| TO: | Honorable Mike Hamilton, Chair, House Committee on Licensing & Administrative Procedures |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HB2424 by Thompson (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.), As Introduced |
The bill would authorize the Texas Lottery Commission to license and regulate video gaming on bingo premises. Video gaming licenses could be approved for bingo operators and those licensed to lease bingo premises. Video gaming retailers would be required to submit 20 percent of their gross video gaming revenues to the state, plus an additional 10 percent to the licensed charitable organizations for which the bingo games are provided.
The bill would set up a state video gaming account as a special account of general revenue. This fund would be used to operate and administer video lottery, with the excess to be transferred to the general revenue fund.
Annual retailer license fees would range from $1,250 to $5,000, depending on the size-class of the bingo operation, as determined by annual gross receipts. The number of video gaming machines allowed at a location would be 30 for the smallest class, 60 for the midrange class, and 120 for the largest class. Video gaming manufacturers and distributors would be licensed at $10,000 each. License fees for video gaming managers would be $2,500, $100 for key video gaming personnel and technicians, and $50 for other video gaming employees. The license fee for each video gaming terminal would be $250. The commission would be authorized to shut down or receive penalty fees from retailers not submitting payments to the state.
The commission must adopt rules for implementing video gaming no later than October 1, 2011, but retailers would have a provisional period from 18 months to 36 months after the passage of the bill to obtain video gaming equipment and terminals. The commission would have this provisional period to approve state network operating centers, site controllers, and video gaming terminals and equipment.
Factors left to the discretion of video gaming retailers affect the fiscal impact of this legislation. These include the unknown percentage of licensed bingo operators and lessors of bingo premises that would apply and pay for a video gaming license. Because the revenue per day per gaming machine depends on the hours of operation and the geographic locations in which the machines are placed, state and charity revenue impacts cannot be reliably estimated.
Illustratively, Texas has approximately 500 establishments-currently licensed to offer bingo that might be qualified to have video gaming. Small establishments, of which it is assumed would be most numerous, could have up to 30 machines. Midsize establishments could have 60 machines and large establishments 120. Revenue, then, would depend on how many of these establishments would choose to have video gaming, how many machines per establishment, operating hours and physical location, etc.
The Texas Lottery Commission (TLC) would require 24 FTEs per year and administrative costs of $923,442 to the State Video Gaming Account beginning in fiscal year 2012 growing to $8.35 million in fiscal year 2016.
The Department of Public Safety indicates that applicant fees from license holders will result in a revenue gain to General Revenue of $28,900 in each fiscal year.
This legislation would create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either with or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
Sections 1 through 8 of this bill take effect on the date that the constitutional amendment authorizing video and Indian gaming operations would be approved by the voters. Sections 9 through 12 of this bill would take effect immediately upon enactment, assuming that the bill received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, these sections would take effect September 1, 2011.
| Source Agencies: | 304 Comptroller of Public Accounts, 362 Texas Lottery Commission, 405 Department of Public Safety
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| LBB Staff: | AG, JOB, SD
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