83R4576 YDB-F

By: Thompson of Harris H.B. No. 2603

A BILL TO BE ENTITLED

AN ACT

relating to the operation of casino gaming in this state by federally recognized Indian tribes on certain land; providing penalties; authorizing fees.

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

SECTION 1. Subtitle A, Title 13, Occupations Code, is amended by adding Chapter 2004 to read as follows:

CHAPTER 2004. CASINO GAMING BY

FEDERALLY RECOGNIZED INDIAN TRIBES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2004.001. DEFINITIONS. In this chapter:

(1) "Casino game" means any game of chance, including a game of chance in which the outcome may be partially determined by skill or ability, that involves the making of a bet, as defined by Section 47.01, Penal Code. The term does not include:

(A) conduct authorized under Chapters 2001 and 2002;

(B) wagering on a horse or greyhound race authorized under the Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes);

(C) gambling permitted under Chapter 47, Penal Code; or

(D) conduct authorized under Chapter 466, Government Code.

(2) "Casino gaming" means the conduct of casino games authorized under this chapter.

(3) "Casino gaming manager" means a person certified under this chapter to manage casino gaming operations at a location authorized under this chapter to conduct casino gaming in this state.

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

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

(6) "Gaming vendor" means a person licensed under this chapter to provide, maintain, manufacture, distribute, sell, or lease casino gaming equipment and services to a person authorized to operate casino gaming in this state.

(7) "Indian lands" means lands on which a federally recognized Indian tribe may be authorized to conduct casino gaming under Section 47a, Article III, Texas Constitution.

Sec. 2004.002. APPLICABILITY OF FEDERAL LAW. All shipments of casino gaming equipment and devices into, out of, or within this state in connection with casino gaming 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.

SUBCHAPTER B. ADMINISTRATION

Sec. 2004.051. POWERS AND DUTIES OF COMMISSION AND EXECUTIVE DIRECTOR. (a) The commission and executive director, consistent with the applicable gaming compact entered into under Subchapter D, have broad authority and shall exercise strict control over and closely monitor casino gaming in this state to protect the public health, welfare, and safety and ensure integrity, security, honesty, and fairness in the conduct and administration of casino gaming.

(b) The executive director may contract with or employ a person to perform a function, activity, or service in connection with casino gaming as prescribed by the executive director.

(c) The commission shall as necessary to protect the public health and safety:

(1) monitor casino gaming operations on a continuing basis;

(2) establish standards for:

(A) the operation of casino gaming;

(B) the provision of casino gaming equipment and services; and

(C) the establishment and maintenance of casino gaming facilities; and

(3) inspect and examine all gaming facilities, 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 revenue of casino gaming operations of an Indian tribe authorized to conduct casino gaming under this chapter.

Sec. 2004.052. RULES AND PROCEDURES. (a) The commission shall adopt all rules necessary to supervise casino gaming in this state, administer this chapter, and ensure the security of casino gaming operations in this state.

(b) The commission shall establish procedures for the monitoring and inspection of casino 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.

Sec. 2004.053. FEES. The commission shall establish the application, certification, and certification renewal fees for each type of certification issued under this chapter in amounts reasonable and necessary to cover the state's costs incurred in the administration of this chapter and the regulation of casino gaming.

Sec. 2004.054. ANNUAL REPORT. The commission shall make an annual report to the governor, the comptroller, and the legislature that provides a summary of casino gaming revenues and expenses for the state fiscal year preceding the report. The report must be in the form and reported at the time provided by the General Appropriations Act.

Sec. 2004.055. INVESTIGATIONS. (a) The commission may investigate a violation or alleged violation of this chapter by any person.

(b) The Department of Public Safety may investigate a violation or alleged violation of the penal laws of this state in connection with the administration of this chapter, the regulation of casino gaming, or the conduct of casino gaming by a person authorized to operate casino gaming under this chapter.

SUBCHAPTER C. CASINO GAMING

Sec. 2004.101. AUTHORIZATION OF CASINO GAMING. In accordance with this chapter, commission rules, and any applicable compact, casino gaming may be conducted in this state only:

(1) by a federally recognized Indian tribe that may be authorized to operate casino games under Section 47a, Article III, Texas Constitution; and

(2) on the tribe's Indian lands in this state.

Sec. 2004.102. CERTIFICATES REQUIRED. (a) A person may not provide, maintain, manufacture, distribute, sell, or lease casino games or casino gaming equipment or services for use in this state unless the person holds a gaming vendor certificate issued under this chapter.

(b) A person may not act as a casino gaming manager for a gaming facility in this state unless the person holds a casino gaming manager certificate issued under this chapter.

(c) Unless the person holds the required gaming employee license, a person may not act as a gaming employee in any gaming employee position for which the commission by rule requires a person to hold a certificate issued under this chapter.

Sec. 2004.103. GAMING VENDOR CERTIFICATE. (a) The commission shall issue a gaming vendor certificate to an eligible person with the resources and experience required to provide casino games or casino gaming equipment and services for casino gaming operations authorized under this chapter.

(b) The commission by rule shall establish the minimum qualifications for a gaming vendor certificate to ensure a competitive market for casino gaming equipment and services and the availability of reliable casino gaming equipment and services, consistent with the health and safety of the public.

Sec. 2004.104. CASINO GAMING MANAGER CERTIFICATE. (a) The commission shall issue a casino gaming manager certificate to an eligible person with the qualifications and experience required to manage casino gaming operations under this chapter.

(b) The commission by rule shall establish the minimum qualifications for a casino gaming manager certificate necessary to protect the health and safety of the public.

Sec. 2004.105. GAMING EMPLOYEE CERTIFICATE. The commission by rule and as necessary to protect the health and safety of the public may establish other gaming employee positions that require a certificate issued under this chapter to act in those positions.

Sec. 2004.106. BACKGROUND INVESTIGATIONS. (a) Before issuing a certificate to a person under this chapter, the commission shall conduct a background investigation that includes obtaining criminal history record information of the person seeking the certificate to assist the commission in determining the person's eligibility or suitability for the certificate.

(b) The Department of Public Safety may enter into an agreement with an Indian tribe to conduct background investigations for the tribe related to casino gaming.

SUBCHAPTER D. COMPACT

Sec. 2004.151. COMPACT WITH FEDERALLY RECOGNIZED INDIAN TRIBE. (a) As authorized by Section 47a, Article III, Texas Constitution, notwithstanding any other law, the chairman of a federally recognized Indian tribe may execute a gaming compact containing the terms set forth in Subsection (b) on receipt of a duly enacted resolution of the governing body of the tribe authorizing the chairman to execute the compact and on submission of a copy of the resolution to the secretary of state. The secretary of state is not required to take any further action before the gaming compact becomes effective. The executed gaming compact between this state and the tribe is intended to fulfill tribal-state compact requirements under the Indian Gaming Regulatory Act (Pub. L. No. 100-497). The tribe is responsible for submitting a copy of the executed agreement to:

(1) the Texas secretary of state; and

(2) the United States secretary of the interior for approval and publication in the Federal Register.

(b) The gaming compact described by Subsection (a) must be in substantially the following form:

GAMING COMPACT BETWEEN [Insert name of TRIBE]

AND THE STATE OF TEXAS

This Compact is entered into between [insert name of Tribe], a federally recognized Indian Tribe, and the State of Texas, authorizing the operation of casino games (as defined herein) on the Tribe's Indian lands as defined in Part III of this Compact.

PART I. TITLE

This document shall be referred to as the "[Insert name of Tribe] and State of Texas Gaming Compact."

PART II. RECITALS

1. The Tribe is a federally recognized tribal government with sovereign powers and rights of self-government.

2. The State is a state of the United States possessing the sovereign powers and rights of a state.

3. The State and the Tribe maintain a government-to-government relationship, and this Compact will foster mutual respect and understanding between those governments.

4. The Tribe and the State jointly intend to protect the integrity of gaming regulated under this Compact.

5. The gaming under this Compact will further the purposes of promoting tribal economic development, self-sufficiency, and strong tribal government.

PART III. DEFINITIONS

In this Compact:

A. "Commission" means the Texas Lottery Commission, which is the state governmental agency authorized to carry out the State's regulatory responsibilities under this Compact, or another state agency the State authorizes to carry out the State's regulatory responsibilities under this Compact.

B. "Compact" means this gaming compact between the Tribe and the State.

C. "Casino Game" or "Casino Gaming Activity" means any game that involves the making of a bet, as defined by Section 47.01, Penal Code, for consideration, including a banking or percentage game played with cards, dice, or a mechanical, electromechanical, or electronic device or machine for money, property, checks, credit, or a representative of value. The term includes roulette, blackjack, craps, poker, slot machines, any other electronic games of chance, and any other casino game permitted by State law for any person.

D. "Covered Gaming Employee" means an individual employed and licensed by the Tribe whose responsibilities include providing services related to the operation, maintenance, or management of Casino Games. The term includes:

1. managers and assistant managers;

2. accounting personnel;

3. surveillance and security personnel;

4. cashiers, supervisors, and floor personnel;

5. cage personnel; and

6. any other employee whose employment duties require or authorize access to restricted areas of a facility.

E. "Covered Gaming Vendor" means a person who provides, maintains, manufactures, distributes, sells, or leases casino gaming equipment and services to a Casino Gaming Operation.

F. "Document" means a book, a record, or other written material, or an electronic, magnetic, or computer media document.

G. "Effective Date" means the date on which the Compact becomes effective under Part XIII.A of this Compact.

H. "Casino Gaming Facility" means a building or buildings of the Tribe in which a Casino Game authorized by this Compact is conducted on the Tribe's Indian lands.

I. "Casino Gaming Manager" means a person licensed pursuant to this Compact to manage a Casino Gaming Operation at a location authorized to conduct Casino Gaming in the State.

J. "Casino Gaming Operation" means the tribal business enterprise that offers and operates Casino Games.

K. "Class II gaming" has the meaning assigned by the Indian Gaming Regulatory Act (Pub. L. No. 100-497).

L. "Department" means the Department of Public Safety of the State of Texas.

M. "Gross Gaming Revenue" means the total receipts from the play of all Casino Games less all prize payouts and participation fees.

N. "IGRA" means the Indian Gaming Regulatory Act (Pub. L. No. 100-497).

O. "Independent Certified Public Accountant" means an accountant licensed by the State to practice as an independent certified public accountant.

P. "Indian lands" means:

1. land that was held in trust by the United States on January 1, 2011, for the benefit of the Tribe or an individual member of the Tribe and over which the Tribe exercises governmental power; and

2. land that is acquired by the Tribe that is not more than five miles from the border of land described in Part III.P.1 of this Compact.

Q. "Participation Fee" means a payment made to a supplier on a periodic basis by the Tribe for the right to lease or otherwise offer for play a gaming device that the Tribe does not own for authorized Casino Gaming Activity.

R. "Patron" means a person who is on the premises of a Casino Gaming Facility or who is entering the Tribe's Indian lands for the purpose of playing a Casino Game authorized by this Compact.

S. "Rules" means rules adopted by the Commission or the Tribal Regulatory Agency to implement this Compact.

T. "State" means the State of Texas.

U. "Tribal Regulatory Agency" ("TRA") means the agency designated by the Tribe to exercise regulatory authority pursuant to this Compact.

V. "Tribe" means the [insert name of Tribe], a federally recognized Indian tribe.

PART IV. AUTHORIZATION AND LOCATION OF CASINO GAMES

The Tribe and State agree that the Tribe is authorized to operate Casino Games in a Casino Gaming Facility on the Tribe's Indian lands in accordance with the provisions of this Compact.

PART V. RULES; MINIMUM REQUIREMENTS

A. The Tribe is responsible for all duties assigned to the Tribe and the TRA under this Compact. The TRA shall adopt any rules necessary to implement this Compact. The rules must:

1. require licensing of Casino Gaming Facilities, Casino Gaming Managers, Covered Gaming Employees, and Covered Gaming Vendors;

2. establish minimum Internal Control Standards and require the Tribe to engage an Independent Certified Public Accountant to perform agreed procedures and to report on the Gaming Operation's compliance with those standards;

3. establish safeguards against problem gambling;

4. require annual audits, including an audit of the Financial Statements of the Casino Gaming Operation by an Independent Certified Public Accountant;

5. require the posting of rules for all Casino Games;

6. prohibit underage gambling;

7. require investigation of all suspected violations of the Compact;

8. include procedures for resolving Patron disputes;

9. include public health and safety standards that are at least as stringent as applicable federal law; and

10. include building codes that are at least as stringent as a building code of the State or a local government in the area of the casino.

B. The Commission may adopt the additional rules necessary to ensure proper implementation of this Compact, protect the public health, welfare, and safety, preserve the integrity of the State, the Indian tribe, and any Casino Gaming Operations on Indian lands, and prevent financial loss to the State and the Indian tribe.

PART VI. TORT CLAIMS; LIMITED CONSENT TO SUIT

A. The Tribe shall ensure that a Patron of a Casino Gaming Facility is afforded due process in seeking just compensation for a tort claim for personal injury or property damage against a Casino Gaming Facility arising out of an incident occurring at a Casino Gaming Facility.

B. The Tribe shall maintain public liability insurance in the amount of $5 million for the express purposes of providing coverage for a tort claim.

C. Nothing in this section requires the Tribe to waive its immunity from suit except to the extent of the policy limits required by this part.

PART VII. STATE REGULATION AND ENFORCEMENT

A. The Commission may audit all records regarding Gross Gaming Revenue of the Casino Gaming Operation, the conduct of any Casino Game, and the Casino Gaming Operation to determine compliance with this Compact.

B. An agent of the Commission or the Department may have, without prior notice, unfettered access to all public areas of the Casino Gaming Facility. A Commission or Department agent may also have access to nonpublic areas of the Casino Gaming Facility immediately on giving the TRA notice of the agent's arrival and providing proper photographic identification.

C. Subject to this Compact, a Commission agent has the right to review and request a copy of any Document of the Casino Gaming Facility related to the conduct of a Casino Game, including the required annual financial audit, agreed procedures report, and the workpapers of the Independent Certified Public Accountant. The review and copying of Documents must be during normal business hours.

D. The Commission may investigate a violation or alleged violation of this Compact. The Department may investigate a violation of the penal laws of this State in connection with the administration of this Compact or the conduct of Casino Gaming by a person authorized to operate Casino Gaming under this Compact.

E. The Tribe, the State, and the National Indian Gaming Commission may enter into a memorandum of understanding or similar agreement that authorizes the National Indian Gaming Commission to regulate Class II gaming at Casino Gaming Facilities under the terms and conditions of the agreement as authorized by Section 47a(b), Article III, Texas Constitution.

PART VIII. LICENSING

A. The TRA shall require completion of an application by any Casino Gaming Manager, Covered Gaming Employee, or Covered Gaming Vendor and shall conduct a background investigation of each applicant to determine whether the applicant is suitable to be licensed for association with the Casino Gaming Operation. Suitability standards shall be established by rules adopted by the TRA and shall protect the integrity of the Casino Gaming Operation and the health and safety of the public.

B. The TRA may enter into an agreement with the Department, pursuant to Section 2004.106, Occupations Code, to obtain criminal history record information. The Department shall cooperate in furnishing to the TRA that information, unless furnishing the information would violate any agreement the Department has with a source of the information other than the applicant, or would impair or impede a criminal investigation, or unless the TRA cannot provide sufficient safeguards to assure the Department that the information will remain confidential.

C. The Commission may require completion of an application by any Casino Gaming Manager, Covered Gaming Employee, or Covered Gaming Vendor and may conduct a background investigation pursuant to state law to determine whether the Casino Gaming Manager, Covered Gaming Employee, or Covered Gaming Vendor applicant would be suitable to be certified for association with the Casino Gaming Operation. The Commission and the TRA shall cooperate and share information. On completion of the necessary background investigation, the Commission shall issue a notice to the TRA certifying that the Commission determined that the applicant would be suitable, or that the applicant would be unsuitable, for association with the Casino Gaming Operation and, if unsuitable, stating the reasons for unsuitability. The Tribe may not employ, continue to employ, or purchase, lease, or otherwise obtain any gaming equipment or services from any Casino Gaming Manager, Covered Gaming Employee, or Covered Gaming Vendor whose application for certification or for renewal of certification has been denied by the Commission.

D. The Casino Gaming Operation and Casino Gaming Facility shall be licensed by the TRA and certified by the Commission in conformance with the requirements of this Compact before the commencement of operation and annually after commencement. Before the initial commencement of the operation, the Commission and the TRA shall verify compliance with this requirement through a joint pre-operation inspection and shall issue a license or certification, as appropriate.

E. The Commission shall establish application and certification fees in amounts reasonable and necessary to cover the State's costs incurred in the administration of this Compact.

PART IX. PAYMENTS TO THE STATE OF TEXAS

A. In consideration of the substantial exclusivity established under this agreement, the Tribe agrees to pay the State a portion of the revenue derived from the operation of Casino Games in an amount equal to eight percent of the Gross Gaming Revenue received by the Tribe in a calendar year from the play of the Casino Games. The amount is due and payable not later than the 20th day after the last day of the preceding quarter for the revenue received by the Tribe in the preceding quarter and shall be made to the comptroller of public accounts of the State of Texas. The Tribe may direct that, of the eight percent of the total annual revenue, the percentage authorized by Chapter 2004, Occupations Code, be paid by the Tribe to local governments for government services that benefit the general public, including public safety, mitigation of the impacts of gaming, or promotion of commerce and economic development.

B. If after the effective date of this Compact state law changes to allow the operation of video lottery terminals, slot machines, or any other forms of Casino Gaming by any person at a location within 70 miles of the Tribe's Indian lands as of the date of the Compact, the Tribe may cease payments under the revenue sharing provisions required under Part IX.A of this Compact.

PART X. DISPUTE RESOLUTION

A dispute under this Compact shall be resolved according to the following procedures:

A. A party asserting noncompliance shall serve written notice on the other party, identifying the provision in dispute and the factual basis for the claim. Representatives of the Tribe and State shall meet in an effort to resolve the dispute not later than the 30th day after the date of receipt of notice.

B. If the parties are unable to resolve a dispute through the process under Part X.A of this Compact, notwithstanding any other provision of law, the State or Tribe may bring an action in a federal district court regarding the dispute in a district in which the federal court has venue. If the federal district court declines to exercise jurisdiction, the State or the Tribe may bring the action in state court.

C. For purposes of an action based solely on a dispute between the State and the Tribe that arises under this Compact and the enforcement of any judgment resulting from the action, the State and the Tribe expressly waive the right to assert sovereign immunity from suit and from enforcement of any judgment, and consent to be sued in all levels of federal or state court, provided that:

1. the dispute is limited solely to issues arising under this Compact;

2. the action does not include a claim for monetary damages, other than payment of any money required by the terms of this Compact, and injunctive relief or specific performance enforcing a provision of this Compact requiring the payment of money to the State may be sought; and

3. nothing in this Compact may be construed to constitute a waiver of the sovereign immunity of the State or the Tribe with respect to a third party that is made a party or intervenes as a party in such action.

D. In the event that intervention, joinder, or other participation by a third party in any action between the State and the Tribe would result in the waiver of the State's or the Tribe's sovereign immunity to the third party's claim, the waiver of the State or the Tribe under this Compact may be revoked.

PART XI. FEDERAL APPROVAL

If at any time the Tribe is subject to the IGRA, this Compact is intended to meet the requirements of the IGRA on the effective date of this Compact. Changes to the IGRA after the effective date of this Compact that diminish the rights of the State or Tribe may not be applied to alter the terms of this Compact, except to the extent that federal law mandates that retroactive application without the respective consent of the State or Tribe. If at any time during the term of this Compact the Tribe becomes subject to the IGRA, this Compact shall be automatically converted to a tribal-state Compact under 25 U.S.C. Section 2710(d).

PART XII. NOTICES

A notice required under this Compact must be given by certified mail, return receipt requested, commercial overnight courier service, or personal delivery, to: Texas Secretary of State Capitol Building 1100 Congress Austin, TX 78701

[Insert Title of Tribal Official] [Insert name of Tribe] [Insert street address of Tribe] [Insert city, state, Zip Code of Tribe]

With copies to the general counsel for each party.

PART XIII. EFFECTIVE DATE AND TERM

A. This Compact is effective on due execution of the Tribe, and if applicable, on approval of the United States Secretary of the Interior as a tribal-state compact under the IGRA either by publication of the notice of approval in the Federal Register or by operation of law under 25 U.S.C. Section 2710(d)(8)(C).

B. This Compact has a term of 25 years beginning on the first day of the month following the month in which the Compact becomes effective under Part XIII.A of this Compact.

PART XIV. AMENDMENT OF COMPACT

This Compact may be amended on the written agreement of the parties. The Texas Secretary of State is authorized to agree to amendments that are not inconsistent with the purposes of this Compact.

PART XV. EXECUTION

The [Insert title of Tribal Official] of the [Insert name of Tribe] affirms that the [Insert title of Tribal Official] is duly authorized and has the authority to execute this Compact on behalf of the Tribe. APPROVED: [Insert name of Tribe] _______________ [Insert title of Tribal Official] DATE:________________________ State of Texas___________________________________________________ Texas Secretary of State DATE:________________________

SUBCHAPTER E. REVENUE

Sec. 2004.201. REVENUE FROM INDIAN TRIBE CASINO GAMING. (a) Except as provided by Subsection (b), a federally recognized Indian tribe that conducts casino gaming in this state, as authorized under Section 47a, Article III, Texas Constitution, and this chapter, shall transfer to the commission in the manner required by commission rule the percentage of gross gaming revenue generated from the casino gaming that is specified by commission rule. The commission shall determine the percentage based on the total costs to this state and to local governments in connection with or as a result of casino gaming operations. The percentage:

(1) may not be less than eight percent of the gross gaming revenue; and

(2) may be assessed in accordance with the category of casino game from which the gross gaming revenue is derived.

(b) A compact entered into under Section 2004.151 must provide for the commission to receive not less than eight percent of the gross gaming revenue generated from casino gaming operated under the compact.

Sec. 2004.202. STATE CASINO GAMING ACCOUNT. The state casino gaming account is a special account in the general revenue fund. The account consists of all revenue received by the commission from casino gaming, fees received under this chapter, and all money credited to the account from any other fund or source under law.

SUBCHAPTER F. OFFENSES; PENALTIES

Sec. 2004.251. MANIPULATION OR TAMPERING. (a) A person commits an offense if the person intentionally or knowingly manipulates the outcome of a casino game, the amount of a casino game prize, or the operation of a casino gaming 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. 2004.252. SALE OF CASINO GAME TO PERSON YOUNGER THAN 18 YEARS OF AGE. (a) A casino gaming manager or an employee or agent of a casino gaming manager or an employee, agent, or member of an Indian tribe commits an offense if the person intentionally or knowingly:

(1) sells or offers to sell a play of a casino game to an individual the person knows is younger than 18 years of age or permits the individual to purchase a play of a casino game; or

(2) pays money or issues a credit slip or other winnings for a play of a casino game to an individual the person knows is younger than 18 years of age.

(b) An individual who is younger than 18 years of age commits an offense if the individual:

(1) purchases a play of a casino game;

(2) accepts money, a credit slip, or other payment of winnings for play of a casino game; or

(3) falsely represents the individual to be 18 years of age or older by displaying evidence of age that is false or fraudulent or misrepresents in any way the individual's age in order to purchase a play of a casino 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.

Sec. 2004.253. DISCIPLINARY ACTION. (a) The commission may refuse to issue a certificate or may revoke, suspend, or refuse to renew a certificate or may reprimand a certificate 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 certificate holder or applicant under Subsection (a), the certificate holder or applicant is entitled to notice and a hearing.

(c) The commission may place on certificate probation subject to reasonable conditions a person whose certificate is suspended under this section.

(d) The commission may summarily suspend a certificate issued under this chapter in the same manner as the commission is authorized to suspend a license under Section 466.160, Government Code, if the commission determines that the action is necessary to maintain the integrity, security, or fairness of casino gaming.

(e) The commission by rule shall develop a system for monitoring a certificate holder's compliance with this chapter.

Sec. 2004.254. 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 is authorized to impose an administrative penalty under Subchapter M, Chapter 2001.

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

(c) In determining the amount of the penalty, the executive 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.

Sec. 2004.255. CIVIL PENALTY. (a) A person who violates this chapter or a rule adopted by the commission under this chapter is liable to this 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.

SECTION 2. 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 2004, 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 3. 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 2004, 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 certificate or other authorization under Chapter 2004, Occupations Code.

SECTION 4. 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 2004, Occupations Code, for transportation in interstate or foreign commerce.

SECTION 5. (a) Not later than December 31, 2013, the Texas Lottery Commission shall adopt the rules necessary to implement casino gaming in accordance with Chapter 2004, Occupations Code, as added by this Act.

(b) The Texas Lottery Commission may adopt initial rules for purposes of implementing casino gaming in accordance with Chapter 2004, Occupations Code, as added by this Act, that expire not later than May 1, 2014. Chapter 2001, Government Code, does not apply to the adoption of those rules. This subsection expires June 1, 2014.

SECTION 6. This Act takes effect December 15, 2013, but only if the constitutional amendment authorizing the operation of casino games in this state by federally recognized Indian tribes on certain land is approved by the voters. If that amendment is not approved by the voters, this Act has no effect.