82R8797 YDB-D
 
  By: Thompson H.B. No. 2424
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the operation of video gaming by authorized
  organizations and commercial operators that are licensed to conduct
  bingo or lease bingo premises; providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The legislature finds and declares that:
               (1)  the purpose and intent of this Act is to carry out
  the intent of the voters as established by the approval of Section
  47a, Article III, Texas Constitution, to expand the
  revenue-generating ability of this state by authorizing the
  operation of video gaming consistent with public policy strictly
  limiting the expansion of gambling in this state;
               (2)  except as expressly authorized under other law,
  the people of this state intend to allow only state-regulated video
  gaming games to be conducted in this state and only in locations at
  which bingo is conducted by authorized charitable organizations;
               (3)  the video gaming games operated under this Act are
  regulated by this state in a manner that allows this state to
  monitor, both routinely and randomly, all video gaming terminals
  and to direct the disabling of any video gaming terminal for the
  protection of the public and this state;
               (4)  through network operating centers or a video
  gaming system, this state will monitor video gaming terminals to
  ensure maximum security unique to state-regulated gambling. Except
  as may otherwise be provided by state or federal law governing
  gaming on Indian lands, each operating video gaming terminal in
  this state will be connected to a network operating center or a
  state-regulated video gaming system;
               (5)  in authorizing only state-regulated video gaming
  terminals in limited locations and continuing the general
  prohibition on gambling in this state as a matter of public policy,
  this state is protecting the state's legitimate interests by
  restricting such activity.  By limiting the operation of video
  gaming terminals to those connected to a network operating center
  or a state-regulated video gaming system on certain land with
  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;
               (6)  this Act is game-specific and may not be construed
  to allow the operation of any other form of gambling unless
  specifically allowed by Chapter 2001A, Occupations Code, as added
  by this Act.  This Act does not allow the operation of dice games,
  roulette wheels, house-banked games, including house-banked card
  games, or games in which winners are determined by the outcome of a
  live sports contest that are expressly prohibited under other state
  law;
               (7)  in light of the financial crisis facing this
  state, the Texas Lottery Commission is authorized to commence
  implementation and authorization of video gaming in accordance with
  Chapter 2001A, Occupations Code, as added by this Act, at the
  earliest possible date, consistent with legislative directive; and
               (8)  the financial crisis facing this state constitutes
  an imminent peril to public welfare, requiring the rapid adoption
  of rules and authorization for the Texas Lottery Commission to
  conduct certain pre-implementation activities related to
  regulating video gaming to ensure:
                     (A)  that the increase in state revenue from the
  portion of gross gaming income transferred to the state is realized
  as soon as possible to lessen the financial crisis faced by this
  state;
                     (B)  that video gaming is fairly conducted and the
  charitable proceeds derived from it are used for an authorized
  purpose; and
                     (C)  the integrity, security, and fairness of
  video gaming.
         SECTION 2.  Subtitle A, Title 13, Occupations Code, is
  amended by adding Chapter 2001A to read as follows:
  CHAPTER 2001A. VIDEO GAMING BY LICENSED AUTHORIZED ORGANIZATIONS
  AND LICENSED COMMERCIAL LESSORS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2001A.001.  DEFINITIONS.  In this chapter:
               (1)  "Commission" means the Texas Lottery Commission.
               (2)  "Crime of moral turpitude" has the meaning
  assigned by Section 2001.002.
               (3)  "Director" means the director of charitable bingo
  operations of the commission.
               (4)  "Disable," with respect to video gaming terminals,
  means the process that causes a video gaming terminal to cease
  functioning on issuance of a shutdown command from a network
  operating center or site controller.
               (5)  "Distribute," with respect to video gaming
  terminals, means the sale, lease, marketing, offer, or other
  disposition of a video gaming terminal, an electronic computer
  component of a video gaming terminal, the cabinet in which a video
  gaming terminal is housed, video gaming equipment, or video gaming
  game software intended for use or play in this state.
               (6)  "Gross gaming income" means the total amount of
  money paid to play video gaming games less the value of all credits
  redeemed, including any progressive prizes and bonuses, by the
  players of the video gaming games. Promotional prizes unrelated to
  video gaming game wagers that are offered by a video gaming retailer
  may not be deducted or otherwise considered credits redeemed for
  money by players for the purpose of determining gross gaming
  income.
               (7)  "Independent testing laboratory" means a
  nationally recognized laboratory facility that is demonstrably
  competent and qualified to scientifically test and evaluate video
  gaming equipment for compliance with this chapter.
               (8)  "Licensed authorized organization" has the
  meaning assigned by Section 2001.002.
               (9)  "Licensed commercial lessor" has the meaning
  assigned by Section 2001.002.
               (10)  "Major component or part" means a component or
  part that comprises the inner workings and peripherals of a video
  gaming terminal, site controller, or network operating center,
  including the device's hardware, software, human interface
  devices, interface ports, power supply, ticket payout system, bill
  validator, and printer, and any component that affects or could
  affect the result of a game played on the device.
               (11)  "Manufacture," with respect to video gaming
  terminals, means to design, assemble, fabricate, produce, program,
  or make modifications to a video gaming terminal, an electronic
  computer component of a video gaming terminal, a major component or
  part of video gaming equipment, the cabinet in which a video gaming
  terminal is housed, video gaming equipment, or video gaming game
  software intended for use or play in this state.
               (12)  "Network operating center" means a computer
  server that is connected directly or indirectly to a video gaming
  manufacturer's video gaming terminals operated in this state.
               (13)  "Player account card" means a plastic magnetic
  strip, paper, or smart card that may be used to:
                     (A)  enable or track the play of video gaming
  games;
                     (B)  track and record customer account data,
  including electronic credits purchased, played, won, or otherwise
  available for participating in a video gaming game; or
                     (C)  redeem credits purchased, played, or won
  through a cashier or other point-of-sale station or redemption
  system.
               (14)  "Site controller" means computer hardware and
  software located on the premises of a video gaming retailer that:
                     (A)  stores and distributes video gaming games for
  display on video gaming terminals;
                     (B)  networks and communicates with a video gaming
  manufacturer's video gaming terminals at the premises; and
                     (C)  communicates with the manufacturer's network
  operating center.
               (15)  "Video gaming" means the conduct of video gaming
  games on video gaming terminals.
               (16)  "Video gaming distributor" means a person
  licensed under this chapter to provide video gaming equipment,
  major components and parts of video gaming equipment, installation,
  and technical services to a licensed video gaming retailer.
               (17)  "Video gaming equipment" means:
                     (A)  a video gaming terminal;
                     (B)  equipment, a component, or a contrivance used
  remotely or directly in connection with a video gaming terminal to:
                           (i)  affect the reporting of gross revenue
  and other accounting information, including a device for weighing
  and counting money;
                           (ii)  provide accounting, player tracking,
  bonuses, and in-house or wide-area prizes;
                           (iii)  monitor video gaming terminal
  operations; and
                           (iv)  provide for the connection of video
  gaming terminals to the network operating center or site
  controller; or
                     (C)  any other communications technology or
  equipment necessary for the operation of a video gaming terminal or
  the video gaming system.
               (18)  "Video gaming game" means any game of chance,
  including a game of chance in which the outcome may be partially
  determined by skill or ability, that for consideration may be
  played by an individual on a video gaming terminal.
               (19)  "Video gaming manufacturer" means a person who
  holds a license under this chapter to manufacture video gaming
  equipment and major components or parts of video gaming equipment.
               (20)  "Video gaming premises" means the area subject to
  direct control of and actual use by a licensed authorized
  organization, a group of licensed authorized organizations, or a
  licensed commercial lessor to conduct video gaming.
               (21)  "Video gaming retailer" means a licensed
  authorized organization or a licensed commercial lessor that holds
  a license to conduct video gaming under this chapter.
               (22)  "Video gaming system" means the system
  established as authorized by the commission to allow the commission
  or person contracting with the commission to monitor the operation
  of video gaming in this state.
               (23)  "Video gaming terminal" means a mechanical,
  electrical, or other type of device, contrivance, or machine that
  plays or operates on insertion of a coin, currency, a token, or a
  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 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 or authorized under other law.
         Sec. 2001A.002.  APPLICABILITY OF OTHER LAW. (a)  All
  shipments into, out of, or within this state of video gaming
  terminals or other gaming devices authorized under this chapter are
  legal shipments of the devices and are exempt from the provisions of
  15 U.S.C. Sections 1171-1178 prohibiting the transportation of
  gambling devices.
         (b)  To the extent of any conflict, this chapter controls
  over any local zoning law that impedes the implementation of video
  gaming at a location where bingo was conducted on January 1, 2011,
  and where a video gaming retailer is authorized to conduct video
  gaming under this chapter.
         Sec. 2001A.003.  EXEMPTION FROM TAXATION. A political
  subdivision of this state may not impose a tax or fee for attendance
  or admission to a video gaming premises unless specifically
  authorized by statute.
  [Sections 2001A.004-2001A.050 reserved for expansion]
  SUBCHAPTER B. ADMINISTRATION
         Sec. 2001A.051.  POWERS AND DUTIES OF COMMISSION AND
  DIRECTOR. (a) The commission and the director have broad authority
  and shall exercise strict control and close supervision over video
  gaming operated in this state to promote and ensure the integrity,
  security, honesty, and fairness of video gaming.
         (b)  The commission may contract with or employ a person to
  perform a function, activity, or service in connection with the
  regulation of video gaming as prescribed by the commission.
         (c)  The commission shall, as necessary to protect the public
  health and safety:
               (1)  monitor and regulate video gaming operations on a
  routine and random basis;
               (2)  establish standards for:
                     (A)  the operation of video gaming;
                     (B)  the provision of video gaming equipment and
  services; and
                     (C)  video gaming premises; and
               (3)  inspect and examine all video gaming premises and
  all video gaming equipment, services, records, and operations to
  ensure compliance with the standards established by the commission.
         (d)  The commission may demand access to and inspect,
  examine, and audit all records regarding gross gaming income of a
  video gaming retailer.
         Sec. 2001A.052.  RULES; PROCEDURES. (a) The commission
  shall adopt all rules necessary to supervise and regulate video
  gaming in this state, administer this chapter, and ensure the
  security of video gaming operations in this state.
         (b)  The commission shall establish procedures for the
  approval, monitoring, and inspection of video gaming operations as
  necessary to protect the public health, welfare, and safety and the
  integrity of this state and to prevent financial loss to this state.
         (c)  In adopting rules and procedures under this chapter, the
  commission shall examine the laws of other jurisdictions and
  incorporate best practices from established responsible gaming
  systems.
         Sec. 2001A.053.  RULES FOR ADDITIONAL 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. 2001A.054.  LICENSE FEES; TERMINAL FEE. (a)  An
  applicant for a license under this chapter shall submit with the
  application the annual license fee required for the type of license
  sought.  The fee is nonrefundable.
         (b)  The annual license fee is:
               (1)  for a video gaming manufacturer license, $10,000;
               (2)  for a video gaming distributor license, $10,000;
               (3)  for a video gaming retailer holding:
                     (A)  a class 1 license, $1,250;
                     (B)  a class 2 license, $2,500; or
                     (C)  a class 3 license, $5,000;
               (4)  for a video gaming manager, $2,500;
               (5)  for key video gaming personnel, $100;
               (6)  for a video gaming technician, $100; and
               (7)  for a video gaming employee, $50.
         (c)  The annual fee for each video gaming terminal operated
  by the video gaming retailer at a video gaming premises is $250.
         Sec. 2001A.055.  ESTABLISHMENT OF VIDEO GAMING SYSTEM. (a)  
  In accordance with Section 47a, Article III, Texas Constitution,
  the commission shall establish a video gaming system that allows
  the commission to monitor and regulate video gaming and direct the
  disabling of video gaming terminals for the public safety, health,
  and welfare or the preservation of the integrity of video gaming and
  to prevent any financial loss to this state. The system must provide
  video gaming auditing, security, and other information required by
  the commission.
         (b)  This section does not affect or restrict the ability of
  a video gaming retailer to monitor activity of video gaming
  terminals and to disable video gaming terminals in accordance with
  commission rules.
         (c)  The commission may direct the disabling of a video
  gaming terminal if a video gaming retailer's license is revoked,
  surrendered, or summarily suspended under this chapter and as
  necessary to prevent any financial loss to this state.
         Sec. 2001A.056.  ANNUAL REPORT. The commission shall file
  an annual report with the governor, the comptroller, and the
  legislature regarding the collection and disposition of video
  gaming revenue for the state fiscal year preceding the report. The
  report must be in the form and reported in the time provided by the
  General Appropriations Act.
  [Sections 2001A.057-2001A.100 reserved for expansion]
  SUBCHAPTER C. LICENSE AND CONTRACT REQUIREMENTS
         Sec. 2001A.101.  RETAILER LICENSE REQUIRED; ELIGIBILITY
  REQUIREMENTS. (a) A person may not conduct video gaming in this
  state unless the person holds a video gaming retailer license
  issued under this chapter.
         (b)  A person is eligible for issuance of a video gaming
  retailer license under this chapter only if the person:
               (1)  is a licensed authorized organization that:
                     (A)  on January 1, 2011, held a license to conduct
  bingo at a bingo premises;
                     (B)  except as provided by Subsection (e),
  conducts video gaming only at the bingo premises where the
  organization is the only licensed authorized organization
  conducting bingo at that premises; and
                     (C)  does not lease the premises from a licensed
  commercial lessor; or
               (2)  is a licensed commercial lessor who:
                     (A)  on January 1, 2011, held a license to lease
  bingo premises; and
                     (B)  except as provided by Subsection (e),
  conducts video gaming only at the premises the lessor leases to
  licensed authorized organizations for the conduct of bingo.
         (c)  On application and payment of required fees, the
  commission shall issue a video gaming retailer license to a person
  described by Subsection (b) unless the person is ineligible to hold
  the license under another provision of this chapter or commission
  rule.
         (d)  The commission shall establish the following
  classifications of video gaming retailer licenses:
               (1)  class 1 license for a premises where:
                     (A)  a licensed authorized organization that does
  not lease bingo premises from a licensed commercial lessor conducts
  bingo on the premises under Chapter 2001; or
                     (B)  a licensed commercial lessor who held a Class
  A, B, or C commercial lessor license under Chapter 2001 on January
  1, 2011, leases the premises to one or more licensed authorized
  organizations that conduct bingo on the premises;
               (2)  class 2 license for a licensed commercial lessor
  who held a Class D, E, F, or G commercial lessor license under
  Chapter 2001 on January 1, 2011; or
               (3)  class 3 license for a licensed commercial lessor
  who held a Class H, I, or J commercial lessor license under Chapter
  2001 on January 1, 2011.
         (e)  A video gaming retailer may conduct video gaming at a
  premises other than the premises described by Subsection (b) if:
               (1)  the county, justice precinct, or municipality in
  which those premises are located holds an election in which the
  majority of the voters of the jurisdiction favor prohibiting bingo
  games in the jurisdiction; and
               (2)  the other premises are located in a jurisdiction
  in which a majority of the voters voting in an election held before
  January 1, 2011, voted in favor of legalizing bingo games.
         Sec. 2001A.102.  DISTRIBUTOR OR MANUFACTURER LICENSE
  REQUIRED. (a)  A person may not sell, lease, distribute, or provide
  video gaming equipment or a major component or part of video gaming
  equipment or provide technical services to a video gaming retailer
  for use in this state unless the person holds a video gaming
  distributor license issued under this chapter.
         (b)  A person may not manufacture video gaming equipment or a
  major component or part of video gaming equipment for use in this
  state or buy, sell, lease, or distribute to a distributor video
  gaming equipment or a major component or part of video gaming
  equipment for use in this state unless the person holds a video
  gaming manufacturer license issued under this chapter.
         (c)  The commission shall issue a video gaming distributor
  license or a video gaming manufacturer license, as applicable, to
  an eligible person who has the resources and experience required to
  manufacture or provide video gaming equipment or a major component
  or part of video gaming equipment and technical services to video
  gaming retailers conducting video gaming under this chapter and who
  is not ineligible to hold the license under this chapter or
  commission rule.
         (d)  A video gaming manufacturer may not directly provide
  video gaming equipment or a major component or part of video gaming
  equipment to a video gaming retailer.
         Sec. 2001A.103.  LICENSE REQUIRED FOR VIDEO GAMING
  EMPLOYEES, MANAGERS, TECHNICIANS, AND KEY PERSONNEL. (a) To protect
  the public health and safety and prevent financial loss to this
  state, the commission by rule shall establish categories and
  eligibility requirements for employees required to hold a license
  issued under this chapter to operate in the licensed capacity at a
  video gaming premises under this chapter. The license holder must
  maintain eligibility to continue to hold the license. The
  commission shall require the following persons to be licensed:
               (1)  key video gaming personnel, including executive
  personnel critical to the operation of video gaming;
               (2)  video gaming employees, including gaming floor
  workers and accounting personnel;
               (3)  video gaming technicians who install, maintain,
  and repair video gaming equipment; and
               (4)  video gaming managers who contract with a video
  gaming retailer to oversee video gaming operations at premises
  authorized to operate video gaming under this chapter.
         (b)  A video gaming distributor that holds a video gaming
  manager's license under this section may serve as the manager for a
  premises.
         Sec. 2001A.104.  INELIGIBILITY FOR LICENSE. (a)  A person is
  not eligible to hold a license issued under this chapter if the
  person would be ineligible under Section 2001.154, 2001.202, or
  2001.207 to hold a license issued under Chapter 2001.
         (b)  The commission shall adopt any rules necessary to
  implement this section.
         Sec. 2001A.105.  LICENSE APPLICATION; TERM.  (a)  An
  applicant for a license under this chapter must file with the
  commission an application on the form prescribed by the commission.
         (b)  The license application must include:
               (1)  the name and address of the applicant and each
  other person who has a greater than 10 percent proprietary,
  equitable, or credit interest in or who is in any capacity a real
  party in interest in the applicant's business as it pertains to this
  chapter;
               (2)  a designation and address of the video gaming
  premises or location intended to be covered by the license;
               (3)  a statement that the applicant complies with the
  conditions for eligibility for the license; and
               (4)  any other information required by commission rule.
         (c)  A license issued under this chapter expires on the first
  anniversary of the date of issuance.
         Sec. 2001A.106.  BACKGROUND INVESTIGATIONS. (a)  Before
  issuing a license to a person under this chapter, the commission
  shall conduct a background investigation that includes obtaining
  criminal history record information as permitted by law of:
               (1)  an applicant for or holder of a license issued
  under this chapter;
               (2)  a person required to be named in a license
  application; and
               (3)  an employee or other person who works or will work
  for a license holder and is required to hold a license under this
  chapter or commission rule.
         (b)  The commission is not required to conduct a background
  investigation under Subsection (a) for a person who has undergone
  an investigation authorized by Section 2001.3025 that is sufficient
  for the person to continue to hold a license under Chapter 2001.
         Sec. 2001A.107.  LICENSE RENEWAL. The commission shall
  renew a license issued under this chapter to a license holder who is
  not ineligible to hold the license on payment of the license renewal
  fee and on the license holder's compliance with any additional
  requirements established by commission rule.
  [Sections 2001A.108-2001A.150 reserved for expansion]
  SUBCHAPTER D.  REGULATION OF VIDEO GAMING
         Sec. 2001A.151.  LIMITATION ON NUMBER OF VIDEO GAMING
  TERMINALS. A video gaming retailer may operate video gaming
  terminals at a premises as follows:
               (1)  a person who holds a class 1 video gaming retailer
  license may operate not more than 30 video gaming terminals at the
  premises;
               (2)  a person who holds a class 2 video gaming retailer
  license may operate not more than 60 video gaming terminals at the
  premises; and
               (3)  a person who holds a class 3 video gaming retailer
  license may operate not more than 120 video gaming terminals at the
  premises.
         Sec. 2001A.152.  EMPLOYEES. An employee who works in a video
  gaming premises must be at least 18 years of age.
         Sec. 2001A.153.  CREDIT PROHIBITED. (a)  A video gaming
  retailer may not knowingly accept as payment for play of a video
  gaming game any type of consideration borrowed from a person
  licensed under this chapter or obtained through a credit card
  transaction or similar credit transaction.
         (b)  This section does not prohibit a video gaming retailer
  from:
               (1)  offering for play a video gaming game on a video
  gaming terminal that tallies game credits; or
               (2)  accepting a player account card for play of a video
  gaming game.
         Sec. 2001A.154.  VIDEO GAMING SYSTEM; INDEPENDENT
  LABORATORY TESTING. (a)  The commission by rule shall establish
  standards and specifications for video gaming systems, network
  operating centers, and site controllers in this state as necessary
  to protect the public health and safety and to prevent financial
  loss to this state. The standards must require a video gaming
  manufacturer's video gaming system to:
               (1)  meet the industry security standards adopted by
  commission rule; and
               (2)  be certified as meeting the standard adopted under
  Subdivision (1) by an independent testing laboratory approved by
  the commission.
         (b)  The commission shall monitor and direct any disabling of
  video gaming systems or video gaming terminals in this state.
         (c)  The commission may contract with or otherwise authorize
  a video gaming manufacturer or other person to provide monitoring
  and reporting information required under this chapter.
         (d)  A video gaming retailer may operate video gaming
  terminals of more than one manufacturer on the retailer's video
  gaming premises.
         Sec. 2001A.155.  NETWORK OPERATING CENTER REQUIREMENTS. (a)  
  Each video gaming manufacturer that has any of the manufacturer's
  video gaming terminals in operation at the video gaming premises of
  a video gaming retailer in this state shall provide at the
  manufacturer's expense at least one network operating center for
  the manufacturer's terminals at the commission's office or another
  location authorized by the commission. The manufacturer is not
  required to have a separate network operating center for each video
  gaming premises at which the manufacturer has video gaming
  terminals in operation.
         (b)  The manufacturer shall allow the commission complete
  access to the manufacturer's network operating center at all times.
         (c)  Each network operating center must provide monitoring,
  auditing, reporting, and command and control capabilities for each
  video gaming terminal connected to the center, regardless of the
  location of the terminal in this state.
         Sec. 2001A.156.  SITE CONTROLLER REQUIREMENTS. (a)  The
  video gaming distributor shall provide at each video gaming
  premises where the distributor's video gaming terminals are in
  operation a site controller to network the distributor's terminals
  at the premises and to communicate with the video gaming
  manufacturer's network operating center.
         (b)  The commission by rule may authorize a video gaming
  distributor that has in operation at any premises less than the
  number of video gaming terminals established by commission rule to
  connect the terminals at the premises directly to the
  manufacturer's network operating center without the use of a site
  controller.
         (c)  A site controller may be used to:
               (1)  create, shuffle, store, and configure video gaming
  games;
               (2)  distribute video gaming games to video gaming
  terminals;
               (3)  account for electronic credits purchased, played,
  or won playing a video gaming game, including through the use of a
  player account card;
               (4)  exchange credits described by Subdivision (3) for
  additional video gaming games; or
               (5)  allow the play of video gaming authorized by this
  chapter.
         (d)  A site controller must:
               (1)  at a minimum monitor, track, account for, and
  retain data on:
                     (A)  all transactions that occur on the
  controller;
                     (B)  amounts paid to play video gaming games;
                     (C)  the amount of consideration paid for play on
  each video gaming terminal;
                     (D)  the amount paid out in prizes;
                     (E)  the number of video gaming games played;
                     (F)  for video gaming games that use tickets, an
  inventory of current, out-of-stock, and excess game tickets and the
  name of the game, serial number of the terminal, time stamp, and
  terminal location when a player wins the video gaming game;
                     (G)  out-of-service time periods for any video
  gaming equipment;
                     (H)  the time of entry and exit when any
  compartment of the terminal is accessed, including main door
  access, cash box access, and logic compartment access;
                     (I)  software signature failures and unauthorized
  communications with a manufacturer's network operating center,
  site controller, or terminal;
                     (J)  payment vouchers dispensed and game payout
  percentage; and
                     (K)  any outage of a communications system between
  a network operating center and site controller;
               (2)  cease operation when a main or cash door is opened;
               (3)  produce reports for the commission as required by
  the commission;
               (4)  prevent an unauthorized person from accessing data
  or downloading games to the location level; and
               (5)  provide a physical and electronic method, through
  the use of a password or other method specified by commission rule,
  to secure:
                     (A)  video gaming games created, shuffled,
  stored, and configured by the site controller; and
                     (B)  accounting system data.
         (e)  This section does not require the use of a site
  controller for the play of a video gaming game and does not prohibit
  the use of other methods to create, shuffle, store, configure, or
  distribute video gaming games.
         (f)  The commission may not require a preapproved site
  controller to be retested on the basis that the site controller is
  used by a video gaming retailer to create or distribute video gaming
  games.
         Sec. 2001A.157.  CENTRAL MONITORING AND CONTROL. (a)  
  Notwithstanding any other provision of this chapter, the commission
  may develop and implement a secure, web-based central reporting
  system to gather data from a video gaming manufacturer's video
  gaming systems. The cost of the reporting system shall be divided
  proportionately between the manufacturers providing video gaming
  equipment in this state.
         (b)  The central system may not limit or preclude potential
  video gaming manufacturers or distributors from providing
  state-of-the-art industry standard video gaming terminals and
  video gaming equipment, such as player tracking systems, accounting
  systems, progressive systems, and bonus systems.
         Sec. 2001A.158.  VIDEO GAMING TERMINAL SPECIFICATIONS. (a)  
  The commission shall adopt rules for approval of video gaming
  terminals, including requirements for video gaming games.
         (b)  A commission-approved video gaming terminal must meet
  the following minimum specifications:
               (1)  the terminal must:
                     (A)  operate through a player's insertion of a
  chip, ticket, voucher, token, or player account card or another
  instrument of value that may only be used to purchase a play of a
  video gaming game into the video gaming terminal that causes the
  video gaming terminal to display credits that entitle the player to
  select one or more symbols or numbers or causes the video gaming
  terminal to select symbols or numbers;
                     (B)  allow the player to win additional game play
  credits, chips, tickets, or tokens based on game rules that
  establish the selection of winning combinations of symbols or
  numbers and the number of free play credits or tokens to be awarded
  for each winning combination;
                     (C)  account for credits purchased, played, or won
  playing a video gaming game; and
                     (D)  allow the player at any time to clear all game
  play credits and receive a video gaming ticket or other
  representation of credits 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 gaming terminal, a
  battery or equivalent power backup for the electronic meters must
  be capable of maintaining the accuracy of all accounting records
  and video gaming terminal status reports for a period of 180 days
  after power is disconnected from the video gaming terminal, and the
  power backup device must be in the compartment specified in
  Subdivision (4);
               (3)  the operation of each video gaming 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 or from the
  video gaming terminal that is locked and sealed in accordance with
  commission rule;
               (5)  the instructions for play of each game must be
  displayed on the video gaming 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 gaming terminal to communicate with
  the site controller or network operating center through the use of a
  communications protocol provided by each video gaming manufacturer
  and each video gaming distributor, which must include information
  retrieval and programs to activate and disable the terminal;
               (7)  a video gaming terminal may be operated only if
  connected to a site controller or network operating center unless
  otherwise authorized by this chapter or commission rule, and play
  on the terminal may not be conducted unless the terminal is
  connected to the site controller or network operating center; and
               (8)  a video gaming game may not be purchased with and a
  video gaming terminal may not be operated through the insertion of
  money or negotiable currency.
         (c)  Nothing in this chapter prohibits a video gaming
  terminal from generating or creating graphics and animation to
  correspond to, display, or represent, in an entertaining manner,
  the outcome of a video gaming game.
         Sec. 2001A.159.  VIDEO GAMING TERMINAL: TESTING; REPORT.  
  (a)  A video gaming manufacturer 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 the video
  gaming terminal or other video gaming equipment.
         (b)  The commission may require a working model of a video
  gaming terminal to be provided to the commission for testing unless
  the video gaming manufacturer provides a certification from a
  commission-approved independent testing laboratory that the video
  gaming terminal meets the requirements of this chapter and
  commission rule.
         (c)  The commission may not require a preapproved video
  gaming terminal to be retested on the basis that the terminal
  creates graphics and animation.
         Sec. 2001A.160.  VIDEO GAMING TERMINAL REMOVAL. (a)  If any
  video gaming terminal that has not been approved by the commission
  is distributed by a video gaming distributor or operated by a video
  gaming retailer or if an approved video gaming terminal
  malfunctions, the commission shall require the terminal to be
  removed from use and play.
         (b)  The commission may order that an unapproved video gaming
  terminal be seized and destroyed.
         (c)  The commission may suspend or revoke the license of a
  video gaming retailer or of a video gaming distributor for the
  distribution, possession, or operation of an unauthorized video
  gaming terminal.
         (d)  A video gaming retailer may retain on the premises of a
  video gaming establishment a number of video gaming terminals that
  the retailer determines is necessary for spare parts or repair
  purposes or as replacements.  The retailer must provide to the
  commission each month a list of the terminals retained under this
  subsection.
         Sec. 2001A.161.  PRACTICE BY VIDEO GAMING RETAILER. (a)  A
  video gaming retailer must:
               (1)  comply with state alcoholic beverage control laws;
               (2)  at all times maintain sufficient tokens, chips,
  tickets, or other representations of value accepted by video gaming
  terminals;
               (3)  promptly report all video gaming terminal
  malfunctions and downtime;
               (4)  prohibit illegal gambling and any related
  paraphernalia;
               (5)  except as otherwise provided by this chapter, at
  all times prohibit money lending or other extensions of credit at
  the video gaming premises;
               (6)  supervise employees and activities to ensure
  compliance with all commission rules and this chapter; and
               (7)  maintain an entry log for each video gaming
  terminal on the premises and maintain and submit complete records
  on receipt of each video gaming terminal on the premises as
  determined by the commission.
         (b)  A video gaming retailer must use secure bill acceptors
  that detect and reject counterfeit money.
         (c)  A video gaming manufacturer must ensure the
  communication method used to transmit data from the video gaming
  terminals or site controller to the network operating center is
  secure by using cellular, DSL, cable, or Internet encryption that
  is secure or another method approved by the commission.
         Sec. 2001A.162.  RESPONSIBILITY FOR VIDEO GAMING
  OPERATIONS. (a)  A video gaming retailer is responsible for the
  management of video gaming game operations, including:
               (1)  the validation and payment of prizes,
  determination of game themes, prizes, bonuses, progressives,
  number and placement of video gaming terminals, and individual
  payout percentage settings; and
               (2)  the management of cashiers, food and beverage
  workers, floor workers, security personnel, the security system,
  building completion, janitorial services, landscape 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 gaming.
         (c)  In addition to other requirements under this chapter
  relating to video gaming, a video gaming retailer at all times
  shall:
               (1)  operate only video gaming terminals that are
  distributed by a video gaming distributor and provide a secure
  location for the placement, operation, and play of the video gaming
  terminals;
               (2)  prevent any person from tampering with or
  interfering with the operation of a video gaming terminal;
               (3)  ensure that communication technology from the
  network operating center to the site controller and video gaming
  terminals is connected at all times and prevent any person from
  tampering or interfering with the operation of the connection;
               (4)  ensure that video gaming terminals are in the
  sight and control of designated employees of the video gaming
  retailer;
               (5)  monitor video gaming terminals to prevent access
  to or play by persons who are younger than 21 years of age or who are
  visibly intoxicated;
               (6)  pay all credits won by a player on presentment of a
  valid winning video gaming game ticket;
               (7)  install, post, and display prominently at the
  licensed location redemption information and other informational
  or promotional materials as required by the commission;
               (8)  maintain general liability insurance coverage for
  the video gaming terminal establishment and all video gaming
  terminals in the amounts required by the commission;
               (9)  assume liability for money lost or stolen from any
  video gaming terminal; and
               (10)  annually submit an audited financial statement to
  the commission in accordance with generally accepted accounting
  principles.
         Sec. 2001A.163.  TECHNICAL STANDARDS FOR VIDEO GAMING
  EQUIPMENT. The commission by rule shall establish minimum
  technical standards for video gaming equipment that may be operated
  in this state.
         Sec. 2001A.164.  INCIDENT REPORTS. (a)  A video gaming
  retailer shall record in accordance with commission rules all
  unusual occurrences related to gaming activity on the video gaming
  premises operated by the retailer.
         (b)  A video gaming retailer 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 gaming retailer who investigated the incident.
         Sec. 2001A.165.  COMMISSION APPROVAL REQUIRED FOR
  PROCEDURES AND ACCOUNTING CONTROLS. (a)  The commission's approval
  is required for all internal procedures and accounting controls of
  a video gaming retailer.
         (b)  The commission by rule shall establish general
  accounting and auditing requirements and internal control
  standards for video gaming retailers.
         Sec. 2001A.166.  EMPLOYEE REGISTRY. (a)  The commission
  shall maintain a registry of individuals on whom the commission has
  conducted a criminal history background check and who are approved
  to be involved in the conduct of video gaming.  An individual listed
  in the registry may be involved in the conduct of video gaming at
  any location at which video gaming is authorized.  The commission
  shall maintain the registry in the same manner as the commission
  maintains the registry of approved bingo employees under Section
  2001.313.
         (b)  The commission may prohibit an employee from performing
  any act relating to video gaming terminals if the commission finds
  that the 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.
         (c)  The commission may prohibit an employee from performing
  any act relating to video gaming terminals based on a revocation or
  suspension of any gaming or wagering license or other affirmative
  regulatory approval or for any other reason the commission finds
  appropriate, including a refusal by a regulatory authority to issue
  a license or other affirmative regulatory approval for the employee
  to engage in or be involved with the lottery or with regulated
  gaming or pari-mutuel wagering in any jurisdiction.
         (d)  In this section, "employee" includes any person
  connected directly with or compensated by a license applicant or
  the holder of a license under this chapter as an agent, personal
  representative, consultant, or independent contractor for
  activities directly related to video gaming operations in this
  state.
         Sec. 2001A.167.  REPORT OF VIOLATIONS. A person who holds a
  license under this chapter shall immediately report to the
  commission a violation or suspected violation of this chapter or a
  rule adopted under this chapter by any license holder, an employee
  of the holder, or any person on the retailer's video gaming
  premises.
         Sec. 2001A.168.  SECURITY. (a)  A video gaming retailer
  shall comply with the following security procedures:
               (1)  except for a video gaming retailer whose gross
  gaming income is less than the minimum amount specified by
  commission rule, all video gaming terminals must be continuously
  monitored through the use of a closed-circuit television system
  that records activity for a continuous 24-hour period and all
  videotapes or other media used to store video images shall be
  retained for at least 30 days and made available to the commission
  on request;
               (2)  the video gaming retailer must provide to the
  commission a security plan for the retailer's video gaming
  operations that includes a floor plan of the area where video gaming
  terminals are to be operated showing video gaming terminal
  locations and security camera mount locations; and
               (3)  each license holder shall 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 gaming premises and the safety and well-being of the
  players.
         (b)  Private security personnel must be present during all
  hours of video gaming operations at each retailer's video gaming
  premises.
         (c)  An agent or employee of the commission or the Department
  of Public Safety or other law enforcement personnel may be present
  at a retailer's video gaming premises at any time.
         (d)  The commission may adopt rules to impose additional
  surveillance and security requirements related to video gaming
  premises and the operation of video gaming terminals.
         Sec. 2001A.169.  COMMISSION RIGHT TO ENTER. The commission
  or the commission's representative, after displaying appropriate
  identification and credentials, has the free and unrestricted right
  to enter the premises involved in operation or support of video
  gaming of a person licensed under this chapter and to enter any
  other locations involved in operation or support of video gaming at
  all times to examine the systems and to inspect and copy the records
  of the person pertaining to the operation of video gaming.
         Sec. 2001A.170.  INDEPENDENT LABORATORY TESTING. (a)  The
  commission may not approve an independent testing laboratory to
  certify a video gaming system under Section 2001A.154 or a video
  gaming terminal under Section 2001A.159 if the laboratory is owned
  or controlled by a person licensed under this chapter.
         (b)  This section does not prohibit an applicant or license
  holder from paying an independent testing laboratory for testing
  that is requested.
  [Sections 2001A.171-2001A.200 reserved for expansion]
  SUBCHAPTER E. REVENUE
         Sec. 2001A.201.  DISTRIBUTION OF VIDEO GAMING REVENUE. (a)
  At the times and in the manner prescribed by commission rule, a
  video gaming retailer shall:
               (1)  remit to the commission 20 percent of the gross
  gaming income derived from video gaming games operated by the video
  gaming retailer; and
               (2)  distribute 10 percent of the gross gaming income
  derived from the video gaming games operated by the video gaming
  retailer to:
                     (A)  the licensed authorized organization that
  conducts bingo on the premises; or
                     (B)  if more than one licensed authorized
  organization is conducting bingo on the premises, the organizations
  in equal amounts.
         (b)  The remainder of the gross gaming income may be retained
  by the video gaming retailer.
         (c)  Except for a video gaming retailer whose gross gaming
  income is less than the minimum amount specified by commission
  rule, the commission shall require a video gaming retailer to
  establish a separate electronic funds transfer account for
  depositing money from video gaming operations and making payments
  to the commission.
         (d)  The commission by rule shall establish the procedures
  for:
               (1)  depositing money from video gaming terminal
  operations into electronic funds transfer accounts; and
               (2)  handling money from video gaming terminal
  operations.
         (e)  Unless otherwise directed by the commission, a video
  gaming retailer shall maintain in its account this state's share of
  the gross gaming income, to be electronically transferred on dates
  established by the commission.  On a retailer's failure to maintain
  this balance, the commission may direct the disabling of all of a
  retailer's video gaming 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.
         (f)  In the commission's sole discretion, rather than
  directing the disabling of a video gaming retailer's video gaming
  terminals under Subsection (e), the commission may elect to impose
  an administrative penalty on a retailer in an amount determined by
  the commission not to exceed $5,000 for each violation of that
  subsection.  If the retailer fails to remedy the violation,
  including payment of any amounts assessed by or due to this state,
  on or before the 30th day after the date the retailer is notified of
  the violation, the commission may direct the disabling of the
  retailer's video gaming terminals or use any other means for
  collection as provided by the penalty chart established by the
  commission.
         (g)  A video gaming retailer is solely responsible for
  resolving any income discrepancies between actual money collected
  and the gross gaming income reported by the network operating
  center or central reporting system established by the commission.  
  Unless an accounting discrepancy is resolved in favor of the video
  gaming retailer, the commission may not make any credit
  adjustments.  Any accounting discrepancies which cannot otherwise
  be resolved shall be resolved in favor of the commission.
         (h)  A video gaming retailer shall remit payment as directed
  by the commission if the electronic transfer of money is not
  operational or the commission notifies the retailer that other
  remittance is required.  The retailer shall report this state's
  share of gross gaming income and remit the amount generated from the
  terminals during the reporting period.
         (i)  A licensed authorized organization may only use the
  money distributed to the organization under Subsection (a)(2) for
  the charitable purposes of the organization that are authorized
  under Chapter 2001.
         Sec. 2001A.202.  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 chapter or in which the license holder
  has an interest.  The license holder must authorize and direct all
  third parties in possession or control of the accounts or records to
  allow examination of any of those accounts or records by the
  commission.
         Sec. 2001A.203.  FINANCIAL INFORMATION REQUIRED. (a)  A
  video gaming retailer shall furnish to the commission all
  information and bank authorizations required to facilitate the
  timely transfer of money to the commission.
         (b)  A video gaming retailer must provide the commission
  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 gaming retailer is
  responsible for any interruption or delay in the transfer of money.
         Sec. 2001A.204.  STATE VIDEO GAMING ACCOUNT. (a) The state
  video gaming account is a special account in the general revenue
  fund. The account consists of all revenue received by the
  commission from video gaming, fees received under this chapter, and
  all money credited to the account from any other fund or source
  under law.
         (b)  Money in the state video gaming account may be used to
  pay the costs incurred by the commission in the operation and
  administration of video gaming. The remainder of the account shall
  be deposited to the credit of the general revenue fund.
  [Sections 2001A.205-2001A.250 reserved for expansion]
  SUBCHAPTER F. OFFENSES; PENALTIES
         Sec. 2001A.251.  MANIPULATION OR TAMPERING. (a) A person
  commits an offense if the person intentionally or knowingly:
               (1)  manipulates the outcome of a video gaming game or
  the amount of a video gaming prize; or
               (2)  tampers with, damages, defaces, renders
  inoperable, or manipulates the operation of a video gaming terminal
  or other device by physical, electronic, or other means, other than
  in accordance with commission rules.
         (b)  An offense under this section is a felony of the third
  degree.
         Sec. 2001A.252.  VIDEO GAMING BY INDIVIDUAL YOUNGER THAN 21
  YEARS OF AGE. (a)  A person commits an offense if the person
  intentionally or knowingly:
               (1)  sells or offers to sell a play of a video gaming
  game to an individual the person knows is younger than 21 years of
  age or permits the individual to purchase a play of a video gaming
  game; or
               (2)  pays money or issues a credit slip or other
  winnings for a play of a video gaming game to an individual the
  person knows is younger than 21 years of age.
         (b)  An individual who is younger than 21 years of age
  commits an offense if the individual:
               (1)  purchases a play of a video gaming game; or
               (2)  falsely represents the individual to be 21 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 play of a video gaming game.
         (c)  An offense under Subsection (a) is a Class B
  misdemeanor.
         (d)  An offense under Subsection (b) is a misdemeanor
  punishable by a fine not to exceed $250.
         (e)  It is a defense to the application of Subsection (b)
  that the individual younger than 21 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.
         Sec. 2001A.253.  UNAUTHORIZED OPERATION, USE, OR POSSESSION
  OF VIDEO GAMING TERMINAL.  (a)  A person may not operate, use, or
  possess a video gaming terminal unless the operation, use, or
  possession is expressly authorized by this chapter or other law.
         (b)  Except for transport to or from licensed video gaming
  premises and as provided by this chapter or other law, a person
  commits an offense if the person operates, uses, or possesses any
  video gaming terminal that is not connected to a site controller or
  network operating center as required by this chapter or commission
  rule. An offense under this subsection is a felony of the third
  degree.
         (c)  It is an exception to the application of Subsection (b)
  that the commission possesses video gaming terminals for study and
  evaluation or that a video gaming retailer, video gaming
  distributor, or video gaming manufacturer stores or possesses a
  video gaming terminal as authorized by the commission.
         Sec. 2001A.254.  OTHER OFFENSES; REVOCATION OF LICENSE. (a)
  A person commits an offense and the person's license is subject to
  revocation under this chapter if the person knowingly:
               (1)  makes a false statement or material omission in an
  application for a license under this chapter;
               (2)  fails to maintain records that fully and
  accurately record each transaction connected with the video gaming
  operations, the leasing of premises to be used for video gaming, or
  the manufacture, sale, or distribution of video gaming equipment;
               (3)  falsifies or makes a false entry in a book or
  record if the entry relates to video gaming, the disposition of
  video gaming proceeds, or the gross receipts from the manufacture,
  sale, or distribution of video gaming equipment;
               (4)  diverts or pays a portion of the gross gaming
  income 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 issued
  under this chapter.
         (b)  An offense under Subsection (a)(2), (3), or (5) is a
  Class A 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 state jail felony. An offense under
  Subsection (a)(1) or (4) is a Class A misdemeanor.
         (c)  A person whose license is revoked under this section may
  not apply for another license under this chapter before the first
  anniversary of the date of revocation.
         Sec. 2001A.255.  DISCIPLINARY ACTION. (a) The commission
  may refuse to issue a license, may revoke, suspend, or refuse to
  renew a license, or may reprimand a license holder for a violation
  of this chapter, other state law, or a rule of the commission.
         (b)  If the commission proposes to take action against a
  license holder or applicant under Subsection (a), the license
  holder or applicant is entitled to notice and a hearing.
         (c)  The commission may place on license probation subject to
  reasonable conditions a person whose license is suspended under
  this section.
         (d)  The commission by rule shall develop a system for
  monitoring a license holder's compliance with this chapter.
         Sec. 2001A.256.  EFFECT OF DENIAL OF LICENSE. (a)  A person
  whose application for a license has been denied may not have any
  interest in or association with a video gaming retailer or any other
  business conducted in connection with video gaming without prior
  approval of the commission.
         (b)  Any contract between a person holding a license and a
  person denied a license must be terminated immediately on receipt
  of notice from the commission.  If the person denied a license has
  previously been granted a temporary license, the temporary license
  expires immediately on denial of the permanent license.
         (c)  Except as otherwise authorized by the commission, a
  person denied a license may not reapply for any license before the
  second anniversary of the date of the denial.
         Sec. 2001A.257.  SUMMARY SUSPENSION OF VIDEO GAMING
  RETAILER; TERMINAL DISABLED.  (a)  The commission may summarily
  suspend the license of a video gaming retailer without notice or a
  hearing if the commission finds the action is necessary to maintain
  the integrity, security, honesty, or fairness of the operation or
  administration of video gaming or to prevent financial loss to this
  state and:
               (1)  the retailer fails to deposit money received from
  video gaming terminal operations as required by this chapter or
  commission rule;
               (2)  an event occurs that would render the retailer
  ineligible for a license under this subchapter;
               (3)  the retailer refuses to allow the commission, the
  commission's agents, or the state auditor, or their designees, to
  examine the retailer's books, records, papers, or other objects as
  required under this chapter or commission rule; or
               (4)  the director learns the retailer failed to
  disclose information that would, if disclosed, render the retailer
  ineligible for a license under this chapter.
         (b)  A summary suspension under this section must comply with
  the notice and procedure requirements provided by Section 466.160,
  Government Code.
         (c)  The commission may direct the disabling of a video
  gaming terminal operated by a video lottery retailer under this
  chapter at the time:
               (1)  a proceeding to summarily suspend the retailer's
  license is initiated;
               (2)  the commission discovers the retailer failed to
  deposit money received from video gaming terminal operations as
  required if the license is being summarily suspended under this
  section; or
               (3)  an act or omission occurs that, under commission
  rule, justifies the termination of video gaming operations to:
                     (A)  protect the integrity of the video gaming or
  the public health, welfare, or safety; or
                     (B)  prevent financial loss to this state.
         (d)  The commission shall immediately direct the disabling
  of a video gaming terminal if necessary to protect the public
  health, welfare, or safety.
         Sec. 2001A.258.  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:
               (1)  video gaming is being conducted or is intended to
  be conducted; or
               (2)  video gaming equipment is found.
         Sec. 2001A.259.  INJUNCTION. (a) If the commission has
  reason to believe that this chapter has been or is about to be
  violated, the commission may petition a court for injunctive relief
  to restrain the violation.
         (b)  Venue for an action seeking injunctive relief is in a
  district court in Travis County.
         (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 video
  gaming to be forfeited to the commission as a civil penalty.
         Sec. 2001A.260.  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)  Except as otherwise provided by this chapter, 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 violation;
               (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, specifically Sections
  2001.603 through 2001.610.
         Sec. 2001A.261.  CIVIL PENALTY. (a) A person who violates
  this chapter or a rule adopted by the commission under this chapter
  is liable to the state for a civil penalty not to exceed $5,000 for
  each day of violation.
         (b)  At the request of the commission, the attorney general
  shall bring an action to recover a civil penalty authorized by this
  section. The attorney general may recover reasonable expenses,
  including attorney's fees, incurred in recovering the civil
  penalty.
         Sec. 2001A.262.  REMEDIES NOT EXCLUSIVE. The commission may
  suspend or revoke a license under this subchapter, impose an
  administrative or civil penalty under this subchapter, or both,
  depending on the severity of the violation.
  [Sections 2001A.263-2001A.300 reserved for expansion]
  SUBCHAPTER G.  RESPONSIBLE GAMING
         Sec. 2001A.301.  DEFINITIONS. In this subchapter:
               (1)  "Fully executed gaming transaction" means an
  activity involving a video gaming terminal or video gaming
  equipment that occurs on the gaming floor of a video gaming premises
  and that results in an individual obtaining any money or thing of
  value from, or being owed any money or thing of value by, a video
  gaming retailer.
               (2)  "Gaming activity" means an activity involving or
  related to the play of video gaming terminals, including player
  club memberships or promotional activities.
               (3)  "Self-excluded person" means a person whose name
  and identifying information is included, at the person's own
  request, on the self-exclusion list.
               (4)  "Self-exclusion list" means a list maintained by
  the commission of names and identifying information of persons who,
  under this subchapter, have voluntarily agreed to be excluded from
  a video gaming premises and all gaming activities at a video gaming
  premises and to be prohibited from collecting any winnings,
  recovering any losses, or accepting complimentary gifts or services
  or any other thing of value at a video gaming premises.
               (5)  "Winnings" means any money or thing of value
  received from or owed by a video gaming retailer as a result of a
  fully executed gaming transaction.
         Sec. 2001A.302.  UNDERAGE PERSONS EXCLUDED. (a)  An
  individual younger than 18 years of age may not enter or be on the
  gaming floor of a video gaming premises.
         (b)  An individual younger than 21 years of age may not:
               (1)  whether personally or through an agent, operate,
  use, play, or place a wager on a video gaming game at a video gaming
  premises;
               (2)  receive check cashing privileges, be rated as a
  player, or receive any complimentary service, item, or discount as
  a result of, or in anticipation of, video gaming activity; or
               (3)  in any manner or in any proceeding, whether
  personally or through an agent, collect winnings or recover losses
  arising as a result of any video gaming activity.
         (c)  Winnings incurred by an individual younger than 21 years
  of age shall be remitted to the commission.  For the purposes of
  this subsection, winnings issued to, found on or about, or redeemed
  by an individual younger than 21 years of age shall be presumed to
  constitute winnings subject to remittance to the commission.
         (d)  A person holding a license issued by the commission may
  not permit or enable an individual to engage in conduct that
  violates Subsection (a), (b), or (c).
         (e)  A video gaming retailer shall establish procedures that
  are designed to prevent violations of this section and shall submit
  a copy of the procedures to the commission not later than the 30th
  day before the date the retailer begins video gaming operations at
  the video gaming premises. The commission shall provide to a video
  gaming retailer written notification of any deficiencies in the
  plan, and the retailer may submit revisions of the plan to the
  commission.  The video gaming retailer may not begin video gaming
  operations until the commission approves the retailer's
  procedures. Amendments to these procedures must be submitted to and
  approved by the commission before implementation.
         (f)  A video gaming retailer may be subject to administrative
  sanctions if a person engages in conduct that violates Subsection
  (a), (b), or (c) at its video gaming premises.
         (g)  A video gaming retailer who violates this subchapter may
  be held jointly and severally liable for the violation.
         (h)  A video gaming retailer shall post signs that include a
  statement substantially similar to the following: "It is unlawful
  for any person under 21 years of age to engage in any gaming
  activities. Individuals violating this prohibition will be removed
  and may be subject to arrest for criminal trespass."  The complete
  text of the sign shall be submitted to and approved by the
  commission as part of the procedures required under this section.
  The signs shall be prominently posted within 50 feet of each
  entrance and exit of the gaming floor.
         (i)  It is an affirmative defense to administrative
  penalties imposed for violations of this section if it is shown by a
  preponderance of the evidence that:
               (1)  the video gaming retailer or the retailer's agent
  verified the underage person's age using identification supplied by
  the person;
               (2)  the identification supplied by the person included
  a driver's license or identification card issued by this state,
  another state, or an agency of the United States;
               (3)  the driver's license or identification card
  included a photograph of the person; and
               (4)  the driver's license or identification card
  reasonably appeared on its face to be valid.
         Sec. 2001A.303.  COMMISSION EXCLUSION OR EJECTION FROM VIDEO
  GAMING PREMISES; EXCLUSION LIST.  (a)  The legislature finds that
  the exclusion or ejection of certain persons from video gaming
  premises is necessary to maintain strict and effective regulation
  of video gaming. The commission by rule shall provide for a list of
  persons who are to be excluded or ejected from a video gaming
  premises. Persons included on the exclusion list shall be
  identified by name and physical description. The commission shall
  publish the exclusion list on its website, and shall transmit a copy
  of the exclusion list periodically to video gaming retailers, as
  the list is initially issued and as it is revised. A video gaming
  retailer shall take steps necessary to ensure that all its key video
  gaming personnel and video gaming employees are aware of and
  understand the exclusion list and its function, and that all its key
  video gaming personnel and video gaming employees are kept aware of
  the content of the exclusion list.
         (b)  The exclusion list may include any person whose presence
  at a video gaming premises the commission determines poses a threat
  to the interests of this state, to achieving the intents and
  purposes of this chapter, or to the strict and effective regulation
  of video gaming.  In determining whether to include a person on the
  exclusion list, the commission may consider:
               (1)  any prior conviction of the person of:
                     (A)  a crime that is a felony under the laws of
  this state, another state, or the United States;
                     (B)  a crime involving moral turpitude; or
                     (C)  a violation of the gaming laws of this state,
  another state, or the United States;
               (2)  a violation or a conspiracy to violate by the
  person of any provision of this chapter, including:
                     (A)  a failure to disclose an interest in a gaming
  facility for which the person must obtain a license;
                     (B)  purposeful evasion of taxes or fees; or
                     (C)  a violation of an order of the commission or
  of any other governmental agency that warrants exclusion or
  ejection of the person from a video gaming premises;
               (3)  whether the person has pending charges or
  indictments for a gaming or gambling crime or a crime related to the
  integrity of gaming operations in any state;
               (4)  whether the person's conduct or reputation is such
  that the person's presence at a video gaming premises may call into
  question the honesty and integrity of the video gaming operations,
  interfere with the orderly conduct of the video gaming operations,
  or adversely affect public confidence and trust that video gaming
  is free from criminal or corruptive elements;
               (5)  whether the person is a career or professional
  offender whose presence at a video gaming premises would be adverse
  to the interest of licensed gaming in this state;
               (6)  whether the person has a known relationship or
  connection with a career or professional offender whose presence at
  a video gaming premises would be adverse to the interest of licensed
  gaming in this state;
               (7)  whether the commission has suspended the person's
  gaming privileges;
               (8)  whether the commission has revoked the person's
  licenses related to video gaming;
               (9)  whether the commission determines that the person
  poses a threat to the safety of patrons or employees of a video
  gaming premises; and
               (10)  whether the person has a history of conduct
  involving the disruption of gaming operations at a video gaming
  premises.
         Sec. 2001A.304.  NOTIFICATION OF EXCLUSION. (a)  The
  commission shall notify a person of the commission's intent to
  include the person on the exclusion list created under Section
  2001A.303. The notice shall be provided by personal service, by
  certified mail to the person's last known address, or, if service
  cannot be accomplished by personal service or certified mail, by
  daily publication for two weeks in a newspaper of general
  circulation in the county in which the person's last known address
  is located and in a newspaper of general circulation in each county
  in which a video gaming premises is located.
         (b)  A person who receives notice of the commission's intent
  to include the person on the exclusion list is entitled to an
  adjudication hearing under Chapter 2001, Government Code, except as
  provided by this section, in which the person may demonstrate why
  the person should not be included on the exclusion list. The person
  shall request the adjudication hearing not later than the 30th day
  after:
               (1)  the date the person receives the notice by
  personal service or certified mail; or
               (2)  the date of the last newspaper publication of the
  notice.
         (c)  If the adjudication hearing or any appeal under Chapter
  2001, Government Code, results in an order that the person should
  not be included on the exclusion list, the commission shall:
               (1)  publish a revised exclusion list that does not
  include the person; and
               (2)  notify video gaming retailers that the person has
  been removed from the exclusion list.
         (d)  A video gaming retailer shall take all steps necessary
  to ensure its key video gaming personnel and video gaming employees
  are made aware that the person has been removed from the exclusion
  list.
         (e)  This section does not apply to the self-exclusion list.
         Sec. 2001A.305.  REQUEST FOR SELF-EXCLUSION. (a)  A person
  requesting placement on the self-exclusion list shall submit, in
  person or as provided by commission rule, a completed written
  request to the commission on a form prescribed by the commission.
         (b)  A request for self-exclusion must include the person's:
               (1)  name, including any aliases or nicknames;
               (2)  date of birth;
               (3)  address of current residence;
               (4)  telephone number;
               (5)  social security number, if voluntarily provided in
  accordance with any applicable federal law;
               (6)  physical description, including height, weight,
  gender, hair color, eye color, and any other physical
  characteristic that may assist in the identification of the person;
  and
               (7)  any other information required by commission rule.
         (c)  Not later than the 30th day after any change in the
  information provided in Subsection (b), the self-excluded person
  must update the changed information using a form prescribed by the
  commission.
         (d)  A person may request self-exclusion until:
               (1)  the first anniversary of the date the person is
  placed on the self-exclusion list;
               (2)  the fifth anniversary of the date the person is
  placed on the self-exclusion list; or
               (3)  the person's death.
         (e)  A request for self-exclusion must include a signed
  release statement that:
               (1)  acknowledges that the request for self-exclusion
  has been made voluntarily;
               (2)  certifies that the information provided in the
  request for self-exclusion is true and accurate;
               (3)  acknowledges that the person requesting
  self-exclusion is a problem gambler;
               (4)  acknowledges that:
                     (A)  a person requesting a lifetime exclusion may
  not request removal from the self-exclusion list; and
                     (B)  a person requesting a one-year or five-year
  exclusion:
                           (i)  will remain on the self-exclusion list
  until a request for removal is approved; and
                           (ii)  may not request removal from the
  self-exclusion list until the requested exclusion period ends;
               (5)  acknowledges that a person on the self-exclusion
  list who is discovered on the gaming floor or engaging in gaming
  activities at any video gaming premises is subject to removal and to
  arrest for criminal trespass; and
               (6)  releases, indemnifies, holds harmless, and
  forever discharges this state, the commission, and all video gaming
  retailers from any claims, damages, losses, expenses, or liability
  arising out of, by reason of, or relating to the self-excluded
  person or to any other party for any harm, monetary or otherwise,
  that may be proximately caused by:
                     (A)  the failure of a video gaming retailer to
  withhold gaming privileges from or restore gaming privileges to a
  person who is on the self-exclusion list at the time of the failure;
  or
                     (B)  a video gaming retailer otherwise permitting
  or not permitting a self-excluded person to engage in gaming
  activity at a video gaming premises while on the self-exclusion
  list.
         (f)  The exclusion of a person who requests self-exclusion
  for one year or five years remains in effect unless, after the end
  of the self-exclusion period, the self-excluded person requests
  removal from the commission's self-exclusion list as provided by
  Section 2001A.308. The exclusion terminates on the date the
  commission removes the person's name from the self-exclusion list.
         (g)  A person submitting a self-exclusion request must
  present a government-issued identification containing the person's
  signature and photograph when the person submits the request.
         (h)  The commission may require a person requesting
  self-exclusion under this subchapter to have the person's
  photograph taken by the commission or an agent of the commission on
  the commission's acceptance of the person's request to be on the
  list.
         Sec. 2001A.306.  SELF-EXCLUSION LIST; CONFIDENTIALITY. (a)  
  The commission shall maintain the self-exclusion list and shall
  notify by first class mail or direct electronic transmission each
  video gaming retailer of any addition to or deletion from the list
  not later than the fifth business day after the date the commission
  verifies the information received under this subchapter.
         (b)  The notice provided to video gaming retailers by the
  commission must include:
               (1)  the person's identifying information specified by
  Section 2001A.305(b); and
               (2)  a copy of the person's photograph, if any, taken by
  the commission.
         (c)  The notice provided to video gaming retailers by the
  commission concerning a person whose name has been removed from the
  self-exclusion list must include the name and date of birth of the
  person.
         (d)  A video gaming retailer shall maintain a copy of the
  self-exclusion list and establish procedures to ensure that the
  copy of the self-exclusion list is updated and that all appropriate
  employees and agents of the video gaming retailer are notified of
  any addition to or deletion from the list not later than the fifth
  business day after the day notice is mailed or transmitted
  electronically to the video gaming retailer under Subsection (a).
         (e)  Information furnished to or obtained by the commission
  under this subchapter is confidential and may not be disclosed
  except in accordance with this subchapter.
         (f)  Except as provided by this subsection, a video gaming
  retailer or an employee or agent of the retailer may not disclose
  the name of, or any information about, a person who has requested
  self-exclusion to anyone other than employees and agents of the
  video gaming retailer whose duties and functions require access to
  the information. A video gaming retailer may disclose the identity
  of a self-excluded person to appropriate employees of other video
  gaming retailers in this state or affiliated video gaming entities
  in other jurisdictions for the limited purpose of assisting in the
  proper administration of responsible gaming programs.
         (g)  A self-excluded person may not in any manner or in any
  proceeding collect any winnings or recover any losses arising as a
  result of any video gaming activity that occurs during the period
  that the person is on the self-exclusion list.
         (h)  Winnings incurred by a self-excluded person shall be
  remitted to the commission.  For the purposes of this subsection,
  winnings issued to, found on or about, or redeemed by a
  self-excluded person shall be presumed to constitute winnings
  subject to remittance to the commission.
         Sec. 2001A.307.  DUTIES OF VIDEO GAMING RETAILERS REGARDING
  SELF-EXCLUDED PERSONS. (a)  A video gaming retailer shall train its
  employees and establish procedures designed to:
               (1)  identify a self-excluded person who is present at
  the retailer's video gaming premises and, on identification,
  immediately notify the following:
                     (A)  employees of the retailer whose duties
  include the identification and removal of self-excluded persons; or
                     (B)  commission agents or a peace officer at the
  premises;
               (2)  immediately notify the Department of Public Safety
  when a self-excluded person is discovered on the retailer's video
  gaming premises or engaging in video gaming activities;
               (3)  refuse wagers from and deny video gaming
  privileges to a self-excluded person;
               (4)  deny check cashing privileges, player club
  membership, complimentary goods and services, junket
  participation, and other similar privileges and benefits to a
  self-excluded person;
               (5)  ensure that a self-excluded person does not
  receive, either from the retailer or an agent of the retailer,
  junket solicitations, targeted mailings, telemarketing promotions,
  player club materials, or other promotional materials relating to
  video gaming activities at the retailer's video gaming premises;
               (6)  comply with Section 2001A.306(d); and
               (7)  disseminate written materials to patrons
  explaining the self-exclusion program.
         (b)  A video gaming retailer shall submit a copy of its
  procedures and training materials established under Subsection (a)
  to the commission for review and approval not later than the 30th
  day before the date the retailer begins gaming operations at the
  video gaming premises.  The commission shall notify the video
  gaming retailer in writing of any deficiencies in the procedures
  and training materials, and the retailer may submit amendments to
  the procedures and training materials to the commission.  A video
  gaming retailer may not begin video gaming operations until the
  commission approves the procedures and training.
         (c)  A video gaming retailer shall submit amendments to the
  procedures and training materials required under Subsection (b) to
  the commission for review and approval not later than the 30th day
  before the intended implementation date of the amendments.  The
  video gaming retailer may implement the amendments on the intended
  implementation date unless the video gaming retailer receives a
  notice under Subsection (d) objecting to the amendments.
         (d)  If during the review period prescribed by Subsection (c)
  the commission determines that the amendments to the procedures and
  training materials will not promote the prevention of gaming by
  self-excluded persons or assist in the proper administration of the
  self-exclusion program, the commission may, by written notice to
  the video gaming retailer, object to the amendments.  The objection
  must:
               (1)  specify the nature of the objection and, when
  possible, an acceptable alternative; and
               (2)  direct that the amendments not be implemented
  until approved by the commission.
         (e)  If the commission objects to amendments to the
  procedures and training materials under Subsection (d), the video
  gaming retailer may submit revised amendments not later than the
  30th day after the day the retailer receives the written notice of
  objection from the commission.  The video gaming retailer may
  implement the amendments on the 30th day following the submission
  of the revisions unless it receives written notice under Subsection
  (d) objecting to the amendments.
         (f)  A video gaming retailer shall post signs at all
  entrances to the retailer's video gaming premises indicating that a
  person who is on the self-exclusion list will be subject to arrest
  for trespassing if the person is on the video gaming premises or
  engaging in video gaming activities.  The text and font size of the
  signs shall be submitted for approval to the commission under the
  procedures specified by Subsection (b).
         (g)  The self-exclusion list is confidential, and any
  distribution of the list to an unauthorized source constitutes a
  violation of this subchapter.
         (h)  A video gaming retailer shall report the discovery of a
  self-excluded person on the retailer's video gaming premises or
  engaging in gaming activities to the commission within 24 hours of
  the discovery.
         Sec. 2001A.308.  REMOVAL FROM SELF-EXCLUSION LIST.  (a)  A
  person who requests self-exclusion for a one-year or five-year
  period may, after the end of the self-exclusion period, request
  removal of the person's name from the self-exclusion list by
  submitting a completed request for removal as required by
  Subsections (b) and (c). The request must be made in person unless
  the commission provides otherwise by rule.
         (b)  A self-excluded person's request for removal from the
  self-exclusion list must include:
               (1)  the person's identifying information specified by
  Section 2001A.305(b); and
               (2)  the person's signature, indicating acknowledgment
  of the following statement:
         "I certify that the information that I have provided is true
  and accurate.  I am aware that my signature constitutes a revocation
  of my previous request for self-exclusion, and I authorize the
  Texas Lottery Commission to permit all video gaming retailers in
  this state to reinstate my gaming privileges at video gaming
  premises."
         (c)  A person submitting a request for removal from the
  self-exclusion list must present a government-issued
  identification containing the person's signature and photograph
  when the person submits the request.  Not earlier than the fifth
  business day after the date the request is submitted, the person
  submitting the request shall:
               (1)  return to the commission office where the request
  was submitted;
               (2)  present a government-issued identification
  containing the person's signature and photograph; and
               (3)  sign the request a second time.
         (d)  Not later than the fifth business day after the date the
  person requesting removal from the self-exclusion list signs the
  request for the second time, the commission shall remove the
  person's name from the self-exclusion list and notify each video
  gaming retailer of the removal.
         Sec. 2001A.309.  EXCEPTION. A self-excluded person is not
  prohibited from being at a video gaming premises if:
               (1)  the individual is carrying out the duties of
  employment or incidental activities related to employment;
               (2)  the video gaming retailer's security personnel and
  any agent of the commission located at the video gaming premises
  have received prior notice;
               (3)  access to the video gaming premises is limited to
  the time necessary to complete the individual's assigned duties;
  and
               (4)  the self-excluded individual does not otherwise
  engage in any gaming activities.
         SECTION 3.  Section 2001.3025, Occupations Code, is amended
  to read as follows:
         Sec. 2001.3025.  ACCESS TO CRIMINAL HISTORY RECORD
  INFORMATION.  (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)  an applicant for or holder of a license issued
  under this chapter;
               (2)  a person required to be named in a license
  application; or
               (3)  an employee or other person who works or will work
  for a license holder and who is required by another provision of
  this chapter to undergo a criminal background check.
         (b)  The commission is not required to conduct a criminal
  background check under Subsection (a) for a person who has
  undergone an investigation authorized by Section 2001A.106 that is
  sufficient for the person to continue to hold a license under
  Chapter 2001A.
         SECTION 4.  Section 411.108(a-1), Government Code, is
  amended 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:
               (1)  a person licensed under Chapter 2001, Occupations
  Code, or described by Section 2001.3025, Occupations Code; or
               (2)  a person holding or seeking a license under
  Chapter 2001A, Occupations Code.
         SECTION 5.  Section 466.024(b), Government Code, is amended
  to read as follows:
         (b)  The commission shall adopt rules prohibiting the
  operation of any game using a video lottery machine or machine,
  except in accordance with Chapter 2001A, 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)  was permitted under Chapter 2001A, Occupations
  Code;
               (4)  consisted entirely of participation in the state
  lottery authorized by [the State Lottery Act (]Chapter 466,
  Government Code[)];
               (5) [(4)]  was permitted under the Texas Racing Act
  (Article 179e, Vernon's Texas Civil Statutes); or
               (6) [(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.
         SECTION 7.  Section 47.09, Penal Code, is amended by
  amending Subsection (a) and adding Subsection (c) 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)  Chapter 2001A, Occupations Code; or
                     (D)  the Texas Racing Act (Article 179e, Vernon's
  Texas Civil Statutes);
               (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.
         (c)  Subsection (a)(1)(C) applies to a person manufacturing,
  possessing, or operating a gambling device under a license or other
  authorization of the Texas Lottery Commission under Chapter 2001A,
  Occupations Code.
         SECTION 8.  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 under
  Chapter 2001A, Occupations Code, for transportation in interstate
  or foreign commerce.
         SECTION 9.  (a)  As soon as practicable after the effective
  date of this Act, but not later than October 1, 2011, the Texas
  Lottery Commission shall adopt the rules necessary to implement
  video gaming in accordance with Chapter 2001A, Occupations Code, as
  added by this Act.
         (b)  Before the constitutional amendment authorizing the
  establishment of video gaming operations in this state and
  providing that certain federally recognized Indian tribes are not
  prohibited from conducting video gaming on certain Indian lands
  proposed by the 82nd Legislature, Regular Session, 2011, is
  submitted to the voters, the Texas Lottery Commission may:
               (1)  expend money from the commission's appropriation
  for the 2012-2013 state fiscal biennium for purposes of conducting
  the pre-implementation activities necessary to promptly establish
  video gaming in this state in accordance with Chapter 2001A,
  Occupations Code, as added by this Act;
               (2)  request and receive information related to
  applications for licensing and testing for video gaming equipment
  as authorized under Chapter 2001A, Occupations Code, as added by
  this Act; or
               (3)  develop and approve forms necessary for licensing
  persons to conduct video gaming and for testing video gaming
  equipment.
         (c)  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 video
  gaming.
         (d)  Notwithstanding any other law, the following provisions
  apply to procedures for adoption of the rules required by
  Subsection (a) of this section:
               (1)  the Texas Lottery Commission must give not less
  than 15 days' notice of its intent to adopt a rule under this
  section before adopting the rule;
               (2)  a rule adopted under this section takes effect on
  the date it is filed in the office of the secretary of state; and
               (3)  the commission shall notify all holders of a
  license issued under Section 10 of this Act of the adoption of a
  rule under this section.
         SECTION 10.  (a)  Notwithstanding Chapter 2001A, Occupations
  Code, as added by this Act, and except as otherwise provided by this
  section, on or after the effective date of this Act, the Texas
  Lottery Commission shall:
               (1)  issue a provisional video gaming manufacturer
  license to an applicant who:
                     (A)  holds a manufacturer's license issued under
  Chapter 2001, Occupations Code;
                     (B)  is eligible to hold a license under Section
  2001A.102, Occupations Code, as added by this Act;
                     (C)  files with the commission on the form
  required by the commission an application for a video gaming
  manufacturer license; and
                     (D)  pays the required application and license
  fees;
               (2)  issue a provisional video gaming distributor
  license to a person who:
                     (A)  holds a distributor's license issued under
  Chapter 2001, Occupations Code;
                     (B)  is eligible to hold a license under Section
  2001A.102, Occupations Code, as added by this Act;
                     (C)  files with the commission on the form
  required by the commission an application for a video gaming
  distributor license; and
                     (D)  pays the required application and license
  fees;
               (3)  issue a provisional video gaming retailer license
  to a person who:
                     (A)  is a licensed commercial lessor or a licensed
  authorized organization under Chapter 2001, Occupations Code;
                     (B)  is eligible to hold a license under Section
  2001A.101, Occupations Code, as added by this Act;
                     (C)  files with the commission on the form
  required by the commission an application for a video gaming
  retailer license; and
                     (D)  pays the required application and license
  fees; and
               (4)  issue a provisional video gaming employee license
  to a person who:
                     (A)  is listed in the registry of approved bingo
  workers maintained as required under Section 2001.313, Occupations
  Code;
                     (B)  is eligible to hold a license under Chapter
  2001A, Occupations Code, as added by this Act;
                     (C)  files with the commission on the form
  required by the commission an application for a video gaming
  employee license; and
                     (D)  pays the required application and license
  fees.
         (b)  Notwithstanding Chapter 2001A, Occupations Code, as
  added by this Act, and except as otherwise provided by this section,
  during the period that begins on the effective date of this Act and
  ends on a date determined by the Texas Lottery Commission that is
  not less than 18 months or more than 36 months after the effective
  date of this Act, the commission shall:
               (1)  approve for use in this state network operating
  centers, site controllers, video gaming terminals, and video gaming
  equipment that meets the standards established under the laws of
  another state, the United States, or the National Indian Gaming
  Commission unless the commission determines the licensing
  standards are insufficient to protect the public health and safety
  and prevent financial loss to this state; and
               (2)  issue a reciprocal license to a video gaming
  manufacturer who:
                     (A)  is licensed as a video gaming manufacturer
  under the laws of another state unless the commission determines
  the licensing standards are insufficient to protect the public
  health and safety and prevent financial loss to this state;
                     (B)  submits a letter from an independent testing
  laboratory approved by the commission that describes in detail the
  video gaming equipment the manufacturer is seeking to deploy in
  this state and certifies that the equipment has undergone
  independent tests performed by the laboratory; and
                     (C)  submits documentation from the independent
  testing laboratory that verifies the manufacturer's equipment
  meets the standards established under the laws of another state,
  the United States, or the National Indian Gaming Commission.
         (c)  The Texas Lottery Commission shall establish the term of
  a provisional license issued under Subsection (a) of this section
  or a reciprocal license issued under Subsection (b) of this
  section, which may not be less than 18 months. The commission by
  rule shall establish timelines for license holders who hold a
  provisional or reciprocal license issued under this section to
  comply with the requirements of Chapter 2001A, Occupations Code, as
  added by this Act, and commission rules.  The rules must allow
  license holders at least six months to comply with the rules and
  requirements.
         (d)  Notwithstanding Chapter 2001A, Occupations Code, as
  added by this Act, during the provisional period specified by the
  commission, which may not be less than 18 months or more than 36
  months after the effective date of this Act, a video gaming retailer
  must obtain video gaming equipment and video gaming terminals from
  a video gaming distributor who holds a bingo distributor's license
  issued under Chapter 2001, Occupations Code.
         (e)  Notwithstanding Chapter 2001A, Occupations Code, as
  added by this Act, or any other law, a video gaming manufacturer,
  video gaming distributor, or applicant for a video gaming
  distributor or manufacturer license may display video gaming
  equipment in this state before the effective date of this Act if:
               (1)  the video gaming equipment is disabled for
  marketing purposes so that the equipment does not accept or
  dispense money or pay out video gaming tickets or the equipment
  contains only demonstration software that cannot be disabled;
               (2)  for a trade show or similar event, the Texas
  Lottery Commission:
                     (A)  is notified in advance of the proposed event
  of:
                           (i)  the date and location of the event;
                           (ii)  the model and serial number of each
  item of video gaming equipment to be displayed;
                           (iii)  the manner of transport of each item
  to be displayed; and
                           (iv)  a description of how the item will at
  all times be possessed by and be under the control of the applicant
  or license holder; and
                     (B)  approves the display of the equipment.
         SECTION 11.  The change in law made by this Act applies only
  to an offense committed on or after the effective date of this Act.
  An offense committed before the effective date of this Act 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 Act if any element of the offense was committed before that
  date.
         SECTION 12.  (a)  Sections 1 through 8 of this Act take
  effect on the date the constitutional amendment authorizing the
  establishment of video gaming operations in this state and
  providing that federally recognized Indian tribes are not
  prohibited from conducting video gaming on certain Indian lands
  proposed by the 82nd Legislature, Regular Session, 2011, is
  approved by the voters. If that amendment is not approved by the
  voters, Sections 1 through 8 of this Act have no effect.
         (b)  Sections 9 through 11 of this Act 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 9 through 11 of this
  Act and this section take effect September 1, 2011.