BILL ANALYSIS

 

 

 

C.S.H.B. 4172

By: Thompson

Licensing & Administrative Procedures

Committee Report (Substituted)

 

 

 

BACKGROUND AND PURPOSE

 

Bingo is authorized under the Texas Constitution as a fundraising method for certain kinds of charitable and nonprofit organizations. The bill author has informed the committee that inflation following the COVID-19 pandemic, an advisory opinion by the Texas Lottery Commission, and a pilot project for communicating about charitable bingo all present the need for changes in the Bingo Enabling Act. C.S.H.B. 4172 seeks to respond to these events and potential opportunities by providing commercially reasonable grounds for charitable organizations to return goods purchased from bingo distributors, by allowing increased capital reserves in response to increased costs, and by providing a mechanism for charitable bingo to communicate with the public.

 

CRIMINAL JUSTICE IMPACT

 

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

 

RULEMAKING AUTHORITY

 

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

 

ANALYSIS

 

C.S.H.B. 4172 amends the Occupations Code to authorize a licensed distributor to receive returned bingo equipment or supplies from a licensed authorized organization if the distributor delivered the equipment or supplies to the organization and the equipment or supplies were defective, not ordered by the organization, or delivered in a quantity that exceeds the quantity the organization ordered. The bill requires a licensed authorized organization that returns bingo equipment or supplies to the licensed distributor to do the following:

·       maintain a record specifying the following for each returned equipment or supply:

o   the reason for the return from those reasons specified by the bill; and

o   the quantity returned; and

·       provide a copy of the record to the distributor.

The bill requires a licensed distributor that receives returned equipment or supplies from a licensed authorized organization to maintain a record showing receipt of the returned equipment or supplies and provide a copy of the record to the organization.

 

C.S.H.B. 4172 authorizes a statewide organization in existence before January 1, 2024, that as of that date has as its principal purpose assisting the following entities in furthering the interests of charitable bingo, to form a nonprofit corporation governed under state law to carry out the bill's purposes for such a nonprofit corporation:  

·       licensed authorized organizations;

·       qualifying units of licensed authorized organizations as provided by the Bingo Enabling Act;

·       licensed commercial lessors; and

·       licensed bingo distributors and licensed bingo manufacturers.

For purposes of establishing such a nonprofit corporation, an organization is a statewide organization if the organization's membership includes multiple licensed authorized organizations that collectively have primary business offices in at least 15 counties in Texas.

 

C.S.H.B. 4172 authorizes a nonprofit corporation to accept money remitted to the corporation by a licensed authorized organization as provided by the bill's provisions relating to prize fees and spend the money for purposes that include the following:

·       advertising and promotional activities to inform the public about charitable bingo, including the following:

o   the purposes for which charitable bingo is conducted;

o   the types of charities benefiting from charitable bingo;

o   the locations where and times when charitable bingo is conducted;

o   the types of games conducted at charitable bingo locations; and

o   the amount of a prize or series of prizes that may be offered at a bingo occasion;

·       legal and accounting services;

·       labor;

·       utilities;

·       office space; and

·       other necessary expenses related to such purposes.

 

C.S.H.B. 4172 does the following in relation to a nonprofit corporation established under the bill:

·       requires a nonprofit corporation's board, at least annually, to adopt a plan for the corporation to spend money;

·       restricts the corporation's authorized uses of the money to those that adhere to the plan adopted by the board;

·       establishes that a nonprofit corporation commences business on the date the corporation's board adopts an initial annual plan;

·       requires the corporation, on that date, to provide notification of the corporation's commencement of business to the Texas Lottery Commission and each licensed authorized organization that remitted money from a cash bingo prize fee to a county or municipality in 2023;

·       prohibits a nonprofit corporation from spending any money until the date the corporation provides such notice;

·       establishes that a nonprofit corporation is exempt from the sales and use tax and franchise tax;

·       prohibits a nonprofit corporation from using money remitted to the corporation by a licensed authorized organization to make:

o   a campaign contribution, a direct campaign expenditure, a political expenditure, or an expenditure for political advertising, as those terms are defined by Election Code provisions regulating political funds and campaigns; or

o   an expenditure to influence legislative subject matter or administrative action as described by Government Code provisions relating to the registration of lobbyists, including to compensate or reimburse a person required to register as a lobbyist or for legislative advertising, as defined by those provisions;

·       establishes that nothing in the bill's provisions regarding the establishment of a nonprofit corporation prohibits such a corporation from accepting and spending money from sources other than bingo prize fees;

·       requires a nonprofit corporation to maintain books and records as required by state and federal law; and

·       prohibits a nonprofit corporation from being licensed to conduct bingo or licensed as a commercial lessor, bingo distributor, or bingo manufacturer.

The bill includes a nonprofit organization established under the bill's provisions among the entities authorized to advertise bingo and authorizes a licensed authorized organization, a licensed commercial lessor, such a nonprofit corporation, and the lottery commission to include in an advertisement or promotion the total amount of bingo prizes offered statewide. The bill authorizes a nonprofit corporation established under the bill to include in an advertisement or promotion the amount of a prize or series of prizes offered at a bingo occasion in the same manner that such other entities are authorized to do so.

 

C.S.H.B. 4172 raises the statutory cap on the amount of operating capital a licensed authorized organization or a unit of licensed authorized organizations may retain in the organization's or unit's bingo account from $50,000 to $100,000 for a single organization or each member of a unit. The bill includes a licensed authorized organization that has been closed for at least six months among the organizations for which the lottery commission must adopt rules allowing the organization to retain a maximum amount of operating capital in the bingo account exceeding that cap.

 

C.S.H.B. 4172 increases from more than $5 to more than $100 the minimum amount of a cash bingo prize that triggers the requirement for a licensed authorized organization or unit of licensed authorized organizations to collect a five percent fee from a person who wins the prize. The bill does the following in relation to a licensed authorized organization or unit that collects such a prize fee for a bingo game conducted in a county or municipality entitled to receive a portion of a bingo prize fee as of January 1, 2019:

·       authorizes the organization or unit to reduce the amount remitted under applicable statutory provisions, after remitting 50 percent of the amount collected to the lottery commission, by an amount capped at 15 percent of the total amount remitted to the applicable county or municipality by the organization or unit in 2023;

·       requires the organization or unit to remit the amount remaining after the remittance to the applicable county or municipality to, and authorizes the amount remaining to be accepted by, a nonprofit corporation formed under the bill's provisions; and

·       if the nonprofit corporation does not accept that remitted amount, requires the organization or unit to remit the amount in the manner provided under existing provisions relating to the remittance of prize fees.

These bill provisions relating to prize fees take effect October 1, 2025.

 

EFFECTIVE DATE

 

Except as otherwise provided, September 1, 2025.

 

COMPARISON OF INTRODUCED AND SUBSTITUTE

 

While C.S.H.B. 4172 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

 

Both the introduced and substitute raise the statutory cap on the amount of operating capital a licensed authorized organization or a unit of licensed authorized organizations may retain in the organization's or unit's bingo account for a single organization or each member of a unit. However, the introduced raised the cap to $75,000, whereas the substitute raises it to $100,000.

 

The substitute includes a licensed authorized organization that has been closed for at least six months among the organizations for which the lottery commission must adopt rules allowing the organization to retain a maximum amount of operating capital in the bingo account exceeding that cap, whereas the introduced did not do so.