80R898 YDB-D

By: Brimer S.B. No. 1478

A BILL TO BE ENTITLED

AN ACT

relating to authorizing certain nonprofit organizations to conduct charitable poker tournaments; providing penalties.

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

SECTION 1. Subtitle A, Title 13, Occupations Code, is amended by adding Chapter 2004 to read as follows: CHAPTER 2004. CHARITABLE POKER GAMING SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2004.001. DEFINITIONS. In this chapter:

(1) "Authorized organization" means a person described by Sections 2001.101(a)(1)-(5) who is eligible to hold a license to conduct poker gaming under this chapter.

(2) "Bet" means an agreement to win or lose chips or tokens in a poker game.

(3) "Charitable poker tournament" means an event of poker gaming held by a licensed qualified organization.

(4) "Charitable purposes" means a purpose described by Section 2004.203.

(5) "Commission" means the Texas Lottery Commission.

(6) "Director" means the director of poker gaming operations of the commission.

(7) "Executive director" means the executive director of the commission.

(8) "Licensed organization" means an organization that holds a license issued under this chapter to conduct poker gaming.

(9) "Poker" means any of a variety of card games that is played by players who are dealt cards from a poker card deck by a nonplayer dealer and in which each player bets into a communal pot and attempts to win the other players' bets. The term includes draw, stud, low ball, or Texas Hold 'em poker, or any variety or combination of those games.

(10) "Poker gaming" means the conduct of poker games on which wagering is conducted.

(11) "Poker gaming equipment" means any equipment, machine, or device, expendable supply of items, or any other items or paraphernalia used to directly facilitate poker gaming. The term includes playing cards, gaming chips or tokens, card shuffling devices, and computerized systems or software for monitoring poker gaming revenue.

(12) "Premises" means the area used by a licensed organization to conduct poker gaming.

Sec. 2004.002. IMPUTED ACTIONS OF ORGANIZATION. For purposes of this chapter, an organization performs an act if a member, officer, or other agent of the organization performs the act with the consent or authorization of the organization. [Sections 2004.003-2004.050 reserved for expansion] SUBCHAPTER B. COMMISSION POWERS AND DUTIES

Sec. 2004.051. SUPERVISION OF POKER GAMING BY LICENSED ORGANIZATIONS; POKER DIVISION. (a) The commission has broad authority and shall exercise strict control and close supervision over all poker gaming conducted by licensed organizations in this state to protect the public health and safety and to ensure that:

(1) the poker gaming is fairly conducted in compliance with the law; and

(2) the proceeds derived from poker gaming by a licensed organization are used for an authorized purpose.

(b) The commission shall establish a separate division to administer this chapter.

Sec. 2004.052. DIRECTOR OF POKER GAMING. (a) The commission shall employ a director of poker gaming.

(b) The director shall administer the poker gaming division under the direction of the commission.

Sec. 2004.053. RULES; REGULATION OF POKER GAMING AND POKER GAMING EQUIPMENT. (a) The commission shall adopt rules to implement this chapter for the protection of the health, safety, morals, and general welfare of this state.

(b) The commission may establish the hours during which a licensed organization may conduct poker gaming and the types of poker gaming that may be played during a poker tournament conducted by a licensed organization.

(c) The commission by rule shall provide procedures for approval of poker gaming equipment used in poker gaming conducted by a licensed organization.

(d) A licensed organization may not use poker gaming equipment unless the equipment has been approved by the commission for that use.

Sec. 2004.054. OFFICERS AND INVESTIGATORS. The commission may employ officers or investigators the commission considers necessary to administer this chapter.

Sec. 2004.055. 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 relating to gambling by the commission or its employees, a licensed organization, an employee of a licensed organization, or a player in poker gaming conducted by a licensed organization.

Sec. 2004.056. ENFORCEMENT. (a) The executive director or designated personnel of the commission may investigate violations of this chapter and violations of the rules adopted under this chapter.

(b) After conducting an investigation, the executive director, a person designated by the commission, or any law enforcement agency may file a complaint with the district attorney of Travis County or with the appropriate prosecuting attorney of the county in which a violation is alleged to have occurred.

Sec. 2004.057. WORKER REGISTRY. (a) The commission shall establish and maintain a registry of persons who have submitted an application to the commission to be included on the registry and who are not disqualified under this section from being included on the registry. A person other than an individual may not be included on the registry.

(b) A person may not act as a manager, dealer, or cashier in connection with poker gaming conducted by a licensed organization unless the person is listed on the registry established under this section.

(c) A licensed organization with the person's written consent may apply to have the person's name included on the registry.

(d) The commission must conduct a criminal history background check of a person before including the person on the registry. The commission shall refuse to add a person's name to or shall remove a person's name from the registry if, after notice and a hearing, the person is finally determined to have:

(1) been convicted of an offense listed under Section 2004.106(b);

(2) converted money that is or should have been in the poker gaming account of a licensed organization;

(3) taken any action, individually or in concert with another person, that affects the integrity of poker gaming conducted by a licensed organization under this chapter; or

(4) acted as a manager, dealer, or cashier in connection with poker gaming conducted by a licensed organization without being listed on the registry established under this section.

(e) The commission shall make the registry available to the public by publishing it on the commission's Internet website. This subsection does not require the commission to disclose information that is confidential by law.

(f) A licensed organization shall report to the commission the discovery of any conduct on the part of a person listed on the registry under this section or applying for a position that requires the person to be listed on the registry if there is substantial basis for believing that the conduct would constitute grounds for removal of the person's name from, or refusal to add the person's name to, the registry established by this section. A statement made in good faith to the commission or to an adjudicative body in connection with the report may not be the basis for an action for defamation of character.

(g) A person who has been finally determined to have taken action prohibited under Subsections (d)(2)-(4) may not be included on the registry established under this section and may not act as a manager, dealer, or cashier in connection with poker gaming conducted by a licensed organization before the first anniversary of the date of the determination. On expiration of the one-year period, the person may be included on the registry if the person is otherwise eligible to be included.

(h) The commission shall collect a reasonable fee from each person listed on the registry in an amount sufficient to cover the costs incurred in registering the person, conducting criminal background checks, and maintaining the registry under this section. A licensed organization may pay the fee on the person's behalf.

Sec. 2004.058. IDENTIFICATION CARD FOR REGISTERED PERSONS. (a) The commission may require a person listed on the registry maintained under Section 2004.057 to wear an identification card while the person is performing a service for which registration is required by that section during the conduct of poker gaming by a licensed organization. The commission by rule shall prescribe the form and content of the card.

(b) The commission shall provide the identification card or shall provide a form to be completed by a person that allows the person to prepare the identification card. The commission shall collect a reasonable charge to cover the cost of providing the card or form.

Sec. 2004.059. ACCESS TO CRIMINAL HISTORY RECORD INFORMATION. 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) an individual who provides or is seeking to provide a service to a licensed organization for which the person is required to be listed on the registry under Section 2004.057;

(2) a person required to be named in a license application;

(3) an employee or member of a licensed organization, if the employee is or will be directly involved in poker gaming conducted by the organization; or

(4) if a person described by Subdivision (2) or (3) 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 poker gaming;

(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 poker gaming. [Sections 2004.060-2004.100 reserved for expansion] SUBCHAPTER C. LICENSE TO CONDUCT POKER GAMING

Sec. 2004.101. LICENSE REQUIRED TO CONDUCT POKER GAMING. An authorized organization may conduct poker gaming in this state if the organization holds a license to conduct poker gaming issued under this chapter.

Sec. 2004.102. LICENSE APPLICATION. (a) An organization seeking a license to conduct poker gaming under this chapter must file with the commission a verified application on a form prescribed by the commission.

(b) The application must include:

(1) the name and address of the applicant;

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

(3) the address of the premises where and the dates and times when the applicant intends to conduct charitable poker under the license sought;

(4) the name and address of the lessor or other owner of the premises, if the applicant intends to lease or otherwise use premises that are not owned by the organization seeking the license to conduct charitable poker;

(5) the capacity or potential capacity for public assembly in the premises included under Subdivision (3);

(6) the amount of rent to be paid or other consideration to be given, directly or indirectly, for the use of premises described by Subdivision (4) for use in conducting poker gaming;

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

(8) the specific purposes to which and the manner in which the net proceeds of poker gaming are to be used;

(9) a statement that the net proceeds of poker gaming will be used for one or more of the charitable purposes authorized by this chapter;

(10) a designation of one or more active members of the applicant organization under whose supervision the charitable poker will be conducted, accompanied by a statement signed by each designated member stating that the member will be responsible for the conduct of poker gaming under the terms of the license and this chapter; and

(11) sufficient facts relating to the applicant's incorporation and organization to enable the commission to determine whether the applicant is an authorized organization.

(c) A copy of an Internal Revenue Service letter that approves an applicant's exemption from taxation under Section 501(c), Internal Revenue Code, is adequate evidence of the person's tax-exempt status. A letter of good standing from a parent organization that holds an exemption from taxation under Section 501(c), Internal Revenue Code, for both the parent organization and its affiliate is adequate evidence of the affiliate organization's tax-exempt status.

Sec. 2004.103. PERMIT TO CONDUCT POKER TOURNAMENT. (a) A licensed organization may conduct poker gaming only at a poker tournament for which the organization holds a permit under this section.

(b) A licensed organization may apply for a permit to conduct a poker tournament by filing with the commission an application, on a form prescribed by the commission, accompanied by a fee in an amount set by the commission.

(c) The application must include the name and address of each person who will work at the proposed tournament in a position for which the person is required to be listed on the registry under Section 2004.057, the nature of the work to be performed, and a statement as to whether the person has been convicted of a felony, a gambling offense, criminal fraud, or a crime of moral turpitude.

(d) A tournament permit is valid only for the hours and on the date specified by the permit.

(e) A licensed organization may not receive more than 12 tournament permits for a calendar year and not more than one tournament permit for a calendar month.

(f) Subject to Section 2004.104, a licensed organization may apply for all or any portion of the total number of tournament permits that the organization may receive under this section in a calendar year in one application without stating in the application the days or hours for which the organization will use the permits.

Sec. 2004.104. VERIFICATION OF TOURNAMENT PERMIT. (a) Before using a tournament permit issued under Section 2004.103(f), an organization shall:

(1) notify the commission of the specific date and hours of the poker tournament for which the license will be used; and

(2) provide the commission with the information required under Section 2004.103(c) that is relevant to the poker tournament.

(b) If the commission receives the notification by noon of the day before the day the tournament to which the permit applies will be held, the commission shall verify receipt of the notice before the end of the business day on which the notice is received.

(c) If the commission does not receive the notification by noon of the day before the day the permit will be used, the commission shall verify receipt of the notice before noon of the business day that follows the day the commission received the notice.

(d) A verification under this section may be delivered by facsimile, e-mail, or any other means reasonably contemplated to arrive before the time the tournament to which the permit applies will be held.

Sec. 2004.105. LICENSE FEE. The commission shall set the fee for a license to conduct poker gaming in an amount reasonable to defray administrative costs. An applicant for a license or renewal of a license shall pay the fee annually.

Sec. 2004.106. LICENSE ISSUANCE OR RENEWAL. (a) The commission shall issue or renew a license to conduct poker gaming on payment of the license fee provided by Section 2004.105 if the commission determines that:

(1) the member or members of the applicant organization designated in the application are active members of the organization;

(2) the organization's charitable poker is to be conducted in accordance with this chapter;

(3) the proceeds of the poker gaming are to be disposed of in accordance with this chapter;

(4) the applicant has made and can demonstrate significant progress toward the accomplishment of the purposes of the organization during the 12 months preceding the date of application for a license or license renewal;

(5) all persons who will conduct, promote, or administer the proposed poker gaming are active members of the applicant organization and all other persons who will assist in conducting, promoting, or administering the proposed poker gaming are persons authorized to do so under this chapter; and

(6) a person under whose supervision the poker gaming will be conducted or who will provide a service to the organization for which the person is required to be listed on the registry under Section 2004.057 has not been convicted of a felony, a gambling offense, criminal fraud, or a crime of moral turpitude if less than 10 years has elapsed since the termination of a sentence, parole, mandatory supervision, or community supervision served for the offense.

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

Sec. 2004.107. FORM AND CONTENT OF TOURNAMENT PERMIT. A permit to conduct a poker tournament must include:

(1) the name and address of the licensed organization seeking the permit;

(2) the names and addresses of the member or members of the licensed organization under whose supervision the poker tournament will be conducted;

(3) an indication of the premises where and the time when the poker tournament is to be conducted; and

(4) the specific purposes to which the net proceeds of the poker tournament are to be devoted.

Sec. 2004.108. TRAINING PROGRAM. (a) Each person designated under Section 2004.102(b)(10) shall complete eight hours of training as provided by commission rule.

(b) A training program approved by the commission must include training related to:

(1) administering and conducting a poker tournament; and

(2) promoting a poker tournament.

(c) The commission by rule shall establish:

(1) the content of the training course;

(2) information concerning training to be reported to the commission; and

(3) other training program requirements that the commission determines to be necessary to promote the fair conduct of poker tournaments and compliance with this chapter.

Sec. 2004.109. LICENSE AND PERMIT AMENDMENT. A licensed organization may file an application with the commission to change:

(1) the premises at which the organization may conduct poker gaming;

(2) the time the organization will conduct a poker tournament; or

(3) the names of the persons required to be listed on the registry under Section 2004.057.

Sec. 2004.110. ACCESS TO INTERNAL REVENUE SERVICE INFORMATION; OFFENSE. (a) Under a contract between the comptroller and the Internal Revenue Service, the commission may obtain from the Internal Revenue Service information relating to a person's qualification for a license under this chapter regarding an authorized organization or an applicant for a license.

(b) Information received by the commission from the Internal Revenue Service is confidential and may only be used as provided by the contract under which the information was obtained.

(c) A person commits an offense if the person releases or discloses information obtained under this section except on court order. An offense under this subsection is a Class A misdemeanor.

(d) The comptroller shall adopt rules governing the custody and use of information obtained under this section. [Sections 2004.111-2004.150 reserved for expansion] SUBCHAPTER D. DENIAL, REVOCATION, AND SUSPENSION OF LICENSE OR PERMIT

Sec. 2004.151. DENIAL OF LICENSE OR PERMIT. The commission may deny an application for a license or permit or renewal of a license or permit issued under this chapter for a cause that would allow or require the suspension or revocation of a license or permit issued under this chapter or for a violation of this chapter or rules adopted under this chapter.

Sec. 2004.152. HEARING. (a) A person whose application for a license or permit is denied by the commission may make a written request for a hearing. At the hearing the applicant is entitled to be heard on the qualifications of the applicant and the merits of the application.

(b) The burden of proof is on the applicant to establish by a preponderance of the evidence its eligibility for the license or permit.

Sec. 2004.153. SUSPENSION OR REVOCATION OF LICENSE OR PERMIT. After a hearing, the commission may suspend or revoke a license or permit issued under this chapter for:

(1) failure to comply with this chapter or a commission rule; or

(2) a reason that would allow or require the commission to refuse to issue or renew a license or permit of the same type.

Sec. 2004.154. FINAL HEARING. (a) The commission shall hold a final hearing on the suspension or revocation of a license or permit, if requested by the license or permit holder, not later than the 30th day after the date the commission receives written notice of the request.

(b) A final hearing on suspension or revocation is governed by the same rules as a hearing on any other suspension or revocation under this chapter.

Sec. 2004.155. TEMPORARY SUSPENSION. (a) The commission may temporarily suspend a license or permit issued under this chapter for failure to comply with this chapter or a commission rule.

(b) Before temporarily suspending a license or permit, the director of poker gaming operations must follow any prehearing rules adopted by the commission to determine if the license or permit holder's continued operation may constitute an immediate threat to the health, safety, morals, or welfare of the public.

(c) Chapter 2004, Government Code, does not apply to the director of poker gaming operations or to the commission in the enforcement and administration of a temporary suspension under this section.

(d) The director shall provide notice of a temporary suspension in the same manner as notice is provided under Section 2001.356.

Sec. 2004.156. JUDICIAL REVIEW. (a) An applicant for or the holder of a license or permit issued or to be issued under this chapter whose application has been denied, whose license or permit has been revoked or suspended, or who is otherwise aggrieved by an action of the commission relating to licensing or permitting under this chapter may appeal the decision of the commission to a district court in Travis County not later than the 30th day after the date on which the commission's decision becomes final and appealable.

(b) Judicial review of a commission decision is under the substantial evidence rule as provided by Chapter 2004, Government Code. [Sections 2004.157-2004.200 reserved for expansion] SUBCHAPTER E. POKER GAMING ACCOUNTS AND USE OF PROCEEDS

Sec. 2004.201. ORGANIZATION POKER GAMING ACCOUNTS. (a) A licensed organization shall establish and maintain one regular checking account designated as the organization's poker gaming account. The organization may also maintain an interest-bearing savings account designated as the poker gaming savings account.

(b) A licensed organization shall deposit in the poker gaming account all money derived from the conduct of poker gaming.

(c) A licensed organization may not commingle gross receipts derived from the conduct of poker gaming with other money of the organization.

Sec. 2004.202. AUTHORIZED USES OF POKER GAMING ACCOUNT. A licensed organization may draw a check on its poker gaming account only for:

(1) the payment of necessary and reasonable expenses incurred and paid in connection with the conduct of poker gaming;

(2) the disbursement of net proceeds derived from the conduct of poker gaming to charitable purposes; or

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

Sec. 2004.203. USE OF NET PROCEEDS FOR CHARITABLE PURPOSES. (a) A licensed organization shall devote to the charitable purposes of the organization its net proceeds of poker gaming.

(b) Except as otherwise provided by law, the net proceeds derived from poker gaming are dedicated to the charitable purposes of the organization only if directed to a cause, deed, or activity that is consistent with the federal tax exemption the organization obtained under Section 501, Internal Revenue Code, and under which the organization qualifies as a nonprofit organization. If the organization is not required to obtain a federal tax exemption under Section 501, Internal Revenue Code, the organization's net proceeds are dedicated to the charitable purposes of the organization only if directed to a cause, deed, or activity that is consistent with the purposes and objectives for which the organization qualifies as an authorized organization.

Sec. 2004.204. USE OF PROCEEDS BY RECIPIENT. A person who receives proceeds from a licensed organization for a charitable purpose may not use the proceeds:

(1) to pay for services rendered or materials purchased in connection with the conduct of poker gaming by the donor organization; or

(2) for a purpose that would not constitute a charitable purpose if the activity were conducted by the donor organization.

Sec. 2004.205. USE OF PROCEEDS BY LICENSED ORGANIZATION. A licensed organization may not use the net proceeds from poker gaming directly or indirectly to:

(1) support or oppose a candidate or slate of candidates for public office;

(2) support or oppose a measure submitted to a vote of the people; or

(3) influence or attempt to influence legislation.

Sec. 2004.206. REQUIRED DISBURSEMENTS TO CHARITY. (a) Before the end of each calendar quarter, a licensed organization shall disburse for charitable purposes an amount not less than 35 percent of the organization's adjusted gross receipts from poker gaming from the preceding calendar quarter, less the amount of authorized expenses.

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

(c) A licensed organization that has ceased to conduct poker gaming for any reason and that has unexpended poker gaming money shall disburse the money for charitable purposes before the end of the next calendar quarter after the calendar quarter in which the organization ceases to conduct poker gaming.

Sec. 2004.207. ITEMS OF EXPENSE. An item of expense may not be incurred or paid in connection with the conduct of poker gaming except an expense that is reasonable or necessary to conduct the poker gaming. [Sections 2004.208-2004.250 reserved for expansion] SUBCHAPTER F. ENFORCEMENT

Sec. 2004.251. OFFENSES; REVOCATION OF LICENSE OR PERMIT. (a) A person commits an offense and the person's license or permit is subject to revocation under this chapter if the person:

(1) makes a false statement or material omission in an application for a license or permit under this chapter;

(2) fails to maintain records that fully and accurately record each transaction connected with the conduct of poker gaming or the leasing of premises to be used for poker gaming;

(3) falsifies or makes a false entry in a book or record if the entry relates to poker gaming, the disposition of poker gaming proceeds, or the gross receipts from the manufacture, sale, or distribution of poker gaming supplies or equipment;

(4) diverts or pays a portion of the net proceeds of poker gaming to a person except in furtherance of one or more of the lawful purposes provided by this chapter; or

(5) violates this chapter or a term of a license or permit issued under this chapter.

(b) An offense under Subsection (a)(2), (3), or (5) is a Class C misdemeanor, unless it is shown on the trial of the offense that the person has been convicted previously under this section, in which event the offense is a Class B misdemeanor. An offense under Subsection (a)(1) or (4) is a Class A misdemeanor.

(c) A person whose license or permit is revoked under this section may not apply for another license or permit under this chapter before the first anniversary of the date of revocation.

Sec. 2004.252. INSPECTION OF PREMISES. The commission, its officers or agents, or a state, municipal, or county peace officer may enter and inspect the contents of premises where poker gaming is being conducted or intended to be conducted.

Sec. 2004.253. INJUNCTION; CIVIL PENALTY. (a) If the commission or the attorney general has reason to believe that this chapter has been or is about to be violated, the commission or attorney general may seek injunctive relief to restrain the violation.

(b) Venue for an action under this section is in Travis County in addition to any other county in which venue is proper under other law.

(c) If the court finds that this chapter has been violated or is about to be violated, the court shall issue a temporary restraining order and, after due notice and hearing, a temporary injunction, and after a final trial, a permanent injunction to restrain the violation.

(d) If the court finds that this chapter has been knowingly violated, the court shall order all proceeds from the illegal poker gaming to be forfeited to the state as a civil penalty.

Sec. 2004.254. REMEDIES NOT EXCLUSIVE. The commission may suspend or revoke a license or permit under this chapter or impose an administrative penalty, or both, depending on the severity of the violation.

Sec. 2004.255. EXAMINATION OF RECORDS; DISCLOSURE OF INFORMATION. (a) The attorney general may:

(1) examine or cause to be examined the records of an organization that is or has been licensed to conduct poker gaming, to the extent the organization's activities relate to poker gaming, including the maintenance, control, and disposition of net proceeds derived from poker gaming or from the use of its premises for poker gaming; and

(2) examine a manager, officer, director, agent, member, or employee of the organization under oath regarding:

(A) the conduct of poker gaming under a license;

(B) the use of premises for poker gaming or related activities; or

(C) the disposition of proceeds derived from poker gaming.

(b) The commission or a person authorized in writing by the commission may examine the books, papers, records, equipment, and premises of a license holder and may investigate the character of the license holder's activities to verify the accuracy of a statement or report made to the commission.

(c) The commission may set and charge to the license holder a fee in an amount reasonably necessary to recover the cost of an authorized investigation or audit authorized under this chapter.

(d) If the commission determines that a person is not complying with this chapter, the commission shall notify the attorney general.

Sec. 2004.256. ADMINISTRATIVE PENALTY. (a) The commission may impose an administrative penalty against a person who violates this chapter or a rule or order adopted by the commission under this chapter in the same manner as the commission imposes an administrative penalty under Subchapter M, Chapter 2001.

(b) The amount of the administrative penalty may not exceed $1,000 for each violation. Each day a violation continues or occurs may be considered a separate violation for purposes of imposing a penalty.

(c) In determining the amount of the penalty, the director shall consider:

(1) the seriousness of the violation, including the nature, circumstances, extent, and gravity of the prohibited acts;

(2) the history of previous violations;

(3) the amount necessary to deter future violations;

(4) efforts to correct the violation; and

(5) any other matter that justice may require.

(d) The notice, hearing, and appeal for an administrative penalty assessed under this section shall be provided or conducted in the same manner as notice, hearing, and appeals are provided or conducted under Subchapter M, Chapter 2001.

SECTION 2. Section 411.108, Government Code, is amended by adding Subsection (a-1) and amending Subsection (b) to read as follows:

(a-1) The Texas Lottery Commission is entitled to obtain from the department criminal history record information maintained by the department that relates to a person who, under Chapter 2004, Occupations Code, is:

(1) a person who is or is applying to be listed on the registry under Section 2004.057, Occupations Code;

(2) a person required to be named in a license application under Chapter 2004, Occupations Code;

(3) an employee or member of a licensed organization under Chapter 2004, Occupations Code, if the employee is or will be directly involved in poker gaming conducted by the organization; or

(4) if a person described in Subdivision (2) or (3) 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 poker gaming;

(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 poker gaming.

(b) Criminal history record information obtained by the commission under Subsection (a) or (a-1) may not be released or disclosed to any person except on court order or as provided by Subsection (c).

SECTION 3. 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, and poker gaming.

SECTION 4. 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; or

(3) the owner of premises leased to a licensed organization for poker gaming under Chapter 2004, Occupations Code.

SECTION 5. Sections 467.101(a) and (c), Government Code, are amended to read as follows:

(a) The commission has broad authority and shall exercise strict control and close supervision over all activities authorized and conducted in this state under:

(1) Chapter 2001, Occupations Code; [and]

(2) Chapter 466 of this code; and

(3) Chapter 2004, Occupations Code.

(c) The commission also has the powers and duties granted under:

(1) Chapter 2001, Occupations Code; [and]

(2) Chapter 466 of this code; and

(3) Chapter 2004, Occupations Code.

SECTION 6. 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 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 2004, Occupations Code.

SECTION 7. Section 47.06(f), Penal Code, is amended to read as follows:

(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 an organization licensed under Chapter 2004, Occupations Code, to conduct poker gaming; or

(2) to another jurisdiction where the possession or use of the device, equipment, or paraphernalia was legal.

SECTION 8. 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;

(B) Chapter 2002, Occupations Code; [or]

(C) the Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes); or

(D) Chapter 2004, Occupations Code;

(2) consisted entirely of participation in the state lottery authorized by Chapter 466, Government Code; or

(3) was a necessary incident to the operation of the state lottery and was directly or indirectly authorized by:

(A) Chapter 466, Government Code;

(B) the lottery division of the Texas Lottery Commission;

(C) the Texas Lottery Commission; or

(D) the director of the lottery division of the Texas Lottery Commission.

SECTION 9. The Texas Lottery Commission shall adopt rules necessary to implement Chapter 2004, Occupations Code, as added by this Act, as soon as practicable after the effective date of this Act.

SECTION 10. This Act takes effect September 1, 2007.