By: Huberty H.B. No. 2070
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of sports wagering; requiring an
  occupational permit; authorizing a fee; imposing a tax; creating
  criminal offenses; decriminalizing wagering on sports events.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  LEGISLATIVE FINDINGS. The Legislature finds the
  following:
               (1)  Consistent with a 2018 United States Supreme Court
  decision authorizing states to exercise their lawful prerogative to
  license and regulate sports wagering activity, it is in this
  state's interest to authorize a strict regulatory model for sports
  wagering.
               (2)  A legal, regulated sports wagering market will
  help to deter unlawful sports wagering and provide for more
  regulatory and law enforcement oversight over sports wagering,
  while generating revenue to this state;
               (3)  Any sports wagering enforcement and regulatory
  structure must begin from the bedrock premise that participation in
  a lawful and licensed sports-wagering industry is a privilege and
  not a right and that strict regulatory oversight is intended to
  safeguard the integrity of wagering on sporting events and to
  ensure accountability and the public trust;
               (4)  The most expeditious way to legalize sports
  wagering in this state and to strictly regulate this activity is to
  utilize the resources of the Texas Department of Licensing and
  Regulation, which has experience regulating business activities in
  this state; and
               (5)  Sports wagering within this state will be vested
  in sports wagering operators acting under authority of state law
  and will promote trust and integrity in all sports wagering
  operations.
         SECTION 2.  Subtitle A, Tile 13, Occupations Code, is
  amended by adding Chapter 2005 to read as follows:
  CHAPTER 2005. SPORTS WAGERING
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2005.001.  SHORT TITLE. This chapter may be cited as
  the Texas Sports and Entertainment Recovery Act.
         Sec. 2005.002.  DEFINITIONS. In this chapter:
               (1)  "Adjusted gross revenue" means gross wagering
  revenue received by a sports wagering operator from all sports
  wagers authorized under this chapter, minus:
                     (A)  all cash or cash equivalents paid out as
  winnings to players;
                     (B)  the actual cost paid by a sports wagering
  operator for any personal property distributed to a player as a
  result of a sports wager authorized under this chapter;
                     (C)  the cash value of any bonuses or promotional
  credits provided to players that are then returned to a sports
  wagering operator;
                     (D)  Uncollectible receivables, not to exceed
  four percent of gross revenue, except that the commission may
  increase that percentage upon a showing of that a higher amount is
  reasonable and warranted; and
                     (E)  excise tax payments on sports wagers remitted
  to the federal government.
                     (F)  Amounts returned to an authorized
  participant:
                           (i)  because of game, platform, or system
  malfunction; or
                           (ii)  because the sports bet must be voided
  due to concerns regarding the integrity of the wager or game.
               (2)  "Authorized sports entity" means:
                     (A)  a sports team or a sports team designee;
                     (B)  a Class 1 racetrack, as defined by Section
  2026.102; or
                     (C)  a greyhound racetrack, as described by
  Subchapter D, Chapter 2025
               (3)  "Cash equivalent" means an asset that is
  convertible to cash and approved for use in connection with
  authorized sports wagering. Approved cash equivalents include:
                     (A)  travelers checks;
                     (B)  foreign currency and coin;
                     (C)  certified checks, cashier's checks, and
  money orders;
                     (D)  personal checks and drafts;
                     (E)  digital, crypto, and virtual currencies;
                     (F)  online and mobile payment systems that
  support online money transfers;
                     (G)  credit cards and debit cards;
                     (H)  prepaid access instruments; and
                     (I)  any other form approved by the commission.
               (4)  "College sport" means an athletic or sporting
  event in which at least one participant is a team or contestant
  competing on behalf or under the sponsorship of a public or private
  institution of higher education, regardless of where the
  institution is located.
               (5)  "Commission" means the Texas Commission of
  Licensing and Regulation.
               (6)  "Comptroller" means the Comptroller of Public
  Accounts of the State of Texas.
               (7)  "Covered service" means the operation,
  management, or control of wagers authorized by this chapter,
  including the development or operation of sports wagering platforms
  and the provision of odds lines and risk management information.
  The term excludes:
                     (A)  payment processing and similar financial
  services;
                     (B)  customer identity, age verification, and
  geolocation services;
                     (C)  streaming or other video and data that do not
  include odds or line information;
                     (D)  telecommunications, internet service
  providers, and other similar services not specifically designed for
  use in connection with sports wagering;
                     (E)  other goods or services designed to support
  the operation, management, or control of a sports wagering
  platform; and
                     (F)  other goods or services not specifically
  designed for use in connection with sports wagering.
               (8)  "Department" means the Texas Department of
  Licensing and Regulation.
               (9)  "Executive director" means the executive director
  of the department.
               (10)  "Interactive sports wagering" means engaging in
  sports wagering via the internet, on a mobile device, or any other
  telecommunications service.
               (11)  "Interactive sports wagering permit" means a
  permit issued by the commission that authorizes the operation of
  interactive sports wagering under this chapter;
               (12)  "Interactive sports wagering operator" means the
  holder of an interactive sports wagering permit.
               (13)  "Key person" means an officer or director of a
  sports wagering operator who:
                     (A)  is directly involved in the operation,
  management, or control of the conduct of sports wagering under this
  chapter; and
                     (B)  exercises substantial influence or control
  over the sports wagering operator's sports wagering activities.
               (14)  "Official league data" means statistics,
  results, outcomes, and other data relating to a sporting event
  obtained for determining the outcome of tier two sports wagers
  under an agreement wager between a sports wagering operator and:
                     (A)  the relevant sports governing body that
  authorizes the use of the data for determining the outcome of tier
  two sports wagers; or
                     (B)  an entity expressly authorized by the sports
  governing body to provide the information described by this
  subdivision to sports wagering operators.
               (15)  "Permit holder" means a person who holds a permit
  issued under this chapter.
               (16)  "Professional sports" means an athletic or
  sporting event at which two or more competitors participate and one
  or more competitors receive compensation.
               (17)  "Retail permit" means a permit issued by the
  commission to an entity included in Section 2005.103 that
  authorizes the operation of sports wagering at a location
  authorized by the commission, but with the operation limited to
  accepting in-person sports wagering only from individuals who are
  physically present in the location.
               (18)  "Retail permit holder" means the holder of a
  retail permit.
               (19)  "Retail sports wagering" means engaging in sports
  wagering at authorized locations in person.
               (20)  "Service provider" means the holder of a service
  provider permit.
               (21)  "Service provider permit" means a permit issued
  by the commission that authorizes the provision of covered
  services.
               (22)  "Sporting event" or "sports event" means
  professional sports and athletic events, college sports and
  athletic events, amateur sports and athletic events, motor race
  events, electronic sports events, competitive video game events, or
  any other event approved by the commission.
               (23)  "Sports wagering brand" means the names, logos,
  and brands by which a sports wagering operator advertises,
  promotes, or otherwise holds out to the public its sports wagering
  platform or retail sports wagering operations.
               (24)  "Sports wagering operator" means:
                     (A)  an interactive sports wagering permit
  holder;
                     (B)  a service provider permit holder operating
  sports wagering on behalf of an interactive sports wagering permit
  holder;
                     (C)  a retail permit holder; or
                     (D)  a service provider permit holder operating
  sports wagering on behalf of a retail permit holder.
               (25)  "Sports wagering platform" means a website,
  mobile application, or other interactive platform accessible via
  the internet or mobile, wireless, or similar communications
  technology that players may use to place sports wagers authorized
  under this chapter.
               (26)  "Sports entertainment district" means a public
  entertainment facility, as that term is defined in Section
  108.73(2), Alcoholic Beverages Code that is related infrastructure
  to an approved venue project, as those terms are defined in Section
  334.001, Local Government Code.
               (27)  "Sports facility" means:
                     (A)  a facility that is the primary host of a Major
  League Baseball, National Basketball Association, National
  Football League, Major League Soccer, or National Hockey League,
  professional sports franchise in this state and that has a seating
  capacity of at least 5,000 people; or
                     (B)  a Class 1 racetrack as defined by Section
  2026.102.
               (28)  "Sports governing body" means the organization
  that prescribes final rules and enforces codes of conduct with
  respect to a professional sporting event and participants in the
  professional sporting event and whose corporate headquarters is
  located in the United States.
               (29)  "Sports wagering" means accepting wagers on
  sporting events or portions of sporting events, or on the
  individual performance statistics of participants in a sporting
  event or combination of sporting events, by any system or method of
  wagering, including in-person or over the internet through a
  website or on mobile devices. The term includes but is not limited
  to single-game wagers, teaser wagers, parlays, over-unders,
  moneylines, pools, exchange wagering, in-game wagering, in-play
  wagers, proposition wagers, and straight wagers. The term does not
  include:
                     (A)  fantasy or simulated games or contests as
  that term is defined in Section 47.01(2-a), Penal Code ; or
                     (B)  greyhound racing or horse racing regulated
  under Subtitle A-1 (Texas Racing Act).
               (30)  "Sports team" means a Major League Baseball,
  National Basketball Association, National Football League, Major
  League Soccer, or National Hockey League professional sports
  franchise located in this state that leases, subleases, or
  exclusively or by a joint venture with another sports team operates
  a sports facility.
               (31)  "Sports team designee" means any person
  designated by a sports team as being authorized to receive an
  interactive sports wagering license in lieu of the sports team.
               (32)  "Tier one sports wager" means a sports wager that
  is not a tier two sports wager.
               (33)  "Tier two sports wager" means a sports wager that
  is placed after the event it concerns has started.
               (34)  "Youth sports" means an athletic or sporting
  event in which the majority of participants are under the age of 18
  or are competing on behalf or under the sponsorship of one or more
  public or private preschools or elementary, middle, or secondary
  schools. The term does not include professional sports or events
  that occur under the sponsorship or oversight of national or
  international athletic bodies that are not educational
  institutions and that include participants both over and under the
  age of 18.
         Sec. 2005.002.  COMPLIANCE WITH FEDERAL AND STATE LAW. (a)
  All sports wagering authorized under this chapter must be
  initiated, received, and otherwise made within this state unless
  otherwise determined by the commission in accordance with
  applicable federal and state laws.
         (b)  Consistent with the intent of the United States Congress
  in the Unlawful Internet Gambling Enforcement Act of 2006 (31
  U.S.C. § 5361, et seq.), the intermediate routing of electronic
  data relating to internet sports wagering authorized under this
  chapter, including routing across state lines, does not determine
  the location in which such wagers are initiated, received, or
  otherwise made.
         Sec. 2005.003.  REVIEW OF AGENCY ACTIONS. Except as
  otherwise provided by this chapter, all actions of the commission
  or department are subject to review under the Administrative
  Procedure Act.
  SUBCHAPTER B.  POWERS AND DUTIES
         Sec. 2005.051.  SPORTS WAGERING PROGRAM. (a) Subject to the
  requirements set forth in this chapter, the commission shall
  authorize an authorized sports entity to become an interactive
  sports wagering operator for the purpose of offering and accepting
  sports wagers to and from players on sporting events.
         (b)  The department under the direction of the commission and
  executive director shall administer this chapter.
         (c)  The commission may not authorize sports wagers
  involving youth sports.
         (d)  Nothing in this chapter may be construed to apply to
  pari-mutuel wagering on horse-racing or greyhound racing as
  authorized by Subtitle A-1 or fantasy or simulated games or
  contests.
         Sec. 2005.052.  RULES. The commission shall adopt rules for
  the administration of this chapter and to regulate sports wagering
  in this state.
         Sec. 2005.053.  CERTIFICATION OF REVENUES AND EXPENSES. The
  commission shall:
               (1)  certify monthly to the comptroller a full and
  complete statement of sports wagering revenues and expenses for the
  previous month; and
               (2)  within thirty days of the end of the fiscal year,
  provide to the comptroller a full and complete statement of sports
  wagering revenues and expenses for that fiscal year, along with any
  recommendations for changes to this chapter that may be warranted
  and prudent to protect the public interest.
         Sec. 2005.054.  AUDITS. (a)  To ensure a proper accounting
  of all revenues due to the state, the commission and the comptroller
  each independently shall have the right to audit the books and
  records of a sports wagering operator that are related to sports
  wagering activities conducted in this state and authorized under
  the chapter.  The commission and the comptroller shall coordinate
  to ensure that such requests are not duplicative or overly
  burdensome on the sports wagering operator.
         (b)  The comptroller may perform audits of any taxes or fees
  paid under this chapter.
         Sec. 2005.055.  VOLUNTARY EXCLUSION PROGRAM. (a) The
  commission shall adopt rules to establish and implement a statewide
  voluntary exclusion program administered by the commission.
         (b)  The rules must include:
               (1)  a requirement that the commission will establish
  and administer a statewide self-exclusion list, hosting a website
  that sport wagering operators may link to in order to allow
  individuals to register for self-exclusion, and that the commission
  shall regularly distribute such list to sport wagering operators;
               (2)  a requirement that each sports wagering operator
  implement a procedure by which individuals may access the
  commission's website form to ask to be excluded from participation
  in sports wagering and under which the sports wagering operator
  will bar individuals on the self-exclusion list from any further
  participation in sports wagering for the period that they are
  self-excluded;
               (3)  except as otherwise provided by commission rule, a
  requirement that an individual who participates in the voluntary
  exclusion program agrees to refrain from participating in sports
  wagering for the period of time specified at self-exclusion;
               (3)  except as otherwise provided by commission rule, a
  requirement that a person who participates in the voluntary
  exclusion program may not petition the commission for removal from
  the program; and
               (4)  a requirement that the sports wagering operator
  must make all commercially reasonable attempts and cause its sales
  agents and others operating on its behalf to make commercially
  reasonable efforts to cease all direct marketing efforts to persons
  participating in the program.
         (c)  The voluntary exclusion program may not preclude a
  sports wagering operator and its agents and others operating on
  their behalf from seeking the payment of a debt accrued by a person
  before entering the program.
         Sec. 2005.056.  RISK MANAGEMENT. The commission shall adopt
  rules permitting sports wagering operators to use systems that
  offset loss or manage or lay off risk in the operation of sports
  wagering under this chapter, including through liquidity pools,
  exchanges, or similar mechanisms in other approved jurisdiction in
  which the sports wagering operator or an affiliate of either or
  other third party also holds a license or the equivalent.
         (b)  Notwithstanding Subsection (a), the rules adopted under
  this section must require that at all times adequate protections
  are maintained to ensure sufficient funds are available to pay all
  players.
         Sec. 2005.057.  PLACES OF PUBLIC ACCOMODATION. (a) Except
  as provided by Subsection (b), and other than an authorized retail
  sports wagering location, the commission may not authorize or allow
  a person to:
               (1)  operate or to allow the operation of a place of
  public accommodation, a club (including a club or association
  limited to dues-paying members or similar restricted groups), or a
  similar establishment in which computer terminals or similar access
  devices are intended or are made available to be used principally
  for the purpose of accessing a sports wagering platform; or
               (2)  otherwise advertise to the general public that the
  place of public accommodation, club, or similar establishment is
  available to engage in sports wagering.
         (b)  The commission may authorize:
               (1)  an interactive sports wagering operator or a
  service provider operating sports wagering on behalf of an
  interactive sports wagering permit holder to establish a place of
  public accommodation for the purpose of accessing a sports wagering
  platform if it is located within an interactive sports wagering
  operator's sports facility or sports entertainment district; and
               (2)  the advertisement of an activity described by
  Subsection (b)(1) at the location.
         (c)  The commission shall adopt rules governing the
  establishment of a sports wagering public accommodation at a sports
  facility or sports entertainment district.
         (d)  Places of public accommodation, clubs, or similar
  establishments that are allowed under this section are subject to
  all applicable state, local, criminal, zoning, or other regulatory
  powers that are not intended to be limited in any way by this
  chapter.
         (e)  This section does not apply to operations and
  advertisement conducted by a retail permit holder or a service
  provider operating sports wagering on behalf of a retail permit
  holder.
  SUBCHAPTER C. SPORTS WAGERING PERMITS
         Sec. 2005.101.  INTERACTIVE SPORTS WAGERING PERMIT. (a)
  The commission shall issue an interactive sports wagering permit to
  a qualified authorized sports entity under this chapter if the
  applicant:
               (1)  submits a completed application to the commission
  on a form prescribed by the commission, containing the information
  required by this section; and
               (2)  pays to the commission a permitting fee of
  $500,000, which must be refunded in the event the applicant's
  application is denied, after deduction of the commission's expenses
  in considering the application.
         (b)  The commission may only award an interactive sports
  wagering permit to an authorized sports entity as defined by this
  chapter. The interactive sports wagering operator or a service
  provider on behalf of an interactive sports wagering operator may:
               (1)  offer retail sports wagering in a place of public
  accommodation located at its sports facility or the sports
  entertainment district created in connection with the sports
  facility;
               (2)  conduct state-wide interactive sports wagering;
  and
               (3)  operate kiosks for interactive sports wagering.
         (c)  The commission may only award an interactive sports
  wagering permit to an authorized sports entity that is based in the
  United States.
         (d)  The commission shall only award one interactive sports
  wagering permit per authorized sports entity, except that if a
  person owns more than one authorized sports entity, that person may
  only obtain one interactive sports wagering permit.
         (e)  The interactive sports wagering operator shall only be
  permitted to hold out its sports wagering platform to the public
  under one brand.
         (f)  The commission shall evaluate and then grant or deny
  each application submitted under this section in its discretion in
  the same manner and based on the same considerations that it uses to
  consider applications for service provider permits. The
  commission's decision is final and not appealable, except as
  otherwise may be required under state law.
         (g)  The commission shall prescribe an application form for
  an interactive sports wagering permit that includes:
               (1)  the applicant's proposed initial business plan,
  which must include the range of contemplated types and modes of
  sports wagering;
               (2)  the applicant's proposed measures to address age
  and identity verification and geolocation requirements;
               (3)  the applicant's proposed internal controls,
  including controls to ensure that no ineligible person will be able
  to participate in sports wagering;
               (4)  the applicant's history of working to prevent
  compulsive gambling, including training programs for its
  employees;
               (5)  the applicant's written information security
  program, including information security governance and the
  designation of a chief security officer of equivalent (which
  designation shall be a requirement for issuance of a license);
               (6)  the sports wagering brand (which shall be limited
  to a maximum of one brand and may be different from the brand
  offered by a retail permit holder) under which an interactive
  sports wagering operator plans to hold out its sports wagering
  platform to the public;
               (7)  any personal information the commission may
  determine by rule should be required concerning the applicant's key
  persons; and
               (8)  any other information the commission considers
  necessary.
         (h)  The commission may accept permitting or authorization
  to operate by another jurisdiction that is specifically determined
  by the commission to have similar permitting requirements, as
  evidence that the applicant meets the interactive sports wagering
  operator requirements. The commission may accept another
  jurisdiction's or an approved third party's testing of the
  interactive sports wagering platform as evidence that the platform
  meets any requirements mandated by commission rule.
         (i)  Notwithstanding any other law, the information an
  applicant submits under this section shall be considered
  confidential and exempt from public disclosure.
         (j)  An authorized applicant may elect to assign its
  interactive sports wagering permit to a third-party designee to
  handle all of the applicant's sports wagering management and
  operations. If the applicant makes this election, the application
  and disclosure requirements described by this section should be
  made by the designee rather than the applicant, in accordance with
  procedures determined by the commission.
         Sec. 2005.102.  SERVICE PROVIDER PERMIT. (a) An applicant
  for a service provider permit shall:
               (1)  submit an application to the commission on a form
  prescribed by the commission, containing the information required
  under this section; and
               (2)  pay to the commission an application fee of
  $25,000.
         (b)  An application submitted under this section must
  include:
               (1)  the applicant's background in sports wagering or
  the covered service;
               (2)  the applicant's experience in connection with
  sports wagering or other wagering activities in other
  jurisdictions, including the applicant's history and reputation of
  integrity and compliance, as well as a list of all active or lapsed
  permits or licenses for sports wagering or other wagering
  activities (including the reason for any lapse);
               (3)  the applicant's written information security
  program, including information concerning information security
  governance and the designation of a chief security officer or
  equivalent (which designation shall be a requirement for issuance
  of a permit);
               (4)  any personal information the commission
  determines by rule should be required concerning the applicant's
  key persons; and
               (5)  any other information the commission considers
  necessary.
         (c)  The commission shall conduct a background investigation
  on the applicant and key persons as considered necessary by the
  commission. The background investigation must include a credit
  history check, a tax record check, and a criminal history records
  check.
         (d)  The commission shall grant or deny a service provider
  permit within 90 days of receipt of a completed application. The
  commission's decision is final and not appealable, except as
  otherwise may be required under state law.
         (e)  Notwithstanding any other provision of law, the
  information an applicant submits under this section is considered
  confidential and exempt from public disclosure.
         (f)  The following shall constitute the sole grounds for
  denial of a service provider permit:
               (1)  the commission reasonably believes the applicant
  will be unable to satisfy the duties of a permittee described by
  this chapter;
               (2)  the commission reasonably believes that the
  applicant or any of its key persons are not of good character,
  honesty, or integrity;
               (3)  the commission reasonably believes that the
  applicant's or any of its key person's prior activities, criminal
  record, reputation, or associations are likely to:
                     (A)  pose a threat to the public interest;
                     (B)  impede the regulation of sports wagering; or
                     (C)  promote unfair or illegal activities in the
  conduct of sports wagering;
               (4)  the applicant or a key person knowingly fails to
  comply with the provisions of this chapter or any of the
  commission's requirements;
               (5)  the applicant or a key person knowingly fails to
  comply with the provisions of this chapter or any of the
  commission's requirements;
               (6)  the applicant or a key person was convicted of a
  felony, a crime of moral turpitude, or any criminal offense
  involving dishonesty or breach of trust within the 10 years before
  the submission date of the application;
               (7)  the applicant's or a key person's license,
  registration, or permit to conduct sports wagering, other forms of
  gambling activity, or a covered service issued by any other state
  has been revoked; or
               (8)  the applicant defaults in payment of any
  obligation or debt due to the state.
         Sec. 2005.103.  RETAIL PERMIT. (a) The commission may award
  a retail permit to:
               (1)  an authorized sports entity;
               (2)  a sports facility that is the primary host of a
  Minor League Baseball, Basketball, Hockey, or Soccer professional
  sports franchise in this state that is affiliated with a sports team
  or a related sports entertainment district;
               (3)  a racetrack that is not a Class 1 racetrack as
  defined by Section 2026.102;
               (4)  a motorsports racetrack that has a seating
  capacity of at least 5,000 people; or
               (5)  a facility operated by the PGA TOUR that is the
  primary host of a PGA TOUR professional golf tournament.
         (b)  A person eligible to receive a retail permit under
  Subsection (a) may only hold a retail permit for offering retail
  sports wagering at any approved location by the Commission,
  including:
               (1)  the sports facility that the sports team or its
  affiliate leases, subleases, or exclusively or by a joint venture
  with another sports team operates;
               (2)  the sports entertainment district related to the
  sports facility;
               (3)  a facility owned or exclusively leased by an
  authorized sports entity and approved by the commission; or
               (4)  in the case of a facility described by Subsection
  (a)(5), the golf facility or entertainment or resort complex
  related to the golf facility.
         (c)  A retail permit holder that is not also an interactive
  sports wagering operator may only conduct sports wagering with
  individuals who are physically present at the location authorized
  by the commission for retail sports wagering. A retail permit
  holder may operate kiosks for sports wagering at locations approved
  by the commission.
         (d)  The retail permit holder shall only be permitted to hold
  out its sports wagering platform to the public under one brand. If
  an interactive sports wagering operator permit holder also holds a
  retail permit, the brand offered under the retail permit may be
  different from the brand offered under the interactive sports
  wagering operator permit.
         (e)  An applicant for a retail permit shall:
               (1)  submit an application to the commission on a form
  prescribed by the commission, containing the information required
  under this section; and
               (2)  pay to the commission an application fee of
  $50,000.
         (f)  An application submitted under this section must
  include:
               (1)  the applicant's background in sports wagering or
  the covered service;
               (2)  the applicant's experience in connection with
  sports wagering or other wagering activities in other
  jurisdictions, including the applicant's history and reputation of
  integrity and compliance, as well as a list of all active or lapsed
  permits or licenses for sports wagering or other wagering
  activities (including the reason for any lapse);
               (3)  the applicant's written information security
  program, including information concerning information security
  governance and the designation of a chief security officer or
  equivalent (which designation shall be a requirement for issuance
  of a permit);
               (4)  the sports wagering brand (maximum of one) under
  which the retail permit holders plans to offer retail sports
  wagering to the public;
               (5)  any personal information the commission
  determines by rule should be required concerning the applicant's
  key persons; and
               (6)  any other information the commission considers
  necessary.
         (f)  The commission shall conduct a background investigation
  on the applicant and key persons as considered necessary by the
  commission. The background investigation must include a credit
  history check, a tax record check, and a criminal history records
  check.
         (g)  The commission shall grant or deny a service provider
  permit within 90 days of receipt of a completed application. The
  commission's decision is final and not appealable, except as
  otherwise may be required under state law.
         (h)  Notwithstanding any other provision of law, the
  information an applicant submits under this section is considered
  confidential and exempt from public disclosure.
         (i)  The following shall constitute the sole grounds for
  denial of a retail permit:
               (1)  the commission reasonably believes the applicant
  will be unable to satisfy the duties of a permittee described by
  this chapter;
               (2)  the commission reasonably believes that the
  applicant or any of its key persons are not of good character,
  honesty, or integrity;
               (3)  the commission reasonably believes that the
  applicant's or any of its key person's prior activities, criminal
  record, reputation, or associations are likely to:
                     (A)  pose a threat to the public interest;
                     (B)  impede the regulation of sports wagering; or
                     (C)  promote unfair or illegal activities in the
  conduct of sports wagering;
               (4)  the applicant or a key person knowingly fails to
  comply with the provisions of this chapter or any of the
  commission's requirements;
               (5)  the applicant or a key person was convicted of a
  felony, a crime of moral turpitude, or any criminal offense
  involving dishonesty or breach of trust within the 10 years before
  the submission date of the application;
               (6)  the applicant's or a key person's license,
  registration, or permit to conduct sports wagering, other forms of
  gambling activity, or a covered service issued by any other state
  has been revoked; or
               (7)  the applicant defaults in payment of any
  obligation or debt due to the state.
         (j)  An authorized applicant may elect to assign its retail
  permit to a third-party designee to handle all of the applicant's
  sports wagering management and operations. If the applicant makes
  this election, the application and disclosure requirements
  described by this section should be made by the designee rather than
  the applicant, in accordance with procedures determined by the
  commission.
         Sec. 2005.104.  PERMIT RENEWAL. (a) A permit issued under
  this chapter shall be valid for:
               (1)  if the permit application is submitted by a Class 1
  Racetrack, as defined by Section 2026.102, a sports team or
  affiliate of the sports team, three years after the date of
  issuance; or
               (2)  if the permit application is submitted by a
  designee of the sports team or the sports team's affiliate, the
  earlier of:
                     (A)  three years after the date of issuance; or
                     (B)  the date of the expiration of any contract
  wager between the sports teams or an affiliate of the sports team
  and the designee of the sports team or affiliate authorizing the
  designee to handle the sports team's or affiliate's sports wagering
  management and operations.
         (b)  At least 60 days before the expiration of a permit, the
  permit holder shall submit a renewal application on a form
  prescribed by the commission. The permit holder must include a
  renewal fee of:
               (1)  $100,000 for renewal of an interactive sports
  wagering permit;
               (2)  $25,000 for renewal of a retail permit; and
               (3)  $10,000 for renewal of a service provider permit.
         (c)  The commission may deny an application for permit
  renewal if the commission finds grounds for denial set forth in
  Section 2005.101 for an interactive sports wagering permit, Section
  2005.102 for a service provider permit, or Section 2005.103 for a
  retail permit holder.
  SUBCHAPTER D. REQUIREMENTS FOR PERMIT HOLDERS AND OPERATORS
         Sec. 2005.151.  DUTIES OF SPORTS WAGERING OPERATORS. (a) A
  sports wagering operator shall ensure that it implement reasonable
  measures:
               (1)  to ensure that only persons physically located in
  the state or as otherwise may be authorized by the commission are
  able to place a wager through its sports wagering platform;
               (2)  to protect the confidential information of players
  using its sports wagering platform;
               (3)  to prevent wagering on prohibited events as set
  forth in this chapter or as otherwise determined by the commission;
               (4)  to prevent persons from placing wagers as agents
  or proxies for others;
               (5)  to allow persons to restrict themselves from
  placing wagers through its sports wagering platform as set forth in
  this chapter, including sharing, at the person's request, that
  person's request for self-exclusion with the commission for the
  sole purpose of disseminating the request to other sports wagering
  operators;
               (6)  to establish procedures to detect suspicious or
  illegal wagering activity, including measures to report suspicious
  or illegal activity to the commission; and
               (7)  to provide for the withholding or reporting of
  income tax of players where required by applicable state or federal
  law.
         (b)  For three years after a sporting event occurs,
  interactive sports wagering operators must maintain records on:
               (1)  all wagers, including the identity of the player,
  the amount and type of wager, the time and location of the wager
  (including IP address if available), and the outcome of the wager;
  and
               (2)  suspicious or illegal wagering activity.
         (c)  An interactive sports wagering operator must disclose
  the records described in Subsection (b) to the commission upon
  request.
         (d)  If a sports governing body has notified the commission
  that real-time information sharing for wagers placed on its
  sporting events is necessary and desirable, sports wagering
  operators must share with that sports governing body or its
  designee in real time, at the account level:
               (1)  anonymized information regarding a wager;
               (2)  the amount and type of wager;
               (3)  the time the wager was place;
               (4)  the location of the wager, including the IP
  address if applicable;
               (5)  the outcome of the wager; and
               (6)  records of abnormal wagering activity.
         (e)  A sports governing body may use the information
  described by Subsection (d) solely for integrity purposes. For
  purposes of Subsection (d), "real time" means on a commercially
  reasonable periodic interval, but in any event not less than once
  every 72 hours.
         (f)  In advertising its sports wagering operation, a sports
  wagering operator must ensure that its advertisements:
               (1)  do not target persons under the age of 21;
               (2)  disclose the identity of the sports wagering
  operator;
               (3)  provide information about or links to resources
  related to gambling addiction and prevention; and
               (4)  are not misleading to a reasonable person.
         Sec. 2005.152.  ESTABLISHMENT OF INTERACTIVE ACCOUNTS. (a)
  The sports wagering operator is responsible for verifying the
  identity of a player and ensuring that the player is at least 21
  years of age. This section does not mean that a patron is required
  to have an account to wager with a retail permit holder at the
  retail permit holder's facility.
         (b)  A player may not have more than one account with each
  sports wagering operator.
         (c)  The following persons are prohibited from the placement
  of sports wagers:
               (1)  any person under the age of 21;
               (2)  any person who has requested and not revoked
  exclusion from sports wagering under this chapter or who otherwise
  has been adjudicated by law as prohibited from engaging in sports
  wagering;
               (3)  any member, officer, or employee of the department
  or the commission;
               (4)  any employee or key person of a permit holder, only
  as to the affiliated permittee's sports wagering platform; and
               (5)  any participant, including athlete, coach,
  trainer, referee, or other official, and any employee or other
  staff of a participant, in a competition that is the subject of
  sports wagering under this chapter (but only as to the league with
  which the individual is affiliated);
               (6)  any employee or other staff of a governing or
  authorizing league or similar sponsoring organization for a
  competition that is the subject of sports wagering under this
  chapter (but only as to the league with which the individual is
  affiliated).
         (d)  A sports wagering operator may not be charged with
  violation of Subsection (c)(5) or (6) absent notice or actual
  knowledge that a player is within the scope of those provisions.
         (d)  In determining which persons are excluded from placing
  wagers under Subsection (c)(5) or (6), a sports wagering operator
  shall use any list of persons that is provided by the commission.
         (e)  A sports wagering account:
               (1)  must be established in the name or on behalf of the
  player who is a natural person and may not be in the name of any
  beneficiary, custodian, joint trust, corporation, partnership, or
  any other entity;
               (2)  must be established through the sports wagering
  operator's sports wagering platform or a specialized website or
  interface established for that purpose;
               (3)  must include terms that:
                     (A)  prohibit the transfer or sale of an account
  or account balance to another registered player;
                     (B)  prohibit the use of any virtual private
  network or other technology that may obscure or falsify the
  players' physical location;
                     (C)  prohibit any form of collusion, cheating, or
  other unlawful activity;
                     (D)  affirm that the player meets all eligibility
  requirements for registration; and
                     (E)  authorize the provision of notices and other
  required communications either through a designated mobile or other
  interface or to an electronic mail address designated by the
  player.
         (f)  The sports wagering operator may allow for the
  establishment of sports wagering accounts remotely, provided that
  it has in place measures sufficient to verify the age and identity
  of the player.
         (g)  A sports wagering operator may suspend or terminate a
  sports wagering account if:
               (1)  it is determined that the player has provided any
  false or misleading information in connection with the opening of
  the account or has engaged in cheating or other unlawful conduct;
               (2)  the player is or has been barred from placing
  wagers in this state;
               (3)  the player is or otherwise becomes ineligible
  under this chapter;
               (4)  the sports wagering operator determines that it
  lacks sufficient information to verify the age and eligibility of
  the player; or
               (5)  for any other reason at the sole discretion of the
  sports wagering operator, provided that it is not on the basis of a
  player's actual or believed sex, gender identity, race, religion,
  national origin, sexual orientation, or other lawfully protected
  characteristic.
         (h)  In the event of termination for any reason other than
  set forth in Subsection (g)(1), the player shall be provided a
  timely ability to access and withdraw any funds remaining in the
  sports wagering account.
         Sec. 2005.152.  "LAYOFF" WAGERING.  Nothing in this
  subchapter is intended to prohibit sports wagering operators from
  engaging in risk management measures commonly known as "layoff"
  wagering in the ordinary course of business.
  SUBCHAPTER E. COMPETITION INTEGRITY; PROHIBITED EVENTS
         Sec. 2005.201.  PROHIBITION ON YOUTH SPORTS WAGERING. No
  person shall place or accept a wager on youth sports.
         Sec. 2005.202.  MONITORING PROGRAM. Before the commencement
  of sports wagering under this chapter, the commission shall adopt
  rules and a monitoring program sufficient to protect the integrity
  of all sports wagering under this chapter and that provides for a
  sharing of suspicious activities on wagering with sports wagering
  operators and regulators in other states.
         Sec. 2005.203.  AUTHORITY TO SUSPEND WAGERING. The
  commission, as necessary to protect the integrity of a competition
  or its participants or as set forth in Section 2005.204, shall have
  the authority to suspend wagering on any competition, category or
  type of competition, any other aspect of a competition.
         Sec. 2005.204.  LIMITATIONS ON CERTAIN SPORTS WAGERING FOR
  GOOD CAUSE. (a)  If a sports governing body believes that the type,
  form, or category of sports wagering on that sports governing
  body's sporting events has the potential to undermine the integrity
  or perceived integrity of the sports governing body or its sporting
  events, the sports governing body may submit to the commission in
  writing a request to restrict, limit, or exclude a certain type,
  form, or category of sports wagering for that sports governing
  body's sporting events. The sports governing body shall provide the
  request in a form and manner as the commission may reasonably
  require.
         (b)  The commission may request comment from sports wagering
  operators on all requests described by Subsection (a) before
  granting the request.
         (c)  After giving due consideration to all comments received
  under Subsection (b), the commission shall, upon a demonstration of
  good cause from the requestor that the type, form, or category of
  sports wagering is likely to undermine the perceived integrity or
  the integrity of sports governing body or its sporting events,
  grant the request.
         (d)  If feasible, the commission must respond to a request
  under Subsection (a) concerning a particular event before the start
  of the event. If it is not feasible to respond before the start of
  the event, the commission must respond no later than seven days
  after the request is made.
         (e)  If the commission determines that the requestor under
  Subsection (a) is more likely than not to prevail in successfully
  demonstrating good cause for its request, the commission may
  provisionally grant the request until the commission makes a final
  determination as to whether the requestor has demonstrated good
  cause. Absent a provisional grant by the commission, a sports
  wagering operator may continue to offer sports wagering on sporting
  events that are the subject of a request under this section during
  the pendency of the commission's consideration of the request.
         Sec. 2005.205.  COOPERATION WITH INVESTIGATIONS. The
  commission and sports wagering operators shall cooperate with
  investigations conducted by sports governing bodies or law
  enforcement agencies, including by providing or facilitating the
  provision of account-level wagering information and audio or video
  files relating to persons placing wagers.
         Sec. 2005.206.  PROMPT REPORTING TO COMMISSION. (a)  A
  sports wagering operator must promptly report to the commission any
  information relating to:
               (1)  criminal or disciplinary proceedings commenced
  against the sports wagering operator in connection with its
  operations;
               (2)  abnormal wagering activity or patterns that may
  indicate a concern with the integrity of a sporting event;
               (3)  any potential breach of the relevant sports
  governing body's internal rules and codes of conduct pertaining to
  sports wagering;
               (4)  any other conduct that corrupts a wagering outcome
  of a sporting event for purposes of financial gain, including match
  fixing; and
               (5)  suspicious or illegal wagering activities,
  including use of funds derived from illegal activity, wagers to
  conceal or launder funds derived from illegal activity, using
  agents to place wagers, and using false identification.
         (b)  Sports wagering operators must promptly report
  information relating to conduct described in Subsections (a)(2),
  (3), and (4) to the relevant sports governing body.
         Sec. 2005.207.  CONFIDENTIALITY OF INFORMATION. (a)  A
  sports wagering operator must maintain the confidentiality of
  information provided by a sports governing body to the operator,
  unless disclosure is required by this chapter, the commission,
  other law, or court order.
         (b)  The commission, and sports wagering operators must
  maintain the confidentiality of all information relating to conduct
  described in Section 2005.206(a)(2), (3), and (4), unless
  disclosure is required by this chapter, other law, or court order,
  or as authorized by the relevant sports governing body.
         (c)  Nothing in this chapter prohibits the commission or a
  sports wagering operator from making a confidential disclosure to
  another sports wagering operator, a sports governing body, a sports
  wagering regulating entity, a law enforcement entity, or other
  party for the purpose of preventing or investigating conduct that
  corrupts or could corrupt the outcome of a sporting event,
  including match fixing.
         Sec. 2005.208.  DATA SOURCES. (a)  Except as provided by
  Subsection (c), a sports wagering operator may use any data source
  to determine the results of sports wagers, provided that the data is
  not obtained directly or indirectly from live event attendees who
  collect the data in violation of the terms of admittance to an event
  or through automated computer programs that compile data from the
  internet in violation of the terms of service of the relevant
  website or other internet platform.
         (b)  A sports wagering operator may use any data source for
  determining the result of a tier one sports wager.
         (c)  A sports governing body may notify the commission that
  it desires sports wagering operators to use official league data to
  settle tier two sports wagers. A notification under this subsection
  must be made in accordance with forms and procedures prescribed by
  the commission. The commission shall notify each sports wagering
  operator of the sports governing body's notification not later than
  the fifth day after the department's receipt of the notification.
  If a sports governing body does not notify the commission of its
  desire to supply official league data, a sports wagering operator
  may use any data source for determining the result of a tier two
  sports wager on a professional sporting event of the league
  governed by the sports governing body subject to the limitations of
  Subsection (a).
         (d)  Not later than the sixtieth day after the commission
  notifies each sports wagering operator as required by Subsection
  (c), a sports wagering operator must use only official league data
  to determine the results of tier two sports wagers on professional
  sports events of the league governed by the sports governing body,
  unless any of the following apply:
               (1)  the sports governing body or its applicable
  designee is unable to provide a feed, on commercially reasonable
  terms, of official league data to determine the results of a tier
  two sports wager, in which case sports wagering operators may use
  any data source for determining the results of tier two sports
  wagers until the data feed becomes available on commercial
  reasonable terms; or
               (2)  a sports wagering operator demonstrates to the
  commission that the sports governing body has not provided or
  offered to provide a feed of official league data to the sports
  wagering operator on commercially reasonable terms, according to
  criteria described in Subsection (e).
         (e)  The commission may consider the following information
  in determining whether a sports governing body has provided or
  offered to provide a feed of official league data on commercially
  reasonable terms, provided that no single factor on its own will be
  deemed conclusive evidence that official league data is being
  offered on terms that are not commercially reasonable:
               (1)  the availability of a sports governing body's
  official league data for tier two sports wagers from one or more
  authorized source;
               (2)  market information regarding the purchase, in
  Texas and in other states, by sports wagering operators of data for
  all sports from all authorized sources;
               (3)  the nature and quantity of the data, including the
  quality and complexity of the process used for collecting the data;
  and
               (4)  any other information the commission considers
  relevant.
         (f)  During any time period in which the commission is
  determining whether official league data is available on
  commercially reasonable terms under Subsections (d) and (e), a
  sports wagering operator may use any data source for determining
  the results of any tier two sports wagers subject to the limitations
  of Subsection (a). The commissioner shall make a determination
  under Subsections (d) and (e) not later than the 60th day after a
  sports wagering operator notifies the commission that it desires to
  demonstrate that a sports governing body has not provided or
  offered to provide a feed of official league data to the sports
  wagering operator on commercially reasonable terms. If the
  commission determines that the requestor is more likely than not to
  fail in successfully making the demonstration under this
  subsection, the commission may provisionally deny the request until
  the commission makes a final determination as to whether the
  requestor has made the demonstration.
         Sec. 2005.209.  COMMERCIAL AGREEMENTS.  Any sports governing
  body may enter into a commercial agreement with a sports wagering
  operator under which the sports governing body may share in the
  amount wager or revenues derived from sports wagering on the sports
  governing body's sporting events. A sports governing body is not
  required to obtain a permit or other approval from the commission to
  lawfully accept these amounts or revenues.
  SUBCHAPTER F. TAXES
         Sec. 2005.251.  IMPOSITION OF TAX. (a) A sports wagering
  operator shall pay a tax of ten percent on the sports wagering
  operator's adjusted gross revenue.
         (b)  The tax imposed under this section is due monthly to the
  comptroller and shall be remitted on or before the 20th day of the
  next succeeding calendar month. If the sports wagering operator's
  account necessitates corrections to a previously remitted tax, it
  shall document the corrections when it pays the following month's
  taxes.
         (c)  If the sports wagering operator's adjusted gross
  revenue for a month is a negative amount, the sports wagering
  operator may carry over the negative amount to a return filed for a
  subsequent month and deduct this amount from its tax liability for
  the subsequent month, provided that the amount may not be carried
  over and deducted against tax liability in any month that is more
  than 12 months after the month in which the amount was accrued.
         (d)  Any taxes collected under this section and any fees
  collected by the commission under this chapter that are in excess of
  what the department and commission need to implement this chapter
  shall be dedicated to providing special education and related
  services to eligible students in addition to and as a supplement to
  the funding provided under the Texas Education Code, Section
  48.102. The special education allotment advisory committee
  established under the Texas Education Code, Section 48.1021, shall
  make recommendations for the use of these supplemental fees, and
  the commissioner by rule shall determine the use of these
  supplemental funds based on the advisory committee's
  recommendation.
         Sec. 2005.252.  NO OTHER TAXATION PERMITTED. A sports
  wagering operator may not be subjected to an excise tax, license
  tax, permit tax, privilege tax, amusement tax, sales tax, or
  occupation tax that is imposed upon licensees by the state or any
  political subdivision of the state, except as provided by this
  chapter.
  SUBCHAPTER G. PENALTIES
         Sec. 2005.301.  CRIMINAL PENALTIES. (a) A person commits an
  offense if the person knowingly offers or engages in sports
  wagering in violation of this chapter. An offense under this
  subsection is a Class B misdemeanor.
         (b)  A person commits an offense if the person knowingly
  attempts to suborn, collude, or otherwise conspire to impermissibly
  influence the outcome of any competition or aspect of any
  competition that is the subject of sports wagering under this
  chapter. An offense under this subsection is a state jail felony.
         (c)  A person commits an offense if the person knowingly or
  willfully falsifies, conceals, or misrepresents a material fact or
  knowingly or willfully makes a false, fictitious, or fraudulent
  statement or representation in any application under Section
  2005.101 or Section 2005.102. An offense under this section is a
  state jail felony.
         Sec. 2005.302.  CIVIL PENALTIES. If the commission
  determines that a permit holder has intentionally violated any
  material provision of this chapter or a rule adopted by the
  commission under this chapter, the commission, after providing at
  least 15 days notice and a hearing, may:
               (1)  suspend or revoke the permit holder's permit; and
               (2)  impose a monetary penalty not to exceed $10,000
  for each violation.
         SECTION 3.  Section 47.01, Penal Code, is amended by
  amending Subdivision (1) and adding Subdivision (2-a) to read as
  follows:
               (1)  "Bet" means an agreement to win or lose something
  of value solely or partially by chance. A bet does not include:
                     (A)  contracts of indemnity or guaranty, or life,
  health, property, or accident insurance;
                     (B)  an offer of a prize, award, or compensation
  to the actual contestants or participants in a bona fide contest for
  the determination of skill, speed, strength, or endurance or to the
  owners of animals, vehicles, watercraft, or aircraft entered in a
  contest; [or]
                     (C)  an offer of merchandise, with a value not
  greater than $25, made by the proprietor of a bona fide carnival
  contest conducted at a carnival sponsored by a nonprofit religious,
  fraternal, school, law enforcement, youth, agricultural, or civic
  group, including any nonprofit agricultural or civic group
  incorporated by the state before 1955, if the person to receive the
  merchandise from the proprietor is the person who performs the
  carnival contest; or
                     (D)  an offer of a prize, award, or compensation
  to the participants in a fantasy or simulated sports game or
  contest.
               (2-a)  "Fantasy or simulated sports game or contest"
  means a bona fide contest, reflecting the knowledge and skill of the
  participants, in which:
                     (A)  participants assemble a fictional sports
  team composed of actual professional or amateur athletes to compete
  against other fictional sports teams assembled by other
  participants for a prize, award, or compensation;
                     (B)  the value of any prize, award, or
  compensation is established in advance of the beginning of the game
  or contest;
                     (C)  the outcome of the game or contest is
  determined by the accumulated statistical performances of the
  individual athletes on a participant's fictional sports team; and
                     (D)  the outcome of the game or contest is not
  based solely on the score, point spread, or performance of a single
  professional or amateur team or athlete.
         SECTION 4.  Section 47.02(c), Penal Code, is amended to read
  as follows:
         (c)  It is a defense to prosecution under this section that
  the actor reasonably believed that the conduct:
               (1)  was permitted under Chapter 2001, Occupations
  Code;
               (2)  was permitted under Chapter 2002, Occupations
  Code;
               (3)  was permitted under Chapter 2004, Occupations
  Code;
               (4)  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 5.  Section 47.09(a), Penal Code, 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 6.  Not later than the 90th day after the effective
  date of this Act, the Texas Commission on Licensing and Regulation
  shall publish applications and adopt rules allowing for the
  submission of applications for interactive sports wagering
  permits, service provider permits, and retail permits. The initial
  application period shall close 45 days after the publication of the
  application and adoption of rules. The commission shall complete
  the review of all applications received and award interactive
  sports wagering permits, service provider permits, and retail
  permits not later than the 30th day after the close of the initial
  application period. Additional available permits may be issued on a
  rolling basis thereafter.
         SECTION 7.  The change in law made by this Act applies only
  to an offense committed on or after the effective date of this Act.
  An offense committed before the effective date of this Act is
  governed by the law in effect on the date the offense was committed,
  and the former law is continued in effect for that purpose. For
  purposes of this section, an offense was committed before the
  effective date of this Act if any element of the offense occurred
  before that date.
         SECTION 8.  This Act takes effect January 1, 2022, but only
  if the constitutional amendment authorizing the legislature to
  legalize sports wagering in this state is approved by the voters. If
  that amendment is not approved by the voters, this Act has no
  effect.