By: Leach, Meyer, Patterson, Moody, Rose, H.B. No. 1942
      et al.
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of sports wagering; requiring
  occupational permits; authorizing fees; imposing a tax;
  decriminalizing wagering on certain sports events; creating
  criminal offenses; providing administrative penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  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 the
  interest of this state 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 state revenue;
               (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 Lottery Commission; and
               (5)  sports wagering within this state will be vested
  in operators acting under authority of state law and will promote
  trust and integrity in all sports wagering operations.
         SECTION 2.  Subtitle A, Title 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)  "Authorized sports entity" means:
                     (A)  a sports entity; or
                     (B)  a sports entity designee.
               (2)  "Cash equivalent" means an asset that is
  convertible to cash and approved for use in connection with
  authorized sports wagering, including the following approved cash
  equivalents:
                     (A)  traveler's checks;
                     (B)  foreign currency;
                     (C)  certified checks, cashier's checks, and
  money orders;
                     (D)  personal checks and drafts;
                     (E)  digital and virtual currencies and
  cryptocurrencies;
                     (F)  online and mobile payment systems that
  support online money transfers; 
                     (G)  credit cards and debit cards;
                     (H)  electronic devices with prepaid access, as
  defined by 31 C.F.R. Section 1010.100(ww); and
                     (I)  any other form approved by the commission.
               (3)  "Class 1 racetrack" means a class 1 racetrack
  described by Section 2026.102 that was in existence on January 1,
  2023.  The term includes an entity that operates a class 1
  racetrack.
               (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 Lottery Commission.
               (6)  "Covered service" means any service that involves
  the operation, management, or control of wagers authorized by this
  chapter, including the development or operation of sports wagering
  platforms and the provision of sports wagering odds and line
  information and sports wagering risk management information. The
  term does not include:
                     (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 sports wagering 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. 
               (7)  "Executive director" means the executive director
  of the commission.
               (8)  "Fantasy sports contest" has the meaning assigned
  by Section 47.01, Penal Code.
               (9)  "Interactive sports wagering" means the conduct of
  sports wagering through or by means of the Internet, a mobile
  device, or any other telecommunications service.
               (10)  "Interactive sports wagering operator" means the
  holder of an interactive sports wagering permit.
               (11)  "Interactive sports wagering permit" means a
  permit issued by the commission that authorizes the operation of
  interactive sports wagering under this chapter.
               (12)  "Key person" means an officer or director of an
  interactive sports wagering operator who:
                     (A)  is directly involved in the operation,
  management, or control of the conduct of sports wagering under this
  chapter; or
                     (B)  exercises substantial influence or control
  over the interactive sports wagering operator's wagering
  activities.
               (13)  "Official league data" means statistics,
  results, outcomes, and other sporting event data obtained for
  determining the outcome of tier two sports wagers under an
  agreement between an interactive 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 interactive sports wagering operators.
               (14)  "Permit holder" means a person who holds an
  interactive sports wagering permit or service provider permit
  issued under this chapter.
               (15)  "Professional sports" means an athletic or
  sporting event involving at least two competitors, at least one of
  whom receives compensation for participating in the event.
               (16)  "Service provider" means the holder of a service
  provider permit.
               (17)  "Service provider permit" means a permit issued
  by the commission that authorizes the provision of covered
  services.
               (18)  "Sporting event" or "sports event" means a
  professional sports or athletic event, college sports or athletic
  event, amateur sports or athletic event, motor race event,
  electronic sports event, competitive video game event, or any other
  event approved by the commission.
               (19)  "Sports entity" means:
                     (A)  a sports team;
                     (B)  a sports organization that:
                           (i)  holds in this state sanctioned annual
  professional golf tournaments as part of a national tour of
  professional golfers; and
                           (ii)  held events described by Subparagraph
  (i) before January 1, 2023;
                     (C)  a class 1 racetrack that was in operation on
  January 1, 2023; or
                     (D)  a racetrack that:
                           (i)  existed and operated before January 1,
  2000, and annually hosted National Association for Stock Car Auto
  Racing Cup Series events for at least 20 years preceding May 1,
  2023; or
                           (ii)  existed and operated before January 1,
  2015, and annually hosted the Formula One United States Grand Prix
  in each year that the race occurred for at least five years
  preceding May 1, 2023.
               (20)  "Sports entity designee" means any person, other
  than an individual, that is designated and authorized by a sports
  entity to receive an interactive sports wagering permit on behalf
  of the sports entity.
               (21)  "Sports facility" means:
                     (A)  a facility in this state that is the primary
  host of:
                           (i)  a Major League Baseball, National
  Basketball Association, Women's National Basketball Association,
  National Football League, Major League Soccer, National Lacrosse
  League, or National Hockey League professional sports franchise; or
                           (ii)  a sanctioned annual professional golf
  tournament that is part of a national tour of professional golfers;
                     (B)  a class 1 racetrack that was in operation on
  January 1, 2023; or
                     (C)  a racetrack that:
                           (i)  existed and operated before January 1,
  2000, and annually hosted National Association for Stock Car Auto
  Racing Cup Series events for at least 20 years preceding May 1,
  2023; or
                           (ii)  existed and operated before January 1,
  2015, and annually hosted the Formula One United States Grand Prix
  in each year that the race occurred for at least five years
  preceding May 1, 2023.
               (22)  "Sports governing body" means the organization
  that:
                     (A)  prescribes final rules and enforces codes of
  conduct with respect to a professional sporting event and
  participants in the professional sporting event; and
                     (B)  has corporate headquarters located in the
  United States.
               (23)  "Sports team" means a Major League Baseball,
  National Basketball Association, Women's National Basketball
  Association, National Football League, Major League Soccer,
  National Lacrosse League, or National Hockey League professional
  sports franchise located in this state that:
                     (A)  leases, subleases, or exclusively or jointly
  operates a sports facility; and
                     (B)  existed on January 1, 2023.
               (24)  "Sports wagering" means a bet placed on sporting
  events or portions of sporting events, or on the individual
  performance statistics of athletes in a sporting event or
  combination of sporting events. The term includes 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 sports contests; or
                     (B)  horse racing or greyhound racing regulated
  under Subtitle A-1 (Texas Racing Act).
               (25)  "Sports wagering brand" means the names, logos,
  and brands by which an interactive sports wagering operator
  advertises, promotes, or otherwise holds out to the public its
  sports wagering platform.
               (26)  "Sports wagering platform" means an Internet
  website, mobile application, or other interactive platform
  accessible through or by means of the Internet, a mobile device, or
  any other telecommunications service that sports wagering players
  may use to place sports wagers and participate in sports wagering
  authorized under this chapter.
               (27)  "Tier one sports wager" means any sports wager
  other than a tier two sports wager.
               (28)  "Tier two sports wager" means a sports wager
  placed after a sporting event begins. 
               (29)  "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 of or under the sponsorship of one or
  more public or private preschools or public or private elementary,
  middle or junior high, or high 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. 2005.003.  COMPLIANCE WITH FEDERAL AND STATE LAW. (a)
  All sports wagering authorized under this chapter must be
  initiated, received, and otherwise placed within the boundaries of
  this state unless otherwise authorized by commission rule adopted
  in accordance with applicable federal and state laws. 
         (b)  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 wagers are initiated, received, or otherwise placed,
  consistent with the Unlawful Internet Gambling Enforcement Act of
  2006 (31 U.S.C. Section 5361, et seq.).
         Sec. 2005.004.  INAPPLICABILITY OF CHAPTER TO CERTAIN
  EVENTS. This chapter does not to apply to:
               (1)  fantasy sports contests; or
               (2)  pari-mutuel wagering on horse-racing or greyhound
  racing under Subtitle A-1 (Texas Racing Act).
         Sec. 2005.005.  REVIEW OF COMMISSION ACTION. Except as
  otherwise provided by this chapter, an action of the commission
  under this chapter is subject to review under Chapter 2001,
  Government Code.
         Sec. 2005.006.  ALLOCATION OF EXCESS FEE REVENUE. Any fees
  collected by the commission under this chapter in amounts that
  exceed the amount the commission requires to implement this chapter
  shall be remitted to the comptroller to be deposited as prescribed
  by Section 2005.258.
  SUBCHAPTER B. COMMISSION POWERS AND DUTIES
         Sec. 2005.051.  SPORTS WAGERING PROGRAM. (a) The commission
  shall by rule establish an interactive sports wagering program
  under this chapter and issue permits to operate interactive sports
  wagering on sporting events as authorized by this chapter and
  commission rule.
         (b)  The commission may not authorize sports wagering
  involving youth sports.
         Sec. 2005.052.  RULES. The commission shall adopt all
  necessary rules to administer this chapter and regulate sports
  wagering in this state.
         Sec. 2005.053.  ADMINISTRATION AND ENFORCEMENT. The
  executive director under direction of the commission shall
  administer and enforce this chapter.
         Sec. 2005.054.  CERTIFICATION OF REVENUES AND EXPENSES. The
  commission shall:
               (1)  each month certify to the comptroller in the form
  and manner required by the comptroller a full and complete
  statement of sports wagering revenue and expenses for the preceding
  month; and
               (2)  not later than September 30 of each year, provide
  to the comptroller a full and complete statement of sports wagering
  revenue and expenses for the preceding state fiscal year and any
  recommendations for amendments to this chapter that may be
  warranted and prudent to protect the public interest.
         Sec. 2005.055.  AUDITS. (a) To ensure a proper accounting
  of all revenue due to this state, the commission and the comptroller
  each independently shall have the right to audit the books and
  records of interactive sports wagering operators and service
  providers that are related to sports wagering activities authorized
  under this chapter. The commission and comptroller shall
  coordinate to ensure audits are not duplicative or overly
  burdensome on the operators or providers.
         (b)  The comptroller may conduct an audit of any taxes or
  fees imposed under this chapter in the same manner the comptroller
  conducts an audit of taxes imposed under Title 2, Tax Code.
         Sec. 2005.056.  VOLUNTARY EXCLUSION PROGRAM. (a) The
  commission by rule shall establish, implement, and administer a
  voluntary exclusion program.
         (b)  The rules adopted under this section must require:
               (1)  the commission to establish and administer a
  statewide self-exclusion list that allows an individual to register
  on the commission's public Internet website for self-exclusion for
  the period specified in the exclusion registration agreement and
  requires the commission to regularly distribute the list to each
  interactive sports wagering operator;
               (2)  each interactive sports wagering operator to
  provide information on the procedures for individuals to request to
  be added to the commission's self-exclusion list and for operators
  to bar individuals on the self-exclusion list from any further
  participation in sports wagering for the period the individuals are
  included on the list;
               (3)  except as otherwise provided by commission rule,
  an individual who participates in the voluntary exclusion program
  to agree to refrain from participating in sports wagering for the
  period specified in the exclusion registration agreement;
               (4)  except as otherwise provided by commission rule,
  an individual who participates in the voluntary exclusion program
  to agree not to petition the commission for removal from the program
  for the period specified in the exclusion registration agreement;
  and
               (5)  a permit holder to make all commercially
  reasonable attempts and cause its sales agents and others operating
  on its behalf to make reasonable efforts to cease all direct
  marketing efforts to individuals participating in the voluntary
  exclusion program.
         (c)  An individual's registration under the voluntary
  exclusion program does not prevent a permit holder and its agents
  and others operating on their behalf from seeking payment of a debt
  accrued by the individual before the individual entered the
  program.
         Sec. 2005.057.  RISK MANAGEMENT. (a) The commission shall
  adopt rules allowing interactive sports wagering operators and
  their service providers to use systems that offset loss or manage
  risk in the operation of sports wagering under this chapter,
  including through liquidity pools, exchanges, or similar
  mechanisms in other approved jurisdictions in which the interactive
  sports wagering operator, service provider, affiliate of either, or
  other third party also holds an equivalent permit or license. 
         (b)  Notwithstanding Subsection (a), the rules adopted under
  this section must require that adequate protections be maintained
  at all times to ensure sufficient funds are available to pay all
  sports wagering players.
         Sec. 2005.058.  PLACES OF PUBLIC ACCOMMODATION. 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, or a similar establishment in which
  computer terminals or similar access devices are intended or are
  made available for the primary use 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.
         Sec. 2005.059.  AUTHORITY TO SUSPEND WAGERING. The
  commission, as necessary to protect the integrity of a competition
  or its participants or as described in Section 2005.060, may
  suspend wagering on any competition, category or type of
  competition, or other aspect of a competition.
         Sec. 2005.060.  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 a
  written 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 the form and manner prescribed by commission rule.
         (b)  The commission shall request comment from interactive
  sports wagering operators on each request described by Subsection
  (a) before granting the request. 
         (c)  After giving due consideration to all comments received
  under Subsection (b), the commission shall, on 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 the sports governing body or its sporting events,
  grant the request.
         (d)  The commission shall:
               (1)  if feasible, respond to a request under Subsection
  (a) concerning a particular event before the event begins; or
               (2)  if not feasible, respond not later than the
  seventh day after the date the request is submitted.
         (e)  If the commission determines the requestor who
  submitted a request under Subsection (a) is likely to prevail in
  successfully demonstrating good cause for its request, the
  commission may provisionally grant the request until the commission
  issues a final determination on whether the requestor has
  demonstrated good cause. Absent a provisional grant by the
  commission, an interactive sports wagering operator may continue to
  offer sports wagering on sporting events that are the subject of a
  request under this section during the commission's consideration of
  the request.
         Sec. 2005.061.  MONITORING PROGRAM. The commission by rule
  shall adopt and administer a monitoring program sufficient to
  protect the integrity of all sports wagering regulated under this
  chapter. The program must provide for the sharing of suspicious
  activities on wagering with operators and regulators in other
  states.
  SUBCHAPTER C. SPORTS WAGERING PERMITS
         Sec. 2005.101.  INTERACTIVE SPORTS WAGERING PERMIT
  APPLICATION; FEE. (a) The commission shall issue not more than one
  interactive sports wagering permit for each authorized sports
  entity under this chapter. Each sports entity may designate only
  one sports entity designee as an authorized sports entity. 
         (b)  The commission shall issue an interactive sports
  wagering permit to an authorized sports entity that:
               (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 in an
  amount equal to $2 million, which the commission must refund if the
  applicant's application is denied after deducting the commission's
  expenses incurred in considering the application.
         (c)  The commission may issue an interactive sports wagering
  permit to an authorized sports entity that is a sports entity
  designee only if the designee is based in the United States.
         (d)  The commission shall prescribe an application form for
  an interactive sports wagering permit that requires an applicant to
  submit:
               (1)  the applicant's proposed initial business plan,
  including 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 an ineligible person does not
  participate in sports wagering; 
               (4)  the applicant's history of preventing problem
  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 or equivalent; 
               (6)  the single sports wagering brand under which an
  interactive sports wagering operator plans to hold out its sports
  wagering platform to the public;
               (7)  any personal information the commission by rule
  may determine is required for the applicant's key persons; and
               (8)  any other information the commission considers
  necessary.
         Sec. 2005.102.  SERVICE PROVIDER PERMIT APPLICATION; FEE.
  (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
  by this section; and
               (2)  pay to the commission an application fee in an
  amount equal to $25,000. 
         (b)  An application submitted under this section must
  include:
               (1)  the applicant's background in sports wagering or a
  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, a list of all active or lapsed permits or
  licenses for sports wagering or other wagering activities, and the
  reason for any lapse;
               (3)  the applicant's written information security
  program, including information security governance and the
  designation of a chief security officer or equivalent; 
               (4)  any personal information the commission by rule
  determines should be required concerning the applicant's key
  persons; and 
               (5)  any other information the commission considers
  necessary.
         Sec. 2005.103.  BACKGROUND CHECK. The commission shall
  conduct a background check on each service provider applicant,
  including any key persons of the applicant, as required by
  commission rule. A background check conducted under this section
  must include a credit history check, a tax record check, and a
  criminal history record information check.
         Sec. 2005.104.  GRANT OR DENIAL. (a) The commission shall
  grant or deny a completed application under this subchapter not
  later than the 90th day after the date the commission receives the
  application. The commission's decision is final and not
  appealable, except as otherwise required under state law.
         (b)  The commission may accept a license, permit, or any
  other authorization to operate sports wagering issued by another
  jurisdiction that the commission specifically determines has
  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.
         (c)  The commission shall grant a permit to an applicant for
  a service provider permit unless:
               (1)  the commission reasonably believes:
                     (A)  the applicant will be unable to satisfy the
  duties of a service provider under this chapter;
                     (B)  the applicant or a key person of the
  applicant is not of good character, honesty, or integrity; or
                     (C)  the applicant's or a key person of the
  applicant's prior activities, criminal record, reputation, or
  associations are likely to:
                           (i)  pose a threat to the public interest;
                           (ii)  impede the regulation of sports
  wagering; or
                           (iii)  promote unfair or illegal activities
  in the conduct of sports wagering;
               (2)  the applicant or a key person of the applicant
  knowingly fails to comply with the provisions of this chapter or a
  commission rule under this chapter;
               (3)  the applicant or a key person of the applicant has
  been previously convicted of a felony, a crime of moral turpitude,
  or any criminal offense involving dishonesty or breach of trust in
  the 10 years preceding the date the application is submitted;
               (4)  the applicant's or a key person of the applicant's
  license, registration, or permit to conduct sports wagering, other
  forms of gambling activity, or a covered service issued by another
  state has been revoked; or
               (5)  the applicant defaults in payment of any
  obligation or debt due to this state.
         Sec. 2005.105.  CONFIDENTIAL INFORMATION. Notwithstanding
  any other law, the information an applicant submits under this
  subchapter is confidential and exempt from public disclosure.
         Sec. 2005.106.  PERMIT RENEWAL. (a) Except as provided by
  Subsection (b), a permit issued under this chapter expires on the
  third anniversary of the date of issuance.
         (b)  If the permit application is submitted by a designee of
  a sports entity or the sports entity's affiliate, a permit under
  this chapter expires on the earlier of:
               (1)  the third anniversary of the date of issuance; or
               (2)  the expiration date of any contract between the
  sports entity or an affiliate of the sports entity and the designee
  of the sports entity or affiliate authorizing the designee to
  manage and operate the sports entity's or affiliate's sports
  wagering activities.
         (c)  At least 60 days before the expiration date of a permit,
  a permit holder may renew a permit by submitting a renewal
  application on a form prescribed by the commission. The permit
  holder must include a renewal fee in an amount equal to:
               (1)  $400,000 for renewal of an interactive sports
  wagering permit; or
               (2)  $10,000 for renewal of a service provider permit.
         (d)  The commission may deny an application for permit
  renewal if the commission finds grounds for denial as provided in
  Section 2005.101 for an interactive sports wagering permit or
  Section 2005.102 for a service provider permit.
  SUBCHAPTER D. SPORTS WAGERING OPERATORS
         Sec. 2005.151.  INTERACTIVE SPORTS WAGERING OPERATOR. An
  interactive sports wagering operator or a service provider on
  behalf of an interactive sports wagering operator may conduct
  statewide interactive sports wagering.
         Sec. 2005.152.  DUTIES OF INTERACTIVE SPORTS WAGERING
  OPERATORS. (a) An interactive sports wagering operator and its
  service provider shall implement reasonable measures to:
               (1)  ensure that only individuals physically located in
  this state or as otherwise authorized by commission rule may place a
  wager through its sports wagering platform;
               (2)  protect the confidential information of players
  using its sports wagering platform; 
               (3)  prevent wagering on events that are prohibited
  events, as provided by this chapter or commission rule;
               (4)  prevent individuals from placing wagers as agents
  or proxies for other individuals; 
               (5)  allow individuals to restrict themselves from
  placing wagers through the sports wagering platform under the
  voluntary exclusion program established under Section 2005.056; 
               (6)  establish procedures to detect suspicious or
  illegal wagering activity, including measures to report suspicious
  or illegal wagering activity to the commission; and
               (7)  provide for the withholding or reporting of income
  tax of players as required by applicable state or federal law.
         (b)  An interactive sports wagering operator shall maintain
  until the third anniversary of the date of a sporting event records
  of:
               (1)  all sports wagers placed on the event, including:
                     (A)  the identity of the player;
                     (B)  the amount and type of wager;
                     (C)  the time and location of the wager, including
  an Internet Protocol address, if available; and 
                     (D)  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 on
  request.
         (d)  If a sports governing body notifies the commission that
  real-time information sharing for wagers placed on its sporting
  events is necessary and desirable, interactive sports wagering
  operators must share with that sports governing body or its
  designee in real time, at the account level: 
               (1)  anonymized information regarding an individual
  who places a wager;
               (2)  the amount and type of wager;
               (3)  the time the wager was placed; 
               (4)  the location of the wager, including the Internet
  Protocol 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 sports wagering integrity
  purposes. 
         (f)  In advertising its sports wagering platform, an
  interactive sports wagering operator must ensure that its
  advertisements:
               (1)  are not targeted to individuals under the age of
  21;
               (2)  disclose the identity of the interactive sports
  wagering operator's brand;
               (3)  provide information about or links to resources
  related to problem gambling and prevention, including a toll-free
  crisis help telephone number approved by the commission; and
               (4)  are not misleading to a reasonable individual.
         (g)  For purposes of Subsection (d), "real-time information
  sharing" means the sharing of information at a commercially
  reasonable periodic interval of not less than once every 72 hours.
         Sec. 2005.153.  ESTABLISHMENT OF INTERACTIVE ACCOUNTS. (a)
  An interactive sports wagering operator:
               (1)  is responsible for verifying the identity of a
  sports wagering player and ensuring that the player is at least 21
  years of age; and
               (2)  may remotely verify the identity of a sports
  wagering player in order to establish the player's interactive
  sports wagering account.
         (b)  A sports wagering player may not establish more than one
  account with any interactive sports wagering operator.
         (c)  The following individuals are prohibited from placing
  sports wagers:
               (1)  any individual under 21 years of age;
               (2)  any individual who has requested and has not
  revoked exclusion from sports wagering under the voluntary
  exclusion program established under Section 2005.056, or who
  otherwise has been adjudicated by law as prohibited from engaging
  in sports wagering;
               (3)  any member, officer, or employee of the
  commission;
               (4)  any employee or key person of a permit holder for
  that permit holder's sports wagering platform; 
               (5)  any participant, including an 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 for the league with which the
  participant is affiliated; and
               (6)  any employee or other staff of a sports governing
  body or authorizing league or similar sponsoring organization for a
  competition subject to sports wagering under this chapter for the
  sports governing body, authorizing league, or similar sponsoring
  organization with which the individual is employed or otherwise
  affiliated.
         (d)  An interactive sports wagering operator and, as
  applicable, the operator's service providers may not accept a
  sports wager from an individual described by Subsection (c)(5) or
  (6) if the interactive sports wagering operator or, as applicable,
  the operator's service provider, has notice or actual knowledge
  that the individual is prohibited from placing a sports wager under
  those subsections.
         (e)  An interactive sports wagering account must:
               (1)  be established in the name or on behalf of a 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)  be established:
                     (A)  through the interactive sports wagering
  operator's sports wagering platform or a specialized Internet
  website or other interface established for that purpose; or
                     (B)  by any other means approved by the
  commission; and
               (3)  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
  player's 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 interactive sports wagering operator may allow for
  the establishment, verification, and funding of an account
  remotely, provided the operator has in place measures sufficient to
  remotely verify the age and identity of the player.
         (g)  An interactive sports wagering operator may suspend or
  terminate an account:
               (1)  if the operator determines 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)  if the player is or has been barred from placing
  sports wagers in this state;
               (3)  if the player is or otherwise becomes ineligible
  under this chapter;
               (4)  if the interactive sports wagering operator
  determines 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
  operator, provided that reason is not based on a player's actual or
  believed sex, gender identity, race, religion, national origin,
  sexual orientation, or other lawfully protected characteristic.
         (h)  On termination for any reason other than the reason
  described in Subsection (g)(1), an interactive sports wagering
  operator must provide the player sufficient time and access to
  withdraw any funds remaining in the account.
         Sec. 2005.154.  BRAND LIMITATION. An interactive sports
  wagering operator may hold out the operator's sports wagering
  platform to the public under only one sports wagering brand.
         Sec. 2005.155.  ASSIGNMENT OF SPORTS WAGERING OPERATIONS TO
  THIRD PARTY. (a) Subject to commission approval, an interactive
  sports wagering operator may assign the operator's interactive
  sports wagering operations to a third-party designee to manage and
  operate the operator's sports wagering activities. 
         (b)  A third-party designee described by Subsection (a) must
  submit to the commission the information required for an applicant
  under Subchapter C in accordance with procedures prescribed by
  commission rule. 
         Sec. 2005.156.  FANTASY SPORTS CONTESTS. An interactive
  sports wagering operator may offer fantasy sports contests to the
  extent those contests are authorized by law.
         Sec. 2005.157.  RISK MANAGEMENT MEASURES. An interactive
  sports wagering operator may engage in risk management measures,
  commonly known as layoff wagering, in the ordinary course of
  business. 
         Sec. 2005.158.  DATA SOURCES. (a)  An interactive sports
  wagering operator is not required to use official league data in
  determining the result of a tier one sports wager.
         (b)  A sports governing body may notify the commission in
  accordance with forms and procedures prescribed by the commission
  of the governing body's determination that an interactive sports
  wagering operator must use official league data to settle tier two
  sports wagers. The commission shall notify each interactive sports
  wagering operator of the sports governing body's notification not
  later than the fifth day after the date the commission receives the
  notification.  If a sports governing body does not notify the
  commission of its determination to provide official league data, an
  operator is not required to use official league data in determining
  the result of a tier two sports wager on a professional sports event
  of the league governed by the sports governing body.
         (c)  Not later than the 60th day after the date the
  commission notifies each interactive sports wagering operator as
  required by Subsection (b), a permit holder may only use 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:
               (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 an operator is not required to use
  official league data in determining the results of tier two sports
  wagers until the data feed becomes available on commercially
  reasonable terms; or
               (2)  an 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 operator on commercially
  reasonable terms.
         (d)  The commission may consider the following nonexclusive
  factors in evaluating whether a sports governing body has provided
  or offered to provide a feed of official league data on commercially
  reasonable terms:
               (1)  the availability of a sports governing body's
  official league data for tier two sports wagers from more than one
  authorized source;
               (2)  market information, including price, terms, and
  conditions, regarding the purchase, in this state and other states,
  by interactive sports wagering operators of comparable data for the
  purpose of settling sports wagers;
               (3)  the nature and quantity of the data, including the
  quality and complexity of the process used for collecting the data;
  and
               (4)  the extent to which sports governing bodies or
  their designees have made data used to settle tier two sports wagers
  available to sports wagering operators and any terms and conditions
  relating to the use of that data.
         (e)  During any period in which the commission is determining
  whether official league data is available on commercially
  reasonable terms under Subsections (c) and (d), an interactive
  sports wagering operator is not required to use official league
  data in determining the results of any tier two sports wagers. The
  commission shall make a determination under Subsections (c) and (d)
  not later than the 60th day after the date an 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 operator on commercially reasonable terms. If
  the commission determines that the requesting operator is likely 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
  requesting operator has made the demonstration.
         Sec. 2005.159.  COMMERCIAL AGREEMENTS. (a) Any sports
  governing body may enter into a commercial agreement with an
  interactive sports wagering operator under which the sports
  governing body may share in the amounts wagered or revenues derived
  from sports wagering on the sports governing body's sporting
  events.
         (b)  A sports governing body is not required to obtain a
  permit or other approval from the commission to lawfully accept
  amounts or revenues described by Subsection (a).
  SUBCHAPTER E. COMPETITION INTEGRITY: PROHIBITED EVENTS;
  INVESTIGATIONS; PROMPT REPORTING
         Sec. 2005.201.  PROHIBITION ON YOUTH SPORTS WAGERING. A
  person may not place or accept a sports wager on youth sports.
         Sec. 2005.202.  COOPERATION WITH INVESTIGATIONS. The
  commission and interactive 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 individuals placing wagers.
         Sec. 2005.203.  REQUIRED REPORT TO COMMISSION. (a) An
  interactive sports wagering operator must promptly report to the
  commission any information relating to:
               (1)  criminal or disciplinary proceedings commenced
  against the interactive 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, to the extent the operator has actual knowledge of
  the potential breach;
               (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 the use of funds derived from illegal activity, the
  placement of wagers to conceal or launder funds derived from
  illegal activity, the use of agents to place wagers, and the use of
  false identification in placing wagers.
         (b)  Interactive 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. 2005.204.  CONFIDENTIALITY OF CERTAIN REPORTED
  INFORMATION. (a) An interactive 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, sports governing bodies, and
  interactive sports wagering operators must maintain the
  confidentiality of all information relating to conduct described in
  Sections 2005.203(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)  The commission must maintain the confidentiality of all
  information provided by sports wagering operators for compliance
  purposes unless disclosure is required by this chapter, other law,
  or court order.
         (d)  The commission and an interactive sports wagering
  operator may disclose confidential information to another
  interactive 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.
  SUBCHAPTER F. WAGERING REVENUE TAX
         Sec. 2005.251.  IMPOSITION OF TAX. A tax is imposed on the
  adjusted gross wagering revenue of an interactive sports wagering
  operator.
         Sec. 2005.252.  COMPUTATION OF ADJUSTED GROSS WAGERING
  REVENUE; LOSS CARRYFORWARD. (a) For purposes of the tax imposed
  under this subchapter, an interactive sports wagering operator
  shall compute the operator's adjusted gross wagering revenue for a
  reporting period by determining the total amount of wagering
  revenue the operator received from all sports wagers authorized
  under this chapter during the period and subtracting the following
  for the period:
               (1)  all cash or cash equivalents the operator paid as
  winnings to players;
               (2)  the actual cost paid by the operator for any
  personal property the operator distributed to a player as a result
  of a sports wager authorized under this chapter;
               (3)  uncollectible receivables, not to exceed four
  percent of the amount of gross wagering revenue except as provided
  by Subsection (b);
               (4)  any federal excise tax payments on sports wagers
  the operator remitted to the federal government; and
               (5)  amounts returned to an authorized participant due
  to technical malfunction or due to concerns regarding the integrity
  of the wager or the sporting event.
         (b)  The commission may increase the percentage of gross
  wagering revenue that an interactive sports wagering operator may
  deduct as uncollectible receivables under Subsection (a)(3) on a
  showing that a greater percentage is reasonable and warranted.
         (c)  An interactive sports wagering operator that has an
  adjusted gross wagering revenue for a reporting period computed
  under Subsection (a) that is less than zero may carry that amount
  forward and deduct the amount from the operator's adjusted gross
  wagering revenue for one or more of the succeeding 12 reporting
  periods before determining the amount of tax due under this
  subchapter for the applicable reporting period.
         (d)  Notwithstanding Subsection (a), an interactive sports
  wagering operator may, before the first anniversary of the date the
  operator is initially issued an interactive sports wagering permit
  under this chapter, exclude wagers placed using free bets or
  promotional credits from the computation of the operator's adjusted
  gross wagering revenue for a reporting period.
         Sec. 2005.253.  RATE OF TAX. The rate of the tax imposed
  under this subchapter is 15 percent of the adjusted gross wagering
  revenue for a reporting period, subject to Section 2005.252(c).
         Sec. 2005.254.  PAYMENT OF TAX. The tax imposed under this
  subchapter is due and payable to the comptroller on or before the
  20th day of the month following the month in which the adjusted
  gross wagering revenue on which the tax is based is received.
         Sec. 2005.255.  TAX REPORT. (a) A person required to pay a
  tax under this subchapter shall file a tax report with the
  comptroller on a form prescribed by the comptroller. The tax report
  is due on the date the tax is due under Section 2005.254.
         (b)  The tax report must include separate statements of:
               (1)  the amount of the gross wagering revenue the
  person received from all sports wagers authorized under this
  chapter during the reporting period;
               (2)  the total amount of cash or cash equivalents the
  person paid as winnings to players during the reporting period;
               (3)  the amount of the actual cost the person paid
  during the reporting period for any personal property the person
  distributed to a player as a result of a sports wager authorized
  under this chapter;
               (4)  the cash value of any bonuses or promotional
  credits provided to players that are returned to the person in the
  form of a deposit or wager during the reporting period;
               (5)  the person's total amount of uncollectible
  receivables during the reporting period as determined under Section
  2005.252;
               (6)  the amount of any federal excise tax payments on
  sports wagers the person remitted to the federal government during
  the reporting period; and
               (7)  the total negative amount of adjusted gross
  wagering revenue that is eligible to be deducted under Section
  2005.252(c), the amount of that revenue the person actually
  deducted for the report in determining the tax due, and the
  remaining amount of that revenue that is eligible to be deducted on
  a subsequent report.
         Sec. 2005.256.  RECORDS. A person required to pay a tax
  under this subchapter shall keep a record of:
               (1)  the amounts the person is required to report under
  Section 2005.255; and
               (2)  any other information the comptroller requires.
         Sec. 2005.257.  ADMINISTRATION AND ENFORCEMENT; RULES. (a)
  The comptroller shall administer, collect, and enforce the tax
  imposed under this subchapter in the manner the comptroller
  administers, collects, and enforces taxes imposed under Title 2,
  Tax Code, except as otherwise provided by this subchapter.
         (b)  The comptroller shall adopt rules providing for the
  manner in which a person required to pay a tax under this subchapter
  may file an amended tax report for a reporting period or otherwise
  account for errors or omissions in a tax report filed under this
  subchapter. The comptroller may adopt other rules as necessary to
  implement this subchapter.
         Sec. 2005.258.  ALLOCATION OF TAX REVENUE AND EXCESS FEE
  REVENUE. The comptroller shall deposit the net revenue from the tax
  collected under this subchapter and the excess fee revenue
  collected under Section 2005.006 as follows:
               (1)  two percent to the problem gambling and addiction
  grant fund established under Section 2005.259; and
               (2)  the remainder to the general revenue fund to be
  appropriated to the Texas Education Agency for use in providing
  property tax relief through the reduction of the state compression
  percentage, as defined by Section 48.255, Education Code.
         Sec. 2005.259.  PROBLEM GAMBLING AND ADDICTION GRANT FUND.
  (a) The problem gambling and addiction grant fund is established as
  an account in the general revenue fund.
         (b)  Money credited to the fund may be used only for awarding
  grants under this section.  The fund shall be administered in
  accordance with this section.
         (c)  An expenditure from the problem gambling and addiction
  grant fund shall be made in accordance with the General
  Appropriations Act.
         (d)  From funds appropriated as described by Subsection (c),
  the commission shall administer a grant program to provide:
               (1)  assistance for the direct treatment of persons
  diagnosed as suffering from pathological gambling and other
  addictive behaviors; and
               (2)  funding for research regarding the impact of
  gambling on residents of this state.
         (e)  Research grants awarded under Subsection (d)(2) may
  include grants for determining the effectiveness of education and
  prevention efforts on the prevalence of pathological gambling in
  this state.
         Sec. 2005.260.  INAPPLICABILITY OF OTHER TAXES.
  Notwithstanding any other law, except this chapter, an interactive
  sports wagering operator is exempt from all excise taxes, license
  taxes, permit taxes, privilege taxes, amusement taxes, and
  occupation taxes imposed by this state or any political subdivision
  of this state.
  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
  wilfully falsifies, conceals, or misrepresents a material fact or
  knowingly or wilfully makes a false, fictitious, or fraudulent
  statement or representation in an application submitted under this
  chapter. An offense under this subsection is a state jail felony. 
         (d)  If conduct constituting an offense under this chapter
  also constitutes an offense under Chapter 47, Penal Code, the actor
  may be prosecuted under either chapter or under both chapters.
         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 sports contest.
               (2-a)  "Fantasy sports contest" means a bona fide
  contest, reflecting the relative 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.  (a) Not later than the 90th day after the
  effective date of this Act, the Texas Lottery Commission shall post
  on the commission's Internet website the application forms and
  adopt rules allowing for the submission of applications for
  interactive sports wagering permits and service provider permits,
  as required by Chapter 2005, Occupations Code, as added by this Act.
         (b)  Not later than the 45th day after the date the
  application forms are posted and rules are adopted as required by
  Subsection (a) of this section, the Texas Lottery Commission shall
  open an initial application period for issuance of permits under
  Chapter 2005, Occupations Code, as added by this Act.
         (c)  Not later than the 30th day after the date the initial
  application period described by Subsection (b) of this section
  commences, the Texas Lottery Commission shall complete the review
  of all applications received during the initial application period
  and award interactive sports wagering permits in accordance with
  Chapter 2005, Occupations Code, as added by this Act.
         (d)  Following the close of the initial application period
  described by Subsection (c) of this section, the Texas Lottery
  Commission shall issue additional available permits on a rolling
  basis.
         SECTION 7.  The changes in law made by this Act to Chapter
  47, Penal Code, apply 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, 2024, but only
  if the constitutional amendment authorizing the legislature to
  legalize wagering in this state on certain sporting events is
  approved by the voters. If that amendment is not approved by the
  voters, this Act has no effect.