86R10533 ADM-F
 
  By: Guillen H.B. No. 2669
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the authorization and regulation of social gaming
  establishments and the duties of the Texas Department of Licensing
  and Regulation; providing civil and administrative penalties;
  authorizing a fee; requiring an occupational license.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle A, Title 13, Occupations Code, is
  amended by adding Chapter 2005 to read as follows:
  CHAPTER 2005. SOCIAL GAMING
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2005.001.  SHORT TITLE. This chapter may be cited as
  the Social Gaming Act of 2019.
         Sec. 2005.002.  DEFINITIONS. In this chapter:
               (1)  "Bet" means an agreement to win or lose money,
  chips, tokens, or other consideration in a social game.
               (2)  "Buy-in" means the amount of consideration paid by
  a player to enter a social game.
               (3)  "Commercial game" means a game conducted in a
  manner that provides a mathematical or financial economic benefit
  to any person other than a player or participant in the game.
               (4)  "Commission" means the Texas Commission of
  Licensing and Regulation.
               (5)  "Communal pot" means the total amount of
  considerations collected through all bets placed during one
  instance of a social game.
               (6)  "Controlling person" means an individual who:
                     (A)  controls 25 percent or more of the voting
  securities of a corporation that offers or proposes to offer social
  gaming as an operator;
                     (B)  has final authority to set policy and direct
  management of an entity that offers or proposes to offer social
  gaming as an operator;
                     (C)  is authorized by an entity that offers or
  proposes to offer social gaming as an operator to contract with
  another entity to conduct social gaming on behalf of the
  contracting entity; or
                     (D)  is an officer or director of a corporation or
  a general partnership that offers social gaming as an operator.
               (7)  "Dealer" means a person who exchanges bets between
  players, monitors activities, or conducts hands in a social game at
  a licensed social gaming establishment.
               (8)  "Department" means the Texas Department of
  Licensing and Regulation.
               (9)  "Executive director" means the executive director
  of the department.
               (10)  "Operator" means a person that organizes,
  operates, or promotes social games at a licensed social gaming
  establishment.
               (11)  "Pay-out" means the amount of consideration paid
  to a player on the player's exit from a social game.
               (12)  "Player" means an individual who is a registered
  member of a social gaming establishment, is at least 21 years of
  age, and participates in a social game while physically present on
  the premises of the establishment.
               (13)  "Social game" means a card game:
                     (A)  that is conducted with players placing bets
  on predetermined outcomes in which no person receives an economic
  benefit except for personal winnings;
                     (B)  in which, except for the advantages of skill
  or luck, the risk of losing and the chance of winning are the same
  for all players; and
                     (C)  that does not include any commercial game or
  any video, mechanical, electronic, or online version of a game
  described by Paragraphs (A) and (B).
               (14)  "Social gaming establishment" means an
  establishment in which social gaming authorized by this chapter is
  conducted.
         Sec. 2005.003.  APPLICABILITY.  This chapter does not apply
  to the conduct of bingo, charitable raffles, the state lottery, or
  greyhound or horse racing.
         Sec. 2005.004.  OTHER GAMING NOT AUTHORIZED.  This chapter
  does not authorize the conduct of commercial games or gambling
  otherwise prohibited by law.
         Sec. 2005.005.  PRIVATE PLACE.  For purposes of this chapter
  and other law, a social game conducted in a licensed social gaming
  establishment is conducted in a private place.
         Sec. 2005.006.  ECONOMIC BENEFIT; SERVICE GRATUITY;
  ENTRANCE FEE. (a)  For purposes of this chapter and other law, a
  social game is considered to be conducted in a manner that does not
  provide to any person an economic benefit other than player
  pay-outs if the social game is conducted in a licensed social gaming
  establishment in which:
               (1)  total buy-ins equal total pay-outs;
               (2)  bets are placed only between players; and
               (3)  a fee or percentage of winnings is not collected
  from any communal pot.
         (b)  A service gratuity may be accepted only if the gratuity:
               (1)  does not create a discrepancy in the equal balance
  of buy-ins and pay-outs; and
               (2)  is offered in a manner that does not conflict with
  Subsection (a).
         (c)  An operator may not receive any economic benefit from a
  bet placed during a social game organized, operated, or promoted by
  that operator.
         (d)  An operator may charge a player a fee to enter a social
  game held at a licensed social gaming establishment.
         Sec. 2005.007.  PUBLIC POLICY: PREFERENCE FOR STATE
  RESOURCES. It is the intent of this chapter, where possible, to use
  the resources, goods, labor, and services of this state in the
  operation of social gaming-related amenities to the extent
  allowable by law.
  SUBCHAPTER B. POWERS AND DUTIES OF COMMISSION AND DEPARTMENT
         Sec. 2005.051.  COMMISSION RULES ON REGULATION AND
  LICENSING.  (a)  To protect the public health, safety, and welfare
  and to ensure that social gaming authorized under this chapter is
  conducted fairly at social gaming establishments, the commission
  shall adopt rules providing for:
               (1)  fees in amounts reasonable and necessary to
  administer this chapter;
               (2)  requirements for licensing and renewal of a
  license issued under this chapter;
               (3)  standards of conduct for license holders under
  this chapter; and
               (4)  the administration and enforcement of this
  chapter.
         (b)  The executive director shall ensure that rules adopted
  under this section are consistent with state and federal law.
         Sec. 2005.052.  EXECUTIVE DIRECTOR AND DEPARTMENT DUTIES;
  APPLICABILITY OF OTHER LAW.  (a)  The  executive director and
  department  shall administer this chapter and license and regulate
  each social gaming establishment and operator in accordance with
  this chapter and rules adopted under this chapter.
         (b)  Chapter 51 applies to licensing, regulation, and
  enforcement under this chapter.  The department shall assess
  against a social gaming establishment a civil or administrative
  penalty authorized under that chapter for a violation of that
  chapter, this chapter, or a commission rule.
  SUBCHAPTER C.  SOCIAL GAMING LICENSING AND REGULATION
         Sec. 2005.101.  LICENSE REQUIRED. (a)  A person may not own
  or operate a social gaming establishment unless the person holds a
  social gaming establishment license issued under this chapter for
  the conduct of social games at the social gaming establishment.
         (b)  A person may not act as an operator at a social gaming
  establishment unless the person holds a license issued under this
  chapter.
         Sec. 2005.102.  GENERAL APPLICATION REQUIREMENTS; LICENSE
  TERM. (a)  An applicant for a license under this chapter shall:
               (1)  submit to the department a completed application
  on a form prescribed by the department;
               (2)  pay the required fees; and
               (3)  provide any other information required by
  commission rule.
         (b)  A license issued under this chapter expires on the first
  anniversary of the date of issuance.
         (c)  An applicant for a social gaming establishment license
  for a social gaming establishment in a county subject to Chapter
  234, Local Government Code, must hold a game room permit issued
  under that chapter and be in good standing with the issuing
  authority.
         Sec. 2005.103.  OPERATOR LICENSE QUALIFICATIONS. (a)  An
  applicant for issuance or renewal of an operator license, or the
  applicant's controlling person, if applicable, must:
               (1)  be 18 years of age or older;
               (2)  demonstrate honesty, trustworthiness, and
  integrity; and
               (3)  complete an education course approved by the
  commission under Section 2005.151.
         (b)  On receipt of an original application for a license
  under this chapter, the department shall conduct a criminal history
  check on each applicant and each controlling person of an applicant
  to determine whether the applicant or controlling person is
  qualified for issuance of a license under this chapter.  The
  department in accordance with commission rules may conduct a
  criminal history check for renewal of a license issued under this
  chapter.
         (c)  In conducting a criminal history check under Subsection
  (b), the department may obtain from the Department of Public Safety
  criminal history record information for the applicant, controlling
  person, or license holder, as provided by Section 411.122,
  Government Code.
         (d)  In conducting a criminal history check under Subsection
  (b), the department must obtain fingerprints from the applicant,
  controlling person, or license holder and submit the fingerprints
  for processing through appropriate local, state, and federal law
  enforcement agencies.
         Sec. 2005.104.  SURETY BOND FOR OPERATOR LICENSE. (a)  An
  applicant for issuance of, or a license holder applying for renewal
  of, an operator license must provide a surety bond in the amount of
  $50,000.
         (b)  The surety bond provided by an applicant or license
  holder:
               (1)  must be issued by a company authorized to conduct
  business in this state;
               (2)  must comply with all applicable provisions of the
  Insurance Code;
               (3)  must be payable to the department for the purpose
  of:
                     (A)  satisfying a judgment awarded to this state
  or a political subdivision of this state against the applicant or
  license holder for actions engaged in as an operator conducting
  social gaming activities;
                     (B)  paying penalties assessed on the applicant or
  license holder by this state or a political subdivision of this
  state for actions engaged in as an operator conducting social
  gaming activities; or
                     (C)  settling a tax debt or other debt owed to this
  state or a political subdivision of this state arising out of
  actions engaged in by an operator conducting social gaming
  activities; and
               (4)  may not be limited to one claim, provided that the
  sum of all claims does not exceed the face value of the surety bond.
         (c)  An applicant or license holder required to file a surety
  bond under this section must file a new bond with each application
  for renewal of the license holder's operator license.
         (d)  A company that issues a surety bond for purposes of
  satisfying this section shall notify the department in writing not
  later than the 30th day before the date on which the company will
  cancel the bond.
         (e)  An operator whose surety bond is canceled shall
  immediately cease operating a social gaming establishment. The
  operator may continue to operate the social gaming establishment
  after providing to the department a surety bond that is an
  acceptable replacement for the canceled bond.
         Sec. 2005.105.  DENIAL OF APPLICATION. The commission or
  the executive director may deny an application for issuance or
  renewal of a license if:
               (1)  the applicant or license holder does not meet the
  qualifications for the license;
               (2)  after conducting an investigation and providing
  notice and an opportunity for a hearing, the executive director
  determines that the applicant or license holder has violated this
  chapter or a rule adopted under this chapter; or
               (3)  the applicant or license holder engaged in fraud
  or misrepresentation in applying for or obtaining a license under
  this chapter.
         Sec. 2005.106.  LICENSE RENEWAL.  (a)  A license issued under
  this chapter expires on the first or second anniversary of the date
  of issuance, as determined by commission rule.
         (b)  The commission by rule shall establish the requirements
  for renewal of a license issued under this chapter, including the
  payment of applicable fees.
         Sec. 2005.107.  STATEWIDE VALIDITY; NONTRANSFERABLE.  A
  license issued under this chapter is valid throughout this state
  and is not transferable.
  SUBCHAPTER D.  EDUCATION
         Sec. 2005.151.  RECOGNITION OF EDUCATION PROGRAMS AND
  COURSES. The commission by rule shall develop criteria by which the
  commission approves education programs and courses for operators
  and dealers.
  SUBCHAPTER E.  INSPECTIONS AND INVESTIGATIONS
         Sec. 2005.201.  INSPECTIONS; INVESTIGATIONS.  (a)  The
  department may conduct inspections and investigations of social
  gaming establishments and persons suspected of being in violation
  of or threatening to violate this chapter as necessary to enforce
  this chapter or Chapter 51.
         (b)  The department may:
               (1)  enter the business premises of a license holder
  regulated by the department or a person suspected of being in
  violation of or threatening to violate this chapter or a rule or
  order of the commission or an order of the executive director under
  this chapter; and
               (2)  examine and copy records pertinent to the
  inspection or investigation.
  SUBCHAPTER F.  ADMINISTRATIVE SANCTIONS; ENFORCEMENT
         Sec. 2005.251.  ADMINISTRATIVE SANCTIONS. (a)  The
  commission or the executive director may deny an application for a
  license, revoke, suspend, or refuse to renew a license, or
  reprimand a license holder for a violation of this chapter or a rule
  or order of the commission or an order of the executive director.
         (b)  The commission or the executive director may impose an
  administrative penalty on a person under Subchapter F, Chapter 51,
  regardless of whether the person holds a license under this
  chapter, if the person violates this chapter or a rule or order of
  the commission or an order of the executive director.
         Sec. 2005.252.  CEASE AND DESIST ORDER; INJUNCTION; CIVIL
  PENALTY. (a)  The executive director may issue a cease and desist
  order as necessary to enforce this chapter if the executive
  director determines that the action is necessary to prevent a
  violation of this chapter or to protect the health and safety of the
  public.
         (b)  The attorney general or the executive director may bring
  an action for an injunction or a civil penalty under this chapter,
  as provided by Section 51.352.
         SECTION 2.  Section 47.02(c), Penal Code, as effective April
  1, 2019, is amended to read as follows:
         (c)  It is a defense to prosecution under this section that
  the actor reasonably believed that the conduct:
               (1)  was permitted under Chapter 2001, Occupations
  Code;
               (2)  was permitted under Chapter 2002, Occupations
  Code;
               (3)  was permitted under Chapter 2004, Occupations
  Code;
               (4)  was permitted under Chapter 2005, Occupations
  Code;
               (5)  consisted entirely of participation in the state
  lottery authorized by the State Lottery Act (Chapter 466,
  Government Code);
               (6) [(5)]  was permitted under Subtitle A-1, Title 13,
  Occupations Code (Texas Racing Act); or
               (7) [(6)]  consisted entirely of participation in a
  drawing for the opportunity to participate in a hunting, fishing,
  or other recreational event conducted by the Parks and Wildlife
  Department.
         SECTION 3.  Section 47.06, Penal Code, is amended by adding
  Subsection (f-1) to read as follows:
         (f-1)  It is a defense to prosecution under Subsection (a) or
  (c) that the person owned, manufactured, transferred, or possessed
  the equipment or paraphernalia related to social gaming for the
  sole purpose of shipping it to a social gaming establishment
  licensed under Chapter 2005, Occupations Code.
         SECTION 4.  Section 47.09(a), Penal Code, as effective April
  1, 2019, is amended to read as follows:
         (a)  It is a defense to prosecution under this chapter that
  the conduct:
               (1)  was authorized under:
                     (A)  Chapter 2001, Occupations Code;
                     (B)  Chapter 2002, Occupations Code;
                     (C)  Chapter 2004, Occupations Code;
                     (D)  Chapter 2005, Occupations Code;
                     (E)  Subtitle A-1, Title 13, Occupations Code
  (Texas Racing Act); or
                     (F) [(E)]  Chapter 280, Finance Code;
               (2)  consisted entirely of participation in the state
  lottery authorized by Chapter 466, Government Code; or
               (3)  was a necessary incident to the operation of the
  state lottery and was directly or indirectly authorized by:
                     (A)  Chapter 466, Government Code;
                     (B)  the lottery division of the Texas Lottery
  Commission;
                     (C)  the Texas Lottery Commission; or
                     (D)  the director of the lottery division of the
  Texas Lottery Commission.
         SECTION 5.  Not later than June 1, 2020, the Texas Commission
  of Licensing and Regulation shall adopt the rules necessary and the
  Texas Department of Licensing and Regulation shall develop the
  applications and establish the procedures necessary to implement
  Chapter 2005, Occupations Code, as added by this Act.
         SECTION 6.  This Act takes effect September 1, 2019.