84R11641 YDB-D

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

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of charitable bingo and amusement redemption machine game rooms; requiring an occupational permit; authorizing fees; creating civil and administrative penalties.

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

ARTICLE 1. REGULATION OF CHARITABLE BINGO

SECTION 1.01. Sections 2001.002(13) and (18), Occupations Code, are amended to read as follows:

(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 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.

SECTION 1.02. Section 2001.057(a), Occupations Code, is amended to read as follows:

(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; and

(4) distributors.

SECTION 1.03. 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 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 commission shall determine the total amount of net proceeds in a manner that does not include [reduce gross 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 1.04. Section 2001.104, Occupations Code, is amended by amending Subsections (a) and (d) and adding Subsection (d-1) to read as follows:

(a) The commission 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 administrative costs but not less than the following:

(1) Class A (annual [gross] receipts of $25,000 or less)-$100;

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

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

(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) Except as provided by Subsection (d-1), an [An] applicant shall pay the fees established under Subsection (a) annually.

(d-1) 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 before the beginning of each year of the two-year license.

SECTION 1.05. 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 two years [one year].

SECTION 1.06. Section 2001.313, Occupations Code, is amended by amending Subsections (a) and (b-2) and adding Subsections (j) and (k) to read as follows:

(a) To minimize duplicate criminal history background checks by the commission and the costs incurred by organizations and individuals, the commission shall maintain a registry of individuals on whom the commission has conducted a criminal history background check, or another person authorized under Subsection (j) has conducted a criminal history background check and has submitted the background check to the commission, and who are approved to be involved in the conduct of bingo or to act as a bingo operator.

(b-2) The commission by rule may impose a fee for an initial registration application and renewal application submitted under this section and on an individual for whom the commission conducts a criminal history background check. The commission shall set the fees [fee] in amounts [an amount] sufficient to cover the application processing costs, including the [a] criminal history background check, identification card, and other administrative costs the commission considers appropriate.

(j) A person other than an individual whose name is included on an initial or renewal license application under this chapter may obtain a criminal history background check to submit under this section from:

(1) the Department of Public Safety, including through the use of the department's online criminal history background check service;

(2) a local law enforcement agency, including through the use of the agency's online criminal history background check service; or

(3) the commission.

(k) A criminal history background check for an individual whose name is included on an initial or renewal license application under this chapter must be performed by the commission.

SECTION 1.07. Section 2001.314(b), Occupations Code, is amended to read as follows:

(b) The commission may [shall] provide the identification card and [shall provide] a form to be completed by an individual that allows the individual to prepare the identification card. The commission may collect a reasonable charge to cover the cost of providing the card or form.

SECTION 1.08. 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 1.09. 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 1.10. 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 1.11. Sections 2001.451(d), (e), and (g), Occupations Code, are amended to read as follows:

(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 in the amounts provided by Section 2001.460 over each calendar year in which [12-month period that ends on an anniversary of the date] the two-year license is in effect [was issued].

SECTION 1.12. 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 commission 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 commission determines reasonably establishes procedures to satisfy the minimum net proceeds percentage in the next calendar year; or

(4) legal or illegal gaming in the area of the bingo premises affected the ability of the organizations to satisfy the minimum net proceeds percentage.

(e) If the commission waives or reduces the minimum net proceeds percentage required by this section because of illegal gaming, the commission 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 commission's action and the reasons for that action.

SECTION 1.13. Section 2001.502, Occupations Code, is amended to read as follows:

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

(1) collect from a person who wins a cash bingo prize of more than $5 a fee in the amount of five percent of the amount [or value] of the prize; [and]

(2) remit to the comptroller [commission] a fee in the amount of 2.5 [five] percent of the amount collected under this section for distribution as required by Section 2001.503; and

(3) deposit the remainder of the fees collected under this section in the general charitable fund of the organization [or value of all bingo prizes awarded].

(b) The fee 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 1.14. Section 2001.503, Occupations Code, is amended to read as follows:

Sec. 2001.503. [LOCAL SHARE OF] PRIZE FEE DISTRIBUTION. (a) Except as provided by Subsection (c), a county that imposed a gross receipts tax on the conduct of bingo as of January 1, 1993, is entitled to [50 percent of] the fee remitted to the comptroller [collected] under Section 2001.502(2) [2001.502 on a prize awarded at a game conducted in the county].

(b) Except as provided by Subsection (c), a municipality that imposed a gross receipts tax on the conduct of bingo as of January 1, 1993, is entitled to [50 percent of] the fee remitted to the comptroller [collected] under Section 2001.502(2) [2001.502 on a prize awarded at a game conducted in the municipality].

(c) If a county and municipality are both entitled to [a share of] the fee remitted to the comptroller under [imposed by] Section 2001.502(2) [2001.502]:

(1) the county is entitled to 50 [25] percent of the fee [on a prize awarded at a game conducted in the county]; and

(2) the municipality is entitled to 50 [25] percent of the fee [on a prize awarded at a game conducted in the municipality].

SECTION 1.15. Section 2001.505(a), Occupations Code, is amended to read as follows:

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

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

(2) each item of expense incurred or paid;

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

(4) the net proceeds derived from bingo;

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

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

SECTION 1.16. Section 2001.507, Occupations Code, is amended to read as follows:

Sec. 2001.507. COLLECTION AND DISBURSEMENT OF PRIZE FEE. (a) The comptroller [commission] shall deposit the revenue collected from the fee on prizes imposed by Section 2001.502 to the credit of a special account in the general revenue fund.

(b) The comptroller [commission] shall determine the total amount of revenue deposited in the account from prizes awarded at games in a county or municipality entitled to a fee [share] under Section 2001.503.

(c) The comptroller [commission] shall send quarterly to a county or municipality entitled to [a share of] the fee on prizes the amount required [county's or municipality's share as provided] by Section 2001.503.

(d) [The commission shall transfer any remaining amounts in the account to a nondedicated account in the general revenue fund.

[(e)] The comptroller [commission] shall transmit a jurisdiction's [share of the] fee on prizes to the treasurer or the officer of the jurisdiction performing the functions of the treasurer's office payable to the jurisdiction. The amount transmitted may be used by the jurisdiction for any purpose for which the general funds of the jurisdiction may be used.

(e) [(f)] The comptroller [commission] may retain in a jurisdiction's suspense account a portion of the jurisdiction's [share of the] fee on prizes collected under this chapter. The amount retained in the suspense account may not exceed five percent of the amount remitted to the jurisdiction. The comptroller [commission] may make refunds from the suspense account of a jurisdiction for overpayments made to those accounts and may redeem dishonored checks and drafts deposited to the credit of the jurisdiction's suspense account.

(f) [(g)] If a jurisdiction entitled to a [share of the] fee on prizes prohibits the conduct of bingo under Sections 2001.651-2001.656, the comptroller [commission] may retain in the suspense account of the jurisdiction for one year five percent of the final remittance to that jurisdiction. The amount retained in the suspense account may be used to cover possible overpayment of the jurisdiction's portion of the fee and to redeem dishonored checks and drafts deposited to the credit of the account. One year after the effective date of the prohibition of bingo in the jurisdiction, the comptroller [commission] shall remit the balance in the account to the jurisdiction and close the account.

(g) [(h)] Interest earned on all fees on prizes collected by the comptroller [commission] under this chapter before distribution to a local jurisdiction, including interest earned from the suspense accounts retained under this section, shall be credited to the general revenue fund.

SECTION 1.17. 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 1.18. (a) The following provisions of the Occupations Code are repealed:

(1) Section 2001.060(b);

(2) Section 2001.305;

(3) Section 2001.436(c); and

(4) Section 2001.459(b).

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

SECTION 1.19. (a) Not later than December 1, 2015, the Texas Lottery Commission shall:

(1) adopt the rules necessary to implement the changes in law made by this Act; and

(2) send to the comptroller a report on the prize fees collected by the commission under Section 2001.502, Occupations Code, as that section existed before amendment by this Act, in the two years preceding the effective date of this Act and specify the licensed authorized organizations that have paid the fee in a timely or untimely manner.

(b) A licensed authorized organization that is listed on the report required under Subsection (a)(2) of this section as paying timely is exempt from posting any bond required under Section 151.254, Tax Code.

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

(d) Section 2001.502, Occupations Code, as amended by this Act, applies to prize fees collected on and after the effective date of this Act. Prize fees collected before that date are governed by the law in effect on the date the fees were collected and that law continues in effect for that purpose.

ARTICLE 2. REGULATION OF AMUSEMENT REDEMPTION MACHINE GAME ROOMS

SECTION 2.01. Section 234.131, Local Government Code, as added by Chapter 1284 (H.B. 2123), Acts of the 83rd Legislature, Regular Session, 2013, is amended by adding Subdivisions (1-a), (1-b), (1-c), (5), (6), (7), and (8) to read as follows:

(1-a) "Applicant" means a person, owner, corporation, partnership, or other business entity required to submit a game room application.

(1-b) "Current fire inspection report" means a fire inspection report issued by a fire department not earlier than the 60th day immediately preceding the date an application for issuance or renewal of a game room is filed.

(1-c) "Gambling device" has the meaning assigned by Section 47.01, Penal Code.

(5) "Peace officer" has the meaning assigned by Article 2.12, Code of Criminal Procedure.

(6) "Public building" means a building used by federal, state, or local government that is open to the general public.

(7) "Regulation" means a regulation adopted by a county in this state for the operation of a game room.

(8) "School" means a facility, including all attached playgrounds, dormitories, stadiums, and other appurtenances that are part of the facility, used for the primary purpose of instruction or education, including primary or secondary schools, colleges, and universities, both public and private.

SECTION 2.02. Section 234.134, Local Government Code, as added by Chapter 1284 (H.B. 2123), Acts of the 83rd Legislature, Regular Session, 2013, is amended to read as follows:

Sec. 234.134. [LICENSES OR] PERMITS. (a) A county may require that an owner or operator of a game room obtain a [license or] permit or renew a [license or] permit on a periodic basis to own or operate a game room in the county. An application for a [license or] permit must be made in accordance with regulations adopted by the county.

(b) Regulations adopted under this section may provide for the denial, suspension, or revocation of a [license or] permit.

(c) A district court has jurisdiction of a suit that arises from the denial, suspension, or revocation of a [license or other] permit by a county.

SECTION 2.03. Subchapter E, Chapter 234, Local Government Code, as added by Chapter 1284 (H.B. 2123), Acts of the 83rd Legislature, Regular Session, 2013, is amended by adding Sections 234.1341 and 234.1342 to read as follows:

Sec. 234.1341. PERMIT APPLICATION. (a) An owner or operator of a game room may not operate, use, or maintain any game room in a county that requires an owner or operator to obtain a permit under Section 234.134 unless the owner or operator holds a permit issued under this subchapter.

(b) An applicant shall file a completed application with the county sheriff's office of the county in which the proposed game room will be located. The application shall be filed on the form provided by the office or on an accurate and legible copy of that form. The applicant must apply in person at the office.

(c) The sheriff's office shall post a copy of the application form and the permit fee amount on the county's Internet website. The office shall establish the hours for submission of applications under this section.

(d) The game room administrator of the sheriff's office shall mail notice of receipt of a completed application or notice of deficiencies in an application to the applicant not later than the 10th day after the date the application is received by the office.

(e) Each application must be accompanied by:

(1) an annual inspection report that includes documentation of compliance with any previous correction ordered by the sheriff's office or a fire safety official;

(2) a copy of the certification of occupancy or certification of compliance issued by a building official as appropriate for the proposed game room premises;

(3) a diagram or the game room floor plan prepared by a licensed architect or engineer that includes the designed occupancy load and has been reviewed by the county clerk;

(4) for a game room operating under an assumed name, a copy of the assumed name certificate filed in the county clerk's office that includes the file mark or stamp evidencing its filing;

(5) a nonrefundable application fee in the amount established by the county commissioners court; and

(6) a copy of the applicant's government-issued photo identification.

(f) An applicant's failure to provide the information or documents required by this section or pay the fee required by Section 234.135 or a determination by the sheriff's office that inaccurate, erroneous, or incomplete information has been submitted is grounds for denial or revocation of the application.

(g) If the sheriff's office denies a game room permit, the office shall give the applicant written notice of the basis for denial.

Sec. 234.1342. PERMIT RENEWAL. A permit holder may annually renew the permit not earlier than 60 days before the date a permit expires by filing a completed application for the permit with the game room permit administrator of the sheriff's office and paying the applicable fee. A renewal application is subject to the same requirements as a permit application.

SECTION 2.04. Section 234.135, Local Government Code, as added by Chapter 1284 (H.B. 2123), Acts of the 83rd Legislature, Regular Session, 2013, is amended to read as follows:

Sec. 234.135. FEES; ISSUANCE OF PERMIT; PREMISES REQUIREMENTS. (a) A county may impose a fee not to exceed $1,000 on an applicant for a [license or] permit or for the renewal of the [license or] permit required under this subchapter. The fee must be based on the cost of processing the application and investigating the applicant.

(b) An applicant shall pay the permit fee imposed under this section to the sheriff's office. On completion of the application process, the game room administrator of the sheriff's office shall give the applicant a signed receipt. The receipt constitutes a permit to operate the game room that is valid until the first anniversary of the date the permit is issued.

(c) A person who holds a permit issued under this section must meet and comply with all requirements of law applicable to the game room premises or any activity conducted on the game room premises. The issuance of a permit under this section does not excuse or provide a defense to the permit holder, the permit holder's agents or employees, or any patrons of the game room for a violation of this subchapter or other law.

SECTION 2.05. Section 234.136, Local Government Code, as added by Chapter 1284 (H.B. 2123), Acts of the 83rd Legislature, Regular Session, 2013, is amended to read as follows:

Sec. 234.136. INSPECTION BY LAW ENFORCEMENT OFFICER. (a) A peace officer or county employee may inspect a business in the county to determine the number of amusement redemption machines subject to regulation under this subchapter that are located on the premises of the business. A peace officer is authorized to inspect any business for a violation of this subchapter.

(a-1) This section does not authorize a right of entry otherwise prohibited by law. A peace officer may enter a business under this section with consent, with a warrant, or under exigent circumstances. A game room permit granted under this subchapter gives peace officers implied consent under this section to enter the premises of the game room.

(a-2) A business for which a game room permit has not been issued under this subchapter that holds itself out as a game room, by sign, advertisement, word-of-mouth, offering of memberships, or any other means, is subject to inspection by a peace officer. Refusal to allow a peace officer entry to inspect the premises of the game room may be considered in establishing probable cause for the issuance of a search warrant to inspect for violations of this subchapter.

(b) A peace officer or county employee may inspect any business in which six or more amusement redemption machines are located to determine whether the business is in compliance with this subchapter or regulations adopted under this subchapter or to inspect records required under Section 234.1362.

(c) A person violates this subchapter if the person fails to allow a peace officer or county employee to conduct an inspection of a game room, an amusement redemption machine, or records required under Section 234.1362 or this section.

SECTION 2.06. Subchapter E, Chapter 234, Local Government Code, as added by Chapter 1284 (H.B. 2123), Acts of the 83rd Legislature, Regular Session, 2013, is amended by adding Sections 234.1361, 234.1362, 234.1363, 234.1364, 234.1365, and 234.1366 to read as follows:

Sec. 234.1361. DISPLAY OF GAME ROOM PERMITS. An owner or operator of a game room shall display the valid game room permit issued to the owner or operator under this subchapter on the game room premises. The permit must be displayed in plain sight in a common area accessible to the public without entrance to a controlled area of the business.

Sec. 234.1362. RECORDS REQUIRED. (a) An owner or operator of a game room shall maintain on the premises:

(1) a record for each employee that includes:

(A) the employee's name, address, date of birth, state identification number or social security number, job function, and W-2 or W-4 form;

(B) a copy of the employee's application to work with the game room and a copy of the employee's I-9 filed for employment eligibility verification with the Department of Homeland Security; and

(C) a photograph of the employee;

(2) a daily register that includes the name, date of birth, state identification number or social security number, and job function of each employee present at the establishment that day; and

(3) a copy of the county and state tax record forms required under Chapter 2153, Occupations Code, or other law for each amusement redemption machine on the premises that includes the name of the manufacturer, the serial number, the type of machine, and the serial number of the tax permit for a coin-operated machine and, if applicable, the serial number for the county tax permit, with the year of expiration for any tax permit.

(b) An owner or operator who violates Subsection (a) shall be assessed a civil penalty of not more than $10,000 for each record required under this section that is missing.

(c) The game room shall preserve the daily register required by Subsection (a)(2) for at least 90 days after the date the register was made. An owner or operator who violates this subsection may be assessed an administrative penalty in the amount of $500 for each register required to be preserved that is missing.

Sec. 234.1363. PROHIBITED EMPLOYMENT; CIVIL PENALTY. (a) An owner or operator of a game room may not knowingly employ any person who has been previously convicted of, or entered a plea of nolo contendere or guilty or received deferred adjudication for, an offense involving any conduct involving gambling violations prohibited under Chapter 47, Penal Code.

(b) An owner or operator of a game room shall conduct a criminal background check on each potential employee.

(c) Failure to comply with this section is a violation and punishable by a civil penalty assessed against an owner or operator not to exceed $10,000 per prohibited employee working at the game room and per employee working at the game room without being subjected to a criminal background check.

(d) Each day a violation of this section continues or occurs constitutes a separate violation for purposes of imposing a penalty under Section 234.137.

Sec. 234.1364. AMUSEMENT REDEMPTION MACHINES; PERMITS AND VIOLATIONS. (a) An owner or operator of a game room shall obtain from the county a permit for each amusement redemption machine on the game room premises in accordance with Chapter 2153, Occupations Code.

(b) The owner or operator of a game room shall pay an annual fee in an amount equal to 25 percent of the state's annual fee per machine.

(c) Each amusement redemption machine permit application shall specify on the application the physical location of the amusement redemption machine.

(d) If a permit is not obtained for an amusement redemption machine, the county tax assessor-collector's office shall lock the machine, and it may not be used until the owner purchases a permit for the machine by paying a $100 permit fee and a $5 release fee per machine.

(e) If a county compliance officer is not allowed entrance to a game room during business hours, a civil penalty not to exceed $10,000 for each date of denial shall be assessed on the owner or operator of the game room.

(f) A county may assess a civil penalty under Section 234.137 on the owner or operator of a game room for each machine:

(1) that is not registered with a valid current year video tax stamp decal prominently displayed on the machine; and

(2) used for illegal gambling.

(g) If a law enforcement agency determines through investigation that a game room is operating in violation of Chapter 47, Penal Code, each amusement redemption machine or gambling device in the game room is considered in violation. A civil penalty not to exceed $10,000 per machine or device may be assessed on the owner or operator of the game room.

(h) It is not a defense to prosecution under this section that the owner is not doing business in the owner's name, is not leasing property in the owner's name, or only has an ownership interest in the business.

Sec. 234.1365. GROUNDS FOR DENIAL, REVOCATION, OR SUSPENSION OF PERMIT. (a) Any violation of this subchapter or regulations adopted under this subchapter or failure to meet the requirements of this subchapter and regulations adopted under this subchapter is grounds for denial, revocation, or suspension of a permit to operate a game room. If a game room's permit has been revoked, denied, or suspended, the game room may not be operated during the pendency of any appeal from the revocation, denial, or suspension.

(b) The sheriff shall deny a game room permit on a finding by the sheriff that the applicant:

(1) has been previously convicted of any of the following offenses:

(A) gambling, gambling promotion, keeping a gambling place, communicating gambling information, possession of gambling devices or equipment, or possession of gambling paraphernalia under Chapter 47, Penal Code;

(B) forgery, credit card abuse, or commercial bribery under Chapter 32, Penal Code;

(C) any criminal offense under Chapter 34, Penal Code;

(D) criminal attempt, conspiracy, or solicitation to commit any of the offenses listed in Paragraphs (A)-(C) or any other offense under the laws of another state or of the United States that, if committed in this state, would have been punishable as one or more of the offenses; or

(E) a criminal offense under Subchapter B, Chapter 352, if:

(i) less than two years have elapsed since the later of the date of conviction or the date of release from confinement imposed for the conviction of a misdemeanor offense; or

(ii) less than five years have elapsed since the later of the date of conviction or the date of release from confinement for the conviction of a felony offense;

(2) makes a misleading statement in the application for the game room permit;

(3) is younger than 18 years of age;

(4) has had a game room permit revoked within the 180-day period immediately preceding the date the application was filed;

(5) is delinquent in the payment to the county of taxes, fees, fines, or penalties assessed or imposed regarding the operation of a game room;

(6) failed to pay the application or renewal fee required by this subchapter; or

(7) has not had the required fire and life safety inspection by a fire safety official within 60 days immediately preceding the date the application was filed.

(c) The sheriff may initiate a proceeding to revoke or suspend a game room permit if:

(1) any person commits on the premises of the game room an offense listed in Subsection (b)(1);

(2) the applicant provides false, fraudulent, or untruthful information on the original or renewal application;

(3) the game room permit should not have been issued under the requirements of this subchapter or regulations adopted under this subchapter;

(4) the owner or operator of the game room fails to comply with corrections ordered by a fire safety official with authority to conduct fire and life safety inspections in the county in which the game room is located; or

(5) the owner is convicted of an offense listed in Subsection (b)(1).

(d) The sheriff may not issue a game room permit or temporary game room permit until final disposition of any case involving an offense listed in Subsection (b)(1) that is pending or arises during the application process.

Sec. 234.1366. DENIAL, REVOCATION, OR SUSPENSION OF PERMIT; HEARING; APPEAL. (a) If an event providing a basis for denial, revocation, or suspension of a game room permit under this subchapter occurs, the sheriff shall send to the game room permit holder or the holder's designated agent a written notice of denial, revocation, or suspension. The notice must set out the reasons for the action. The revocation or suspension is final on the fifth day after the date notice is issued.

(b) The game room permit holder or the holder's designated agent is entitled to appear before a hearing examiner appointed by the commissioners court of the county in which the game room is located on written request submitted to the sheriff not less than the 10th business day after the date the notice is delivered. The written request for a hearing stays the revocation or suspension until the hearing is concluded.

(c) The hearing examiner may not have participated in any investigation of the alleged grounds for the denial, revocation, or suspension. The hearing must be held not later than the 14th business day after the date the request for hearing is submitted.

(d) The game room permit holder and the sheriff are entitled to present evidence, cross-examine witnesses, and be represented by legal counsel. The rules of evidence for a civil, nonjury trial apply to the hearing.

(e) If the facts presented at the hearing support a finding that grounds exist for revoking or suspending a game room permit, the hearing examiner may request that the parties present relevant evidence to show whether suspension or revocation of the game room permit is more appropriate. Reasonable conditions may be attached to a game room permit by the hearing examiner based on the evidence presented at the hearing.

(f) If the hearing examiner determines that a game room permit should be revoked, the hearing examiner shall issue a written order revoking the game room permit that is effective immediately.

(g) If the hearing examiner determines based on the nature of the violations that a suspension instead of a revocation is appropriate, operation of the game room permit may be suspended for a period not to exceed six months. The hearing examiner shall issue a written order suspending the game room permit and attaching any applicable conditions that is effective on the date the owner receives notice.

(h) On a finding that Section 234.1365(c)(3), (4), or (5) has been violated, the hearing examiner shall revoke the game room permit.

(i) Revocation takes effect immediately on notice by the sheriff, subject to reinstatement following an appeal, if:

(1) immediate action is required to protect the public from injury or imminent danger; or

(2) a game room permit was issued based on a misrepresentation in the application, and the game room permit would not have been issued otherwise.

(j) The decision of the hearing examiner is final. The losing party may appeal the decision by filing a petition in a district court in the county not later than the 30th day after the date of the decision. Judicial review is under the substantial evidence rule, and the judgment of the district court may be appealed, as in other civil cases.

(k) An applicant whose permit has been denied, revoked, or suspended may reapply for a game room permit if the applicant makes the changes necessary for the proposed game room to be in compliance with this subchapter and regulations adopted under this subchapter.

SECTION 2.07. Section 234.132, Local Government Code, as added by Chapter 1284 (H.B. 2123), Acts of the 83rd Legislature, Regular Session, 2013, is repealed.

SECTION 2.08. Subchapter E, Chapter 234, Local Government Code, as added by Chapter 1377 (H.B. 1127), Acts of the 83rd Legislature, Regular Session, 2013, is repealed.

ARTICLE 3. EFFECTIVE DATE

SECTION 3.01. This Act takes effect September 1, 2015.