81R2653 YDB-D

By: Flores H.B. No. 3814

A BILL TO BE ENTITLED

AN ACT

relating to charitable bingo accounting procedures and the use of bingo proceeds.

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

SECTION 1. Section 2001.451, Occupations Code, is amended by amending Subsections (a), (c), (d), and (e) and adding Subsections (g), (h), (i), and (j) to read as follows:

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

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

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

(2) the organization notifies [requests and receives the prior approval of] the commission of the transfer not later than the 14th day after the date of the transfer. [Except as provided by this section, no other funds may be deposited in the bingo account.]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 2. Sections 2001.452(a) and (c), Occupations Code, are amended to read as follows:

(a) Funds from the bingo account must be withdrawn by electronic funds transfer or by preprinted, consecutively numbered checks or withdrawal slips, signed by an authorized representative of the licensed authorized organization and made payable to a person. A check or withdrawal slip may not be made payable to "cash," "bearer," or a fictitious payee. The nature of the payment made must also be noted on the face of the check or withdrawal slip. The purpose, amount, and payee for each electronic funds transfer must be recorded in accordance with rules adopted by the commission.

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

SECTION 3. Section 2001.453, Occupations Code, is amended to read as follows:

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

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

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

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

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

SECTION 4. Sections 2001.457(a), (b), and (c), Occupations Code, are amended to read as follows:

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

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

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

SECTION 5. Section 2001.458(a), Occupations Code, is amended to read as follows:

(a) An item of expense may not be incurred or paid in connection with the conduct of bingo except an expense that is reasonable or necessary to conduct bingo, including an expense for:

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

(2) security;

(3) repairs to premises and equipment;

(4) bingo supplies and equipment;

(5) prizes;

(6) stated rental or mortgage and insurance expenses;

(7) bookkeeping, legal, or accounting services related to bingo;

(8) fees for callers, cashiers, ushers, janitorial services, and utility supplies and services;

(9) license fees;

(10) attending a bingo seminar or convention required under Section 2001.107; and

(11) debit card transaction fees and electronic funds transfer fees.

SECTION 6. Section 2001.459(a), Occupations Code, is amended to read as follows:

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

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

(2) security during a bingo occasion;

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

(4) prizes, other than authorized cash prizes;

(5) stated rental expenses;

(6) bookkeeping, legal, or accounting services;

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

(8) janitorial services; and

(9) license fees[; and

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

SECTION 7. Sections 2001.505(a) and (b), Occupations Code, are amended to read as follows:

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

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

(2) each item of expense incurred or paid;

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

(4) the net proceeds derived from bingo;

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

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

(b) A license holder shall[:

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

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

SECTION 8. The following provisions of the Occupations Code are repealed:

(1) Section 2001.406(c);

(2) Section 2001.457(d); and

(3) Section 2001.505(c).

SECTION 9. (a) If on or after the effective date of this Act a licensed authorized organization has a balance in its bingo account of more than the maximum amount of operating capital allowed by Chapter 2001, Occupations Code, as amended by this Act, the organization shall disburse the funds in excess of the organization's maximum operating capital allowed by Chapter 2001, Occupations Code, as amended by this Act, not later than:

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

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

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

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

(c) This section expires January 1, 2013.

SECTION 10. This Act takes effect October 1, 2009.