 of this article, for the
  biennium ending August 31, 2009.
         SECTION 2.10.  The governor shall make the initial
  appointments to the Texas Gaming and Boxing Commission not later
  than January 1, 2008. In making the initial appointments to the
  Texas Gaming and Boxing Commission, the governor shall designate
  two members for terms expiring in 2009, two members for terms
  expiring in 2011, and two members for terms expiring in 2013.
         SECTION 2.11.  Section 47.02(e), Penal Code, is repealed.
         SECTION 2.12.  The change in law made by this article applies
  only to an offense committed on or after the effective date of this
  article.  An offense committed before the effective date of this
  article is covered by the law in effect when the offense was
  committed, and the former law is continued in effect for that
  purpose. For purposes of this section, an offense was committed
  before the effective date of this article if any element of the
  offense was committed before that date.
         SECTION 2.13.  This article takes effect on the date the
  constitutional amendment proposed by the 80th Legislature, Regular
  Session, 2007, authorizing the operation of video lottery games at
  racetracks, on certain Indian lands, and at 12 tourist destination
  locations and authorizing casino gaming at 12 tourist destination
  locations, at racetracks, and on certain Indian lands is approved
  by the voters. If that amendment is not approved by the voters,
  this article has no effect.
  ARTICLE 3.  TRANSFER OF POWERS AND DUTIES OF OTHER STATE AGENCIES TO
  TEXAS GAMING AND BOXING COMMISSION
         SECTION 3.01.  Sections 466.002(1) and (3), Government Code,
  are amended to read as follows:
               (1)  "Commission" means the Texas Gaming and Boxing
  [Lottery] Commission.
               (5-a) [(3)]  "Division" means the state lottery
  division established by the commission under Chapter 2004,
  Occupations Code [467].
         SECTION 3.02.  Section 2001.002(8), Occupations Code, is
  amended to read as follows:
               (8)  "Commission" means the Texas Gaming and Boxing
  [Lottery] Commission.
         SECTION 3.03.  Sections 2052.002(5), (7), (9), and (20),
  Occupations Code, are amended to read as follows:
               (5)  "Commission" means the Texas Gaming and Boxing
  Commission [of Licensing and Regulation].
               (7)  "Division" ["Department"] means the combative
  sports division of the commission [Texas Department of Licensing
  and Regulation].
               (9)  "Executive director" means the executive director
  of the commission [department] or the executive director's
  designated representative.
               (20)  "Ringside physician" means an individual
  licensed to practice medicine in this state who is registered with
  the division [department].
         SECTION 3.04.  Section 2052.051, Occupations Code, is
  amended to read as follows:
         Sec. 2052.051.  ADMINISTRATION OF CHAPTER.  The commission
  [department] shall administer this chapter.
         SECTION 3.05.  Section 2052.052(b), Occupations Code, is
  amended to read as follows:
         (b)  The commission may adopt rules:
               (1)  governing boxing, kickboxing, martial arts, or
  mixed martial arts contests and exhibitions;
               (2)  establishing reasonable qualifications for an
  applicant seeking a license or registration from the division
  [department] under this chapter;
               (3)  recognizing a sanction, medical suspension, or
  disqualification of a licensee or registrant by a combative sports
  authority in any state, provided that if licensure or registration
  is denied based on those actions, an applicant has an opportunity
  for a hearing as prescribed by rule;
               (4)  establishing practice requirements or specialty
  certifications that a person licensed to practice medicine in this
  state must meet to register as a ringside physician;
               (5)  requiring a contestant to present with an
  application for licensure or license renewal documentation of
  recent blood test results that demonstrate whether the contestant
  is free from hepatitis B virus, hepatitis C virus, human
  immunodeficiency virus, and any other communicable disease
  designated by commission rule and providing that a contestant's
  failure to provide the required blood test results disqualifies the
  contestant;
               (6)  providing that to participate in any event a
  contestant must be free of hepatitis B virus, hepatitis C virus,
  human immunodeficiency virus, and any other communicable disease
  designated by rule;
               (7)  requiring that a contestant present with an
  application for licensure or license renewal documentation of the
  results of a physical examination, including an ophthalmologic
  examination, and providing for disqualification of a contestant who
  is determined by an examining physician to be unfit;
               (8)  establishing additional responsibilities for
  promoters; and
               (9)  governing regulated amateur events.
         SECTION 3.06.  Section 2052.055(a), Occupations Code, is
  amended to read as follows:
         (a)  The presiding officer of the commission, with the
  commission's approval, may appoint a medical advisory committee to
  advise the division [department] concerning health issues for
  combative sports event contestants.
         SECTION 3.07.  Section 2052.109(c), Occupations Code, is
  amended to read as follows:
         (c)  A company that issues a bond shall notify the division
  [department] in writing of the cancellation of the bond not later
  than the 30th day before the date on which the bond is canceled.
         SECTION 3.08.  Section 2052.114(b), Occupations Code, is
  amended to read as follows:
         (b)  The holder of a license, registration, or permit may
  renew the license, registration, or permit by paying a renewal fee
  and complying with other renewal requirements prescribed by
  division [department] rule before the expiration date. The
  division [department] shall issue a renewal certificate to the
  holder at the time of renewal.
         SECTION 3.09.  Sections 2052.152(a) and (c), Occupations
  Code, are amended to read as follows:
         (a)  A person on whom a tax is imposed under Section
  2052.151, not later than three business days after the end of the
  event or telecast for which the tax is due, shall submit to the
  division [department] a verified report on a form acceptable to the
  division [department] stating:
               (1)  the number of tickets sold to the event;
               (2)  the ticket prices charged;
               (3)  the gross price charged for the sale or lease of
  broadcasting, television, and motion picture rights without any
  deductions for commissions, brokerage fees, distribution fees,
  advertising, or other expenses or charges; and
               (4)  the amount of gross receipts obtained from the
  event.
         (c)  The division [department] may audit a report filed under
  Subsection (b).
         SECTION 3.10.  Section 2052.302(b), Occupations Code, is
  amended to read as follows:
         (b)  The promoter shall surrender any purse or funds withheld
  as provided by Subsection (a) to the executive director on demand.
  Not later than the fifth working day after the event, the division
  [department] shall notify in writing the promoter and any person
  from whom a sum was withheld of the date of a hearing to determine
  whether all or part of the purse or funds withheld should be
  forfeited to the state. The hearing must be scheduled for a date
  not later than the 10th day after the date of the notice. Not later
  than the 10th day after the date of the hearing, the executive
  director shall enter an order with findings of fact and conclusions
  of law determining whether all or part of the purse or funds should
  be forfeited. Any funds not forfeited shall be distributed to the
  persons entitled to the funds.
         SECTION 3.11.  Section 2052.303(b), Occupations Code, is
  amended to read as follows:
         (b)  The attorney general or the commission [department] may
  file a civil suit to:
               (1)  assess and recover a civil penalty under
  Subsection (a); or
               (2)  enjoin a person who violates or threatens to
  violate this chapter or a rule adopted under this chapter from
  continuing the violation or threat.
         SECTION 3.12.  Sections 1.03(3) and (5), Texas Racing Act
  (Article 179e, Vernon's Texas Civil Statutes), are amended to read
  as follows:
               (3)  "Commission" means the Texas Gaming and Boxing
  [Racing] Commission.
               (5)  "Executive secretary" means the executive
  director [secretary] of the Texas Gaming and Boxing [Racing]
  Commission.
         SECTION 3.13.  The heading to Article 2, Texas Racing Act
  (Article 179e, Vernon's Texas Civil Statutes), is amended to read
  as follows:
  ARTICLE 2. TEXAS GAMING AND BOXING [RACING] COMMISSION
         SECTION 3.14.  Section 3.09(b), Texas Racing Act (Article
  179e, Vernon's Texas Civil Statutes), is amended to read as
  follows:
         (b)  The commission shall deposit the money it collects under
  this Act in the State Treasury to the credit of a special fund to be
  known as the Texas Racing [Commission] fund. The Texas Racing
  [Commission] fund may be appropriated only for the administration
  and enforcement of this Act. Any unappropriated money remaining in
  that special fund at the close of each fiscal biennium shall be
  transferred to the General Revenue Fund and may be appropriated for
  any legal purpose. The legislature may also appropriate money from
  the General Revenue Fund for the administration and enforcement of
  this Act. Any amount of general revenue appropriated for the
  administration and enforcement of this Act in excess of the
  cumulative amount deposited in the Texas Racing [Commission] fund
  shall be reimbursed from the Texas Racing [Commission] fund not
  later than one year after the date on which the general revenue
  funds are appropriated, with 12 percent interest per year until
  August 31, 1993, and 6 3/4 percent interest thereafter with all
  payments first attributable to interest.
         SECTION 3.15.  Section 6.091(a), Texas Racing Act (Article
  179e, Vernon's Texas Civil Statutes), is amended to read as
  follows:
         (a)  An association shall distribute from the total amount
  deducted as provided by Sections 6.08(a) and 6.09(a) of this Act
  from each simulcast pari-mutuel pool and each simulcast
  cross-species pool the following shares:
               (1)(A)  until January 1, 1999, an amount equal to 0.25
  percent of each simulcast pari-mutuel pool and each simulcast
  cross-species simulcast pool as the amount set aside to reimburse
  the general revenue fund for amounts that are appropriated for the
  administration and enforcement of this Act and that are in excess of
  the cumulative amount of funds deposited in the Texas Racing
  [Commission] fund, until the excess amount and interest on the
  excess amount are fully reimbursed;
                     (B)  an amount equal to one percent of each
  simulcast pool as the amount set aside for the state; and
                     (C)  an amount equal to 1.25 percent of each
  cross-species simulcast pool as the amount set aside for the state;
               (2)  an amount equal to 0.25 percent of each pool set
  aside to reimburse the general revenue fund for amounts that are
  appropriated for the administration and enforcement of this Act and
  that are in excess of the cumulative amount of funds deposited in
  the Texas Racing [Commission] fund, until the excess amount and
  interest on the excess amount are fully reimbursed;
               (3)  if the association is a horse racing association,
  an amount equal to one percent of a multiple two wagering pool or
  multiple three wagering pool as the amount set aside for the
  Texas-bred program to be used as provided by Section 6.08(f) of this
  Act;
               (4)  if the association is a greyhound association, an
  amount equal to one percent of a multiple two wagering pool or a
  multiple three wagering pool as the amount set aside for the
  Texas-bred program for greyhound races, to be distributed and used
  in accordance with rules of the commission adopted to promote
  greyhound breeding in this state; and
               (5)  the remainder as the amount set aside for purses,
  expenses, the sending association, and the receiving location
  pursuant to a contract approved by the commission between the
  sending association and the receiving location.
         SECTION 3.16.  (a)  The following laws are repealed:
               (1)  Sections 2.01-2.05, Texas Racing Act (Article
  179e, Vernon's Texas Civil Statutes);
               (2)  Sections 2.073-2.11, Texas Racing Act (Article
  179e, Vernon's Texas Civil Statutes); and
               (3)  Sections 6.093(a) and 18.01(a), Texas Racing Act
  (Article 179e, Vernon's Texas Civil Statutes).
         (b)  Chapter 467, Government Code, is repealed effective
  September 1, 2009.
         SECTION 3.17.  (a) On September 1, 2008, or an earlier date
  specified in the transition plan required under Section 3.19 of
  this article, the following powers, duties, functions, programs,
  and activities are transferred to the Texas Gaming  and Boxing
  Commission:
               (1)  all powers, duties, functions, programs, and
  activities related to administrative support services, such as
  strategic planning and evaluation, audit, legal, human resources,
  information resources, accounting, purchasing, financial
  management, and contract management services, of a state agency or
  entity abolished by Section 3.22 of this article;
               (2)  all powers, duties, functions, programs, and
  activities of the Texas Lottery Commission related to:
                     (A)  the operation of the state lottery or video
  lottery under Chapter 466, Government Code; and
                     (B)  the regulation of bingo under Chapter 2001,
  Occupations Code;
               (3)  all powers, duties, functions, programs, and
  activities of the Texas Racing Commission under the Texas Racing
  Act (Article 179e, Vernon's Texas Civil Statutes); and
               (4)  all powers, duties, functions, programs, and
  activities of the Texas Commission of Licensing and Regulation and
  the Texas Department of Licensing and Regulation under Chapter
  2052, Occupations Code.
         (b)  On the date specified by Subsection (a) of this section:
               (1)  all obligations and contracts of a state agency or
  entity that are related to a power, duty, function, program, or
  activity transferred from the agency or entity under Subsection (a)
  of this section are transferred to the Texas Gaming and Boxing
  Commission;
               (2)  all property and records in the custody of a state
  agency or entity that are related to a power, duty, function,
  program, or activity transferred from the agency or entity under
  Subsection (a) of this section and all funds appropriated by the
  legislature for the power, duty, function, program, or activity
  shall be transferred to the Texas Gaming and Boxing Commission; and
               (3)  all complaints, investigations, or contested
  cases that are pending before a state agency or entity or the
  governing body of the agency or entity and that are related to a
  power, duty, function, program, or activity transferred from the
  agency or entity under Subsection (a) of this section are
  transferred without change in status to the Texas Gaming and Boxing
  Commission.
         (c)  A rule or form adopted by a state agency or entity that
  relates to a power, duty, function, program, or activity
  transferred from the agency or entity under Subsection (a) of this
  section is a rule or form of the Texas Gaming and Boxing Commission
  and remains in effect until altered by the commission.
         (d)  A reference in law to a state agency or entity abolished
  by Section 3.22 of this article, or to the governing body of the
  agency or entity, that relates to a power, duty, function, program,
  or activity transferred under Subsection (a) of this section means
  the Texas Gaming and Boxing Commission.
         (e)  A license, permit, or certification in effect that was
  issued by a state agency or entity abolished by Section 3.22 of this
  article or described in Subsection (a)(4) of this section and that
  relates to a power, duty, function, program, or activity
  transferred under Subsection (a) of this section is continued in
  effect as a license, permit, or certification of the Texas Gaming
  and Boxing Commission.
         SECTION 3.18.  (a)  The Texas Gaming and Boxing Commission
  Transition Legislative Oversight Committee is created to
  facilitate the transfer of powers, duties, functions, programs, and
  activities between the state's gaming agencies and the Texas Gaming
  and Boxing Commission as provided by this article with a minimal
  negative effect on the operation of those regulated activities in
  this state.
         (b)  The committee is composed of seven members, as follows:
               (1)  two members of the senate, appointed by the
  lieutenant governor not later than December 1, 2007;
               (2)  two members of the house of representatives,
  appointed by the speaker of the house of representatives not later
  than December 1, 2007; and
               (3)  three members of the public, appointed by the
  governor not later than December 1, 2007.
         (c)  Once the other members of the committee have been
  appointed, the executive director of the Texas Gaming and Boxing
  Commission serves as an ex officio member of the committee.
         (d)  An appointed member of the committee serves at the
  pleasure of the appointing official.
         (e)  The lieutenant governor and the speaker of the house of
  representatives shall alternate designating a presiding officer
  from among their respective appointments. The speaker of the house
  of representatives shall make the first appointment after the
  effective date of this section.
         (f)  A member of the committee may not receive compensation
  for serving on the committee but is entitled to reimbursement for
  travel expenses incurred by the member while conducting the
  business of the committee as provided by the General Appropriations
  Act.
         (g)  The committee shall:
               (1)  facilitate the transfer of powers, duties,
  functions, programs, and activities between the state's gaming
  agencies and the Texas Gaming and Boxing Commission as provided by
  this article with a minimal negative effect on the gaming
  activities regulated in this state;
               (2)  with assistance from the Texas Gaming and Boxing
  Commission and the gaming agencies listed in Section 3.17(a) of
  this article, advise the executive commissioner of the Texas Gaming
  and Boxing Commission concerning:
                     (A)  the powers, duties, functions, programs, and
  activities transferred under this article and the funds and
  obligations that are related to the powers, duties, functions,
  programs, or activities; and
                     (B)  the transfer of the powers, duties,
  functions, programs, activities, records, property, funds,
  obligations, and employees by the entities as required by Section
  3.17 of this article;
               (3)  meet at the call of the presiding officer;
               (4)  research, take public testimony, and issue reports
  on other appropriate issues or specific issues requested by the
  lieutenant governor, speaker, or governor; and
               (5)  review specific recommendations for legislation
  proposed by the Texas Gaming and Boxing Commission or the other
  agencies.
         (h)  The committee may request reports and other information
  from the Texas Gaming and Boxing Commission, other state agencies,
  and the attorney general relating to gaming in this state and other
  appropriate issues.
         (i)  The committee shall use existing staff of the senate,
  the house of representatives, and the Texas Legislative Council to
  assist the committee in performing its duties under this section.
         (j)  Chapter 551, Government Code, applies to the committee.
         (k)  The committee shall report to the governor, lieutenant
  governor, and speaker of the house of representatives not later
  than November 15 of each even-numbered year. The report must
  include:
               (1)  identification of significant issues within
  gaming regulation, with recommendations for action;
               (2)  an analysis of the effectiveness and efficiency of
  gaming regulation, with recommendations for any necessary
  research; and
               (3)  recommendations for legislative action.
         SECTION 3.19.  (a) The transfer of powers, duties,
  functions, programs, and activities under Section 3.17 of this
  article to the Texas Gaming and Boxing Commission must be
  accomplished in accordance with a schedule included in a transition
  plan developed by the executive commissioner of the Texas Gaming
  and Boxing Commission and submitted to the governor and the
  Legislative Budget Board not later than September 1, 2008. The
  executive commissioner shall provide to the governor and the
  Legislative Budget Board transition plan status reports and updates
  on at least a quarterly basis following submission of the initial
  transition plan. The transition plan must be made available to the
  public.
         (b)  Not later than March 1, 2008, the Texas Gaming and
  Boxing Commission shall hold a public hearing and accept public
  comment regarding the transition plan required to be developed by
  the executive commissioner of the Texas Gaming and Boxing
  Commission under Subsection (a) of this section.
         (c)  In developing the transition plan, the executive
  commissioner of the Texas Gaming and Boxing Commission shall hold
  public hearings in various geographic areas in this state before
  submitting the plan to the governor and the Legislative Budget
  Board as required by this section.
         SECTION 3.20.  An action brought or proceeding commenced
  before the date of a transfer prescribed by this article in
  accordance with the transition plan required under Section 3.19 of
  this article, including a contested case or a remand of an action or
  proceeding by a reviewing court, is governed by the laws and rules
  applicable to the action or proceeding before the transfer.
         SECTION 3.21.  (a) The Texas Gaming and Boxing Commission
  shall implement the powers, duties, functions, programs, and
  activities assigned to the commission under this article in
  accordance with a work plan designed by the commission to ensure
  that the transfer of gaming regulation in this state is
  accomplished in a careful and deliberative manner.
         (b)  A work plan designed by the commission under this
  section must include the following phases:
               (1)  a planning phase, during which the commission will
  focus on and stabilize the organization of the agency's powers,
  duties, functions, programs, and activities, and which must
  include:
                     (A)  initiation of recommendations made by the
  Texas Gaming and Boxing Commission Transition Legislative
  Oversight Committee;
                     (B)  creation of interagency and intra-agency
  steering committees;
                     (C)  development of global visions, goals, and
  organizational strategies; and
                     (D)  development of communications and risk
  management plans;
               (2)  an integration phase, during which the commission
  will identify opportunities and problems and design customized
  solutions for those problems, and which must include:
                     (A)  identification of key issues related to costs
  or legal requirements for other commission activities;
                     (B)  planning for daily operations; and
                     (C)  validation of fiscal and program synergies;
               (3)  an optimization phase, during which the commission
  will complete and expand on the initial transitions, and which must
  include:
                     (A)  optimization of initial implementation
  initiatives;
                     (B)  use of enterprise teaming operations;
                     (C)  building infrastructures to support and
  facilitate changes in gaming regulation and oversight; and
                     (D)  identification and use of beneficial assets
  management and facilities approaches; and
               (4)  a transformation phase, during which the
  commission will continue implementing initial and additional
  changes in gaming regulation and oversight, and which must include
  implementation of changes in agency management activities.
         SECTION 3.22.  (a) The Texas Lottery Commission and the
  Texas Racing Commission are abolished on the date on which their
  respective powers, duties, functions, programs, and activities are
  transferred under Section 3.17 of this article, and after that date
  a reference in any law to the Texas Lottery Commission or to the
  Texas Racing Commission means the Texas Gaming and Boxing
  Commission.
         (b)  The abolition of a state agency or entity listed in
  Subsection (a) of this section and the transfer of its powers,
  duties, functions, programs, activities, obligations, rights,
  contracts, records, property, funds, and employees as provided by
  this article do not affect or impair an act done, any obligation,
  right, order, permit, certificate, rule, criterion, standard, or
  requirement existing, or any penalty accrued under former law, and
  that law remains in effect for any action concerning those matters.
         SECTION 3.23.  (a) Except as provided by Subsection (b),
  Sections 3.01 through 3.16 of this article take effect on the date
  the Texas Lottery Commission and the Texas Racing Commission are
  abolished under Section 3.22 of this article.
         (b)  Sections 3.17 through 3.22 of this article and this
  section take effect on the date the amendment adding Section 47-a,
  Article III, Texas Constitution, authorizing the operation of video
  lottery games at racetracks, on certain Indian lands, and at 12
  tourist destination locations and authorizing casino gaming at 12
  tourist destination locations, at racetracks, and on certain Indian
  lands proposed by the 80th Legislature, Regular Session, 2007,
  becomes effective. If that amendment is not approved by the voters,
  this article has no effect.