79R9004 T
By: Allen of Dallas H.B. No. 2038
A BILL TO BE ENTITLED
AN ACT
relating to the establishment and operation of state regulated
video lottery terminals at licensed Texas racetracks to enhance the
Texas Racehorse and Greyhound racing and breeding industries;
providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE __. VIDEO LOTTERY
SECTION 1. PURPOSE.
This state is facing a crisis in providing funding for the
public education system. In order to generate additional revenue
to fund public education and other state governmental programs, a
state-controlled and state-operated video lottery system is
proposed in accordance with this Act.
SECTION 1.01. Section 466.002, Government Code, is amended
by amending Subdivisions (2)-(10) and adding Subdivisions
(11)-(36) to read as follows:
(2) "Communication technology" means the methods used
and the components employed to facilitate the transmission of
information, including transmission and reception systems that
transmit information through wire, cable, radio, microwave, light,
optics, or computer data networks.
(3) "Director" means a [the] director employed by the
executive director under Section 467.033 [of the division].
(4) "Disable" with respect to video lottery terminals
means the process that causes a video lottery terminal to cease
functioning on issuance of a shutdown command from the video
lottery central system.
(5) "Distribute" means the sale, lease, marketing,
offer, or other disposition of a video lottery terminal, the
electronic computer components of a video lottery terminal, the
cabinet in which a video lottery terminal is housed, video lottery
equipment, or video lottery game software intended for use or play
in this state or on Indian lands in this state.
(6) [(3)] "Division" means the lottery division
established by the commission under Chapter 467.
(7) "Electronic storage medium," with respect to video
lottery, means the electronic medium on which the operation
software for a game playable on a video lottery terminal is stored
that is in the form of erasable programmable read only memory,
compact disc-read only memory, flash random access memory, or other
technology medium the commission approves for use in a video
lottery terminal.
(8) [(4)] "Executive director" means the executive
director of the commission.
(9) "Gaming agreement" means an agreement authorized
under Subchapter K between this state and a federally recognized
Indian tribe under which this state permits the tribe to conduct
limited gaming activities authorized under this chapter or
applicable federal law.
(10) "House-banked game" means a game of chance:
(A) in which the house plays as a participant;
(B) in which the house takes on all players,
collects from all losers, and pays all winners; and
(C) that the house has an opportunity to win.
(11) "Indian lands" means:
(A) land located within an Indian reservation;
and
(B) land over which an Indian tribe exercises
governmental power and the title to which is:
(i) held in trust by the United States for
the benefit of an Indian tribe or individual member of an Indian
tribe; or
(ii) held by an Indian tribe or an
individual member of an Indian tribe and subject to restriction by
the United States against alienation.
(C) In no event shall "Indian lands" mean land
described in (A) and (B) that was not occupied by on Indian tribe on
January 1, 1998.
(12) "Institutional investor" means:
(A) a state or federal government pension plan;
or
(B) any of the following that meets the
requirements of a "qualified institutional buyer" as defined in
Rule 144A, Securities Act of 1933 (15 U.S.C. Sections 77a-77aa),
and the rules and regulations adopted under that rule by the United
States Securities and Exchange Commission:
(i) a bank as defined by Section 3(a)(6),
Securities Exchange Act of 1934 (15 U.S.C. Sections 78a-78kk), and
the rules and regulations adopted under that act by the United
States Securities and Exchange Commission;
(ii) an insurance company as defined by
Section 2(a)(17), Investment Company Act of 1940 (15 U.S.C. Section
80a-1 et seq.);
(iii) an investment company registered
under Section 8, Investment Company Act of 1940 (15 U.S.C. Section
80a-1 et seq.);
(iv) an employee benefit plan or pension
fund subject to the Employee Retirement Income Security Act of 1974
(29 U.S.C. Section 1001 et seq.), excluding an employee benefit
plan or pension fund sponsored by a publicly traded corporation
registered with the Securities and Exchange Commission;
(v) a group composed entirely of persons
specified by this subdivision; or
(vi) any other person the commission
recognizes as an institutional investor for reasons consistent with
the policies expressed in this chapter.
(13) "Lottery" means the procedures operated by the
state under this chapter through which prizes are awarded or
distributed by chance among persons who have paid, or
unconditionally agreed to pay, for a chance or other opportunity to
receive a prize. Such procedures shall include instant-ticket
lottery games in which a central system randomly shuffles and
stores paper and electronic ticket series, distributes the tickets
to lottery operators and site controllers, monitors all system
activity, and performs accounting and security functions. Such
tickets shall be predetermined to be either winners or losers
before the time of purchase, and once a player has purchased a
ticket, it shall be removed from the pool of available tickets and
may not be dispensed again.
(14) [(6)] "Lottery game" means an activity conducted
lawfully and in accordance with the Texas Constitution and this
chapter that is controlled by this state as part of the lottery and
through which prizes are awarded or distributed by chance to
persons who have paid or unconditionally agreed to pay, or who
otherwise participate in a game, for a chance or other opportunity
to receive a prize [includes a lottery activity].
(15) [(7)] "Lottery operator" means a person selected
under Section 466.014(b) to operate a lottery game.
(16) "Manufacture," with respect to video lottery,
means to design, assemble, fabricate, produce, program, or make
modifications to a video lottery terminal, the electronic computer
components of a video lottery terminal, the cabinet in which a video
lottery terminal is housed, video lottery equipment, or video
lottery game software intended for use or play in this state or on
Indian lands in this state.
(17) "Net terminal income" means the total amount of
money paid to play video lottery games less the value of all credits
redeemed for money, including any progressive prizes, by the
players of the video lottery games. Promotional prizes offered by a
video lottery retailer or video lottery manager may not be deducted
or otherwise considered credits redeemed for money by players for
the purpose of determining net terminal income. A promotional
prize is a prize unrelated to the play of the game.
(18) "Pari-mutuel license holder" means a person
licensed to conduct wagering on a greyhound race or a horse race
under the Texas Racing Act (Article 179e, Vernon's Texas Civil
Statutes).
(19) "Person" means, for purposes of video lottery
operations, any natural person, corporation, association, trust,
partnership, limited partnership, joint venture, subsidiary, or
other entity, regardless of its form, structure, or nature.
(20) [(8)] "Player" means a person who contributes any
part of the consideration for a ticket or to play a video lottery
game under this chapter.
(21) "Racetrack" means a racetrack as defined by
Section 1.03(25), Texas Racing Act (Article 179e, Vernon's Texas
Civil Statutes).
(22) [(9)] "Sales agent" or "sales agency" means a
person licensed under this chapter to sell tickets.
(23) "Slot machine" means a mechanical, electrical, or
other type of device, contrivance, or machine that, on insertion of
a coin, currency, token, or similar object or on payment of any
other consideration, is available to play or operate, and that is
not connected to the video lottery central system, and the play or
operation of which, through the skill of the operator, by chance, or
both, may deliver or entitle the person playing or operating the
machine to receive cash, premiums, merchandise, tokens, or any
other thing of value, whether the payoff is made automatically from
the machine or in any other manner. The term does not include any
equipment, machine, technological aid, or other device in
connection with the play of bingo under Chapter 2001, Occupations
Code.
(24) "Substantial interest holder" means:
(A) a person who directly, indirectly, or
beneficially owns any interest in a privately owned corporation,
association, trust, partnership, limited partnership, joint
venture, subsidiary, or other entity, regardless of its form,
structure, or nature;
(B) a person who directly, indirectly, or
beneficially owns 10 percent or more of any publicly owned
corporation, association, trust, partnership, limited partnership,
joint venture, subsidiary, or other entity, regardless of its form,
structure, or nature;
(C) a person associated with an applicant or
license holder who the commission determines has the power or
authority to:
(i) control the activities of the applicant
or license holder; or
(ii) elect or select the executive
director, the managers, the partners, or a majority of the board of
directors of the applicant or license holder; and
(D) any key personnel of a video lottery retailer
or video lottery manager, including an executive director, officer,
director, manager, member, partner, limited partner, executive,
employee, or agent, who the commission determines has the power to
exercise significant influence over decisions concerning any part
of the applicant's or license holder's business operation.
A substantial interest holder does not include a bona
fide lender, bank, or other authorized or licensed lending
institution that holds a mortgage or other lien acquired in the
ordinary course of business or a vendor of the applicant or license
holder that is not otherwise a substantial interest holder.
(25) [(10)] "Ticket" means any tangible evidence
issued to provide participation in a lottery game authorized by
this chapter. The term does not include a ticket for play of a video
lottery game.
(26) "Video lottery" means an electronic version of
the paper instant-ticket lottery games conducted by the Commission,
and is composed of
(a) video display terminals that accept players'
paper currency, credit cards, or account cards, and permit players
to view the results of the purchased electronic instant lottery
tickets; and
(b) site controllers that link a number of video
display terminals to a central system, store and manage unpurchased
electronic tickets series and are programmed to dispense electronic
lottery tickets in the sequence received from and determined by the
central system.
(27) "Video lottery central system" means the system
of procedures and facilities operated and controlled by the
commission that links together all video lottery terminals operated
in this state and allows the commission to continuously monitor the
activity of each video lottery terminal and to disable any video
lottery terminal in this state.
(28) "Video lottery central system provider" means a
person that, by contract with the commission, provides the video
lottery central system.
(29) "Video lottery equipment" means:
(A) a video lottery terminal; or
(B) equipment, components, or contrivances used
remotely or directly in connection with a video lottery terminal
to:
(i) affect the reporting of gross revenue
and other accounting information, including a device for weighing
and counting money;
(ii) connect video lottery terminals
together for accounting or wide-area prize or progressive prize
purposes;
(iii) monitor video lottery terminal
operations;
(iv) provide for the connection of video
lottery terminals to the video lottery central system; and
(v) any other communications technology or
equipment necessary for the operation of a video lottery terminal.
(30) "Video lottery game" means an electronically
simulated game approved and controlled by the commission the
outcome of which is determined solely by chance based on a
computer-generated random selection of winning combinations of
symbols or numbers other than roulette, dice, or baccarat game
themes associated with casino gambling, except that game themes
that display symbols that appear to roll on drums to simulate a
classic casino slot machine or themes of other card games and keno
may be used, and that is displayed on a video lottery terminal that:
(A) is connected to the video lottery central
system;
(B) operates by a player's insertion of a coin,
currency, voucher, or token into the video lottery terminal that
causes the video lottery terminal to display credits that entitle
the player to select one or more symbols or numbers or cause the
video lottery terminal to randomly select symbols or numbers;
(C) allows the player to win additional game play
credits, coins, or tokens based on game rules that establish the
random selection of winning combinations of symbols or numbers and
the number of free play credits, coins, or tokens to be awarded for
each winning combination; and
(D) allows the player at any time to clear all
game play credits and receive a video lottery ticket entitling the
player to receive the cash value of those credits.
(31) "Video lottery terminal" means an interactive
electronic terminal device that is connected to the video lottery
central system and displays video lottery games authorized under
this chapter and the Texas Constitution. The term does not include
a house-banked game, a slot machine, or any other stand-alone video
gambling device, that is not connected to the video lottery system
or that is otherwise prohibited under state law.
(32) "Video lottery system" has the meaning assigned
to that term by Section 47(f), Article III, Texas Constitution.
(33) "Video lottery ticket" means the tangible
evidence issued by a video lottery terminal to reflect winnings
from the play of a video lottery game.
(34) "Video lottery terminal establishment" means
premises at which the operation of video lottery terminals is
authorized by the commission under this chapter in accordance with
a license or gaming agreement.
(35) "Video lottery manager" means a person licensed
by the commission under this chapter as required by the Texas
Constitution to manage a video lottery terminal establishment at a
racetrack or who provides management services for a video lottery
terminal establishment on Indian lands.
(36) "Video lottery terminal provider" means a person
in the business of manufacturing or distributing video lottery
terminals in this state.
(37) "Video lottery retailer" means a pari-mutuel
license holder that owns or manages a racetrack at which a video
lottery terminal establishment is located and that holds a video
lottery retailer license under Subchapter K.
SECTION 1.02. Section 466.003, Government Code, is amended
by amending Subsection (b) and adding Subsection (c) to read as
follows:
(b) Any [A] contract or authorized agreement between the
division and a lottery operator, the video lottery central system
provider, a video lottery provider, video lottery terminal provider
under Section 466.014(b) must contain a provision allowing the
contract or authorized agreement to be terminated without penalty
should the division be abolished unless another state agency is
assigned to control and supervise all video lottery game activity
as required by this chapter.
(c) Notwithstanding Subsection (a), if any gaming agreement
that allows video lottery is in effect, the commission or another
state agency designated by the legislature must operate, control,
and supervise video lottery games as necessary to comply with a
gaming agreement under this chapter.
SECTION 1.03. Section 466.004(a), Government Code, is
amended to read as follows:
(a) A political subdivision of this state may not impose:
(1) a tax on the sale of a ticket;
(2) a tax on the payment of a prize under this chapter;
[or]
(3) an ad valorem tax on tickets; or
(4) a tax, fee, other assessment on consideration paid
to play a video lottery game; or
(5) impose a tax or fee for the attendance or admission
to a racetrack or video lottery establishment unless specifically
authorized by statute.
SECTION 1.04. Section 466.014, Government Code, is amended
to read as follows:
Sec. 466.014. POWERS AND DUTIES OF COMMISSION AND EXECUTIVE
DIRECTOR; CONTRACT AUTHORITY. (a) The commission and executive
director have broad authority and shall exercise strict control and
close supervision over [all] lottery games [conducted in this
state] to promote and ensure integrity, security, honesty, and
fairness in the operation and administration of the lottery.
(b) The executive director may contract with or employ a
person to perform a function, activity, or service in connection
with the operation of the lottery as prescribed by the executive
director. A contract relating to the operation of video lottery
must be consistent with Subchapter K. Except as provided by this
subsection, a [A] person with whom the executive director contracts
to operate a lottery game must be eligible for a sales agent license
under Section 466.155. A person with whom the executive director
contracts to provide the video lottery central system or who
registers as a video lottery terminal provider must be licensed,
registered, or approved by the commission in accordance with
Subchapter K.
(c) The executive director may award a contract for lottery
supplies, equipment, or services, including a contract under
Subsection (b), pending the completion of any investigation and
licensing, registration, or other approval authorized and required
by this chapter. A contract awarded under this subsection must
include a provision permitting the executive director to terminate
the contract without penalty if the investigation reveals that the
person to whom the contract is awarded would not be eligible for a
sales agent license under Section 466.155 or with regard to video
lottery does not satisfy the applicable requirements for licensing,
registration, or other approval under Subchapter K.
(d) In the acquisition or provision of facilities,
supplies, equipment, materials, or services related to the
implementation of video lottery, the commission is exempt from:
(1) procurement procedures prescribed under:
(A) Subtitle D, Title 10; and
(B) Section 466.101; and
(2) any bidding or contract requirements provided by
any other law or by commission rules.
(e) Paragraph (d) expires on January 1, 2008.
SECTION 1.05. Section 466.015(b), Government Code, is
amended to read as follows:
(b) The commission shall adopt rules to the extent they are
not inconsistent with Chapters 551 and 552 governing the:
(1) security for the lottery and the commission,
including the development of an internal security plan;
(2) apportionment of the total revenues from the sale
of tickets and from all other sources in the amounts provided by
this chapter;
(3) enforcement of prohibitions on the sale of tickets
to or by an individual younger than 18 years of age; [and]
(4) enforcement of prohibitions on a person playing a
lottery game by telephone; and
(5) enforcement of prohibitions provided by law on the
sale of any purchase or play of a video lottery game.
SECTION 1.06. Section 466.017, Government Code, is amended
to read as follows:
Sec. 466.017. AUDITS. (a) The commission [executive
director] shall provide for a certified public accountant to
conduct an independent audit of the commission's annual financial
statements in accordance with generally accepted auditing
standards that requires the accountant to express an opinion on the
conformity of the financial statements with generally accepted
accounting principles [for each fiscal year of all accounts and
transactions of the lottery]. The certified public accountant may
not have[, as determined by the executive director,] a significant
financial interest in a sales agent, lottery vendor, video lottery
manager, video lottery retailer, video lottery terminal provider,
video lottery central system provider, or lottery operator. The
certified public accountant shall present an audit report to the
executive director, the commission, the governor, the comptroller,
and the legislature not later than the 30th day after the submission
date for the annual financial report required by the General
Appropriations Act. [The report must contain recommendations to
enhance the earnings capability of the lottery and improve the
efficiency of lottery operations.] The state auditor may review
the results of and working papers related to the audit.
(b) The records of a [Each] lottery operator, video lottery
manager, video lottery retailer, video lottery terminal provider,
video lottery central system provider, or sales agent [operator's
and sales agent's records] are subject to audit by the commission
and the state auditor. For the purpose of carrying out this
chapter, the executive director or state auditor may examine all
books, records, papers, or other objects that the executive
director or state auditor determines are necessary for conducting a
complete examination under this chapter and may also examine under
oath any officer, director, or employee of a lottery operator,
video lottery manager, video lottery retailer, video lottery
terminal provider, video lottery central system provider, or sales
agent. The executive director or state auditor may conduct an
examination at the principal office or any other office of the
lottery operator, video lottery manager, video lottery retailer,
video lottery terminal provider, video lottery central system
provider, or sales agent or may require the lottery operator, video
lottery manager, video lottery retailer, video lottery terminal
provider, video lottery central system provider, or sales agent to
produce the records at the office of the commission or state
auditor. If a sales agent, video lottery manager, video lottery
retailer, video lottery terminal provider, or video lottery central
system provider refuses to permit an examination or to answer any
question authorized by this subsection, the executive director may
summarily suspend the license or registration of the sales agent,
video lottery manager, video lottery retailer, or video lottery
terminal provider under Section 466.160 or Subchapter K until the
examination is completed as required. Section 321.013(h) does not
apply to an audit of a lottery operator, video lottery manager,
video lottery retailer, video lottery terminal provider, video
lottery central system provider, or sales agent.
SECTION 1.07. Section 466.018, Government Code, is amended
to read as follows:
Sec. 466.018. INVESTIGATIONS. The attorney general, the
district attorney for Travis County, or the district attorney,
criminal district attorney, or county attorney performing the
duties of district attorney for the county in which the violation or
alleged violation occurred may investigate a violation or alleged
violation of this chapter and of the penal laws of this state by the
commission or its employees, a sales agent, a lottery vendor, [or] a
lottery operator, video lottery manager, video lottery retailer,
video lottery terminal provider, or video lottery central system
provider.
SECTION 1.08. Sections 466.020(c), (d), and (e), Government
Code, are amended to read as follows:
(c) A security officer or investigator employed by the
department of security or a peace officer who is working in
conjunction with the commission or the Department of Public Safety
in the enforcement of this chapter may:
(1) [,] without a search warrant, [may] search and
seize a lottery vending machine, lottery computer terminal, video
lottery terminal, or other lottery or gaming equipment that is
located on premises for which a person holds a sales agent, video
lottery retailer, or video lottery manager license issued under
this chapter; and
(2) seize a lottery vending machine, lottery computer
terminal, video lottery terminal, or other lottery or gaming
equipment that is being used or is in the possession of any person
in violation of this chapter.
(d) The Department of Public Safety or any other state or
local law enforcement agency in this state, at the commission's
request and in accordance with an interagency agreement, shall
perform a full criminal background investigation of a prospective
deputy or investigator of the department of security. The
commission shall reimburse the agency [Department of Public Safety]
for the actual costs of an investigation.
(e) At least once every two years, the executive director
shall employ an independent firm that is experienced in security,
including computer security and systems security, to conduct a
comprehensive study of all aspects of lottery security, including:
(1) lottery personnel security;
(2) sales agent security;
(3) lottery operator and vendor security;
(4) security against ticket counterfeiting and
alteration and other means of fraudulent winning;
(5) security of lottery drawings;
(6) lottery computer, data communications, database,
and systems security;
(7) lottery premises and warehouse security;
(8) security of distribution of tickets;
(9) security of validation and payment procedures;
(10) security involving unclaimed prizes;
(11) security aspects of each lottery game;
(12) security against the deliberate placement of
winning tickets in lottery games that involve preprinted winning
tickets by persons involved in the production, storage,
transportation, or distribution of tickets; [and]
(13) security of video lottery retailers, video
lottery managers, video lottery terminal providers, and the video
lottery central system provider; and
(14) other security aspects of lottery operations,
including video lottery game operations.
SECTION 1.09. Section 466.021(a), Government Code, is
amended to read as follows:
(a) The executive director shall, every two years, employ an
independent firm experienced in demographic analysis to conduct a
demographic study of lottery players. The study must include the
income, age, sex, race, education, and frequency of participation
of players. The study must distinguish between players of
traditional lottery games and video lottery games.
SECTION 1.10. Section 466.022, Government Code, is amended
by amending Subsection (b) and adding Subsections (c) and (d) to
read as follows:
(b) In addition to commission records excepted from
disclosure under Chapter 552, the following information is
confidential and is exempt from disclosure:
(1) security plans and procedures of the commission
designed to ensure the integrity and security of the operation of
the lottery;
(2) information of a nature that is designed to ensure
the integrity and security of the selection of winning tickets or
numbers in the lottery, other than information describing the
general procedures for selecting winning tickets or numbers; [and]
(3) the street address and telephone number of a prize
winner, if the prize winner has not consented to the release of the
information; and
(4) information relating to all system operations of
video lottery games, including the operation of the video lottery
system, security related to video lottery games, and commission
plans and procedures intended to ensure the integrity and security
of the operation of video lottery games.
(c) Information that is confidential under Subsection
(b)(4) includes information and data that:
(1) is required by the commission to be furnished to
the commission under Subchapter K or that may be otherwise obtained
by the commission from any source;
(2) pertains to an applicant's criminal record,
antecedents, and background that is furnished to or obtained by the
commission from any source, including information obtained by the
commission under Section 411.108(d);
(3) is provided to the commission, a commission
employee, or an investigator acting on behalf of the commission by a
governmental agency or an informer or on the assurance that the
information will be held in confidence and treated as confidential;
(4) is obtained by the commission from a video lottery
manager, video lottery retailer, video lottery terminal provider,
or video lottery central system provider; or
(5) is prepared or obtained by an agent or employee of
the commission relating to a license application, a finding of
suitability, or any approval required under Subchapter K.
(d) Information that qualifies as confidential under
Subsection (b)(4) may be disclosed in whole or in part only as
necessary to administer this chapter or on the order of a court of
competent jurisdiction. The commission, subject to appropriate
procedures, may disclose the information and data to an authorized
agent of a political subdivision of this state, the United States,
another state or a political subdivision of another state, a tribal
law enforcement agency, or the government of a foreign country. For
the annual report required under Section 466.016, the commission in
its discretion may disclose a compilation of statistical
information that is otherwise confidential under Subsection (b)(4)
if the compilation does not disclose the identity of an applicant,
license holder, or video lottery establishment. Notwithstanding
any other provision of state law, the information provided under
this subsection may not otherwise be disclosed without specific
commission authorization.
SECTION 1.11. Section 466.024, Government Code, is amended
to read as follows:
Sec. 466.024. PROHIBITED GAMES. (a) The executive
director, [or] a lottery operator, a video lottery manager, a video
lottery retailer, a video lottery terminal provider, or a video
lottery central system provider may not establish or operate a
lottery game in which the winner is chosen on the basis of the
outcome of a sports event.
(b) The commission shall adopt rules prohibiting the
operation of any game, other than a video lottery game as defined in
this chapter, using a video lottery machine [or machine].
(c) In this section:
(1) "Sports event" means a football, basketball,
baseball, or similar game, or a horse or dog race on which
pari-mutuel wagering is allowed.
(2) "Video lottery machine" [or "machine"] means any
electronic video [game] machine that, upon insertion of cash or
token, is available to play [or simulate the play of a video game,
including video poker, keno, and blackjack,] a lottery game using a
video display and microprocessors in which the player may receive
free games or credits that can be redeemed for cash[, coins,] or
tokens[, or that directly dispenses cash, coins, or tokens].
SECTION 1.12. Section 466.025, Government Code, is amended
to read as follows:
Sec. 466.025. REPORTS OF TICKETS SOLD, NET TERMINAL INCOME,
AND PRIZES AWARDED. For each lottery game, other than a video
lottery game, after the last date on which a prize may be claimed
under Section 466.408(d), the director shall prepare a report that
shows the total number of tickets sold and the number and amounts of
prizes awarded in the game. The report must be available for public
inspection. For video lottery games, the director shall prepare a
weekly report that shows the net terminal income for the week of the
report.
SECTION 1.13. Section 466.103(a), Government Code, is
amended to read as follows:
(a) Except as provided by Subsection (b), the executive
director may not award a contract for the purchase or lease of
facilities, goods, or services related to lottery operations to a
person who:
(1) would be denied a license as a sales agent under
Section 466.155; or
(2) with regard to video lottery games:
(A) is not a registered video lottery terminal
provider if registration is required; or
(B) is deemed unsuitable under Subchapter K.
SECTION 1.14. Section 466.110, Government Code, is amended
to read as follows:
Sec. 466.110. PROHIBITED ADVERTISEMENTS. The legislature
intends that advertisements or promotions sponsored by the
commission or the division for the lottery not be of a nature that
unduly influences any person to purchase a lottery ticket or number
or play a video lottery game.
SECTION 1.15. Section 466.151(b), Government Code, is
amended to read as follows:
(b) The executive director may establish a provisional
license or other classes of licenses necessary to regulate and
administer the quantity and type of lottery games provided at each
licensed location of a sales agent.
SECTION 1.16. Section 466.158(a), Government Code, is
amended to read as follows:
(a) Unless suspended or revoked, a license issued under this
subchapter expires on the date specified in the license, which may
not be later than the fifth anniversary of its date of issuance.
SECTION 1.17. Section 466.201(a), Government Code, is
amended to read as follows:
(a) The commission is entitled to conduct an investigation
of and is entitled to obtain criminal history record information
maintained by the Department of Public Safety, the Federal Bureau
of Investigation Identification Division, or another law
enforcement agency to assist in the investigation of:
(1) a sales agent or an applicant for a sales agent
license;
(2) a person required to be named in a license
application;
(3) a lottery operator, video lottery manager, video
lottery retailer, video lottery terminal provider, or video lottery
central system provider, or prospective lottery operator, video
lottery manager, video lottery retailer, video lottery terminal
provider, or video lottery central system provider;
(4) an employee of a lottery operator, video lottery
manager, video lottery retailer, video lottery terminal provider,
or video lottery central system provider or prospective lottery
operator, video lottery manager, video lottery retailer, video
lottery terminal provider, or video lottery central system
provider, if the employee is or will be directly involved in lottery
operations;
(5) a person who manufactures or distributes lottery
equipment or supplies, or a representative of a person who
manufactures or distributes lottery equipment or supplies offered
to the lottery;
(6) a person who has submitted a written bid or
proposal to the commission in connection with the procurement of
goods or services by the commission, if the amount of the bid or
proposal exceeds $500;
(7) an employee or other person who works for or will
work for a sales agent or an applicant for a sales agent license;
(8) a person who proposes to enter into or who has a
contract with the commission to supply goods or services to the
commission; or
(9) if a person described in Subdivisions (1) through
(8) is not an individual, an individual who:
(A) is an officer or director of the person;
(B) holds more than 10 percent of the stock in the
person;
(C) holds an equitable interest greater than 10
percent in the person;
(D) is a creditor of the person who holds more
than 10 percent of the person's outstanding debt;
(E) is the owner or lessee of a business that the
person conducts or through which the person will conduct
lottery-related activities;
(F) shares or will share in the profits, other
than stock dividends, of the person;
(G) participates in managing the affairs of the
person; or
(H) is an employee of the person who is or will be
involved in:
(i) selling tickets; or
(ii) handling money from the sale of
tickets.
SECTION 1.18. Subchapter E, Chapter 466, Government Code,
is amended by adding Section 466.206 to read as follows:
Sec. 466.206. CRIMINAL HISTORY INVESTIGATION FOR VIDEO
LOTTERY. (a) Except as otherwise provided by this section and
Sections 466.020, 466.201, and 466.5034, a criminal history
investigation of a video lottery retailer, video lottery manager,
video lottery terminal provider, or video lottery central system
provider is governed by commission rules adopted under Subchapter
K, which may consider a criminal history investigation conducted
under the Texas Racing Act (Article 179e, Vernon's Texas Civil
Statutes).
(b) The Department of Public Safety or a state or local law
enforcement agency in this state, in accordance with an interagency
agreement with the commission, shall provide any assistance
requested by the commission in the administration and enforcement
of this chapter, including conducting background investigations of
a person seeking a license, registration, or other commission
authorization required under Subchapter K or of any person required
to be named in an application for a license, registration, or other
commission authorization under that subchapter.
(c) This section does not limit the commission's right to
obtain criminal history record information from any other local,
state, or federal agency. The commission may enter into a
confidentiality agreement with the agency as necessary and proper.
(d) Except as otherwise provided by Section 411.108(d) or
another provision of this chapter, criminal history record
information obtained by the commission under this section may be
disclosed only:
(1) to another law enforcement agency to assist in or
further an investigation related to the commission's operation and
oversight of video lottery; or
(2) under a court order.
SECTION 1.19. Section 466.252, Government Code, is amended
to read as follows:
Sec. 466.252. PLAYER [PURCHASE OF TICKET] AGREEMENT TO
ABIDE BY RULES AND INSTRUCTIONS. (a) By purchasing a ticket in a
particular lottery game or participating as a player in a lottery
game, a player agrees to abide by and be bound by the commission's
rules and instructions, including the rules or instructions
applicable to the particular lottery game involved. The player
also acknowledges that the determination of whether the player is a
valid winner is subject to:
(1) the commission's rules, instructions, and claims
procedures, including those developed for the particular lottery
game involved; [and]
(2) any validation tests established by the commission
for the particular lottery game involved; and
(3) the limitations and other provisions prescribed by
this chapter.
(b) If the lottery uses tickets, an abbreviated form of the
rules or a reference to the rules may appear on the tickets.
SECTION 1.20. Section 466.3011, Government Code, is amended
to read as follows:
Sec. 466.3011. VENUE. Venue is proper in Travis County or
any county in which venue is proper under Chapter 13, Code of
Criminal Procedure, for:
(1) an offense under this chapter;
(2) an offense under the Penal Code, if the accused:
(A) is a lottery operator, lottery vendor, sales
agent, video lottery manager, video lottery retailer, video lottery
terminal provider, video lottery central system provider, or
employee of the division; and
(B) is alleged to have committed the offense
while engaged in lottery activities, including video lottery
activities; or
(3) an offense that involves property consisting of or
including lottery tickets under Title 7 or 11, Penal Code.
SECTION 1.21. Subchapter G, Chapter 466, Government Code,
is amended by adding Section 466.3031 to read as follows:
Sec. 466.3031. UNAUTHORIZED OPERATION, USE, OR POSSESSION
OF VIDEO LOTTERY TERMINAL. (a) A person may not operate, use, or
possess a video lottery terminal or other electronic gambling
device unless the operation, use, or possession is expressly
authorized by this chapter.
(b) Except during transport to or from a video lottery
establishment and as provided by this chapter, a person commits an
offense if the person operates, uses, or possesses any video
lottery terminal that is not at all times connected to the video
lottery central system or that does not generate revenue for this
state, except funds retained by the commission to pay
administrative costs. An offense under this subsection is a felony
of the third degree.
(c) A person commits an offense if the person operates,
uses, or possesses a gambling device, other than a video lottery
terminal authorized under this chapter, including a slot machine,
dice game, roulette wheel, house-banked game, or game in which a
winner is determined by the outcome of a sports contest. An offense
under this subsection is a felony of the third degree.
(d) Notwithstanding Subsection (b) or (c), a video lottery
retailer, video lottery manager, or registered video lottery
terminal provider may store or possess a video lottery terminal as
authorized by the commission, and the commission may possess video
lottery terminals for study and evaluation.
(e) Nothing in this section shall be construed to prohibit
the operation, use, or possession of equipment, machines,
technological aids, or other devices allowed in connection with the
play of bingo under Chapter 2001, Occupations Code.
SECTION 1.22. Section 466.305(a), Government Code, is
amended to read as follows:
(a) A sales agent, video lottery manager, or video lottery
retailer, or an employee of a sales agent, video lottery manager, or
video lottery retailer, commits an offense if the person
intentionally or knowingly sells a ticket to another person or
allows the person to play or conduct a game on a video lottery
terminal by extending credit or lending money to the person to
enable the person to purchase the ticket or play the game.
SECTION 1.23. The heading to Section 466.3051, Government
Code, is amended to read as follows:
Sec. 466.3051. SALE OF TICKET OR LOTTERY GAME TO OR PURCHASE
OF TICKET OR LOTTERY GAME BY PERSON YOUNGER THAN 18 YEARS OF AGE.
SECTION 1.24. Section 466.3051, Government Code, is amended
by adding Subsection (a-1) and amending Subsections (b) and (e) to
read as follows:
(a-1) A video lottery manager, video lottery retailer, or an
employee of a video lottery manager or video lottery retailer
commits an offense if the person intentionally or knowingly allows
a person younger than 18 years of age to play a video lottery game.
(b) An individual who is younger than 18 years of age
commits an offense if the individual:
(1) purchases a ticket;
(2) plays a video lottery game; or
(3) [(2)] falsely represents the individual to be 18
years of age or older by displaying evidence of age that is false or
fraudulent or misrepresents in any way the individual's age in
order to purchase a ticket or play a video lottery game.
(e) An offense under Subsection (a) or (a-1) is a Class C
misdemeanor.
SECTION 1.25. Section 466.3053, Government Code, is amended
to read as follows:
Sec. 466.3053. PURCHASE OF TICKET OR VIDEO LOTTERY GAME
WITH PROCEEDS OF AFDC CHECK OR FOOD STAMPS. (a) A person commits an
offense if the person intentionally or knowingly purchases a ticket
or plays a video lottery game with:
(1) the proceeds of a check issued as a payment under
the Aid to Families with Dependent Children program administered
under Chapter 31, Human Resources Code; or
(2) a food stamp coupon issued under the food stamp
program administered under Chapter 33, Human Resources Code.
(b) An offense under this section is a Class C misdemeanor.
SECTION 1.26. Section 466.306, Government Code, is amended
to read as follows:
Sec. 466.306. FORGERY; ALTERATION OF TICKET. (a) A person
commits an offense if the person intentionally or knowingly alters
or forges a ticket or video lottery ticket.
(b) An offense under this section is a felony of the third
degree unless it is shown on the trial of the offense that the prize
alleged to be authorized by the ticket or video lottery ticket
forged or altered is greater than $10,000, in which event the
offense is a felony of the second degree.
SECTION 1.27. Section 466.309(a), Government Code, is
amended to read as follows:
(a) A person commits an offense if the person intentionally
or knowingly tampers with, damages, defaces, or renders inoperable
any vending machine, electronic computer terminal, video lottery
terminal or other video lottery equipment, or other mechanical
device used in a lottery game.
SECTION 1.28. The heading to Section 466.317, Government
Code, is amended to read as follows:
Sec. 466.317. PROHIBITION AGAINST SALE OF CERTAIN LOTTERY
TICKETS OR OPERATION OF CERTAIN VIDEO LOTTERY SYSTEMS.
SECTION 1.29. Section 466.317, Government Code, is amended
by adding Subsection (a-1) and amending Subsections (b) and (c) to
read as follows:
(a-1) A person may not control or operate a video lottery
system in this state except as provided by this chapter.
(b) The state may enter into a compact with another state or
state government [or an Indian tribe or tribal government] to
permit the sale of lottery tickets of this state in the state's[,
tribe's,] or government's jurisdiction and to allow the sale of the
state's[, tribe's,] or government's lottery tickets in this state.
(c) A person commits an offense if the person violates this
section. An offense under this section is a felony of the third
degree [Class A misdemeanor].
SECTION 1.30. Subchapter H, Chapter 466, Government Code,
is amended by adding Section 466.360 to read as follows:
Sec. 466.360. VIDEO LOTTERY TERMINAL REVENUE. Revenue
generated from the operation of video lottery terminals is governed
by Subchapter K and commission rules.
SECTION 1.31. Section 466.355(a), Government Code, is
amended to read as follows:
(a) The state lottery account is a special account in the
general revenue fund. The account consists of all revenue received
from the sale of tickets, license and application fees under this
chapter, other than Subchapter K [chapter], and all money credited
to the account from any other fund or source under law. Interest
earned by the state lottery account shall be deposited in the
unobligated portion of the general revenue fund.
SECTION 1.32. Section 466.402, Government Code, is amended
by adding Subsection (e) to read as follows:
(e) This section does not apply to the payment of prizes for
video lottery games governed by Subchapter K.
SECTION 1.33. Chapter 466, Government Code, is amended by
adding Subchapter K to read as follows:
SUBCHAPTER K. VIDEO LOTTERY
Sec. 466.501. LEGISLATIVE FINDINGS AND DECLARATIONS. The
legislature finds and declares the following:
(1) The purpose and intent of this chapter is to carry
out the intent of the voters as established by the approval of
Section 47(f), Article III, Texas Constitution, to expand the
revenue-generating ability of the state lottery by authorizing the
state to operate a video lottery system consistent with public
policy strictly limiting the expansion of gambling in this state.
(2) Except for the operation of video lottery
terminals on certain Indian lands as defined by the Texas
Constitution, the people of this state intend to allow only
state–controlled video lottery games to be conducted in this state
and only in locations at which pari-mutuel wagering is conducted at
racetracks.
(3) This state has the authority and responsibility to
control the proliferation of gambling by:
(A) limiting the total number of video lottery
terminals permitted at authorized locations in this state;
(B) limiting video lottery licensing to a fixed
number of existing racetracks;
(C) extending strict and exclusive state
oversight and supervision to all persons, locations, practices, and
associations related to the operation of video lottery games; and
(D) providing comprehensive law enforcement
supervision of video lottery game activities.
(4) This state's ability to monitor and control the
operation of all video lottery terminals ensures the integrity of
the system and provides for the most efficient oversight and
supervision. Costs incurred for oversight and supervision of
gambling will be significantly less than if video lottery terminals
were not operated as part of the video lottery system. In addition,
providing for the state–controlled system will defend against
criminal infiltration of gambling operations.
(5) The video lottery games operated at racetracks
under this chapter are controlled by this state in a manner that
allows the state to continuously monitor all video lottery
terminals and to disable any video lottery terminal for the
protection of the public and this state.
(6) Through the video lottery system this state will
monitor the network of video lottery terminals to ensure maximum
security unique to state–operated gambling. Except as may
otherwise be required by federal law governing Indian lands, each
operating video lottery terminal in this state will be connected to
the video lottery central system.
(7) The authorization for state–controlled video
lottery terminals for the purpose of raising revenue is consistent
with this state's public policy prohibiting gambling so long as the
gambling is not, in any way, expanded beyond that directly
controlled by this state. Expanded gambling beyond this limited
form of state–controlled gambling would compromise the public
safety, law, and long-standing policy against gambling in this
state. In addition, such expanded gambling could impose
prohibitive cost on this state's regulatory system and, therefore,
defeat the effort to raise revenue through authorized video lottery
terminals. For all of these reasons, any interpretation that
allows for casino gaming of the type operating in Nevada and New
Jersey in 2004 at racetracks or on Indian lands as a result of the
authorization of video lottery terminals would have severe adverse
consequences on this state's efforts to raise revenue for public
education and other governmental programs through the operation of
video lottery terminals and would violate the public policy against
gambling in such a way that would clearly outweigh any potential
positive economic consequences.
(8) In authorizing only a state-controlled and
state–operated video lottery system and state-controlled video
lottery terminals in limited locations and continuing the general
prohibition on gambling in this state as a matter of public policy,
this state is protecting the state's legitimate interests by
restricting such vice activity. By limiting operation of video
lottery terminals to those connected to the state-controlled video
lottery system and to certain lands and certain types of games, the
legislature seeks to foster this state's legitimate sovereign
interest in regulating the growth of gambling activities in this
state. Historically, this state has banned commercial gambling
altogether and, therefore, it is in this state's best interest to
limit the placement of commercial gambling operations to certain
locations. Limiting video lottery terminals to those controlled by
this state and located on racetracks where regulated gambling
already occurs is reasonably designed to defend against the
criminal infiltration of gambling operations and adverse impacts on
communities statewide. By restricting gambling such as video
lottery terminals to carefully limited locations and video lottery
terminals controlled by this state that may be disabled by this
state if necessary to protect the public, this state furthers the
state's purpose of ensuring that such gambling activities are free
from criminal and undesirable elements.
(9) This chapter is game-specific and may not be
construed to allow the operation of any other form of gambling
unless specifically allowed by this chapter. This chapter does not
allow the operation of slot machines, dice games, roulette wheels,
house-banked games, including house-banked card games, or games in
which winners are determined by the outcome of a sports contest that
are expressly prohibited under state law.
(10) In considering limitations on expanded gambling
in this state, it is a critical factor to effectuate the will of the
voters that any gaming on lands of the Ysleta del Sur Pueblo and
Alabama-Coushatta Indian tribes must be in strict compliance with
state law. The Kickapoo Traditional Tribe of Texas is only entitled
to operate video lottery terminals in strict compliance with state
law, unless otherwise required by federal law and in accordance
with a gaming agreement negotiated with the governor and ratified
by the legislature. A tribe may not under any circumstances operate
Class III gaming as defined by federal law other than video lottery
terminals connected to a video lottery central system controlled
and operated by this state.
(11) The voters have conferred a substantial economic
benefit on federally recognized Indian tribes by allowing operation
of video lottery terminals on lands held in trust by the Ysleta del
Sur Pueblo and Alabama-Coushatta Indian tribes at the time of the
ratification and approval of Section 47(f), Article III, Texas
Constitution, and on Indian lands of the Kickapoo Traditional Tribe
of Texas on which gaming is allowed under applicable federal law.
These tribes have the exclusive right to operate video lottery
terminals at locations on the Indian lands in this state without
incurring the investment necessary to construct, maintain, and
operate racetracks for live racing, and through revenue-sharing
both the policy of self-governance for the tribes and this state's
interests in generating additional revenue for public education and
other state governmental programs can be promoted.
(12) The public has an interest in video lottery game
operations, and lottery operations conducted under Section 47(f),
Article III, Texas Constitution, and this chapter represent an
exception to the general policy of this state prohibiting wagering
for private gain. Therefore, participation in a video lottery game
by a license or registration holder under this chapter is
considered a privilege conditioned on the proper and continued
qualification of the license or registration holder and on the
discharge of the affirmative responsibility of each license or
registration holder to provide to the regulatory and investigatory
authorities established by this chapter any assistance and
information necessary to assure that the policies declared by this
chapter are achieved. Consistent with this policy, it is the intent
of this chapter to:
(A) preclude the creation of any property right
in any license, registration, or approval issued or granted by this
state under this chapter, the accrual of any value to the privilege
of participation in any video lottery game operation, or the
transfer of a license or permit; and
(B) require that participation in video lottery
game operations be solely conditioned on the individual
qualifications of persons seeking this privilege.
(13) Only video lottery terminals lawfully operated in
connection with a video lottery system authorized by this
subchapter may be lawfully operated on Indian lands under the
Johnson Act (15 U.S.C. Section 1175).
Sec. 466.502. LOCAL LAW PREEMPTED; APPLICABILITY OF OTHER
LAWS. (a) This subchapter applies uniformly throughout this state
and all political subdivisions of this state.
(b) To the extent of any inconsistency between Chapter 2003
and a commission rule governing video lottery terminals or a
provision of this subchapter, the commission rule or provision of
this subchapter controls in all matters related to video lottery
terminals, including hearings before the State Office of
Administrative Hearings.
Sec. 466.503. AUTHORITY TO OPERATE VIDEO LOTTERY. (a) The
commission may implement and operate a video lottery system and
control the operation of video lottery terminals at racetracks in
accordance with this chapter and the applicable provisions of the
Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes).
This chapter supersedes any conflicting or inconsistent provision
of the Texas Racing Act (Article 179e, Vernon's Texas Civil
Statutes) or other state law.
(b) The commission may allow the operation of video lottery
terminals pursuant to this chapter at locations on Indian lands in
accordance with an effective gaming agreement and in compliance
with applicable federal law.
(c) For purposes of this chapter, this state may acquire a
proprietary interest in video lottery game software through:
(1) ownership of the software; or
(2) an exclusive product license agreement with a
provider in which the provider retains copyrighted ownership of the
software but the license granted to this state is nontransferable
and authorizes this state to operate the software program, solely
for the state's own use, on the video lottery central system and
video lottery terminals connected to the video lottery central
system.
(d) Video lottery equipment operated under commission
authority and this chapter is exempt from 15 U.S.C. Section 1172.
Sec. 466.5031. STATE CONTROL OF VIDEO LOTTERY SYSTEM. (a)
In accordance with Section 47(f), Article III, Texas Constitution,
the commission shall control and operate the video lottery system
and the video lottery central system through which this state has
the exclusive and unilateral ability to monitor activity of video
lottery terminals and remotely disable video lottery terminals for
the public safety, health, and welfare or the preservation of the
integrity of the lottery and to prevent any financial loss to the
state. This section does not affect or restrict the ability of the
video lottery manager to monitor activity of video lottery
terminals and to disable video lottery terminals in accordance with
commission rules.
(b) The commission may disable a video lottery terminal if a
video lottery retailer's or video lottery manager's license is
revoked, surrendered, or summarily suspended under Section
466.50341, or to prevent any financial loss to the state.
Sec. 466.5032. VIDEO LOTTERY CENTRAL SYSTEM. (a) The
commission shall establish or cause to be established a video
lottery central system to link all video lottery terminals in the
video lottery system. The video lottery central system must be a
central determinant system that provides lottery outcomes from a
central determination computer that is transmitted to video lottery
terminals in a manner prescribed by the commission. The video
lottery central system must provide the auditing and other
information required by the commission.
(b) The commission shall provide to a registered video
lottery terminal provider or an applicant applying for registration
as a video lottery terminal provider the protocol documentation
data necessary to enable the provider's or applicant's video
lottery terminals to communicate with the commission's video
lottery central system for transmission of auditing program
information and for activation and disabling of video lottery
terminals.
(c) The video lottery central system may not limit or
preclude potential video lottery terminal providers from providing
video lottery terminals except for providers that fail to meet
specifications set by the commission.
(d) The video lottery central system provider may not sell
or distribute video lottery terminals in this state.
(e) The commission may contract with a video lottery central
system provider to establish the video lottery central system.
(f) The commission may not contract with a person to provide
the video lottery central system if that person owned, on January 1,
2005, any interest in a racetrack or pari-mutuel license in this
state.
Sec. 466.5033. REGISTRATION AND APPROVAL OF VIDEO LOTTERY
TERMINAL PROVIDERS. (a) A person may not manufacture or
distribute video lottery equipment for use or play in this state
unless the person is registered under this chapter as a video
lottery terminal provider or is otherwise approved by the
commission to manufacture or distribute video lottery equipment in
this state.
(b) Unless suspended or revoked, the registration or
approval expires on the date specified by the commission, which may
not be later than the fifth anniversary of the date of the
registration or approval.
(c) To be eligible for registration or commission approval
as required by this section, an applicant must satisfy all
requirements under this subchapter.
(d) The commission shall adopt rules governing the
registration and approval of video lottery terminal providers. The
rules at a minimum must require the application and any other form
or document submitted to the commission by or on behalf of the
applicant to determine qualification under this section to be sworn
to or affirmed before an officer qualified to administer oaths. The
applicant must provide the following information:
(1) the full name and address of the applicant;
(2) the full name and address of each location at which
video lottery equipment is or will be manufactured or stored in this
state;
(3) the name, home address, and share of ownership of
the applicant's substantial interest holders;
(4) a full description of each separate type of video
lottery equipment that the applicant seeks to manufacture or
distribute in this state;
(5) the brand name under which each type of video
lottery equipment is to be distributed;
(6) if the applicant is incorporated under laws other
than the laws of this state, an irrevocable designation by the
applicant of the secretary of state as resident agent for service of
process and notice in accordance with the law of this state;
(7) a list of all businesses or organizations in this
state in which the applicant has any financial interest and the
details of that financial interest, including all arrangements
through which a person directly or indirectly receives any portion
of the profits of the video lottery terminal provider and
indebtedness between the license holder and any other person, other
than a regulated financial institution, in excess of $5,000;
(8) a list of all affiliated businesses or
corporations in which the applicant or an officer, director, or
substantial interest-holder of the applicant, either directly or
indirectly, owns or controls as a sole proprietor or partner more
than 10 percent of the voting stock of a publicly traded
corporation;
(9) a list of all businesses or corporations licensed
to conduct gambling activities or to supply gambling-related
equipment, supplies, or services in which the applicant or an
officer, director, or substantial interest-holder of the applicant
has any interest;
(10) a list of all jurisdictions in which the
applicant or an officer, director, or substantial interest-holder
of the applicant has been licensed, registered, qualified, or
otherwise approved for gambling-related activities during the
preceding 10 years from the date of the filing of the application;
(11) a statement indicating whether the applicant or
an officer, director, or substantial interest-holder of the
applicant has ever had a license, registration, qualification, or
other approval for gambling-related activities denied, revoked, or
suspended by any jurisdiction or has been fined or otherwise
required to pay penalties or monetary forfeitures for
gambling-related activities in any jurisdiction, including all
related details; and
(12) a statement acknowledging that the applicant will
make available for review at the time and place requested by the
commission all records related to the ownership or operation of the
business.
(e) The commission may require the following information
from an applicant:
(1) personal financial and personal history records of
all substantial interest-holders;
(2) all records related to the scope of activity,
including sales of product, purchases of raw materials and parts,
and any contracts, franchises, patent agreements, or similar
contracts or arrangements related to manufacturing or distributing
video lottery terminals; and
(3) records related to any financial or management
control of or by customers and suppliers.
(f) The applicant must demonstrate the ability to comply
with all manufacturing, quality control, and operational
restrictions imposed on authorized video lottery equipment,
patented or otherwise restricted video lottery games, or other
video lottery equipment that the applicant seeks to manufacture or
distribute for use in this state. The registration process must
include an on-site review of the applicant's manufacturing
equipment and process for each separate type of authorized video
lottery equipment to ensure capability to comply with all
regulatory requirements of this chapter or rules adopted under this
chapter.
(g) The applicant, not later than the 10th day after the
date of the change, shall notify the commission of any change in the
information submitted on or with the application form, including
changes that occur after the registration or other commission
approval has been granted.
(h) The applicant shall comply with all federal and state
laws, local ordinances, and rules.
(i) An applicant seeking registration or approval under
this section must pay a nonrefundable application fee in the amount
prescribed by commission rule that is sufficient to pay the costs to
the commission of administering this section. Application fees
paid under this subsection shall be retained by the commission to
defray costs incurred in the administration and enforcement of this
chapter relating to the operation of video lottery terminals.
(j) The commission may not register or approve an applicant
under this section if the applicant owned, on January 1, 2005, any
interest in a racetrack or pari-mutuel license in this state.
Sec. 466.5034. LICENSING OF VIDEO LOTTERY RETAILERS AND
VIDEO LOTTERY MANAGERS. (a) Except as provided by a gaming
agreement, a person may not own or operate a video lottery terminal
if the person does not satisfy the requirements of this section and
is not licensed by the commission to act as a video lottery retailer
or video lottery manager.
(b) An officer, partner, director, key employee,
substantial interest-holder, video lottery game operation
employee, and owner of video lottery game operations must be
eligible and maintain eligibility in accordance with this
subchapter to be involved in video lottery games in this state.
(c) An applicant for a video lottery retailer or video
lottery manager license must submit a nonrefundable application
processing fee in the amount prescribed by commission rule that is
sufficient and reasonable to pay the costs of determining the
applicant's eligibility. An application may not be processed until
the applicant provides the nonrefundable application fee. If the
application fee is not received within 30 days of the date the
commission notifies the applicant of the amount of the fee, the
application is considered withdrawn and may not be considered by
the commission. The application processing fee may not exceed
$50,000.
(d) The commission shall not accept an application for a
video lottery retail license from a racetrack whose licensed
premises property line is less than one-half mile from the property
line of a school or church.
(e) An applicant for a license under this section must apply
to the commission under rules adopted by the commission, provide
the information necessary to determine the applicant's eligibility
for a license, and provide other information considered necessary
by the commission. An applicant must:
(1) hold a valid pari-mutuel license granted by the
Texas Racing Commission under the Texas Racing Act (Article 179e,
Vernon's Texas Civil Statutes) and own or manage a racetrack as
defined by Section 466.002;
(2) have a valid and executed contract with a person
that satisfies the requirements of Subdivision (1) to act as a video
lottery manager for the person subject to licensing under this
chapter; or
(3) demonstrate to the commission's satisfaction that
the applicant seeks to act as a video lottery manager for a
federally recognized Indian tribe that has entered into a gaming
agreement with this state that is in effect and governs the
regulation of video lottery terminals on Indian lands in this
state.
(f) An applicant for a video lottery retailer or video
lottery manager license has the burden of proving qualification for
a license by clear and convincing evidence. In addition to
satisfying minimum requirements established by commission rules,
an applicant for a video lottery retailer or video lottery manager
license must:
(1) be a person of good character, honesty, and
integrity;
(2) be a person whose background and prior activities,
including criminal record, reputation, habits, and associations,
do not pose a threat to the security and integrity of video lottery
or to the public interest of this state or to the effective
operation and control of the lottery, or do not create or enhance
the dangers of unsuitable, unfair, or illegal practices, methods,
and activities in the conduct of the lottery or in the carrying on
of the business and financial arrangements incidental to the
lottery;
(3) if applying for a new license, provide
fingerprints for a criminal records evaluation by the Texas
Department of Public Safety or other law enforcement agency,
including fingerprints for each person required to be named in an
application, accompanied by a signed authorization for the release
of information to the commission by the department of public safety
and the Federal Bureau of Investigation;
(4) not have been convicted of an offense under this
chapter or of any crime related to theft, bribery, gambling, or
involving moral turpitude;
(5) demonstrate adequate business probity,
competence, experience, and financial stability as defined by the
commission;
(6) demonstrate adequate financing for the operation
of the facility at which the video lottery terminals will be
operated by disclosing all financing or refinancing arrangements
for the purchase, lease, or other acquisition of video lottery
equipment in the degree of detail requested by the commission, and
the commission shall determine whether the financing is from a
source that meets the requirements of this section and is adequate
to support the successful performance of the duties and
responsibilities of the license holder;
(7) when applying for a new license or renewing a
license under this chapter, present evidence to the commission of
the existence and terms of any agreement regarding the proceeds
from the operation of video lottery terminals;
(8) demonstrate that each substantial interest-holder
meets all applicable qualifications under this subchapter;
(9) provide all information, including financial data
and documents, consents, waivers, providers of surety and insurance
and any other materials requested by the commission for purposes of
determining qualifications for a license; and
(10) as part of its application, expressly waive any
and all claims against the commission, this state, and a member,
officer, employee, or authorized agent of the commission or this
state for damages resulting from any background investigation,
disclosure, or publication relating to an application for a video
lottery retailer or video lottery manager license.
(g) An application, registration, or disclosure form and
any other document submitted to the commission by or on behalf of
the applicant for purposes of determining qualification for a video
lottery retailer or video lottery manager license must be sworn to
or affirmed before an officer qualified to administer oaths.
(h) An applicant who knowingly fails to reveal any fact
material to qualification for a license, finding of suitability, or
other approval or who knowingly submits false or misleading
material information is ineligible for a video lottery retailer or
video lottery manager license.
(i) An applicant for a facility site for a video lottery
terminal establishment must ensure that the facility will comply
with all applicable building codes and rules of the commission.
Rules adopted by the commission related to facilities shall be
limited to those matters related solely to the state's interest in
the operation of video lottery terminals. A video lottery terminal
establishment shall provide office space for the commission
sufficient for at least one commission employee.
(j) An applicant or license holder must provide information
as required by commission rule relating to the applicant's or
license holder's video lottery terminal establishment and update
the information at least annually.
(k) An applicant shall notify the commission of any change
in the application information for a license or renewal of a license
not later than the 10th day after the date of the change, except
that a publicly traded corporation or other business association or
entity applicant is not required to notify the commission of a
transfer by which any person directly or indirectly becomes the
beneficial owner of less than 10 percent of the stock of the
corporation or association.
(l) Except as provided by Subsection (n), the commission
shall deny an application for a license or shall suspend or revoke a
license if the commission finds that the applicant would be subject
to denial or revocation of a sales agent license under Section
466.155.
(m) Notwithstanding Section 466.155, the commission may not
deny, suspend, or revoke a license under this chapter based on the
fact that a video lottery terminal establishment or a proposed
video lottery terminal establishment is a location for which a
person holds a wine and beer retailer's permit, mixed beverage
permit, mixed beverage late hours permit, private club registration
permit, or private club late hours permit, issued under Chapter 25,
28, 29, 32, or 33, Alcoholic Beverage Code.
(n) The holder of a license under this subchapter may
operate as a sales agent for lottery tickets in accordance with this
chapter.
(o) Unless suspended or revoked, a license, other than a
video lottery retailer license, issued under this subchapter
expires on the date specified in the license, which may not be later
than the fifth anniversary of the date of issuance. A video lottery
retailer license has the same term as a pari-mutuel license and is
valid until suspended or revoked. To be eligible for renewal of a
license, an applicant must satisfy all licensing requirements under
this subchapter. The commission may charge an annual fee, not to
exceed $50,000, to the holder of a video lottery retailer license.
(p) An application to receive or renew a license or to be
found suitable constitutes a request for a determination of the
applicant's general character, integrity, and ability to
participate or engage in or be associated with the operation of
video lottery terminals. Any written or oral statement made in the
course of an official commission proceeding or investigative
activities related to an application for commission licensing,
registration, or other approval under this subchapter, by any
member or agent or any witness testifying under oath that is
relevant to the purpose of the proceeding is absolutely privileged
and does not impose liability for defamation or constitute a ground
for recovery in any civil action.
(q) The commission by rule may establish other license
qualifications the commission determines are in the public interest
and consistent with the declared policy of this state.
(r) The commission in its discretion may require a
suitability finding for any person doing business with or in
relation to the operation of video lottery terminals who is not
otherwise required to obtain a license or registration from the
commission for the person's video lottery-related business
operations.
Sec. 466.50341. SUMMARY SUSPENSION; TERMINAL DISABLED. (a)
The commission may summarily suspend the license of a video lottery
retailer or video lottery manager without notice or hearing if the
commission finds the action is necessary to maintain the integrity,
security, honesty, or fairness of the operation or administration
of the lottery or to prevent financial loss to this state and:
(1) the license holder fails to deposit money received
from video lottery terminal operations as required by this chapter
or commission rule;
(2) an event occurs that would render the license
holder ineligible for a license under this subchapter;
(3) the license holder refuses to allow the
commission, the commission's agents, or the state auditor, or their
designees, to examine the license holder's books, records, papers,
or other objects under Section 466.017; or
(4) the executive director learns the license holder
failed to disclose information that would, if disclosed, render the
video lottery retailer or video lottery manager ineligible for a
license under this subchapter.
(b) A summary suspension under this subchapter must comply
with the notice and procedure requirements provided by Section
466.160.
(c) The commission may disable a video lottery terminal
operated by a license holder under this subchapter at the time:
(1) a proceeding to summarily suspend the license is
initiated;
(2) the commission discovers the license holder failed
to deposit money received from video lottery terminal operation as
required if the license is being summarily suspended under this
section; or
(3) of the occurrence of an act or omission that, under
commission rules, justifies the termination of video lottery
terminal operations to protect the public health, welfare, or
safety or the integrity of the lottery or to prevent financial loss
to this state.
(d) The commission shall immediately disable a video
lottery terminal if necessary to protect the public health,
welfare, or safety.
Sec. 466.50342. TRANSFER RESTRICTIONS. (a) A video
lottery retailer or video lottery manager license is not
transferable.
(b) A pari-mutuel license holder that sells, transfers,
assigns, or otherwise conveys any interest or control in the
pari-mutuel license or the racetrack owned or managed by the
license holder before video lottery operations begin at the
racetrack or before the third anniversary of the commencement of
video lottery operations shall remit to this state a transfer fee
equal to 75 percent of the sales, transfer, assignment, or other
conveyance price or other consideration received by the pari-mutuel
license holder. A transfer or conveyance of an interest or control
under this subsection may not be approved by the Texas Racing
Commission until the payment to this state under this subsection
has been fully paid.
(c) A sale, transfer, assignment or conveyance of interest
by the commission or control to which subsection (b) applies may not
be approved until the state receives the transfer fee.
Sec. 466.5035. LICENSING, REGISTRATION, SUITABILITY,
QUALIFICATION, AND REGULATORY APPROVAL AS REVOCABLE PERSONAL
PRIVILEGES. (a) An applicant for a license, registration,
suitability, qualification, or other affirmative regulatory
approval under this subchapter does not have any right to the
license, registration, suitability, or qualification, or the
granting of the approval sought. Any license, registration,
suitability, or qualification issued or other regulatory approval
granted under this subchapter is a revocable privilege, and a
holder of the privilege does not acquire any vested right in or
under the privilege. The courts of this state do not have
jurisdiction to review a decision to deny, limit, or condition the
license, registration, suitability, qualification, or request for
approval unless the judicial review is sought on the ground that the
denial, limitation, or condition is based on a suspect
classification, such as race, color, religion, sex, or national
origin, in violation of the Equal Protection Clause of the
Fourteenth Amendment to the United States Constitution. If a state
court has jurisdiction over a claim under this section, then this
state's sovereign immunity is waived only to the extent expressly
provided by Section 466.515.
(b) A license, registration, suitability, qualification, or
regulatory approval granted or renewed under this subchapter may
not be transferred or assigned to another person, and a license,
registration, suitability, qualification, or approval may not be
pledged as collateral. The purchaser or successor of a person who
has been granted a license, registration, suitability,
qualification, or regulatory approval must independently qualify
for a license, registration, suitability, qualification, or
approval required by this subchapter.
(c) The following acts void the license, registration,
suitability, qualification, or other regulatory approval of the
holder unless approved in advance by the commission:
(1) the transfer, sale, or other disposition of an
interest in the holder that results in a change in the identity of a
substantial interest holder; or
(2) the sale of the assets of the holder, other than
assets bought and sold in the ordinary course of business, or any
interest in the assets, to any person not already determined to have
met the applicable qualifications of this subchapter.
Sec. 466.5036. VIDEO LOTTERY TERMINAL ESTABLISHMENT;
PROCUREMENT OF VIDEO LOTTERY TERMINALS. (a) A video lottery
retailer or video lottery manager shall provide all necessary
capital investments and required improvements at a video lottery
terminal establishment operated by the retailer or manager.
(b) The commission shall provide all video lottery
retailers or video lottery managers with a list of registered video
lottery terminal providers, video lottery games, and video lottery
terminals authorized for operation under this subchapter.
(c) At the time and in the manner prescribed by commission
rule, a video lottery retailer or video lottery manager shall remit
to the commission a $2,500 fee for each video lottery terminal
delivered to the video lottery terminal establishment operated by
the retailer or manager.
(d) A video lottery terminal provider may not distribute a
video lottery terminal or other video lottery equipment for
placement at a video lottery terminal establishment in this state
unless the video lottery terminal has been approved by the
commission. Only a video lottery terminal provider registered with
the commission may apply for approval of a video lottery terminal or
other video lottery equipment. At least 10 days before the date of
shipment to a location in this state, a video lottery terminal
provider shall file a report with the commission itemizing all
video lottery terminals and other video lottery equipment to be
provided to a video lottery retailer or video lottery manager in the
shipment.
(d-1) A video lottery terminal provider shall submit two
copies of terminal illustrations, schematics, block diagrams,
circuit analysis, technical and operation manuals, and any other
information requested by the commission for the purpose of
analyzing and testing the video lottery terminal or other video
lottery equipment.
(e) The commission may require a working model of a video
lottery terminal to be provided unless the video lottery terminal
provider can provide a certification by an approved independent
testing laboratory that the video lottery terminal is compatible
and functions as required by the commission.
(f) The video lottery terminal provider is responsible for
the assembly and installation of all video lottery terminals and
other video lottery equipment. The video lottery terminal provider
and video lottery retailer or video lottery manager may not change
the assembly or operational functions of a video lottery terminal
authorized by the commission for placement in this state unless a
request for modification of an existing video lottery terminal
prototype is approved by the commission. The request must contain:
(1) a detailed description of the type of change;
(2) a detailed description of the reasons for the
change; and
(3) technical documentation of the change.
(g) A video lottery terminal approved by the commission for
placement at a video lottery terminal establishment must conform to
the specifications of the video lottery terminal prototype tested
or approved by the commission. If any video lottery terminal that
has not been approved by the commission is distributed by a video
lottery terminal provider or operated by a video lottery retailer
or video lottery manager or if an approved video lottery terminal
malfunctions, the commission shall require the terminal to be
removed from use and play. The commission may order that an
unapproved terminal be seized and destroyed. The commission may
suspend or revoke the license of the video lottery retailer or video
lottery manager or the registration of a video lottery terminal
provider for the distribution, possession, or operation of an
unauthorized video lottery terminal. A video lottery retailer or
video lottery manager may retain on the premises of the video
lottery terminal establishment a number of machines that the
retailer or manager deems necessary to provide for spare parts,
repair purposes or as replacement machines. The retailer or
manager must each month provide a list of machines it retains under
this paragraph to the commission.
(h) The commission shall adopt rules for approval of video
lottery terminals, including requirements for video lottery game
tickets, maximum and minimum payout, and maximum wagers. A
commission-approved video lottery terminal must meet the following
minimum specifications:
(1) a surge protector must be installed on the
electrical power supply line to each video lottery terminal, a
battery or equivalent power backup for the electronic meters must
be capable of maintaining the accuracy of all accounting records
and video lottery terminal status reports for a period of 180 days
after power is disconnected from the video lottery terminal, and
the power backup device must be in the compartment specified in
Subdivision (3);
(2) the operation of each video lottery terminal may
not be adversely affected by any static discharge or other
electromagnetic interference;
(3) the main logic boards of all electronic storage
mediums must be located in a separate compartment in the video
lottery terminal that is locked and sealed by the commission;
(4) the instructions for play of each game must be
displayed on the video lottery terminal face or screen, including a
display detailing the credits awarded for the occurrence of each
possible winning combination of numbers or symbols, and the
commission may reject any instructions for play that the commission
determines to be incomplete, confusing, or misleading;
(5) communication equipment and devices must be
installed to enable each video lottery terminal to communicate with
the video lottery central system through the use of a
communications protocol which must include information retrieval
and programs to activate and disable the terminal provided by the
commission to each registered video lottery terminal provider; and
(6) a video lottery terminal may be operated only if
connected to the video lottery system, and play on the terminal may
not be conducted unless the terminal is connected to the video
lottery central system.
Sec. 466.5037. TRAVEL AND INVESTIGATION COSTS. The travel
and investigative expenses of the commission shall be paid from
money appropriated to the commission.
Sec. 466.5038. CONSENT TO COMMISSION DETERMINATION. An
application for a license, registration, finding of suitability,
qualification, or other approval and any other factor attaching to
an application under this chapter or Chapter 467 and the rules
adopted under this chapter or Chapter 467 constitutes a request to
the commission for a decision on the applicant's general
suitability, character, integrity, and ability to participate or
engage in or be associated with the lottery in the manner or
position sought. By filing an application with the commission, the
applicant specifically consents to the commission's decision at the
commission's election when the application, after filing, becomes
moot for any reason other than death.
Sec. 466.5039. ABSOLUTE AUTHORITY OF COMMISSION; AUTHORITY
TO WAIVE REQUIREMENTS; EFFECT OF DENIAL. (a) The commission has
full and absolute power and authority to deny any application or
limit, condition, restrict, revoke, or suspend any license,
registration, or finding of suitability or approval, and to fine
any person licensed, registered, found suitable, or approved for
any cause deemed reasonable by the commission.
(b) The commission may waive any requirement under this
chapter for a finding of suitability of an institutional investor
that is a substantial interest holder with respect to the
beneficial ownership of the voting securities of a publicly traded
corporation if the institutional investor holds the securities for
investment purposes only. An institutional investor is not
eligible for the waiver, except as otherwise provided by Subsection
(c), if the institutional investor beneficially owns, directly or
indirectly, more than 15 percent of the voting securities and if any
of the voting securities were acquired other than through a debt
restructuring. Voting securities acquired before a debt
restructuring and retained after a debt restructuring or as a
result of an exchange, exercise, or conversion after a debt
restructuring, or any securities issued to the institutional
investor through a debt restructuring, are considered to have been
acquired through a debt restructuring. A waiver granted under this
subsection is effective only as long as the institutional
investor's direct or indirect beneficial ownership interest in the
voting securities meets the limitations set forth in this section,
and if the institutional investor's interest exceeds the limitation
at any time, the investor is subject to the suitability findings
required under this chapter.
(c) An institutional investor that has been granted a waiver
under Subsection (b) may beneficially own more than 15 percent, but
not more than 19 percent, of the voting securities of a publicly
traded corporation registered with or licensed by the commission
only if the additional ownership results from a stock repurchase
program conducted by the publicly traded corporation and on the
conditions that the institutional investor does not purchase or
otherwise acquire any additional voting securities of the publicly
traded corporation that would result in an increase in the
institutional investor's ownership percentage and the
institutional investor reduces its ownership percentage of the
publicly traded corporation to 15 percent or less before the first
anniversary of the date the institutional investor receives
constructive notice that it exceeded the 15 percent threshold,
based on any public filing by the corporation with the United States
Securities and Exchange Commission. The one-year time period may
be extended for a reasonable time on commission approval.
(d) An institutional investor may not be considered to hold
voting securities of a publicly traded corporation for investment
purposes only unless the voting securities were acquired and are
held in the ordinary course of business as an institutional
investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board
of directors, any change in the corporate charter, bylaws,
management, policies, or operations of the corporation registered
with or licensed by the commission or any of its gaming affiliates,
or any other action which the commission finds to be inconsistent
with investment purposes only. The following activities may not be
considered to be inconsistent with holding voting securities for
investment purposes only:
(1) voting, directly or indirectly through the
delivery of a proxy furnished by the board of directors, on all
matters voted on by the holders of the voting securities;
(2) serving as a member of any committee of creditors
or security holders formed in connection with a debt restructuring;
(3) nominating any candidate for election or
appointment to the board of directors in connection with a debt
restructuring;
(4) accepting appointment or election as a member of
the board of directors in connection with a debt restructuring and
serving in that capacity until the conclusion of the member's term;
(5) making financial and other management inquiries of
the type normally made by securities analysts for information
purposes and not to cause a change in management, policies, or
operations; and
(6) any other activity the commission determines to be
consistent with the investment intent.
(e) An application for a waiver under Subsection (b) must
include:
(1) a description of the institutional investor's
business and a statement as to why the institutional investor meets
the definition of an institutional investor set forth in this
chapter;
(2) a certification, made under oath and penalty of
perjury, that the voting securities were acquired and are held for
investment purposes only as defined in Subsection (b), provided the
certification also states that the applicant agrees to be bound by
and comply with this chapter and the rules adopted under this
chapter, to be subject to the jurisdiction of the courts of this
state, and to consent to this state as the choice of forum in the
event any dispute, question, or controversy arises regarding the
application or any waiver granted under Subsection (b), and a
statement by the signatory explaining the basis of the signatory's
authority to sign the certification and bind the institutional
investor to its terms;
(3) a description of all actions, if any, taken or
expected to be taken by the institutional investor related to the
activities described in Subsection (c);
(4) the names, addresses, telephone numbers, dates of
birth, and social security numbers of the officers and directors of
the institutional investor, or the officers' and directors'
equivalents, as well as the persons that have direct control over
the institutional investor's holdings of voting securities of the
publicly traded corporation registered with or licensed by the
commission;
(5) the name, address, telephone number, date of
birth, and social security number or federal tax identification
number of each person who has the power to direct or control the
institutional investor's exercise of its voting rights as a holder
of voting securities of the publicly traded corporation registered
with or licensed by the commission;
(6) the name of each person that beneficially owns
more than five percent of the institutional investor's voting
securities or other equivalent;
(7) a list of the institutional investor's affiliates;
(8) a list of all securities of the publicly traded
corporation registered with or licensed by the commission that are
or were beneficially owned by the institutional investor or its
affiliates within the preceding year, setting forth a description
of the securities, the amount of the securities, and the date of
acquisition or sale of the securities;
(9) a list of all regulatory agencies with which the
institutional investor or any affiliate that beneficially owns
voting securities of the publicly traded corporation registered
with or licensed by the commission files periodic reports, and the
name, address, and telephone number of the person, if known, to
contact at each agency regarding the institutional investor;
(10) a disclosure of all criminal or regulatory
sanctions imposed during the preceding 10 years and of any
administrative or court proceedings filed by any regulatory agency
during the preceding five years against the institutional investor,
its affiliates, any current officer or director, or any former
officer or director whose tenure ended within the preceding twelve
months, except that for a former officer or director, the
information need be provided only to the extent that it relates to
actions arising out of or during the person's tenure with the
institutional investor or its affiliates;
(11) a copy of the institutional investor's most
recent Schedule 13D or 13G and any amendments to that schedule filed
with the United States Securities and Exchange Commission
concerning any voting securities of the publicly traded corporation
registered with or licensed by the commission;
(12) a copy of any filing made under the Securities
Exchange Act of 1934 (15 U.S.C. Section 78a) with respect to the
acquisition or proposed acquisition of voting securities of the
publicly traded corporation registered with or licensed by the
commission; and
(13) any additional information the commission may
request.
(f) An institutional investor that has been granted a waiver
of a finding of suitability and that subsequently intends not to
hold the investor's voting securities of the publicly traded
corporation for investment purposes only or that intends to take
any action inconsistent with the investor's prior intent shall,
within two business days after the date of the decision, deliver
notice to the commission in writing of the change in the investor's
investment intent. The commission may then take any action the
commission deems appropriate. If the commission finds that an
institutional investor has failed to comply with this chapter or is
subject to a finding of suitability to protect the public interest,
the commission may require the institutional investor to apply for
a finding of suitability. Any publicly traded corporation
registered with or licensed by the commission shall immediately
notify the commission of any information about, fact concerning, or
actions of an institutional investor holding any of its voting
securities that may materially affect the institutional investor's
eligibility to hold a waiver under this section.
(g) The commission may waive, either selectively or by
general rule, one or more of the requirements of Sections 466.5033
and 466.5034 if the commission makes a written finding that the
waiver is consistent with the policy of this state, the public
health, safety, and welfare, and the integrity of the lottery.
(h) A person whose application for a license or registration
has been denied may not have any interest in or association with a
video lottery retailer or video lottery manager or any other
business conducted in connection with video lottery without prior
permission of the commission. Any contract between a person holding
a license or registration and a person denied a license or
registration must be terminated immediately on receipt of notice
from the commission. If the person denied a license or registration
has previously been granted a temporary license or registration,
the temporary license or registration expires immediately on denial
of the permanent license or registration. Except as otherwise
authorized by the commission, a person denied a license or
registration may not reapply for any license or registration before
the second anniversary of the date of the denial.
(i) For purposes of this section, "debt restructuring"
means:
(1) a proceeding under the United States Bankruptcy
Code; or
(2) any out-of-court reorganization of a person that
is insolvent or generally unable to pay the person's debts as they
become due.
Sec. 466.504. LIMITATION ON OPERATION OF VIDEO LOTTERY
TERMINALS. (a) Except as otherwise provided by the commission, the
hours of operation for video lottery terminals are subject to
restrictions only as provided by commission rules. The commission
by rule may prescribe restrictions on the hours of video lottery
terminal operations for purposes determined by the commission,
including accounting for and collecting revenue generated by video
lottery terminal operations and performing other operational
services on the video lottery system.
(b) Communication between the video lottery central system
and each video lottery terminal must be continuous and on a
real-time basis as prescribed by the commission.
(c) Except as may be provided by a gaming agreement,
placement or movement of video lottery terminals in a video lottery
terminal establishment must be consistent with a video lottery
terminal establishment floor plan filed with the commission.
(d) A video lottery retailer or video lottery manager must:
(1) be aware of patron conditions and prohibit play by
visibly intoxicated patrons;
(2) comply with state alcoholic beverage control laws;
(3) at all times maintain sufficient change and cash
in denominations accepted by video lottery terminals;
(4) promptly report all video lottery terminal
malfunctions and down-time;
(5) install, post, and display prominently any
material required by the commission;
(6) prohibit illegal gambling and any related
paraphernalia;
(7) except as otherwise provided by this subchapter,
at all times prohibit money lending or other extensions of credit at
the video lottery terminal establishment;
(8) supervise employees and activities to ensure
compliance with all commission rules and this subchapter;
(9) maintain continuous camera coverage of all aspects
of video lottery game operations, including video lottery
terminals; and
(10) maintain an entry log for each video lottery
terminal on the premises of the video lottery terminal
establishment and maintain and submit complete records on receipt
of each video lottery terminal on the premises as determined by the
commission.
(e) A video lottery retailer at all times must hold a valid
pari-mutuel wagering license, except that the commission may allow
a video lottery retailer whose pari-mutuel wagering license has
lapsed or been revoked, suspended, or surrendered to reapply for a
license in order to operate the video lottery terminal
establishment or by rule may establish a period not to exceed two
years during which time the video lottery terminal establishment
may be operated pending acquisition by a person qualified and
licensed under this chapter to operate video lottery terminals. If
the video lottery retailer is not licensed before the second
anniversary of the date a license lapses or is revoked, suspended,
or surrendered or a new video lottery manager or video lottery
retailer is not licensed and authorized to operate the facility
before the second anniversary, the pari-mutuel license holder shall
permanently lose eligibility under this chapter to operate video
lottery terminals. Subject to the commission's discretion, the
video lottery retailer may continue to operate the video lottery
terminal establishment after the second anniversary only to satisfy
the establishment's existing outstanding debt attributable to
video lottery operation.
(f) All transportation and movement of video lottery
terminals into or within this state is prohibited, except as
permitted by this subchapter and approved by the commission.
(g) An obsolete video lottery terminal or a video lottery
terminal that is no longer in operation must be promptly reported to
the commission.
(h) A video lottery retailer or a video lottery manager, if
applicable, is responsible for the management of video lottery game
operations, including validation and payment of prizes and the
management of cashiers, food and beverage workers, floor workers,
security personnel, the security system, building completion,
janitorial services, landscaping design, and maintenance. Nothing
in this subsection limits the authority of the commission, the
Department of Public Safety, or another law enforcement agency to
administer and enforce this chapter as related to video lottery.
(i) The commission shall adopt rules governing:
(1) the range of amounts a player may be charged to
play each video lottery game; and
(2) the range of prizes and credits that may be awarded
to the player of a video lottery game.
(j) The video lottery central system provider shall pay for
the installation and operation of commission-approved
communication technology to provide real-time communication
between each video lottery terminal and the video lottery central
system.
(k) In addition to other requirements under this chapter
relating to video lottery, a video lottery retailer or a video
lottery manager at all times shall:
(1) operate only video lottery terminals that are
distributed by a registered video lottery terminal provider and
provide a secure location for the placement, operation, and play of
the video lottery terminals;
(2) prevent any person from tampering with or
interfering with the operation of a video lottery terminal;
(3) ensure that communication technology from the
video lottery central system to the video lottery terminals is
connected and prevent any person from tampering or interfering with
the operation of the connection;
(4) ensure that video lottery terminals are in the
sight and control of designated employees of the video lottery
retailer or video lottery manager and in the sight of video cameras
as required under this subchapter;
(5) ensure that video lottery terminals are placed and
remain placed in the locations in the video lottery terminal
establishment that are consistent with the retailer's or manager's
commission-approved floor plan;
(6) monitor video lottery terminals to prevent access
to or play by persons who are under 18 years of age or who are
visibly intoxicated;
(7) refuse to accept a credit card payment from a
player for the exchange or purchase of video lottery game credits or
for an advance of coins, currency, vouchers, or tokens to be used by
a player to play video lottery games, refuse to extend credit, in
any manner, to a player that enables the player to play a video
lottery game, and ensure that all persons doing business at the
video lottery terminal establishment, including a person operating
or managing an auxiliary service such as a restaurant, refuse to
accept a credit card payment or to extend credit to a person to play
video lottery games except that:
(A) a license holder may cash a check for a player
if the license holder exercises reasonable caution cashing the
check and does not cash checks for any player in an excessive amount
not to exceed $1,000 in any 24-hour period; and
(B) automated teller machines may be located at a
video lottery terminal establishment in compliance with the Texas
Racing Act (Article 179e, Vernon's Texas Civil Statutes) or an
effective gaming agreement;
(8) pay all credits won by a player on presentment of a
valid winning video lottery game ticket;
(9) conduct only the video lottery game advertising
and promotional activities consistent with criteria prescribed by
the commission, including prohibiting undue influence, offensive
language, and anything that would affect the integrity of video
lottery operation;
(10) install, post, and display prominently at the
licensed location redemption information and other informational
or promotional materials as required by the commission;
(11) maintain general liability insurance coverage
for the video lottery terminal establishment and all video lottery
terminals in the amounts required by the commission;
(12) assume liability for money lost or stolen from
any video lottery terminal; and
(13) annually submit an audited financial statement to
the commission in accordance with generally accepted accounting
principles.
Sec. 466.5041. TECHNICAL STANDARDS FOR VIDEO LOTTERY
EQUIPMENT. The commission by rule shall provide minimum technical
standards for video lottery equipment that may be operated in this
state.
Sec. 466.5042. INCIDENT REPORTS. A video lottery retailer
or video lottery manager shall record all unusual occurrences
related to gaming activity in a video lottery terminal
establishment operated by the retailer or manager. Each material
incident shall be assigned a sequential number and, at a minimum,
the following information must be recorded in a permanent record
prepared in accordance with commission rules to ensure the
integrity of the record:
(1) the number assigned to the incident;
(2) the date and time of the incident;
(3) the nature of the incident;
(4) each person involved in the incident; and
(5) the name of the employee or other agent of the
video lottery retailer or video lottery manager who investigated
the incident.
Sec. 466.5043. EXCLUSION OF PERSONS. (a) The commission
shall compile a list of persons that the video lottery retailer or
video lottery manager must bar from a video lottery terminal
establishment based on a person's criminal history or association
with criminal offenders or because the person poses a threat to the
integrity of the lottery. The video lottery retailer or video
lottery manager shall employ the retailer's or manager's best
efforts to exclude such persons from entry into the establishment.
The video lottery retailer or video lottery manager may exclude a
person for any reason not related to the person's race, sex,
national origin, physical disability, or religion.
(b) A person who believes the person may be playing video
lottery games on a compulsive basis may request that the person's
name be placed on the list compiled by the commission under
Subsection (a). All video lottery game employees shall receive
training in identifying players with a compulsive playing problem.
Signs and other materials shall be readily available to direct
compulsive players to agencies that offer appropriate counseling.
Sec. 466.505. ACCOUNTING, FINANCIAL, AND OTHER REPORTING
PROCEDURES. (a) Not later than the fifth day after acquiring
knowledge of any litigation relating to a video lottery terminal
establishment, including a criminal proceeding, a proceeding
involving an issue related to racing activities that impact video
lottery operations, and a matter related to character or reputation
relevant to a person's suitability under this subchapter, a video
lottery retailer or video lottery manager shall report the
litigation to the commission.
(b) All internal procedures and administrative and
accounting controls of a video lottery retailer or video lottery
manager must be approved by the commission. The commission by rule
shall establish general accounting and auditing requirements and
internal control standards for video lottery retailers and video
lottery managers.
(d) A video lottery retailer or video lottery manager shall
keep a database of video lottery terminal events. The commission by
rule shall determine what constitutes a video lottery terminal
event for purposes of this subsection.
Sec. 466.5051. EMPLOYEE REPORTING. (a) On or before the
15th day of each month, a video lottery retailer or video lottery
manager shall submit to the commission an employee report for the
video lottery terminal establishment operated by the retailer or
manager. The report must provide for each employee of the retailer
or manager the employee's name, job title, date of birth, and social
security number.
(b) The employee report is confidential and may not be
disclosed except under commission order or in accordance with
Section 466.022(d).
(c) The commission may conduct criminal history
investigations for employees of video lottery retailers and video
lottery managers.
(d) The commission may prohibit an employee from performing
any act relating to video lottery terminals if the commission finds
that an employee has:
(1) committed, attempted, or conspired to do any act
prohibited by this chapter;
(2) concealed or refused to disclose any material fact
in any investigation by the commission;
(3) committed, attempted, or conspired to commit
larceny or embezzlement;
(4) been convicted in any jurisdiction of an offense
involving or relating to gambling;
(5) accepted employment in a position for which the
employee is required to have commission approval after approval was
denied for a reason involving personal unsuitability or after
failing to apply for a license or approval on commission request;
(6) been prohibited under color of governmental
authority from being present on the premises of any gaming
establishment or any establishment where pari-mutuel wagering is
conducted for any reason relating to improper gambling activity or
for any illegal act;
(7) willfully defied any legislative investigative
committee or other officially constituted body acting on behalf of
the United States or any state, county, or municipality that sought
to investigate alleged or potential crimes relating to gaming,
corruption of public officials, or any organized criminal
activities; or
(8) been convicted of any felony or any crime
involving moral turpitude.
(e) The commission may prohibit an employee from performing
any act relating to video lottery terminals based on any reason the
commission finds appropriate, including a refusal by a regulatory
authority to issue a license, permit, or other approval for the
employee to engage in or be involved with the lottery or with
regulated gaming or pari-mutuel wagering in any jurisdiction, and a
revocation or suspension of any gaming or wagering license, permit,
or approval.
(f) In this section, "employee" includes any person
connected directly with or compensated by an applicant or license
holder as an agent, personal representative, consultant, or
independent contractor for activities directly related to video
lottery operations.
Sec. 466.5052. REPORT OF VIOLATIONS. A person who holds a
license or registration under this subchapter shall immediately
report a violation or suspected violation of this chapter or a rule
adopted under this chapter by any license or registration holder,
by an employee of a license or registration holder, or by any person
on the premises of a video lottery terminal establishment, whether
or not associated with the license or registration holder.
Sec. 466.506. SECURITY. (a) In addition to the security
provisions applicable under Section 466.020, a video lottery
retailer or video lottery manager shall comply with the following
security procedures:
(1) all video lottery terminals must be continuously
monitored through the use of a closed-circuit television system
that records activity for a continuous 24-hour period and all video
tapes or other media used to store video images shall be retained
for at least 30 days and made available to the commission on
request;
(2) access to video lottery terminal locations shall
be restricted to persons over the age of 18;
(3) the video lottery retailer or video lottery
manager must submit for commission approval a security plan and a
floor plan of the area where video lottery terminals are to be
operated showing video lottery terminal locations and security
camera mount locations; and
(4) each license holder shall employ at least the
minimum number of private security personnel the commission
determines is necessary to provide for safe and approved operation
of the video lottery terminal establishment and the safety and
well-being of the players. Private security personnel must be
present during all hours of operation at each video lottery
terminal establishment.
(b) An agent or employee of the commission, the Texas Racing
Commission, or the Department of Public Safety or any law
enforcement personnel may be present at a video lottery terminal
establishment at any time.
(c) The commission may adopt rules to impose additional
surveillance and security requirements related to video lottery
terminal establishments and the operation of video lottery
terminals.
Sec. 466.507. VIDEO LOTTERY TERMINAL ESTABLISHMENT VISITS.
The commission, the commission's representative, the Texas Racing
Commission, or a representative of the Texas Racing Commission,
after displaying appropriate identification and credentials, has
the free and unrestricted right to enter the premises of a video
lottery terminal establishment and to enter any other locations
involved in operation or support of video lottery at all times to
examine the systems and to inspect and copy the records of a video
lottery retailer or video lottery manager pertaining to the
operation of video lottery.
[Sections 466.508-466.510 reserved for expansion]
Sec. 466.511. INDEMNIFICATION, INSURANCE, AND BONDING
REQUIREMENTS; PATRON DISPUTES. (a) A license or registration
holder shall indemnify and hold harmless this state, the
commission, and all officers and employees of this state and the
commission from any and all claims which may be asserted against a
license holder, the commission, this state, and the members,
officers, employees, and authorized agents of this state or the
commission arising from the license holder's participation in the
video lottery system authorized under this chapter.
(b) Surety and insurance required under this subchapter
shall be issued by companies or financial institutions financially
rated "A" or better as rated by A.M. Best Company or other rating
organization designated by the commission and duly licensed,
admitted, and authorized to do business in this state, or by other
surety approved by the commission.
(c) The commission shall be named as the obligee in each
required surety and as an additional insured in each required
insurance contract.
(d) A video lottery retailer or video lottery manager may
not be self-insured with regard to video lottery terminal
operations under this section.
(e) The commission by rule shall establish minimum
insurance coverage requirements for video lottery retailers, video
lottery managers, and video lottery terminal providers.
(f) This state and the commission are not liable for any
video lottery terminal malfunction or error by a video lottery
retailer, video lottery manager, or video lottery terminal provider
that causes credit to be wrongfully awarded or denied to players.
Any dispute arising between a player and a video lottery retailer or
video lottery manager shall be resolved by the commission as
follows:
(1) if the fair market value of the prize is less than
$1,000, the dispute shall be resolved in accordance with the
commission-approved written policies of the video lottery retailer
or video lottery manager and without any relief available from the
commission or this state; or
(2) if the fair market value of the prize is $1,000 or
more, the dispute shall be resolved by the commission in the
commission's sole discretion in accordance with commission rules.
(g) A court of this state does not have jurisdiction to
review the decision of the commission resolving a dispute between a
player and a video lottery retailer, video lottery manager, or
video lottery terminal provider.
Sec. 466.512. COLLECTION OF REVENUE; ACCOUNTING AND
DISTRIBUTION OF NET TERMINAL INCOME. (a) The commission shall
deposit funds received under this subchapter to the state video
lottery account. The state video lottery account is a special
account in the general revenue fund. The account consists of all
revenue received by this state from the operation of video lottery
terminals.
(a-1) Except as provided by Subsection (b), all revenue
received by this state from the operation of the video lottery
system shall be distributed solely to reimburse the commission
until the $5 million authorized under this section is repaid to the
state lottery account. From funds previously appropriated to the
commission for the state fiscal biennium ending August 31, 2007,
and notwithstanding Section 466.355(b), the commission is
authorized to expend an amount not to exceed $5 million from the
state lottery account during that biennium to establish the video
lottery system in accordance with this chapter. From revenue
deposited in the state video lottery account during that biennium,
the commission is hereby appropriated the amount necessary to
reimburse the state lottery account for the total amount of funds
expended to establish the video lottery system from the
appropriation to the state lottery account, and the commission
shall deposit that amount to the state lottery account. This
subsection expires January 1, 2009.
(b) Two percent of the net terminal income distributed to
this state under Subsection (c) shall be allocated to the
commission to defray expenses incurred in administering this
chapter related to video lottery including expenses incurred to
operate the video lottery central system. All money allocated to
the commission under this subsection may be retained by the
commission to defray expenses of administering this chapter related
to video lottery and shall be deposited in the state video lottery
account.
(c) Net terminal income derived from the operation of video
lottery terminals operated at racetracks shall be distributed as
follows:
(1) a portion of the net terminal income generated in
each calendar year shall be remitted to this state by the video
lottery retailer or video lottery manager in an amount equal to:
(A) 30 percent of the first $50 million of the net
terminal income for that year, except that until January 1, 2009,
the video lottery retailer or video lottery manager shall remit 10
percent of that portion of the first $50 million of net terminal
income that matches the fee paid by the video lottery retailer or
video lottery manager under Section 466.5036;
(B) 35 percent of the net terminal income for
that year that exceeds $50 million but does not exceed $100 million;
(C) 40 percent of the net terminal income for
that year that exceeds $100 million but does not exceed $200
million;
(D) 45 percent of the net terminal income for
that year that exceeds $200 million but does not exceed $500
million; and
(E) 50 percent of the net terminal income for
that year that exceeds $500 million; and
(2) the remainder shall be retained by the video
lottery retailer or video lottery manager.
(c-1) Net terminal income derived from the operation of
video lottery terminals on Indian lands under a gaming agreement
authorized under this subchapter shall be distributed as set forth
in the gaming agreement; provided that the agreement must provide
that this state shall receive no more than 25 percent of the net
terminal income.
(d) The commission shall require a video lottery retailer or
video lottery manager to establish a separate electronic funds
transfer account for depositing money from video lottery terminal
operations, making payments to the commission or its designee, and
receiving payments from the commission or its designee. A video
lottery retailer or video lottery manager may not make payments to
the commission in cash. As authorized by the commission, a video
lottery retailer or video lottery manager may make payments to the
commission by cashier's check.
(e) The commission at least weekly shall transfer this
state's share of net terminal income of a video lottery retailer or
video lottery manager to the commission through the electronic
transfer of the funds. The commission by rule shall establish the
procedures for depositing money from video lottery terminal
operations into electronic funds transfer accounts, as well as
procedures regarding the handling of money from video lottery
terminal operations. This state's share of net terminal income
from video lottery terminal operations shall be held in trust for
the state.
(f) Unless otherwise directed by the commission, a video
lottery retailer or a video lottery manager shall maintain in its
account this state's share of the net terminal income from the
operation of video lottery terminals, to be electronically
transferred by the commission on dates established by the
commission. On a license holder's failure to maintain this
balance, the commission may disable all of a license holder's video
lottery terminals until full payment of all amounts due is made.
Interest shall accrue on any unpaid balance at a rate consistent
with the amount charged under Section 111.060, Tax Code. The
interest shall begin to accrue on the date payment is due to the
commission. In the commission's sole discretion, rather than
disable a license holder's video lottery terminals, the commission
may elect to impose a fine on a license holder in an amount
determined by the commission not to exceed $250,000 for each
violation. If the license holder fails to remedy the violation,
including payment of any amounts assessed by or due to this state,
within ten days, the commission may disable the license holder's
video lottery terminals or use any other means for collection as
provided by the penalty chart established by the commission.
(g) The license holder is solely responsible for resolving
any income discrepancies between actual money collected and the net
terminal income reported by the video lottery central system.
Unless an accounting discrepancy is resolved in favor of the video
lottery retailer or video lottery manager, the commission may not
make any credit adjustments. Any accounting discrepancies which
cannot otherwise be resolved shall be resolved in favor of the
commission.
(h) A video lottery retailer and video lottery manager shall
remit payment as directed by the commission if the electronic
transfer of funds is not operational or the commission notifies the
license holder that other remittance is required. The license
holder shall report this state's share of net terminal income, and
remit the amount generated from the terminals during the reporting
period.
(i) The commission has the right to examine all accounts,
bank accounts, financial statements, and records in a license
holder's possession or control or in which the license holder has an
interest and the license holder shall authorize and direct all
third parties in possession or in control of the accounts or records
to allow examination of any of those accounts or records by the
commission.
(j) A video lottery retailer or video lottery manager shall
furnish to the commission all information and bank authorizations
required to facilitate the timely transfer of money to the
commission. A video lottery retailer or video lottery manager must
provide the commission advance notice of any proposed account
changes in information and bank authorizations to assure the
uninterrupted electronic transfer of funds. The commission is not
responsible for any interruption or delays in the transfer of
funds. The video lottery retailer or video lottery manager is
responsible for any interruption or delay in the transfer of funds.
(k) One-quarter of one percent of the net terminal income
received by this state under Subsections (c) and (c-1) shall be
transferred to the Texas Commission on Alcohol and Drug Abuse for
use in the compulsive gambling program under Section 461.018,
Health and Safety Code, if that program is in operation.
(l) One-quarter of one percent of the net terminal income
received by this state under Subsections (c) and (c-1) shall be
transferred to the Equine Research Program at the College of
Veterinary Medicine at Texas A&M University for use in equine
research under Subchapter F, Chapter 88, Education Code.
(m) The commission may increase the percentage of the annual
net terminal income received by this state by an amount not to
exceed three percent after January 1, 2009, and by an additional
three percent after January 1, 2011, if a review of the audited
financial statements of the video lottery retailers indicates that
the financial condition and financial stability of the video
lottery retailers will not be adversely affected by the increase.
Sec. 466.5121. DEDUCTIONS FROM VIDEO LOTTERY PROCEEDS AT
RACETRACKS. (a) The pari-mutuel license holder that owns or
operates a racetrack at which video lottery games are conducted
under this subchapter and the state breed registry representing the
breed conducting live racing at the racetrack may enter into a
written agreement to allocate a percentage of net terminal revenue
generated from the operation of video lottery terminals at the
racetrack to be used for purses at that racetrack and to specify the
time period for which the percentage shall be in effect. If the
racetrack is a horse racetrack, the officially recognized
horsemen's organization must also be a party to an agreement under
this paragraph. If an agreement cannot be reached, any party to the
agreement may submit the matter to the commission, sixty days after
failure to reach agreement, for determination of the matter under a
procedure in accordance with rules issued by the commission.
(b) Under either an agreement or a commission
determination, the percentage of net terminal revenue to be used
for purses at the racetrack shall be not less than 6.5 percent, and
an additional percentage shall be allocated if necessary, to ensure
the purses at the racetrack are the highest in the industry for that
type of racetrack, and the period of time for which the percentage
shall be in effect shall be not less than two years.
(c) A state breed registry may use a portion, not to exceed
10 percent, of the amount allocated for purses under this section
for administration as determined reasonable by the commission.
(d) The commission shall adopt rules to administer this
section. A matter considered by the commission under this section
shall be a contested matter requiring a public hearing.
Sec. 466.5123. LIABILITY OF VIDEO LOTTERY RETAILER AND
VIDEO LOTTERY MANAGER. A video lottery retailer, video lottery
manager, or both, are jointly and severally liable to the
commission for the state's share of net terminal income reported by
the video lottery central system. Net terminal income received by
the video lottery retailer or video lottery manager shall be held in
trust for the benefit of this state before delivery of the state's
share to the commission or electronic transfer to the state
treasury, and the video lottery retailer or video lottery manager,
or both, are jointly and severally liable to the commission for the
full amount of the money held in trust. If the video lottery
retailer or video lottery manager is not an individual, each
officer, director, or owner of the video lottery retailer or video
lottery manager is personally liable to the commission for the full
amount of the money held in trust, except that shareholders of a
publicly held corporation shall be liable in an amount not to exceed
the value of their equity investment.
Sec. 466.513. PRIZES. (a) Payment of prizes is the sole
and exclusive responsibility of the video lottery retailer or video
lottery manager. A prize may not be paid by the commission or this
state except as otherwise authorized.
(b) Nothing in this subchapter limits the ability of a video
lottery retailer or video lottery manager to provide promotional
prizes, in addition to prize payouts regulated by the commission.
(c) A video lottery ticket is redeemable only for 180 days
following the date of issuance. If a claim is not made for prize
money on or before the 180th day after the date on which the video
lottery ticket was issued, the prize money becomes the property of
this state. The commission shall enact rules consistent with this
section governing the use and redemption of prizes and credits
recorded on electronic player account records, such as players'
club cards and smart cards.
Sec. 466.514. REVOCATION OF LICENSE, REGISTRATION, OR OTHER
REGULATORY APPROVAL. (a) The commission shall revoke or suspend a
license, registration, or other regulatory approval issued under
this subchapter if the license or registration holder or holder of
the approval at any time fails to meet the eligibility requirements
set forth in this subchapter.
(b) Failure to timely remit revenue generated by video
lottery terminals to the commission or any tax or other fee owed to
this state as demonstrated by report from the applicable taxing
authority or to timely file any report or information required
under this subchapter as a condition of any license, registration,
or other approval issued under this subchapter may be grounds for
suspension or revocation, or both, of a license, registration, or
other approval issued under this subchapter.
Sec. 466.5141. DEPRIVATION HEARING FOR REVOCATION OR
SUSPENSION OF REGISTRATION OR LICENSE. (a) Before the commission
revokes or suspends a video lottery terminal provider's
registration or video lottery retailer's or video lottery manager's
license, or imposes monetary penalties for a violation of this
subchapter, the commission shall provide written notification to
the license or registration holder of the revocation, the period of
suspension, or the monetary penalty. The notice shall include:
(1) the effective date of the revocation or the period
of suspension or the amount of the monetary penalty, as applicable;
(2) each reason for the revocation, suspension, or
penalty;
(3) an explanation of the evidence supporting the
reasons;
(4) an opportunity to present the license or
registration holder's position in response on or before the 15th
day after the effective date of the revocation; and
(5) a statement explaining the person's right to an
administrative hearing to determine whether the revocation,
suspension, or penalty is warranted.
(b) The notice required under Subsection (a) must be made by
personal delivery or by mail to the person's mailing address as it
appears on the commission's records.
(c) To obtain an administrative hearing on a suspension,
revocation, or penalty under this section, a person must submit a
written request for a hearing to the commission not later than the
20th day after the date notice is delivered personally or is mailed.
If the commission receives a timely request under this subsection,
the commission shall provide the person with an opportunity for a
hearing as soon as practicable. If the commission does not receive
a timely request under this subsection, the commission may impose
the penalty, revoke or suspend a license or registration, or
sustain the revocation or suspension without a hearing. Except as
provided by Subsection (d) the hearing must be held not earlier than
the 11th day after the date the written request is submitted to the
commission.
(d) The commission may provide that a revocation or
suspension takes effect on receipt of notice under Subsection (a)
if the commission finds that the action is necessary to prevent or
remedy a threat to public health, safety, or welfare. The
commission by rule shall establish a nonexclusive list of
violations that present a threat to the public health, safety, or
welfare. A hearing on a revocation or suspension that takes effect
on receipt of notice must be held not later than the 14th day after
the date the commission receives the request for hearing under
Subsection (c). The revocation or suspension continues in effect
until the hearing is completed. If the hearing is continued, the
revocation or suspension shall continue in effect beyond the 14-day
period at the request of the license or registration holder or on a
finding of good cause by the commission or administrative law
judge.
(e) To prevail in a post-deprivation administrative hearing
under this section, the license or registration holder must
demonstrate by clear and convincing evidence that the deprivation
or imposition of a penalty was unwarranted or otherwise unlawful.
The post-deprivation hearing may be conducted by the commission or
referred to the State Office of Administrative Hearings. The
administrative record created by the hearing conducted by the State
Office of Administrative Hearings shall be provided to the
commission for review and determination on the revocation or
suspension. If an administrative law judge of the State Office of
Administrative Hearings conducts a hearing under this section and
the proposal for decision supports the commission's position, the
administrative law judge shall include in the proposal a finding of
the costs, fees, expenses, and reasonable and necessary attorney's
fees the state incurred in bringing the proceeding. The commission
may adopt the findings for costs, fees, and expenses and make the
finding a part of the final order entered in the proceeding.
Proceeds collected from a finding made under this subsection shall
be paid to the commission.
(f) Any person aggrieved by a final decision of the
commission to revoke or suspend a registration or license or to
impose any monetary penalty may obtain judicial review before a
district court in Travis County. The judicial review must be
instituted by serving on the commission and filing a petition not
later than the 20th day after the effective date of the final
decision and must identify the order appealed from and the grounds
or reason why the petitioner contends the decision of the
commission should be reversed or modified. The review must be
conducted by the court sitting without jury, and must not be a trial
de novo but is confined to the record on review. The reviewing
court may only affirm the decision, remand the case for further
proceedings, or reverse the decision if the substantial rights of
the petitioner have been violated.
(g) A license or registration holder agrees that the
privilege of holding a license or registration under this
subchapter is conditioned on the holder's agreement to this
section in its entirety and, thereby, waives any right to challenge
or otherwise appeal the enforceability of this section.
Sec. 466.515. LIMITED WAIVER OF SOVEREIGN IMMUNITY; NO
LIABILITY OF STATE FOR ENFORCEMENT. (a) This state does not waive
its sovereign immunity by negotiating gaming agreements with Indian
tribes or other persons for the operation of video lottery
terminals or other lottery games under this chapter. An actor or
agent on behalf of this state does not have any authority to waive
the state's sovereign immunity absent an express legislative grant
of the authority. The only waiver of sovereign immunity relative to
video lottery terminal operations is that expressly provided for in
this section.
(b) With regard to video lottery terminal operations on
Indian lands, this state consents to the jurisdiction of the
District Court of the United States situs in the county where the
Indian lands are located solely for the purpose of resolving
disputes arising from a gaming agreement authorized under this
subchapter for declaratory or injunctive relief or contract damages
of $100,000 or more. Any disputes relating to damages or other
awards valued at less than $100,000 shall be arbitrated under the
rules of the American Arbitration Association, provided, however,
that application of the rules may not be construed as a waiver of
sovereign immunity.
(c) All financial obligations of the commission are payable
solely out of the income, revenues, and receipts of the commission
and are subject to statutory restrictions and appropriations.
(d) This state and the commission are not liable if
performance by the commission is compromised or terminated by acts
or omissions of the legislature or the state or federal judiciary.
(e) This state and the commission are not liable related to
any enforcement of this chapter.
Sec. 466.516. ABSOLUTE PRIVILEGE OF REQUIRED
COMMUNICATIONS AND DOCUMENTS. Any communication or document of a
video lottery central system provider, video lottery terminal
provider, video lottery retailer, or video lottery manager, an
applicant, or a license or registration holder that is made or
transmitted to the commission or any of its employees to comply with
any law or the rules of the commission, comply with a subpoena
issued by the commission, or assist the commission or its designee
in the performance of their respective duties is absolutely
privileged, does not impose liability for defamation, and is not a
ground for recovery in any civil action. If the document or
communication contains any information which is privileged under
state law, that privilege will not be waived or lost because the
document or communication is disclosed to the commission or any of
the commission's employees. The commission shall maintain all
privileged information, documents, and communications in a secure
place as determined in the commission's sole discretion accessible
only to members of the commission and authorized commission
employees.
Sec. 466.517. INTELLECTUAL PROPERTY RIGHTS OF COMMISSION.
The legislature finds and declares that the commission has the
right to establish ownership of intellectual property rights for
all lottery products, including video lottery terminals and related
video lottery equipment.
Sec. 466.518. MODEL GAMING AGREEMENT. (a) Not later than
the 30th day after the date the governor receives a request from the
Ysleta del Sur Pueblo Indian tribe, the Alabama-Coushatta Indian
tribe, or the Kickapoo Traditional Tribe of Texas, accompanied by
or in the form of a duly enacted resolution of the tribe's governing
body, to enter into a gaming agreement under this section, the
governor shall execute, at his discretion as chief executive office
of the state and on behalf of this state, a gaming agreement
containing substantially the terms set forth in a model gaming
agreement adopted by the attorney general and filed with the
secretary of state. The attorney general shall adopt a model gaming
agreement for purposes of this section, consistent with the
applicable provisions of this chapter, and shall file the agreement
with the secretary of state not later than July 1, 2005.
(b) An Indian tribe may operate video lottery games and
video lottery terminals in accordance with a gaming agreement
entered into under this section.
(c) The governor may not amend, alter or otherwise modify an
agreement under this section until after the 10th anniversary of
the signing by the governor of the original agreement.
Sec. 466.519. VIDEO LOTTERY GAMES BY INDIAN TRIBES
AUTHORIZED. (a) Notwithstanding any other law, an Indian tribe may
operate video lottery games and video lottery terminals as
authorized by this subchapter pursuant to a compact with the
governor.
(b) To operate video lottery games under this section, an
Indian tribe must be an Indian tribe as listed by the United States
secretary of the interior under 25 U.S.C. Section 479a-1 on or
before January 1, 1998, and must on or before January 1, 1998, have
had Indian lands within the boundaries of this state. At no time
may there be more than three Indian tribes operating video lottery
games on Indian lands in this state.
(c) An Indian tribe may operate video lottery games under
this section only on or immediately adjacent to Indian lands placed
into trust by the United States for the benefit of the Indian tribe
on or before January 1, 1998 that was held and occupied by the
Indian tribe on or before January 1, 1998.
(d) A compact or agreement entered into under this section
must contain provisions for the monitoring and auditing of the
operation of video lottery games and any other gaming activity. The
compact must:
(1) provide that the commissioner may inspect all
public and nonpublic areas of the premises where the Indian tribe
operates video lottery games or other gaming activity;
(2) require the conduct of an annual audit by the
commission or an auditor selected by the commission of the Indian
tribe's video lottery game operations; and
(3) provide that the commission may examine and review
all financial records of the Indian tribe's video lottery game
operations at any reasonable time.
(c) An agreement entered into under this section with any
federally recognized Indian Tribe, or affiliated entity, to permit
the Tribe or entity to operate video lottery games must provide that
the Tribe agrees to collect and remit to the comptroller all state
sales and use taxes for all taxable goods and services sold on its
Indian lands in the state and all state taxes on motor fuels,
alcoholic beverages, cigarettes and tobacco products, and hotel
occupancy sold on its Indian lands. In the case of a federally
recognized Indian tribe, the requirement to collect and remit these
state taxes does not apply to taxes on the sale, use or consumption
of an item by a member of the Tribe. The agreement shall provide a
method to secure payment of these taxes to the state.
(d) The comptroller may adopt rules to ensure that the
exemption from the collection and remission of state taxes under
this section applies solely to members of the Tribe owning the
Tribal land in question.
SECTION 1.34. Section 467.001, Government Code, is amended
by amending Subdivision (9) and adding Subdivision (12) to read as
follows:
(9) "Person that has a significant financial interest
in the lottery" means:
(A) a person or a board member, officer, trustee,
or general partner of a person that manufactures, distributes,
sells, or produces lottery equipment, video lottery equipment,
video lottery games, video lottery central systems, supplies,
services, or advertising;
(B) an employee of a video lottery terminal
provider, video lottery central system provider, or person that
manufactures, distributes, sells, or produces lottery equipment,
video lottery games, supplies, services, or advertising and that
employee is directly involved in the manufacturing, distribution,
selling, or production of lottery equipment, supplies, services, or
advertising;
(C) a person or a board member, officer, trustee,
or general partner of a person that has made a bid to operate the
lottery in the preceding two years or that intends to make a bid to
operate the lottery or an employee of the person if the employee is
directly involved in making the bid; or
(D) a sales agent, video lottery retailer, video
lottery manager, video lottery terminal provider, or video lottery
central system provider.
(12) "Video lottery central system," "video lottery
equipment," "video lottery game," "video lottery manager," "video
lottery retailer," and "video lottery terminal provider" have the
meanings assigned by Section 466.002.
SECTION 1.35. Section 467.027(a), Government Code, is
amended to read as follows:
Sec. 467.027. COMPENSATION AND EXPENSES. (a) A commission
member is [not] entitled to compensation for serving in the
commission. The annual salary of the commission is set by the
legislature.
SECTION 1.36. Section 467.031, Government Code, is amended
to read as follows:
Sec. 467.031. DIVISIONS. The commission shall establish
separate divisions to oversee bingo and the state lottery. The
commission may create a division to oversee video lottery and
delegate responsibilities in the administration of Chapter 466 to
the executive director, the director of the appropriate division
and the division's staff; provided, however, that the commission
may not delegate the following actions:
(1) a final determination in any application or
request for licensing or registration under Chapter 466;
(2) a final determination in any proceeding involving
the suspension or revocation of a registration or license under
Chapter 466;
(3) a final determination that Chapter 466 has been
violated; or
(4) a final determination or imposition of an
assessment of fines or penalties under a law administered by the
commission.
SECTION 1.37. Section 467.035(a), Government Code, is
amended to read as follows:
(a) The commission may not employ or continue to employ a
person who owns a financial interest in:
(1) a bingo commercial lessor, bingo distributor, or
bingo manufacturer; or
(2) a lottery sales agency, [or] a lottery operator, a
video lottery retailer, a video lottery manager, a video lottery
terminal provider, a video lottery central system provider, or a
manufacturer of video lottery games.
SECTION 1.38. Chapter 467.108, Government Code, is amended
to read as follows:
Sec. 467.108. REPRESENTATION BY FORMER OFFICER OR EMPLOYEE.
(a) A former commission member, former executive director, or
former director may not:
(1) [for compensation,] represent any person, either
with or without compensation, [a person that has made or intends to
make a bid to operate the lottery] before the commission before the
fifth [second] anniversary of the date that the person's service in
office or employment with the commission ceases.
(2) represent any person or receive compensation for
services rendered on behalf of any person regarding a particular
matter in which the former officer or employee participated during
the period of service or employment with the commission, either
through personal involvement or because the matter was within the
scope of the officer's or employee's official responsibility; or
(3) [for compensation,] communicate on behalf of any
person, either with or without compensation, directly with a member
of the legislative branch to influence legislation of behalf of a
person that has any [a significant financial] interest in the
lottery, before the fifth [second] anniversary of the date that the
person's service in office or employment with the commission
ceases.
(b) A person commits an offense if the person violates this
section. An offense under this section is a felony of the third
degree [Class A misdemeanor].
SECTION 1.39. Section 411.108, Government Code, is amended
by adding Subsection (d) to read as follows:
(d) The Texas Lottery Commission may obtain from the
department, subject to an interagency agreement entered into under
Section 466.020(d) or 466.206, criminal history record information
maintained by the department that relates to any natural person,
corporation, association, trust, partnership, limited partnership,
joint venture, government, subsidiary, or other entity, regardless
of its form, structure, or nature that the commission has the
authority to investigate under Chapter 466 as related to the
commission's operation and oversight of video lottery. Criminal
history record information obtained by the commission under this
subsection may be released or disclosed only as provided in
Sections 466.022(d) and 466.206.
SECTION 1.40. Section 47.09, Penal Code, is amended by
adding Subsection (c) to read as follows:
(c) Subsection (a)(3) applies to a person manufacturing,
distributing, possessing, or operating a gambling device with the
authorization of the Texas Lottery Commission under Subchapter K,
Chapter 466, Government Code.
SECTION 1.41. Chapter 47, Penal Code, is amended by adding
Section 47.095 to read as follows:
Sec. 47.095. INTERSTATE OR FOREIGN COMMERCE DEFENSE. It is
a defense to prosecution under this chapter that a person sells,
leases, transports, possesses, stores, or manufactures a gambling
device with the authorization of the Texas Lottery Commission under
Subchapter K, Chapter 466, Government Code, for transportation in
interstate or foreign commerce.
SECTION 1.42. Section 47.01(4), Penal Code, is amended to
read as follows:
(4) "Gambling device" means any electronic,
electromechanical, or mechanical contrivance not excluded under
Paragraph (B) or (C) that for a consideration affords the player an
opportunity to obtain anything of value, the award of which is
determined solely or partially by chance, even though accompanied
by some skill, whether or not the prize is automatically paid by the
contrivance. The term:
(A) includes, but is not limited to, gambling
device versions of bingo, keno, blackjack, lottery, roulette, video
poker, slot machines, or similar electronic, electromechanical, or
mechanical games, or facsimiles thereof, that operate by chance or
partially so, that as a result of the play or operation of the game
award credits or free games, and that record the number of free
games or credits so awarded and the cancellation or removal of the
free games or credits; [and]
(B) does not include any electronic,
electromechanical, or mechanical contrivance designed, made, and
adapted solely for bona fide amusement purposes if the contrivance
rewards the player exclusively with noncash merchandise prizes,
toys, or novelties, or a representation of value redeemable for
those items, that have a wholesale value available from a single
play of the game or device of not more than 10 times the amount
charged to play the game or device once or $5, whichever is less.
(C) does not include equipment, machines,
technological aids, or other devices allowed in connection with the
video lottery terminals authorized under Chapter 466, Government
Code.
SECTION 1.43. Article 6, Texas Racing Act (Article 179e,
Vernon's Texas Civil Statutes), is amended by adding Sections
6.20-6.23 to read as follows:
Sec. 6.20. LIVE RACING REQUIREMENT. (a) The commission by
rule shall require a racetrack that is a video lottery terminal
establishment and that conducted live racing in 2002 to conduct at
least the same number of live racing days in each calendar year
after 2005 that the track conducted in 2002.
Sec. 6.21. TRANSFER FEE. The commission shall not approve
the sale, transfer, assignment or other conveyance of any interest
or control in a pari-mutuel license or the racetrack owned or
managed by the license holder if the license holder also holds a
video lottery retailer license until the transfer fee to the state
required by Sec. 466.50342, Government Code, is fully paid.
Sec. 6.22. BREED SPLITS AT VIDEO LOTTERY TERMINAL
ESTABLISHMENTS. The commission shall require each horse racetrack
that holds a video lottery retailer license to allocate 30 percent
of the amount in Section 466.5121, Government Code, set aside for
purses to quarter horse purses and 70 percent to thoroughbred
purses.
SECTION 1.44. The Legislature finds and declares the
following:
(1) Contingent on the approval of the voters, a
limited and narrow exception to the constitutional prohibition on
lotteries has been proposed to authorize a state-controlled and
state-operated video lottery system in accordance with this Act.
(2) In light of the financial emergency faced by the
state in the event the voters approve this limited state-controlled
and state-operated video lottery system, the Texas Lottery
Commission must be authorized to commence operation of the video
lottery system in accordance with this Act at the earliest possible
date, consistent with the intent of the voters and legislative
directive.
(3) The implementation of the video lottery system
will require significant time for application investigations and
determinations and for video lottery terminal and video lottery
central system providers and manufacturers of video lottery games
to develop prototypes for testing for the video lottery central
system and video lottery terminals and games.
(4) The state's budget crisis constitutes an imminent
peril to the public welfare, requiring the adoption of rules and
authorization for the Texas Lottery Commission to conduct certain
limited pre-implementation activities related to the establishment
of the video lottery system to promote and ensure the integrity,
security, honesty, and fairness of the operation and administration
of the video lottery system.
(5) In order to commence operation of the video
lottery system at the earliest possible date and to maintain the
integrity of state-controlled and state-operated video lottery
established by this Act, the Texas Lottery Commission may conduct
limited pre-implementation acts before the Constitutional
amendment proposed by the 79th Legislature, Regular Session, 2005,
to authorize the state video lottery system is submitted to the
voters for approval.
SECTION 1.45. (a) As soon as practicable after the
Constitutional amendment to authorize the state video lottery
system proposed by the 79th Legislature, Regular Session, 2005, is
approved by the voters, the Texas Lottery Commission shall adopt
the rules necessary to implement video lottery in accordance with
Subchapter K, Chapter 466, Government Code, as added by this Act.
(b) Before the proposed Constitutional amendment to
legalize the state video lottery system is submitted to the voters,
the Texas Lottery Commission may expend money from the commission's
appropriation for the 2005-2006 biennium for purposes of conducting
pre-implementation activities to establish the state video lottery
system in accordance with Subchapter K, Chapter 466, Government
Code, as added by this Act. Notwithstanding Section 466.355,
Government Code, the money authorized to be expended under this
section may be withdrawn from the state lottery account and
considered a part of the transfer of funds from the state lottery
account authorized under Section 466.512, Government Code, as added
by this Act, to fund the establishment of the state video lottery
system.
(c) Before the proposed Constitutional amendment to
authorize the state video lottery system is submitted to the
voters, the Texas Lottery Commission may develop and approve forms
for applications for licensing and registration required under
Subchapter K, Chapter 466, Government Code, as added by this Act.
(c-1) Not later than July 1, 2005, and before the proposed
Constitutional amendment to authorize the state video lottery
system is submitted to the voters, the attorney general shall file a
model gaming agreement with the secretary of state.
(d) Before the proposed Constitutional amendment to
authorize the state video lottery system is submitted to the
voters, the Texas Lottery Commission may accept pre-implementation
applications for video lottery retailers and video lottery managers
under Subchapter K, Chapter 466, Government Code, as added by this
Act. On receipt of a complete application, completion of all
investigations, and submittal of the nonrefundable investigatory
fees the commission requires consistent with Subchapter K, Chapter
466, Government Code, as added by this Act, the commission may make
preliminary findings of suitability for an applicant and location
of a video lottery terminal establishment. If the commission
determines that all the requirements under Subchapter K, Chapter
466, Government Code, have been satisfied, the commission may issue
a letter advising the applicant of the status of approval of the
application pending approval by the voters of the proposed
Constitutional amendment to authorize the state video lottery
system. If the commission determines that any requirements under
Subchapter K, Chapter 466, Government Code, have not been
satisfied, the commission may request additional information or
conduct further investigations the commission considers necessary
and may issue a letter advising the applicant of the status of the
application.
(e) Before the proposed Constitutional amendment to
authorize the state video lottery system is submitted to the
voters, the Texas Lottery Commission may request and receive
information related to applications for licensing and registration
under Subchapter K, Chapter 466, Government Code, as added by this
Act. An applicant's failure to comply with any requests made by the
Texas Lottery Commission under this subsection may be considered
grounds for denial of an application.
(f) The Texas Lottery Commission may not issue any license,
registration, or temporary license related to the state video
lottery system under Subchapter K, Chapter 466, Government Code, as
added by this Act, unless and until the Constitutional amendment
authorizing the state video lottery system is approved by the
voters and becomes effective.
(g) Before the proposed Constitutional amendment to
authorize the state video lottery system is submitted to the
voters, the Texas Lottery Commission may conduct investigations and
collect investigative fees related to information requested and
received for pre-implementation applications under this section
and necessary for the commission's evaluation and determination of
an application for any licensing, registration, or commission
approval required under Subchapter K, Chapter 466, Government Code,
as added by this Act.
(h) Before the proposed Constitutional amendment to
authorize the state video lottery system is submitted to the
voters, the Texas Lottery Commission may conduct preregistration of
potential video lottery terminal providers. To qualify for
preregistration under this subsection, an applicant must satisfy
the minimum application requirements under Section 466.5033,
Government Code, as added by this Act, except that the application
fee required under Section 466.5033(i), Government Code, as added
by this Act, is not due until the applicant files an application for
registration under Subchapter K, Chapter 466, Government Code, as
added by this Act. A preregistration application must be
accompanied by a nonrefundable deposit to the Texas Lottery
Commission in the amount of $25,000. A preregistration applicant
shall submit additional money not later than the 10th day after the
date the applicant receives notice from the commission that it has
incurred actual costs for the preregistration investigation in
excess of the initial deposit required under this subsection. If
the commission does not receive the additional money from the
applicant on or before the 15th day after the date the applicant
receives the commission's notice, the commission shall suspend the
application until the money is received by the commission. Any
deposit or other nonrefundable money provided under this subsection
shall be credited toward an application fee required under Section
466.5033(i), Government Code, as added by this Act.
(i) The Texas Lottery Commission may not register any video
lottery terminal providers unless and until the Constitutional
amendment authorizing the state video lottery system is approved by
the voters and becomes effective.
(j) Notwithstanding Section 466.5033, Government Code, as
added by this Act, a video lottery terminal provider that has been
preregistered by the Texas Lottery Commission in accordance with
this section, a video lottery central system provider, or a
manufacturer of video lottery games, under a contract with the
commission, may manufacture and test prototypes of or existing
video lottery equipment for a video lottery central system, video
lottery terminals, and video lottery games for the commission's
consideration.
(k) Before the proposed Constitutional amendment to
authorize the state video lottery system is submitted to the
voters, the Texas Lottery Commission may negotiate contracts with
preregistered video lottery terminal providers. The commission may
enter into contracts with preregistered video lottery terminal
providers, video lottery central system providers, and
manufacturers of video lottery games as required for the creation
and testing of a video lottery central system, video lottery
terminals, and video lottery games for the commission's
consideration.
(l) Before the proposed Constitutional amendment to
authorize the state video lottery system is submitted to the
voters, the Texas Lottery Commission may negotiate and enter
contracts as necessary to establish the video lottery system. The
commission is exempt from the procurement procedures prescribed
under Subtitle D, Title 10, Government Code; Section 466.101,
Government Code; Chapter 2161, Government Code; and any and all
bidding requirements or contract requirements provided by any other
law or by rules of the commission for the acquisition or provision
of facilities, supplies, equipment, materials, or services related
to the implementation of video lottery under this section.
(m) Before the proposed Constitutional amendment to
authorize the state video lottery system is submitted to the
voters, the Texas Lottery Commission may employ additional
full-time equivalent employees to administer this Act and establish
the video lottery system.
SECTION 1.46. Sections 1.01 through 1.42 of this article
take effect on the date the amendment to Section 47, Article III,
Texas Constitution, authorizing a state video lottery system
proposed by the 79th Legislature, Regular Session, 2005, becomes
effective. Sections 1.43 and 1.44 of this article and this section
take effect immediately if this Act receives a vote of two-thirds of
all the members elected to each house, as provided by Section 39,
Article III, Texas Constitution. If this Act does not receive the
vote necessary for immediate effect, Sections 1.43 and 1.44 of this
article and this section take effect on the 91st day after the last
day of the legislative session. Sections 1.43 and 1.44(m) of this
article expire on the 91st day after the date the constitutional
amendment to Section 47, Article III, Texas Constitution,
authorizing a state video lottery system, becomes effective.