84R25603 YDB-D

By: Thompson of Harris H.B. No. 2642

Substitute the following for H.B. No. 2642:

By: Geren C.S.H.B. No. 2642

A BILL TO BE ENTITLED

AN ACT

relating to the transfer of the licensing and regulation of charitable bingo to the Texas Department of Licensing and Regulation and regulation by counties of amusement redemption machine game rooms on bingo premises; requiring an occupational permit; authorizing fees and taxes; creating civil and administrative penalties; increasing a criminal penalty.

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

ARTICLE 1. REGULATION OF CHARITABLE BINGO

SECTION 1.001. Section 2001.002, Occupations Code, is amended by amending Subdivisions (8), (13), (18), and (25-a) and adding Subdivisions (8-a) and (9-a) to read as follows:

(8) "Commission" means the Texas [Lottery] Commission of Licensing and Regulation.

(8-a) "Department" means the Texas Department of Licensing and Regulation.

(9-a) "Executive director" means the executive director of the department.

(13) "Gross gaming revenue [receipts]" means the total amount received from the sale, rental, transfer, or use of bingo cards and entrance fees charged at premises at which bingo is conducted less the amount of cash prizes paid to winners of bingo games.

(18) "Net proceeds" means:

(A) in relation to the total [gross] receipts from the conduct of bingo during one or more bingo occasions, the amount remaining after deducting the reasonable sums necessarily and actually expended for expenses under Section 2001.458 and the tax [fee] on prizes under Section 2001.502; and

(B) in relation to the gross rent or other consideration received by a licensed authorized organization for the use of its premises, fixtures, or equipment by another license holder, the amount remaining after deducting the reasonable sums necessarily and actually expended for any janitorial services and utility supplies directly attributable to the use of the premises, fixtures, or equipment.

(25-a) "Regular license" means a license to conduct bingo that is issued by the department [commission] and that expires on the first [or second] anniversary of the date of issuance unless revoked or suspended before that date by the department [commission. The term includes an annual license].

SECTION 1.002. The heading to Subchapter B, Chapter 2001, Occupations Code, is amended to read as follows:

SUBCHAPTER B. [COMMISSION] POWERS AND DUTIES

SECTION 1.003. The heading to Section 2001.051, Occupations Code, is amended to read as follows:

Sec. 2001.051. CONTROL AND SUPERVISION OF BINGO[; BINGO DIVISION].

SECTION 1.004. Sections 2001.051(a) and (b), Occupations Code, are amended to read as follows:

(a) The department [commission] shall administer this chapter.

(b) The commission has broad authority and shall exercise [strict] control and close supervision over all bingo conducted in this state so that bingo is fairly conducted and the proceeds derived from bingo are used for an authorized purpose.

SECTION 1.005. Section 2001.053, Occupations Code, is amended to read as follows:

Sec. 2001.053. OFFICERS AND INVESTIGATORS. The executive director [commission] may employ officers or investigators the executive director [commission] considers necessary to administer this chapter.

SECTION 1.006. Sections 2001.056(b), (c), (d), and (e), Occupations Code, are amended to read as follows:

(b) A license holder may not use or distribute a bingo card unless the card has been approved by the department [commission].

(c) The executive director or commission may set the price or adopt a schedule of prices for the sale or provision of bingo cards by a licensed authorized organization.

(d) A licensed authorized organization may not sell or provide a bingo card at a price other than a price authorized by the executive director or commission or a schedule adopted by the executive director or commission.

(e) The commission by rule may require a licensed authorized organization to notify the department [commission] of the price for bingo cards the organization will use for one or more reporting periods.

SECTION 1.007. Section 2001.057, Occupations Code, is amended to read as follows:

Sec. 2001.057. BINGO ADVISORY COMMITTEE AND ADVICE FOR COMMISSION. (a) The commission shall [may] appoint a bingo advisory committee consisting of nine members. The commission shall appoint members representing a balance of interests including representatives of:

(1) the public;

(2) charities that operate bingo games; [and]

(3) commercial and charity lessors that participate in the bingo industry;

(4) distributors; and

(5) manufacturers.

(c) An advisory [A] committee member serves at the pleasure of the presiding officer of the commission.

(d) An advisory [A] committee member is not entitled to receive compensation for serving as a member. A [committee] member is entitled to reimbursement for reasonable expenses incurred in performing duties as a member subject to the availability of funds and applicable limitations of the General Appropriations Act.

(e) The advisory committee, executive director, and department may:

(1) advise the commission on the needs and problems of the state's bingo industry;

(2) comment on rules involving bingo during their development and before final adoption unless an emergency requires immediate action by the commission; and

(3) [report annually to the commission on the committee's activities; and

[(4)] perform other duties as determined by the commission or executive director.

(f) The advisory committee may meet [quarterly or] at the executive director's or the presiding officer's [commission's] request.

[(g) The commission may adopt rules to govern the operations of the committee.]

SECTION 1.008. Section 2001.059(f), Occupations Code, is amended to read as follows:

(f) The commission may delegate all or part of the authority and procedures for issuing advisory opinions under this section to an employee of the department [commission].

SECTION 1.009. Sections 2001.060(a) and (c), Occupations Code, are amended to read as follows:

(a) On or before June 1 of each even-numbered year, the department [commission] shall prepare and deliver to the governor, the lieutenant governor, the speaker of the house of representatives, and the chairs of the standing committees of the senate and house of representatives with primary jurisdiction over charitable bingo a report stating for each of the preceding two calendar years:

(1) the total amount of [adjusted] gross gaming revenue [receipts] reported by licensed authorized organizations from their bingo operations;

(2) the total amount of net proceeds reported by licensed authorized organizations from their bingo operations; and

(3) a comparison of the amounts reported under Subdivisions (1) and (2), including the percentage that the net proceeds represents of the [adjusted] gross gaming revenue [receipts].

(c) For purposes of Subsection (a), the department [commission] shall determine the total amount of net proceeds in a manner that does not reduce gross gaming revenue [receipts] by the amount of rent paid for the rental of bingo premises by a licensed authorized organization to another licensed authorized organization if the other organization pays rent for the premises to a licensed commercial lessor.

SECTION 1.010. Section 2001.061, Occupations Code, is amended to read as follows:

Sec. 2001.061. LICENSE RENEWAL PROCESS. The commission shall adopt rules governing each part of the license renewal process for all licenses issued under this chapter, from application submission to completion of the renewal process. [The process must require a license holder renewing a license to submit to the commission the information required in the initial license application.]

SECTION 1.011. Section 2001.101(a), Occupations Code, is amended to read as follows:

(a) The department [commission] may license a person who is an authorized organization eligible for a license to conduct bingo if the person is:

(1) a religious society that has existed in this state for at least three years;

(2) a nonprofit organization:

(A) whose predominant activities are for the support of medical research or treatment programs; and

(B) that for at least three years:

(i) must have had a governing body or officers elected by a vote of members or by a vote of delegates elected by the members; or

(ii) must have been affiliated with a state or national organization organized to perform the same purposes as the nonprofit organization;

(3) a fraternal organization that has been organized in this state for at least three years;

(4) a veterans organization that has existed in this state for at least three years;

(5) a volunteer fire department that has existed in this state for at least three years; or

(6) a volunteer emergency medical services provider that has existed in this state for at least three years.

SECTION 1.012. Sections 2001.102(a) and (b), Occupations Code, are amended to read as follows:

(a) An applicant for a license to conduct bingo must file with the department [commission] an application on a form prescribed by the department [commission].

(b) The application must include:

(1) the name and address of the applicant;

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

(3) the address of the premises where and the time when the applicant intends to conduct bingo under the license sought;

(4) the name and address of the licensed commercial lessor of the premises, if the applicant intends to lease premises to conduct bingo from a person other than an authorized organization;

(5) a statement that the net proceeds of bingo will go to one or more of the authorized charitable purposes under this chapter;

(6) a designation of the applicant organization's bingo chairperson under whom bingo will be conducted accompanied by a statement signed by the chairperson stating that the chairperson will be responsible for the conduct of bingo under the terms of the license and this chapter;

(7) sufficient facts relating to the applicant's incorporation and organization to enable the department [commission] to determine whether the applicant is an authorized organization;

(8) [a copy of] the applicant organization's most recently filed Internal Revenue Service Form 990, if applicable;

(9) a letter of good standing from the applicant organization's parent organization, if the organization receives an exemption from federal income taxes as a member of a group of organizations;

(10) [copies of] the applicant organization's organizing instruments, including any bylaws, constitution, charter, and articles of incorporation;

(11) verification of the applicant organization's good standing with the secretary of state if the organization is organized under the law of this state; and

(12) information necessary to conduct criminal background checks on the applicant organization's officers and directors.

SECTION 1.013. Sections 2001.103(a), (c), (f), and (g), Occupations Code, are amended to read as follows:

(a) An authorized organization may receive a temporary license to conduct bingo by filing with the department [commission] an application, on a form and in the manner prescribed by the department [commission], accompanied by a $25 license fee.

(c) An organization may not receive more than 24 [six] temporary licenses in the 12-month period following the issuance or renewal of the organization's license to conduct bingo [a calendar year].

(f) An authorized organization that holds an annual [a regular] license to conduct bingo may apply for all or any portion of the total number of temporary licenses to which the organization is entitled under Subsection (c) [(e)] in one application without stating the days or times for which the organization will use the temporary licenses.

(g) An organization that has been issued a temporary license under Subsection (f) shall notify the department [commission] of the specific date and time of the bingo occasion for which the temporary license will be used before using the license. [If the commission receives the notification by noon of the day before the day the temporary license will be used, the commission shall verify receipt of the notice before the end of the business day on which the notice is received. If the commission does not receive the notification by noon of the day before the day the temporary license will be used, the commission shall verify receipt of the notice before noon of the business day that follows the day the commission received the notice.]

SECTION 1.014. Sections 2001.104(a), (d), and (e), Occupations Code, are amended to read as follows:

(a) The commission by rule shall set the fees for a license to conduct bingo based on the amount of the licensed authorized organization's total receipts derived from the conduct of bingo and in an amount reasonable to defray the department's administrative costs but not less than the following:

(1) Class A (annual [gross] receipts of not more than $75,000)-$300 [$25,000 or less)-$100];

(2) Class B (annual [gross] receipts of more than $75,000 [$25,000] but not more than $200,000)-$900 [$50,000)-$200];

(3) Class C (annual [gross] receipts of more than $200,000 [$50,000] but not more than $400,000)-$2,000 [$75,000)-$300]; and

(4) Class D (annual [gross] receipts of more than [$75,000 but not more than $100,000)-$400;

[(5) Class E (annual gross receipts of more than $100,000 but not more than $150,000)-$600;

[(6) Class F (annual gross receipts of more than $150,000 but not more than $200,000)-$900;

[(7) Class G (annual gross receipts of more than $200,000 but not more than $250,000)-$1,200;

[(8) Class H (annual gross receipts of more than $250,000 but not more than $300,000)-$1,500;

[(9) Class I (annual gross receipts of more than $300,000 but not more than $400,000)-$2,000; and

[(10) Class J (annual gross receipts of more than] $400,000)-$2,500.

(d) An applicant shall pay the fees established under Subsection (a) annually. [An applicant for a license or renewal of a license may obtain a license that is effective for two years by paying an amount equal to two times the amount of the annual license fee.]

(e) A licensed authorized organization may pay in advance, or establish an escrow account with the department [commission] to cover, fees assessed under this chapter for the amendment of a license or issuance of a temporary license.

SECTION 1.015. Section 2001.105, Occupations Code, is amended to read as follows:

Sec. 2001.105. LICENSE ISSUANCE OR RENEWAL; DISCIPLINARY ACTION FOR CERTAIN CONVICTIONS. (a) The department [commission] shall issue or renew a license to conduct bingo on payment of the license fee provided by Section 2001.104 if the department [commission] determines that:

(1) the member or members of the applicant designated in the application to conduct bingo are active members of the applicant;

(2) the bingo is to be conducted in accordance with this chapter;

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

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

(5) all persons who will conduct, promote, or administer the proposed bingo are active members of the applicant organization and all other persons who will assist in conducting, promoting, or administering the proposed bingo games are persons authorized [to do so] by the applicant [Section 2001.411; and

[(6) no person under whose name bingo will be conducted and no person working at the proposed bingo has been convicted of a gambling offense or criminal fraud].

(b) The department [commission] may not issue a license to an authorized organization to conduct bingo if an officer or member of the board of directors of the organization, or a person under whose name bingo will be conducted, has been convicted of criminal fraud or a gambling or gambling-related offense.

(b-1) The department may not take disciplinary action against a licensed authorized organization that has on file for a person described by Subsection (b) or an organization employee a criminal history records check, conducted by a local law enforcement agency or the Department of Public Safety, that does not contain a record of a conviction for an offense described by that subsection. If the department conducts a criminal history records check on the person or employee that contains a record of a conviction for an offense described by that subsection:

(1) the department shall immediately notify the organization of the conviction; and

(2) the organization is prohibited from allowing the person or employee to conduct bingo for the organization after receipt of the notification.

(b-2) The department may take disciplinary action against an organization that allows a person described by Subsection (b) or organization employee to conduct bingo for the organization after the date the organization receives the notification required under Subsection (b-1)(1).

(c) A [Except as provided by Section 2001.104(d), a] license issued under this subchapter is effective for one year.

SECTION 1.016. Sections 2001.107(b) and (c), Occupations Code, are amended to read as follows:

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

(1) conducting bingo;

(2) administering and operating bingo; and

(3) promoting bingo.

(c) The department [commission by rule] shall establish:

(1) the content of the training course;

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

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

SECTION 1.017. Section 2001.108, Occupations Code, is amended to read as follows:

Sec. 2001.108. LICENSE AMENDMENT FOR CHANGE OF BINGO PREMISES OR OCCASIONS. (a) A licensed authorized organization and the licensed commercial lessor at which the organization conducts or will conduct bingo may file a joint application with the department [commission] to change the premises at which the organization may conduct bingo or the times of the organization's bingo occasions to allow the organization to conduct bingo at the same time and premises that another licensed authorized organization is licensed to conduct bingo if the other organization has ceased, or will cease, conducting bingo at that time and premises. The application must state whether the other organization has ceased or will cease conducting bingo at that time and premises because:

(1) the organization has abandoned or will abandon its licensed time or premises; or

(2) the organization's lease has been or will be terminated.

(b) If the other organization ceased or will cease conducting bingo for the reason stated in Subsection (a)(1), the department [commission] must act on the joint application filed under Subsection (a) not later than the 14th day after the date the application is filed with the department [commission].

(c) If the other organization ceased or will cease conducting bingo for the reason stated in Subsection (a)(2), the department [commission] must act on the joint application filed under Subsection (a) not later than the 14th day after the date the application is filed with the department [commission] or the date on which the termination takes effect, whichever is later.

(d) The department [If the commission fails to act within the time provided by Subsection (b) or (c), the licensed authorized organization may act as if the change in premises or bingo occasions has been approved by the commission and may conduct bingo at the new premises or during the new bingo occasion until the commission acts on the application.

[(e) Notwithstanding Subsection (d), the commission] may issue temporary licenses to one or more licensed authorized organizations that conduct bingo at the same location as an organization that has ceased or will cease to conduct bingo, which are in addition to the number of temporary licenses each organization is entitled to under another provision of this chapter. The department [commission] is not required to act on a joint application under Subsection (a) within the time provided by this section if the number of additional temporary licenses is sufficient to allow the other organizations at the location to conduct bingo during the licensed times of the organization that has ceased or will cease to conduct bingo.

SECTION 1.018. Section 2001.152(a), Occupations Code, is amended to read as follows:

(a) The department [commission] may issue a commercial lessor license only to:

(1) a licensed authorized organization that owns or leases a premises where bingo is or will be conducted or an association of licensed authorized organizations that jointly own or lease premises where bingo is or will be conducted and that the organization or association leases or offers for lease to one or more other authorized organizations for the conduct of bingo;

(2) a person who leases premises to a single licensed authorized organization that subleases or will sublease the premises to one or more other licensed authorized organizations for the conduct of bingo; or

(3) a person who leases premises for the total control and exclusive use of only one licensed authorized organization as that organization's primary business office.

SECTION 1.019. Section 2001.153(a), Occupations Code, is amended to read as follows:

(a) The department [commission] may not issue a commercial lessor license to a person unless the department [commission] receives evidence the department [commission] considers adequate that funds used by the person seeking the license to obtain the premises, provide the premises with furniture, fixtures, or equipment, renovate the premises, or provide utilities to the premises are:

(1) the person's own funds; or

(2) the funds of another person, including loan proceeds, that:

(A) were obtained in an arms-length transaction that was commercially reasonable under the circumstances; and

(B) were not obtained under an expectation or obligation that the person from whom the funds were obtained would directly participate in, or have a legal interest in, rents obtained under the license or revenues or profits from the conduct of bingo on the premises.

SECTION 1.020. Section 2001.154(a), Occupations Code, is amended to read as follows:

(a) The department [commission] may not issue a commercial lessor license to or renew a commercial lessor license of:

(1) a person convicted of criminal fraud or a gambling or gambling-related offense;

(2) a public officer who receives any consideration, direct or indirect, as owner or lessor of premises offered for conducting bingo;

(3) a person who extends credit to, loans money to, or pays or provides for the payment of license fees for an authorized organization;

(4) a distributor or manufacturer; or

(5) a person in which a person covered by Subdivision (1), (2), (3), or (4) or a person married or related in the first degree by consanguinity or affinity, as determined under Chapter 573, Government Code, to one of those persons has greater than a 10 percent proprietary, equitable, or credit interest or in which one of those persons is active or employed[;

[(6) a foreign corporation or other foreign legal entity;

[(7) an individual who is not a resident of this state;

[(8) a corporation or other legal entity owned or controlled by:

[(A) a foreign corporation; or

[(B) an individual who is not a resident of this state; or

[(9) a corporation or other legal entity:

[(A) whose shares are publicly traded; or

[(B) owned or controlled by a corporation whose shares are publicly traded].

SECTION 1.021. Section 2001.156(a), Occupations Code, is amended to read as follows:

(a) An applicant for a commercial lessor license must file with the department [commission] a written verified application on a form prescribed by the department [commission].

SECTION 1.022. Section 2001.158(a), Occupations Code, is amended to read as follows:

(a) The commission by rule shall set the fees for a commercial lessor license in an amount reasonable to defray the department's administrative costs but not less than the following:

(1) Class A (annual gross rentals from licensed organizations of not more than $30,000)-$300 [$12,000)-$100];

(2) Class B (annual gross rentals from licensed organizations of more than $30,000 [$12,000] but not more than $60,000)-$900 [$20,000)-$200];

(3) Class C (annual gross rentals from licensed organizations of more than $60,000 [$20,000] but not more than $90,000)-$2,000 [$30,000)-$300]; and

(4) Class D (annual gross rentals from licensed organizations of more than [$30,000 but not more than $40,000)-$400;

[(5) Class E (annual gross rentals from licensed organizations of more than $40,000 but not more than $50,000)-$600;

[(6) Class F (annual gross rentals from licensed organizations of more than $50,000 but not more than $60,000)-$900;

[(7) Class G (annual gross rentals from licensed organizations of more than $60,000 but not more than $70,000)-$1,200;

[(8) Class H (annual gross rentals from licensed organizations of more than $70,000 but not more than $80,000)-$1,500;

[(9) Class I (annual gross rentals from licensed organizations of more than $80,000 but not more than $90,000)-$2,000; and

[(10) Class J (annual gross rentals from licensed organizations of more than] $90,000)-$2,500.

SECTION 1.023. Sections 2001.159(a) and (b), Occupations Code, are amended to read as follows:

(a) The department [commission] shall issue or renew a commercial lessor license if the department [commission] determines that:

(1) the applicant has paid the license fee as provided by Section 2001.158;

(2) the applicant qualifies to be licensed under this chapter;

(3) the rent to be charged is fair and reasonable;

(4) there is no diversion of the funds of the proposed lessee from the lawful purposes under this chapter;

(5) the person whose signature or name appears in the application is in all respects the real party in interest and is not an undisclosed agent or trustee for the real party in interest; and

(6) the applicant will lease the premises for the conduct of bingo in accordance with this chapter.

(b) The department [commission] shall issue a commercial lessor license under this section for the period specified in the license application or for a shorter period as the department [commission] determines.

SECTION 1.024. Sections 2001.160(a), (e), (f), and (g), Occupations Code, are amended to read as follows:

(a) On approval by the department [commission], a licensed commercial lessor may transfer a commercial lessor license if the person to whom the license will be transferred otherwise meets the requirements of this subchapter.

(e) Unless the department [commission] revokes or suspends the license under this chapter, or an injunction is issued under this section, a licensed authorized organization that conducts bingo lawfully at premises under a license to which Subsection (d) applies may continue conducting bingo at the premises after the death or incapacity of the commercial lessor license holder.

(f) On the showing by the department [commission] of a cause that would be sufficient for the department [commission] to revoke or suspend a license under this chapter or an applicable commission rule, a district court in Travis County [the county for which a commercial lessor license was issued or the commission] by order may temporarily or permanently enjoin the conduct of bingo at premises under a license to which Subsection (d) applies.

(g) The estate or guardian of an individual to whom Subsection (d) applies shall notify the department [commission] not later than one year after the date the individual dies or is determined to be incapacitated by a court of this state. The estate or guardian and the heirs or other appropriate person shall promptly take all necessary steps to complete a transfer of the license to the heirs or other appropriate person.

SECTION 1.025. Section 2001.161(c), Occupations Code, is amended to read as follows:

(c) The department [commission] may issue a commercial lessor license to a licensed authorized organization only for the same premises where the organization is licensed to conduct bingo.

SECTION 1.026. Section 2001.201, Occupations Code, is amended to read as follows:

Sec. 2001.201. MANUFACTURER'S LICENSE REQUIRED. A manufacturer may not sell or supply or offer to sell or supply to a person in this state or for use in this state bingo cards, boards, sheets, pads, or other supplies, or equipment designed to be used in playing bingo, or engage in any intrastate activity involving those items, unless the manufacturer holds a manufacturer's license under this subchapter.

SECTION 1.027. Section 2001.203, Occupations Code, is amended to read as follows:

Sec. 2001.203. MANUFACTURER'S LICENSE APPLICATION. (a) An applicant for a manufacturer's license must file with the department [commission] an application on a form prescribed by the department [commission].

(b) The application must include:

(1) the name and address of the applicant and the name and address of each of its locations where bingo supplies or equipment are manufactured;

(2) a full description of each type of bingo supply or equipment that the applicant intends to manufacture or market in this state and the brand name, if any, under which each item will be sold;

(3) if the applicant:

(A) is not a corporation, the name and home address of each owner; or

(B) is a corporation, the name and home address of each officer and director and each person owning more than 10 percent of a class of stock in the corporation;

(4) if the applicant is a foreign corporation or other foreign legal entity, the name, business name and address, and address of its registered agent for service in this state;

(5) the name and address of each manufacturer, supplier, and distributor in which the applicant has a financial interest and the details of that financial interest, including any indebtedness between the applicant and the manufacturer, supplier, or distributor of $5,000 or more;

(6) information regarding whether the applicant or a person required to be named in the application has been convicted in this state or another state of criminal fraud or a gambling or gambling-related offense;

(7) information regarding whether the applicant or a person required to be named in the application is an owner, officer, director, shareholder, agent, or employee of a licensed commercial lessor or conducts, promotes, administers, or assists in conducting, promoting, or administering bingo for which a license is required by this chapter;

(8) information regarding whether the applicant or a person required to be named in the application is a public officer or public employee in this state;

(9) the name of each state in which the applicant is or has been licensed to manufacture, distribute, or supply bingo equipment or supplies, each license number, the period of time licensed under each license, and whether a license has been revoked, suspended, withdrawn, canceled, or surrendered and, if so, the reasons for the action taken;

(10) information regarding whether the applicant or a person required to be named in the application is or has been a professional gambler or gambling promoter;

(11) the names and addresses of each manufacturer, supplier, or distributor of bingo equipment or supplies in which the applicant or a person required to be named in the application is an owner, officer, shareholder, director, agent, or employee; and

(12) any other information the department [commission] requests.

SECTION 1.028. Section 2001.204, Occupations Code, is amended to read as follows:

Sec. 2001.204. MANUFACTURER'S LICENSE BOND. (a) An applicant for a manufacturer's license must give the department [commission] a cash bond or a bond in the amount of $10,000 issued by a surety company chartered or authorized to do business in this state.

(b) The bond must provide for forfeiture to the department [state] on the manufacturer's failure to comply with this chapter or a commission rule or on suspension or revocation of the manufacturer's license.

SECTION 1.029. Section 2001.205(b), Occupations Code, is amended to read as follows:

(b) In addition to the annual license fee, the department [commission] may require an additional fee in an amount necessary to defray the cost of a background investigation, including the inspection of manufacturing plants and locations. The commission by rule may establish the conditions and procedure for payment of the additional fee.

SECTION 1.030. Section 2001.208, Occupations Code, is amended to read as follows:

Sec. 2001.208. DISTRIBUTOR'S LICENSE APPLICATION. (a) An applicant for a distributor's license must file with the department [commission] an executed verified application on a form prescribed by the department [commission].

(b) The application must include:

(1) the full name and address of the applicant;

(2) the name and address of each location operated by the distributor from which bingo supplies or equipment are distributed or at which bingo supplies or equipment are stored;

(3) if a noncorporate distributor, the name and home address of each owner;

(4) if a corporate distributor, the name and home address of each officer or director and of each person owning more than 10 percent of a class of stock in the corporation;

(5) if a foreign corporation or other foreign legal entity, the name, business name and address, and address of its registered agent for service in this state;

(6) a full description of the type of bingo supply or equipment that the applicant intends to store or distribute in this state and the name of the manufacturer of each item and the brand name, if any, under which the item will be sold or marketed;

(7) the name and address of a manufacturer, supplier, or distributor in which the applicant has a financial interest and the details of that financial interest, including an indebtedness between the applicant and the manufacturer, supplier, or distributor of $5,000 or more;

(8) information regarding whether the applicant or a person required to be named in the application has been convicted in this state or another state of criminal fraud or a gambling or gambling-related offense;

(9) information regarding whether the applicant or a person required to be named in the application is an owner, officer, director, shareholder, agent, or employee of a licensed commercial lessor or conducts, promotes, administers, or assists in conducting, promoting, or administering bingo for which a license is required under this chapter;

(10) information regarding whether the applicant or a person required to be named in the application is a public officer or public employee in this state;

(11) the name of each state in which the applicant is or has been licensed to manufacture, distribute, or supply bingo equipment or supplies, each license number, the period of time licensed under each license, and whether a license was revoked, suspended, withdrawn, canceled, or surrendered and, if so, the reasons for the action taken;

(12) information regarding whether the applicant or a person required to be named in the application is or has been a professional gambler or gambling promoter;

(13) the name and address of each manufacturer, supplier, or distributor of bingo equipment or supplies in which the applicant or a person required to be named in the application is an owner, officer, shareholder, director, agent, or employee; and

(14) any other information the department [commission] requests.

SECTION 1.031. Section 2001.209(b), Occupations Code, is amended to read as follows:

(b) In addition to the annual license fee, the department [commission] may require an additional fee in an amount necessary to defray the cost of a background investigation of the applicant, including the inspection of storage, distribution, or operating locations. The commission by rule may establish the conditions and procedure for payment of the additional fee.

SECTION 1.032. Section 2001.211(a), Occupations Code, is amended to read as follows:

(a) An applicant for a manufacturer's or distributor's license shall, during pendency of the application, notify the department [commission] immediately of any change relating to a fact stated in the application.

SECTION 1.033. Section 2001.212, Occupations Code, is amended to read as follows:

Sec. 2001.212. DENIAL OF LICENSE. The executive director or commission may deny an application for or renewal of a license for a cause that would permit or require the suspension or revocation of the license.

SECTION 1.034. Section 2001.214(a), Occupations Code, is amended to read as follows:

(a) A [Except as provided by Subsection (b), a] manufacturer's or distributor's license is effective for one year unless revoked or suspended by the department [commission].

SECTION 1.035. Section 2001.216, Occupations Code, is amended to read as follows:

Sec. 2001.216. EXAMINATION OF RECORDS. (a) The department [commission] may examine the books and records of the holder of or an applicant for a manufacturer's or distributor's license.

(b) The department [commission] may not disclose information obtained during the examination except as necessary to carry out this chapter.

SECTION 1.036. Section 2001.217, Occupations Code, is amended to read as follows:

Sec. 2001.217. OFFENSE. (a) A person who does not hold a manufacturer's or distributor's license commits an offense if the person sells, offers to sell, or attempts to induce the sale of bingo equipment or supplies to a licensed authorized organization.

(b) A first offense under this section is a state jail felony. A subsequent offense under this section is a felony of the third degree.

SECTION 1.037. Sections 2001.218(b) and (c), Occupations Code, are amended to read as follows:

(b) If a payment is not made when due, the seller shall immediately notify the department [commission]. The department [commission] shall notify all manufacturers and distributors licensed in this state of the default.

(c) In the event of a default, a person may not sell or transfer bingo equipment or supplies to the purchaser in default on terms other than immediate payment on delivery until otherwise authorized by the department [commission].

SECTION 1.038. The heading to Subchapter G, Chapter 2001, Occupations Code, is amended to read as follows:

SUBCHAPTER G. GENERAL PROVISIONS RELATING TO

DEPARTMENT [COMMISSION] LICENSES

SECTION 1.039. Section 2001.301, Occupations Code, is amended to read as follows:

Sec. 2001.301. LICENSE INVESTIGATION. Promptly after the filing of the application for a license under this chapter, the department [commission] shall investigate the qualifications of each applicant and the merits of the application.

SECTION 1.040. Section 2001.302, Occupations Code, is amended to read as follows:

Sec. 2001.302. PROVISION OF SUPPLEMENTAL INFORMATION. (a) In addition to any required application form, a license applicant or license holder shall submit any supplemental information requested by the department [commission].

(b) The executive director or commission may deny or refuse to renew a license application or revoke a license based on a failure to submit requested supplemental information when required.

SECTION 1.041. Section 2001.3025, Occupations Code, is amended to read as follows:

Sec. 2001.3025. ACCESS TO CRIMINAL HISTORY RECORD INFORMATION. The department [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.

SECTION 1.042. Sections 2001.306(a), (a-1), and (d), Occupations Code, are amended to read as follows:

(a) A license issued under this chapter may be amended on application to the department [commission] and on payment of a fee in the amount required by the department [commission] if the subject matter of the proposed amendment could properly have been included in the original license.

(a-1) The commission by rule shall establish an amendment fee schedule. The amount of a fee charged by the department [commission] may vary based on the complexity of the proposed license amendment.

(d) The holder of a license to conduct bingo shall notify the department [commission] before changing the time or date of a game. The license holder may provide notice to the department [commission] regarding the change by use of telephone or other means acceptable to the department [facsimile].

SECTION 1.043. Section 2001.307, Occupations Code, is amended to read as follows:

Sec. 2001.307. MAXIMUM LICENSE TERM. A [Except as otherwise provided by this chapter, a] license issued under this chapter may not be effective for more than one year.

SECTION 1.044. Section 2001.311, Occupations Code, is amended to read as follows:

Sec. 2001.311. RIGHTS NOT VESTED. The issuance of a license [or temporary authorization] by the department [commission] does not grant a vested right in the license[, the temporary authorization,] or the privileges conferred.

SECTION 1.045. Sections 2001.315(a) and (b), Occupations Code, are amended to read as follows:

(a) A person who fails to renew the person's license under this chapter before the date the license expires may renew the license after the expiration date by:

(1) filing a license renewal application with the department [commission] not later than the 14th day after the date the license expires, paying the applicable annual license fee, and paying a late license renewal fee equal to 10 percent of the annual license fee; or

(2) filing a license renewal application with the department [commission] not later than the 60th day after the date the license expires, paying the applicable annual license fee, and paying a late license renewal fee equal to 10 percent of the annual license fee for each 14-day period occurring after the date the license expires and before the date the renewal application is filed with the department [commission].

(b) A person who files a renewal application with the department [commission] under Subsection (a) may continue to perform the bingo activities authorized under the license as if the license has not expired until the license is renewed or renewal of the license is denied.

SECTION 1.046. Section 2001.316, Occupations Code, is amended to read as follows:

Sec. 2001.316. DELIVERY OF DEPARTMENT [COMMISSION] NOTICE. If notice under this chapter is required to be given to an authorized organization, the department [commission] shall send the notice to the bingo chairperson of the authorized organization and to the appropriate commercial lessor, if applicable.

SECTION 1.047. The heading to Section 2001.353, Occupations Code, is amended to read as follows:

Sec. 2001.353. DISCIPLINE OF LICENSE [AND REGISTRATION] HOLDERS.

SECTION 1.048. Sections 2001.353(a), (b), and (c), Occupations Code, are amended to read as follows:

(a) After a hearing, the executive director or commission may suspend, revoke, or refuse to renew a license [or registration] issued under this chapter for:

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

(2) a reason that would allow or require the executive director or commission to refuse to issue or renew a license [or registration] of the same class.

(b) The executive director or commission may place on probation a person whose license [or registration] is suspended. If a license [or registration] suspension is probated, the executive director or commission may require the person:

(1) to report regularly to the department [commission] on the matters that are the basis of the probation;

(2) to limit the person's activities under the license [or registration] in the manner prescribed by the executive director or commission; or

(3) to take any other reasonable action prescribed by the executive director or commission to address the matters that are the basis of the probation.

(c) If the person fails to comply with the conditions of probation, the executive director or commission may suspend or revoke the person's license [or registration].

SECTION 1.049. Section 2001.403(b), Occupations Code, is amended to read as follows:

(b) This section does not apply if more than one premises lawfully exists under a common roof or over a common foundation under a license application filed with the Texas Lottery Commission [commission] on or before May 23, 1997. The department [commission] shall renew a license at the premises that is otherwise in compliance with this chapter.

SECTION 1.050. Section 2001.407(f), Occupations Code, is amended to read as follows:

(f) With the prior written consent of the department [commission], a licensed authorized organization may make an occasional sale of bingo cards or of a used bingo flash board or blower to another licensed authorized organization.

SECTION 1.051. Section 2001.409, Occupations Code, is amended by adding Subsection (b) to read as follows:

(b) Nothing in this chapter shall be construed as authorizing any game using a video lottery machine or machines. In this section "video lottery machine" or "machine" means any electronic video game machine that, on insertion of cash, is available to play or simulate the play of a video game, including but not limited to video poker, keno, and blackjack, utilizing a video display and microprocessor in which the player may receive free games or credits that can be redeemed for cash, coins, or tokens or that directly dispenses cash, coins, or tokens.

SECTION 1.052. Section 2001.411(e), Occupations Code, is amended to read as follows:

(e) The department [commission] may not prohibit an operator responsible for conducting, promoting, or administering bingo from acting as a bingo caller for a licensed authorized organization during a bingo occasion. This subsection does not relieve the operator of the duty to be available to a department [commission] employee or bingo player if required by this chapter.

SECTION 1.053. Section 2001.414, Occupations Code, is amended to read as follows:

Sec. 2001.414. BINGO RECORDS. (a) The commission by rule may provide for different recordkeeping procedures for licensed authorized organizations by class based on the amount of the organization's total [gross] receipts derived from the conduct of bingo [of the organization].

(b) An organization conducting bingo must record on a cash register all transactions for which it receives total [bingo gross] receipts derived from the conduct of bingo in conformance with commission rules relating to transaction recording specifications.

SECTION 1.054. Section 2001.415, Occupations Code, is amended to read as follows:

Sec. 2001.415. ADVERTISEMENTS. (a) A person other than a licensed authorized organization or a[,] licensed commercial lessor[, or the commission] may not advertise bingo.

(b) A licensed authorized organization or[,] licensed commercial lessor[, or the commission] may include in an advertisement or promotion the amount of a prize or series of prizes offered at a bingo occasion.

SECTION 1.055. Section 2001.420, Occupations Code, is amended by adding Subsections (b-1), (d), (e), (f), and (g) to read as follows:

(b-1) For purposes of Subsections (a) and (b), the value of a merchandise bingo prize is the amount paid for the merchandise by the licensed authorized organization. A merchandise bingo prize includes bingo cards, bingo pull-tabs, the use of a card-minder, bingo daubers, and other bingo merchandise awarded as a prize for winning a bingo game.

(d) The commission may adopt for a bingo market region in this state rules that affect the percentage of total receipts derived from the conduct of bingo that is paid by licensed authorized organizations within that market region as prizes for bingo games if the commission determines that the percentages of the total receipts paid for the prizes by the organizations within that market region unreasonably reduce the amount of the organizations' net proceeds in that market region.

(e) A rule adopted under Subsection (d):

(1) may establish a minimum price charged for a bingo card or pull-tab or for use of a card-minding device;

(2) must allow flexibility in compliance with the rule by the licensed authorized organizations within the affected bingo market region to allow the organizations to achieve substantial compliance without undue burden on the organizations or their customers; and

(3) must apply equally to each licensed authorized organization operating at a bingo premises within the bingo market region.

(f) An individual bingo market region set by the commission must include all the territory in a single county and may include part of the territory in an adjacent county as necessary for the commission to define a bingo market region under Subsection (d).

(g) The commission shall annually review the impact of a rule adopted under Subsection (d) on the conduct of bingo within the bingo market region and may amend or repeal the rule if the rule does not serve the purposes of Subsection (d).

SECTION 1.056. Sections 2001.437(a), (b), and (d), Occupations Code, are amended to read as follows:

(a) If the unit accounting agreement of a unit states that a unit manager is responsible for compliance with commission rules and this chapter, the unit manager is responsible for:

(1) the filing of one quarterly report for the unit on a form prescribed by the executive director [commission]; and

(2) the payment of taxes and fees and the maintenance of the bingo inventory and financial records of the unit.

(b) A unit with a unit manager shall notify the department [commission] of the name of the unit manager and immediately notify the department [commission] of any change of unit manager.

(d) An applicant for a unit manager license must file with the department [commission] a written application on a form prescribed by the executive director [commission] that includes:

(1) the name and address of the applicant;

(2) information regarding whether the applicant, or any officer, director, or employee of the applicant, has been convicted of criminal fraud or a gambling or gambling-related offense; and

(3) any other information required by commission rule.

SECTION 1.057. Sections 2001.438(b) and (d), Occupations Code, are amended to read as follows:

(b) The unit shall designate with the department [commission] an agent who will be responsible for providing the department [commission] access to all inventory and financial records of the unit on request of the department [commission].

(d) The unit shall immediately notify the department [commission] of any change in the agent designated under Subsection (b).

SECTION 1.058. Section 2001.439(c), Occupations Code, is amended to read as follows:

(c) The department [commission] may prohibit a person who serves as a designated agent that is listed on a license under this chapter, including having been approved by the department [commission] to work in the bingo operations of a licensed authorized organization or as an operator, from holding or being listed on any license or from being approved to work in the bingo operations of any licensed authorized organization or to serve as an operator if the person has failed to comply with the duties required of the person as a unit manager or designated agent.

SECTION 1.059. Sections 2001.451(b), (c), (d), (e), (g), (i), (j), and (k), Occupations Code, are amended to read as follows:

(b) Except as provided by Section 2001.502(a), a [A] licensed authorized organization shall deposit in the bingo account all funds derived from the conduct of bingo, less the amount awarded as cash prizes under Sections 2001.420(a) and (b). A [Except as provided by Subsection (b-1), a] deposit must be made not later than the second business day after the day of the bingo occasion on which the receipts were obtained.

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

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

(2) the organization notifies the department [commission] of the transfer not later than the 14th day after the date of the transfer.

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

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

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

[(1)] result in net proceeds in the amounts provided by Section 2001.460 over the calendar year in which the license is in effect [the organization's license period; or

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

(i) Prize taxes [fees] held in escrow for remittance as provided by this chapter [to the commission] are not included in the calculation of operating capital under Subsection (h).

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

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

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

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

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

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

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

SECTION 1.060. Section 2001.457(b), Occupations Code, is amended to read as follows:

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

SECTION 1.061. Subchapter J, Chapter 2001, Occupations Code, is amended by adding Section 2001.460 to read as follows:

Sec. 2001.460. REQUIRED MINIMUM NET PROCEEDS. (a) If the combined gross gaming revenue of the licensed authorized organizations located at a single bingo premises exceeds $500,000 in a calendar year, the combined net proceeds of those organizations for that calendar year may not be less than 10 percent of the combined gross gaming revenue of those organizations.

(a-1) Notwithstanding Subsection (a), if the combined gross gaming revenue of the licensed authorized organizations located at a single bingo premises exceeds $500,000 in a calendar year, the combined net proceeds of those organizations may not be:

(1) in 2016, less than six percent of the combined gross gaming revenue of those organizations; and

(2) in 2017, less than eight percent of the combined gross gaming revenue of those organizations.

(b) If the combined gross gaming revenue of the licensed authorized organizations located at a single bingo premises is equal to $500,000 or less in a calendar year, the combined net proceeds of those organizations for that calendar year may not be less than five percent of the combined gross gaming revenue of those organizations.

(b-1) Notwithstanding Subsection (b) and subject to Subsection (c), if the combined gross gaming revenue of the licensed authorized organizations located at a single bingo premises is equal to $500,000 or less in a calendar year, the combined net proceeds of those organizations for that calendar year may not be:

(1) in 2016, less than three percent of the combined gross gaming revenue of those organizations; and

(2) in 2017, less than four percent of the combined gross gaming revenue of those organizations.

(c) A licensed authorized organization located at a bingo premises described by Subsection (b) that conducts not more than two bingo occasions during any week during a calendar year is exempt from the requirements of Subsection (b). The commission by rule may impose minimum net proceeds requirements in amounts less than the amounts required under Subsection (b) on the organizations located at a premises to which this subsection applies.

(c-1) This subsection applies only to a bingo premises that on January 1, 2015, was operated under an active lessor license and was located in a county any part of which is within 75 miles of a casino that has electronic gaming. Notwithstanding any other subsection of this section, the minimum net proceeds requirement for a single bingo premises described by this subsection during a calendar year is:

(1) for a single bingo premises at which the licensed authorized organizations have a combined gross gaming revenue that exceeds $500,000, the lesser of:

(A) the amount determined using the percentage required by this section; or

(B) $12,000 multiplied by the number of licensed authorized organizations conducting bingo at that premises; and

(2) for a single bingo premises at which the licensed authorized organizations have a combined gross gaming revenue equal to $500,000 or less, the lesser of:

(A) the amount determined using the percentage required by this section; or

(B) $6,000 multiplied by the number of licensed authorized organizations conducting bingo at that premises.

(c-2) This subsection and Subsections (a-1), (b-1), and (c-1) expire December 31, 2019.

(d) The department shall waive or reduce the minimum net proceeds required by this section if:

(1) bingo has been conducted at the bingo premises for less than 12 months;

(2) circumstances beyond the control of the licensed authorized organizations operating at the bingo premises, including force majeure, prevented the organizations from satisfying the minimum net proceeds percentage;

(3) the licensed authorized organizations present a business plan that the department determines reasonably establishes procedures to satisfy the minimum net proceeds percentage in the next calendar year; or

(4) based on an annual department survey of one or more bingo markets, the department determines that legal or illegal gaming in the area of the bingo premises affected the ability of the organizations conducting bingo at that bingo premises to satisfy the minimum net proceeds percentage.

(e) If the department waives or reduces the minimum net proceeds percentage required by this section because of illegal gaming, the department shall notify the county commissioners court of the county in which each affected bingo premises is located and the governing body of any municipality in which the premises is located of the department's action and the reasons for that action.

SECTION 1.062. The heading to Subchapter K, Chapter 2001, Occupations Code, is amended to read as follows:

SUBCHAPTER K. TAXES [AND PRIZE FEES]

SECTION 1.063. Section 2001.502, Occupations Code, is amended to read as follows:

Sec. 2001.502. PRIZE TAX [FEE]. (a) A licensed authorized organization shall[:

[(1)] collect from a person who wins a cash bingo prize of more than $5 a tax [fee] in the amount of five percent of the amount [or value] of the prize. Each quarter, the licensed authorized organization shall:

(1) if a county or municipality in which the bingo game is conducted voted to impose the prize tax before November 1, 2015: [; and]

(A) [(2)] remit a tax [to the commission a fee] in the amount of 50 [five] percent of the amount collected as the prize tax under this subsection to:

(i) the county in which the bingo game is conducted, if the county voted to impose the tax by that date and the location at which bingo is conducted is not within the limits of a municipality;

(ii) the municipality in which the bingo game is conducted, if the municipality voted to impose the tax by that date and the county in which the bingo game is conducted did not vote to impose the tax by that date; or

(iii) in equal shares, the county and the municipality in which the bingo game is conducted, if the county and municipality each voted to impose the tax before that date; and

(B) deposit the remainder of the taxes collected under this subsection in the general charitable fund of the organization; or

(2) if a county or municipality is not entitled to a percentage of the amount of taxes collected under this subsection, deposit the taxes collected in the general charitable fund of the organization [or value of all bingo prizes awarded].

(b) The governing body of a county or municipality that voted to impose a prize tax under Subsection (a) may at any time vote to discontinue the imposition of the tax.

(c) The tax required under Subsection (a) does not apply to a merchandise prize, including bingo cards, bingo pull-tabs, use of a card-minder, bingo daubers, and other bingo merchandise awarded as a prize for winning a bingo game.

SECTION 1.064. The heading to Section 2001.504, Occupations Code, is amended to read as follows:

Sec. 2001.504. PAYMENT AND REPORTING OF TAX [OR FEE].

SECTION 1.065. Section 2001.504(a), Occupations Code, is amended to read as follows:

(a) A tax [or fee authorized or] imposed under this subchapter is due and is payable by the license holder or a person conducting bingo without a license [to the commission] quarterly on or before the 25th day of the month succeeding each calendar quarter.

SECTION 1.066. Section 2001.551(f), Occupations Code, is amended to read as follows:

(f) A game exempted under Subsection (b)(4) is subject to the following restrictions:

(1) a person licensed or required to be licensed under this chapter or having an interest in a license under this chapter may not be involved, directly or indirectly, in bingo, except that a licensed manufacturer or licensed distributor may sell or otherwise furnish bingo equipment or supplies for use in a game;

(2) a person conducting bingo may purchase or otherwise obtain bingo equipment or supplies through a newspaper, a radio or television station, or an advertising agency and, unless otherwise authorized by the department [commission], only from a licensed manufacturer or licensed distributor;

(3) a licensed manufacturer or licensed distributor may sell or otherwise furnish bingo equipment or supplies for use in a game only to or through a newspaper or a radio or television station or through an advertising agency acting on behalf of a person authorized to conduct the game; and

(4) the commission by rule may require a person conducting or involved in conducting the game to:

(A) notify the department [commission] of:

(i) the persons involved in conducting the game;

(ii) the manner in which the game is to be conducted; and

(iii) any other information required by the department [commission]; and

(B) keep records of all transactions connected with the game available for department [commission] inspection.

SECTION 1.067. Section 2001.554(a), Occupations Code, is amended to read as follows:

(a) A person commits an offense and the person's license is subject to revocation under this chapter if the person:

(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 conducting of bingo, the leasing of premises to be used for bingo, or the manufacture, sale, or distribution of bingo supplies or equipment;

(3) falsifies or makes a false entry in a book or record if the entry relates to bingo, the disposition of bingo proceeds, the application of rent received by a licensed authorized organization, or the gross gaming revenue [receipts] from the manufacture, sale, or distribution of bingo supplies or equipment;

(4) diverts or pays a portion of the net proceeds of bingo 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.

SECTION 1.068. Section 2001.555(b), Occupations Code, is amended to read as follows:

(b) The immunity granted under this section does not extend to a person:

(1) [knowingly] conducting or participating in bingo under a license obtained by a false pretense, false statement, or material omission made in an application for license or otherwise; or

(2) [knowingly] permitting the conduct of bingo on premises owned or leased by the person under a license known to the person to have been obtained by a false pretense or statement.

SECTION 1.069. Section 2001.557, Occupations Code, is amended to read as follows:

Sec. 2001.557. INSPECTION OF PREMISES. (a) The department [commission], its officers or agents, or a state, municipal, or county peace officer may enter and inspect the contents of premises where:

(1) bingo is being conducted or intended to be conducted; or

(2) equipment used or intended for use in bingo is found.

(b) The commission by rule shall develop and implement policies and procedures to:

(1) prioritize the inspection of premises where bingo is being conducted or is intended to be conducted in accordance with the risk factors the department [commission] considers important, including:

(A) the amount of money derived from the conduct of bingo at the premises;

(B) the compliance history of the premises; and

(C) the amount of time that has elapsed since the date of the immediately preceding department [commission] inspection of the premises; and

(2) inspect premises where bingo is being conducted or is intended to be conducted in accordance with the priorities established under Subdivision (1).

SECTION 1.070. Sections 2001.558(a) and (d), Occupations Code, are amended to read as follows:

(a) If the department [commission], the appropriate governing body, or the attorney general has reason to believe that this chapter has been or is about to be violated, the executive director [commission], the governing body, or the attorney general may petition a court for injunctive relief 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 bingo to be forfeited to the appropriate governing body as a civil penalty.

SECTION 1.071. Section 2001.559, Occupations Code, is amended to read as follows:

Sec. 2001.559. REMEDIES NOT EXCLUSIVE. The executive director or commission may suspend or revoke a license under Section 2001.353 [2001.355], impose an administrative penalty under Subchapter M, or both, depending on the severity of the violation.

SECTION 1.072. Sections 2001.560(c), (c-1), (c-2), (d), and (e), Occupations Code, are amended to read as follows:

(c) The department [commission] or a person authorized in writing by the department [commission] may examine the books, papers, records, equipment, and place of business of a license holder and may investigate the character of the license holder's business to verify the accuracy of a return, statement, or report made, or, if no return is made by the license holder, to ascertain and determine the amount required to be paid.

(c-1) The commission by rule shall develop a policy for auditing license holders. The department [bingo division] shall use audit risk analysis procedures established by the department [commission] to:

(1) annually identify which license holders are most at risk of violating this chapter or rules adopted under this chapter; and

(2) develop a plan for auditing the identified license holders that includes:

(A) a schedule for the audits of the identified license holders;

(B) procedures to annually update the plan based on successive risk analyses; and

(C) a completion date for each audit that is not later than the fifth anniversary of the date the license holder was identified as a candidate for audit.

(c-2) The department [bingo division] shall provide to the commission a copy of the auditing plan developed under Subsection (c-1).

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

(e) If the department [commission] determines that a person is not complying with this chapter, the department [commission] shall notify the attorney general and the governing body of the appropriate political subdivision.

SECTION 1.073. Section 2001.601, Occupations Code, is amended to read as follows:

Sec. 2001.601. IMPOSITION OF PENALTY. The executive director or commission may impose an administrative penalty against a person who violates this chapter or a rule or order adopted by the executive director or commission under this chapter.

SECTION 1.074. Section 2001.654(a), Occupations Code, is amended to read as follows:

(a) If the officer responsible for certifying a petition determines that a petition is valid, the governing body shall:

(1) order that an election be held in the appropriate political subdivision on a date not later than the 60th day after the date of the officer's certification; and

(2) notify the department [commission] by certified mail, return receipt requested, that an election has been ordered.

SECTION 1.075. Section 2001.656(d), Occupations Code, is amended to read as follows:

(d) The governing body of a political subdivision in which a bingo election has been held shall not later than the 14th day after the date of the election give written notification to the department [commission] of the results of the election. If as a result of the election bingo is legalized in the political subdivision, the governing body shall furnish the department [commission] with a map prepared by the governing body indicating the boundaries of the political subdivision in which bingo may be conducted.

SECTION 1.076. Section 404.073(c), Government Code, is amended to read as follows:

(c) Interest that has been and that will be accrued or earned from deposits made under a law to which this subsection applies is state funds not subject to allocation or distribution to taxing units, cities, or transportation authorities under that law. This subsection applies to:

(1) Section 205.02, Alcoholic Beverage Code;

(2) [Section 2001.507, Occupations Code;

[(3)] Section 403.105(d) of this code;

(3) [(4)] Sections 321.501 and 321.504, Tax Code;

(4) [(5)] Sections 322.301 and 322.304, Tax Code; and

(5) [(6)] Sections 323.501 and 323.504, Tax Code.

SECTION 1.077. Section 467.002, Government Code, is amended to read as follows:

Sec. 467.002. APPLICATION OF SUNSET ACT. The commission is subject to Chapter 325 (Texas Sunset Act). Unless continued in existence as provided by that chapter, the commission is abolished and this chapter and [,] Chapter 466 [of this code, and Chapter 2001, Occupations Code,] expire September 1, 2025.

SECTION 1.078. Sections 467.024(a) and (c), Government Code, are amended to read as follows:

(a) An individual is not eligible to be an appointed member of the commission if the individual:

(1) is registered, certified, or licensed by a regulatory agency in the field of [bingo or] lottery;

(2) owns or controls, directly or indirectly, more than a 10 percent interest in a business entity or other organization regulated by the commission or receiving funds from the commission;

(3) is employed by or participates in the management of a business entity or other organization regulated by or receiving funds from the commission;

(4) uses or receives a substantial amount of tangible goods, services, or funds from the commission, other than compensation or reimbursement authorized by law for commission membership, attendance, or expenses;

(5) is an officer, employee, or paid consultant of a Texas trade association in the field of [bingo or] lottery;

(6) is required to register as a lobbyist under Chapter 305 because of the person's activities for compensation on behalf of a profession related to the operation of the commission;

(7) is married to an individual described by Subdivisions (2)-(6);

(8) has been convicted of a felony or of any crime involving moral turpitude; or

(9) is not a citizen of the United States.

(c) A person may not be a commission employee employed in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.), if:

(1) the person is an officer, employee, or paid consultant of a Texas trade association in the field of [bingo or] lottery; or

(2) the person's spouse is an officer, manager, or paid consultant of a Texas trade association in the field of [bingo or] lottery.

SECTION 1.079. Section 467.025(a), Government Code, is amended to read as follows:

(a) A commission member may not:

(1) accept any employment or remuneration from[:

[(A)] a person that has a significant financial interest in the lottery[; or

[(B) a bingo commercial lessor, bingo distributor, or bingo manufacturer];

(2) play any lottery [or bingo] game conducted in this state;

(3) accept or be entitled to accept any part of the winnings to be paid from a lottery [or bingo] game conducted in this state;

(4) use the member's official authority to affect the result of an election or nomination for public office; or

(5) directly or indirectly coerce, attempt to coerce, command, or advise a person to pay, lend, or contribute anything of value to another person for political purposes.

SECTION 1.080. Section 467.033, Government Code, is amended to read as follows:

Sec. 467.033. DIRECTOR OF LOTTERY OPERATIONS [DIVISION DIRECTORS]. The executive director shall employ a director of lottery operations who [to oversee each division. A division director] serves at the will of the executive director and is specifically exempted from Chapter 654.

SECTION 1.081. Section 467.035(a), Government Code, is amended to read as follows:

(a) The commission may not employ or continue to employ a person who owns a financial interest in[:

[(1) a bingo commercial lessor, bingo distributor, or bingo manufacturer; or

[(2)] a lottery sales agency or a lottery operator.

SECTION 1.082. Sections 467.101(a) and (c), Government Code, are amended to read as follows:

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

[(1) Chapter 2001, Occupations Code; and

[(2)] Chapter 466 [of this code].

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

[(1) Chapter 2001, Occupations Code; and

[(2)] Chapter 466 [of this code].

SECTION 1.083. Section 467.111(f), Government Code, is amended to read as follows:

(f) The commission shall prepare a report on the trends and issues identified under Subsection (e) and make the report available to the public. The commission shall address the identified trends and issues, including trends and issues related to the regulation of lottery operations under Chapter 466 [and of bingo under Chapter 2001, Occupations Code].

SECTION 1.084. (a) Sections 467.021(c) and 467.031, Government Code, are repealed.

(b) The following provisions of the Occupations Code are repealed:

(1) Section 2001.051(c);

(2) Section 2001.052;

(3) Section 2001.0541;

(4) Section 2001.058;

(5) Section 2001.060(b);

(6) Section 2001.101(b);

(7) Sections 2001.103(e) and (h);

(8) Section 2001.157;

(9) Section 2001.158(d);

(10) Section 2001.159(c);

(11) Sections 2001.211(b), (c), and (d);

(12) Section 2001.213;

(13) Section 2001.214(b);

(14) Section 2001.304;

(15) Section 2001.305;

(16) Section 2001.308;

(17) Section 2001.313;

(18) Section 2001.314;

(19) Section 2001.351;

(20) Section 2001.352;

(21) Section 2001.353(d);

(22) Section 2001.354;

(23) Section 2001.355;

(24) Section 2001.356;

(25) Section 2001.357;

(26) Section 2001.358;

(27) Section 2001.436(c);

(28) Section 2001.437(f);

(29) Section 2001.451(b-1);

(30) Section 2001.459(b);

(31) Section 2001.501;

(32) Section 2001.503;

(33) Sections 2001.504(b), (c), (d), and (e);

(34) Section 2001.507;

(35) Section 2001.508;

(36) Section 2001.509;

(37) Section 2001.510;

(38) Section 2001.511;

(39) Section 2001.512;

(40) Section 2001.513;

(41) Section 2001.514;

(42) Section 2001.515;

(43) Section 2001.553;

(44) Section 2001.602;

(45) Section 2001.603;

(46) Section 2001.604;

(47) Section 2001.605;

(48) Section 2001.606;

(49) Section 2001.607;

(50) Section 2001.608;

(51) Section 2001.609;

(52) Section 2001.610; and

(53) Section 2001.611.

(c) Section 10, Chapter 1057 (H.B. 3021), Acts of the 74th Legislature, Regular Session, 1995, is repealed.

SECTION 1.085. (a) On September 1, 2015:

(1) all functions and activities performed by the Texas Lottery Commission relating to the regulation of bingo operations under Chapter 2001, Occupations Code, immediately before that date are transferred to the Texas Department of Licensing and Regulation;

(2) a rule, policy, procedure, decision, or form adopted by the Texas Lottery Commission relating to Chapter 2001, Occupations Code, is a rule, policy, procedure, decision, or form of the Texas Commission of Licensing and Regulation or the Texas Department of Licensing and Regulation, as applicable, and remains in effect until amended or replaced by that commission or department unless the rule, policy, procedure, decision, or form conflicts with the changes in law made by this Act;

(3) unless the context clearly indicates otherwise, a reference to the Texas Lottery Commission in a law or administrative rule that relates to Chapter 2001, Occupations Code, means the Texas Commission of Licensing and Regulation or the Texas Department of Licensing and Regulation, as applicable;

(4) a complaint, investigation, or other proceeding before the Texas Lottery Commission that is related to Chapter 2001, Occupations Code, is transferred without change in status to the Texas Department of Licensing and Regulation, and the Texas Department of Licensing and Regulation assumes, as appropriate and without a change in status, the position of the Texas Lottery Commission in an action or proceeding to which the Texas Lottery Commission is a party;

(5) a license, permit, certification, or registration in effect that was issued by the Texas Lottery Commission under Chapter 2001, Occupations Code, is continued in effect as a license, permit, certification, or registration of the Texas Department of Licensing and Regulation;

(6) all money, contracts, leases, property, and obligations of the Texas Lottery Commission relating to Chapter 2001, Occupations Code, are transferred to the Texas Department of Licensing and Regulation; and

(7) the unexpended and unobligated balance of any money appropriated by the legislature for the Texas Lottery Commission related to Chapter 2001, Occupations Code, is transferred to the Texas Department of Licensing and Regulation.

(b) On September 1, 2015, all full time equivalent employee positions at the Texas Lottery Commission that primarily concern the administration, auditing, accounting, enforcement, or other direct and indirect support of Chapter 2001, Occupations Code, become positions at the Texas Department of Licensing and Regulation. When filling the positions, the Texas Department of Licensing and Regulation shall give first consideration to an applicant who, as of August 31, 2015, was an employee at the Texas Lottery Commission primarily involved in administering or enforcing Chapter 2001, Occupations Code.

(c) Not later than June 1, 2015, the Texas Lottery Commission shall grant the Texas Department of Licensing and Regulation inquiry-only security access to:

(1) all licensing, enforcement, and examination software or computer systems used by the Texas Lottery Commission in administering or enforcing Chapter 2001, Occupations Code; and

(2) the uniform statewide accounting system, the state property accounting system, the uniform statewide payroll system, and the human resources information system for the Texas Lottery Commission.

(d) Before September 1, 2015, the Texas Lottery Commission may agree with the Texas Department of Licensing and Regulation to transfer any property of the Texas Lottery Commission to the Texas Department of Licensing and Regulation to implement the transfers required by this Act.

(e) The Texas Department of Licensing and Regulation and the Texas Lottery Commission shall coordinate implementation of this section. The Texas Lottery Commission shall cooperate with the Texas Department of Licensing and Regulation in transferring all data and records necessary to implement the transfers required by this Act.

(f) Before July 15, 2015, the Texas Lottery Commission and the Texas Department of Licensing and Regulation shall develop and enter into a memorandum of understanding regarding the transfers required by this Act. The memorandum must include a transition plan with a timetable and specific steps and deadlines required to complete the transfer.

(g) Not later than December 1, 2015, a manufacturer of bingo equipment or supplies that submitted to the Texas Lottery Commission a bond as required under Section 2001.204, Occupations Code, before September 1, 2015, that is in effect on the effective date of this Act must amend the bond to name the Texas Department of Licensing and Regulation as the payee for the bond.

(h) A bond given by an applicant for a manufacturer's license as required by Section 2001.204, Occupations Code, as amended by this Act, on or after the effective date of this Act must comply with Subchapter E, Chapter 2001, Occupations Code, as amended by this Act.

SECTION 1.086. (a) The repeal by this Act of Section 2001.553, Occupations Code, does not apply to an offense committed under that section before September 1, 2015. For purposes of this section, an offense is committed before September 1, 2015, if any element of the offense occurs before that date.

(b) An offense committed before September 1, 2015, is covered by that section as it existed when the offense was committed, and the former law is continued in effect for that purpose.

SECTION 1.087. The changes in law made by this Act to Chapter 2001, Occupations Code, apply only to a tax or fee charged on or after September 1, 2015. A tax or fee charged before September 1, 2015, is governed by the law in effect immediately before that date, and the former law is continued in effect for that purpose.

SECTION 1.088. (a) The governing body of a county or municipality that was entitled to receive a portion of the prize fee collected under former Section 2001.503, Occupations Code, as that section existed immediately before the effective date of this Act, may only continue receiving a portion of the prize tax collected under Section 2001.502, Occupations Code, as amended by this Act, after the effective date of this Act if the governing body:

(1) by majority vote of the members of the governing body approves the continued receipt of funds under that section and notifies the Texas Department of Licensing and Regulation of that decision not later than November 1, 2015; and

(2) notifies each licensed authorized organization within the county's or municipality's jurisdiction, as applicable, of the continued quarterly imposition of the tax and the payment information for the tax, including the name to which a check for the tax payment is made and the mailing address to which the tax payment must be sent.

(b) Not later than October 1, 2015, the Texas Department of Licensing and Regulation shall notify the governing body of a county or municipality that was entitled to receive a portion of the prize fee collected under former Section 2001.503, Occupations Code, as that section existed immediately before the effective date of this Act, of the requirements for continued receipt of the prize tax under that section as provided in Subsection (a) of this section.

SECTION 1.089. (a) Not later than March 1, 2016, the Texas Commission of Licensing and Regulation shall adopt the rules necessary to implement the changes in law made by this Act.

(b) Section 2001.451, Occupations Code, as amended by this Act, applies beginning January 1, 2016.

(c) Section 2001.502, Occupations Code, as amended by this Act, applies to prize taxes collected on and after January 1, 2016. Prize taxes collected before that date are governed by the law in effect immediately before the effective date of this Act, and that law continues in effect for that purpose.

ARTICLE 2. REGULATION OF AMUSEMENT REDEMPTION MACHINE GAME ROOMS

ON LICENSED BINGO PREMISES

SECTION 2.01. Subchapter E, Chapter 234, Local Government Code, as added by Chapter 1377 (H.B. 1127), Acts of the 83rd Legislature, Regular Session, 2013, is amended by adding Section 234.1331 to read as follows:

Sec. 234.1331. LICENSED BINGO PREMISES. (a) Except as otherwise provided by this section, regulations adopted by the commissioners court of a county as authorized by Section 234.133 apply to a location at which bingo is conducted under Chapter 2001, Occupations Code, in the same manner as the regulations apply to other premises subject to the regulations.

(b) This subsection applies only to a location at which bingo was conducted on or before January 1, 2015, under a license issued under Chapter 2001, Occupations Code. The regulations authorized by Section 234.133 may not:

(1) restrict or prohibit the location of a game room at a location to which this subsection applies;

(2) require signage or place regulations on the windows or doors of a location to which this subsection applies;

(3) restrict the hours of operation of a game room at a location to which this subsection applies; or

(4) apply to a location to which this subsection applies in a manner that is different from a location that derives more than 50 percent of its sales from the sale of food or beverages, including alcohol and liquor sales.

SECTION 2.02. The following provisions are repealed:

(1) Section 234.132, Local Government Code, as added by Chapter 1377 (H.B. 1127), Acts of the 83rd Legislature, Regular Session, 2013; and

(2) Subchapter E, Chapter 234, Local Government Code, as added by Chapter 1284 (H.B. 2123), Acts of the 83rd Legislature, Regular Session, 2013.

ARTICLE 3. EFFECTIVE DATE

SECTION 3.01. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2015.

(b) Section 1.085 of this Act takes 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, that section takes effect September 1, 2015.