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  81R20333 YDB-F
 
  By: Menendez, et al. H.B. No. 222
 
  Substitute the following for H.B. No. 222:
 
  By:  Gutierrez C.S.H.B. No. 222
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the authorization and regulation of poker gaming and
  the duties of the Texas Lottery Commission; providing civil and
  criminal penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle A, Title 13, Occupations Code, is
  amended by adding Chapter 2004 to read as follows:
  CHAPTER 2004. POKER GAMING
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2004.001.  SHORT TITLE; APPLICABILITY. (a)  This
  chapter may be cited as the Poker Gaming Act of 2009.
         (b)  This chapter does not apply to the conduct of bingo,
  charitable raffles, the state lottery, or video poker.
         Sec. 2004.002.  PUBLIC POLICY. (a)  All poker gaming
  conducted in this state and authorized by law shall be regulated and
  licensed under this chapter unless state or federal law
  specifically provides otherwise.
         (b)  The legislature finds and declares it to be the public
  policy of this state that:
               (1)  poker is a game of skill and not a lottery or gift
  enterprise prohibited by the Texas Constitution;
               (2)  unregulated poker gaming conducted by unlicensed
  operators in public establishments is inimical to the public
  health, safety, welfare, and good order. A person in this state may
  not offer and has no right to offer the game of poker for profit
  except as expressly permitted by the laws of this state;
               (3)  the development of regulated poker gaming in this
  state will benefit the general welfare of the people of this state
  by enhancing investment, development, and tourism in this state,
  resulting in new jobs and additional revenue to this state;
               (4)  the conduct of regulated poker gaming by licensed
  operators in authorized establishments will not harm the people of
  this state;
               (5)  the regulation of poker gaming in this state is
  important to ensure that poker gaming:
                     (A)  is conducted honestly and competitively; and
                     (B)  is free from criminal and other corruptive
  elements;
               (6)  public confidence and trust can be maintained only
  by strict regulation of all persons, locations, practices,
  associations, and activities related to the conduct of poker gaming
  and the poker gaming service industry;
               (7)  persons owning any interest in an operator
  licensed to conduct poker gaming and in distributing materials and
  specific equipment relating to poker gaming must be licensed and
  controlled to protect the public health, safety, morals, good
  order, and general welfare of the people of this state;
               (8)  certain operators and employees of establishments
  authorized to conduct poker gaming and certain manufacturers and
  distributors in the poker gaming service industry must be
  regulated, licensed, and controlled to accomplish and promote these
  public policies while protecting the public health, safety, morals,
  good order, and general welfare of the people of this state; and
               (9)  it is the intent of this chapter, where possible,
  to use the resources, goods, labor, and services of the people of
  this state in the operation of poker gaming-related amenities to
  the extent allowable by law.
         Sec. 2004.003.  DEFINITIONS. In this chapter:
               (1)  "Alcoholic beverage" has the meaning assigned by
  Section 1.04, Alcoholic Beverage Code.
               (2)  "Badge" means a form of identification issued by
  the commission to identify the holder of a license issued under this
  chapter.
               (3)  "Bet" means an agreement to win or lose chips or
  tokens, or an electronic facsimile of either, in a game of poker.
               (4)  "Bonus program" means a local promotion bonus
  program or a statewide bad beat bonus program.
               (5)  "Cage manager" means an individual who creates and
  maintains player accounts, provides cash-in and cash-out of chips
  or player accounts, and determines and maintains the amount of
  gross receipts tax due and payable to the comptroller by a licensed
  operator on each day's gross receipts.  The cage manager may be
  assisted by an electronic method to perform any of these duties.
               (6)  "Charitable operator" means a person who holds a
  charitable operator's license issued by the commission to conduct a
  charitable poker tournament for a licensed nonprofit organization.
               (7)  "Charitable poker tournament" means a poker
  tournament conducted by a charitable operator or commercial
  operator to benefit a licensed nonprofit organization.
               (8)  "Collection fee" means the amount charged on the
  communal pot for each poker hand played in accordance with Section
  2004.462.
               (9)  "Commercial operator" means a person who holds a
  commercial operator's license issued by the commission under this
  chapter.
               (10)  "Commission" means the Texas Lottery Commission.
               (11)  "Communal pot" means the total amount of wagers
  collectively made during one hand of poker.
               (12)  "Company" means a corporation, partnership,
  limited partnership, trust, association, joint stock company,
  joint venture, limited liability company, or other form of business
  organization, but does not include a sole proprietorship or natural
  person.
               (13)  "Creditor interest" means a right or claim of any
  character against a person for the payment of money borrowed,
  whether secured or unsecured, matured or unmatured, liquidated or
  absolute, or fixed or contingent, and includes an obligation based
  on the person's profits or receipts.
               (14)  "Dealer" means an individual who deals cards to
  players at a poker gaming table on the premises of a licensed
  operator.
               (15)  "Director" means the director of poker gaming
  operations of the commission.
               (16)  "Distilled spirits" has the meaning assigned by
  Section 1.04, Alcoholic Beverage Code.
               (17)  "Electronic poker table" means a poker gaming
  table, including its components, that provides multiple player
  positions and allows players to play against other players in the
  same poker game using electronic representations of cards and
  chips.
               (18)  "Equity interest" means a proprietary interest,
  right, or claim in a company that allows the holder either to vote
  with respect to matters of organizational governance or to
  participate in the profits and residual assets of the company,
  including common and preferred stock in a corporation, a general or
  limited partnership interest in a partnership, a similar interest
  in any other form of business organization, or a warrant, right, or
  similar interest convertible into, or to subscribe for, a
  proprietary right or claim, with or without the payment of
  additional consideration.
               (19)  "Executive director" means the executive
  director of the commission.
               (20)  "Fidelity bond" means insurance against a
  licensed operator's financial loss resulting from theft or
  embezzlement by an employee.
               (21)  "Gross receipts" means the total amount
  accumulated from:
                     (A)  the collection fees charged from the communal
  pot from each poker hand; and
                     (B)  the promotion bonus fees charged from the
  communal pot from each poker hand played.
               (22)  "Licensed nonprofit organization" means a
  nonprofit organization that holds a license issued by the
  commission authorizing the organization to benefit from charitable
  poker tournaments conducted on its behalf.
               (23)  "Licensed operator" means a charitable operator
  or a commercial operator.
               (24)  "Manufacturer" means:
                     (A)  a person who assembles from raw materials or
  subparts a completed piece of poker gaming equipment or supplies
  for use in poker gaming in this state; or
                     (B)  a person who converts, modifies, adds to, or
  removes parts from any poker gaming equipment, item, or assembly to
  further its promotion or sale for or use in poker gaming in this
  state.
               (25)  "Net proceeds" means, in relation to the gross
  receipts from a charitable poker tournament, the amount remaining
  after deducting the reasonable amounts necessarily and actually
  expended by a licensed operator to conduct the charitable poker
  tournament.
               (26)  "Nonprofit organization" means an unincorporated
  association or a nonprofit corporation formed under the Texas
  Nonprofit Corporation Law, as described by Section 1.008, Business
  Organizations Code, that:
                     (A)  does not distribute any of its income to its
  members, officers, or governing body, other than as reasonable
  compensation for services; and
                     (B)  has tax-exempt status under Section
  501(c)(3), Internal Revenue Code of 1986.
               (27)  "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).
               (28)  "Player" means a patron who participates in poker
  gaming on the premises of a licensed operator.
               (29)  "Poker" or "poker game" means a card game in which
  players place a bet based on the highest or lowest ranking hand of
  cards held or combination of highest and lowest cards held. For
  purposes of this chapter, the term includes the game known as Texas
  Hold'em or any variation or combination of Texas Hold'em, but does
  not include blackjack, hearts, pinochle, rummy, Internet poker,
  video poker, or Asian card games such as Pai Gow.
               (30)  "Poker card deck" means a set of 52 cards with 13
  values and with each card value represented once in each of four
  suits: spades, hearts, diamonds, and clubs. The term includes
  actual cards or an electronic facsimile of cards.
               (31)  "Poker gaming" means the conduct of poker games.
               (32)  "Poker gaming equipment" means any equipment or
  mechanical, electromechanical, or electronic contrivance,
  component, machine, or device, expendable supply, or other
  paraphernalia used in conjunction with poker gaming, including a
  computerized system or software for enabling poker gaming or
  monitoring poker gaming revenue or a device for weighing or
  counting money. The term includes playing cards, gaming chips or
  tokens, or a card shuffling device, or an electronic version of any
  of those items, including a poker game.
               (33)  "Premises" means the area subject to the direct
  control of and actual use by a licensed operator to conduct poker
  gaming. The term includes a location or place.
               (34)  "Principal manager" means a person who, in
  accordance with commission rules, holds or exercises managerial,
  supervisory, or policy-making authority over the management or
  operation of a poker gaming activity that, in the commission's
  judgment, warrants employee licensing as a principal manager for
  the protection of the public interest. The term includes a key
  executive of a holder of a license under this chapter that is a
  company and each person controlling the holder that is a company.
               (35)  "Promotion bonus fee" means the amount charged
  from the communal pot for bonus programs from each poker hand played
  in accordance with Section 2004.461.
               (36)  "Wager" means a bet.
         Sec. 2004.004.  STATUS OF POKER AS CLASS II GAMING.  Poker
  gaming authorized under this chapter is considered Class II gaming
  under the Indian Gaming Regulatory Act (Pub. L. No. 100-497).
  [Sections 2004.005-2004.050 reserved for expansion]
  SUBCHAPTER B. COMMISSION POWERS AND DUTIES
         Sec. 2004.051.  CONTROL AND SUPERVISION OF POKER GAMING;
  POKER DIVISION. (a)  The commission shall administer this chapter.
         (b)  The commission has broad authority and shall exercise
  strict control and close supervision over all poker gaming
  conducted in this state to ensure that poker gaming is fairly
  conducted.
         (c)  The commission shall execute its authority through a
  poker gaming division established by the commission to administer
  this chapter.
         Sec. 2004.052.  DIRECTOR OF POKER GAMING OPERATIONS. (a)  
  The commission shall employ a director of poker gaming operations.
         (b)  The director shall administer the poker gaming division
  under the direction of the commission.
         Sec. 2004.053.  OFFICERS AND INVESTIGATORS. The commission
  may employ officers or investigators the commission considers
  necessary to administer this chapter.
         Sec. 2004.054.  RULEMAKING AUTHORITY. The commission shall
  adopt rules as necessary to enforce and administer this chapter.
         Sec. 2004.055.  APPROVAL OF POKER GAMING EQUIPMENT. (a)  The
  commission by rule shall provide procedures for the approval of
  poker gaming equipment for use in poker gaming in this state.
         (b)  The commission may approve an electronic poker table
  only if the table:
               (1)  is certified by an independent gaming equipment
  testing lab recognized by the commission as meeting the standards
  prescribed by Section 2004.454;
               (2)  is commercially available;
               (3)  is in use in other commercial gaming operations;
  and
               (4)  is not a video lottery terminal or an interactive
  electronic device that is capable of displaying an
  electromechanically or electronically simulated game the outcome
  of which is determined solely by chance based on a
  computer-generated random selection of winning combinations of
  symbols or numbers displaying symbols that appear to roll on drums
  to simulate a classic casino slot machine or themes of other card
  games and keno.
         (c)  The holder of a license issued under this chapter may
  not use, sell, or distribute poker gaming equipment that has not
  been approved by the commission.
         Sec. 2004.056.  PUBLIC INFORMATION. (a)  The commission
  shall provide to any person on request a printed copy of this
  chapter and the rules applicable to the enforcement of this
  chapter.
         (b)  The commission may charge a reasonable fee for a copy
  provided under this section.
         Sec. 2004.057.  ADVISORY OPINIONS. (a)  A person may request
  from the commission an advisory opinion regarding compliance with
  this chapter and commission rules.
         (b)  The commission shall respond to a request under
  Subsection (a) not later than the 60th day after the date a request
  is received, unless the commission determines that the request does
  not contain sufficient facts to provide an answer on which the
  requestor may rely. The commission shall request any additional
  information required from the requestor not later than the 10th
  business day after the date the request is received. If the
  commission requests additional information, the commission shall
  respond to the request not later than the 60th day after the date
  additional information is received pursuant to the request for
  additional information.
         (c)  A person who requests an advisory opinion under
  Subsection (a) may act in reliance on the opinion in the conduct of
  any activity under any license issued under this chapter if the
  conduct is substantially consistent with the opinion and the facts
  stated in the request.
         (d)  An advisory opinion issued under this section is not a
  rule under Subchapter B, Chapter 2001, Government Code, and the
  rulemaking requirements of that subchapter do not apply to a
  request for an advisory opinion or any advisory opinion issued by
  the commission under this chapter.
         (e)  Nothing in this section precludes the commission from
  requesting an attorney general's opinion under Section 402.042,
  Government Code. In the event the commission requests an attorney
  general's opinion on a matter that is the subject of an advisory
  opinion request under this section, the deadlines established under
  Subsection (b) are tolled until the 30th day following the date the
  attorney general's opinion is issued.
         Sec. 2004.058.  GENERAL LICENSE PROHIBITION.  A person
  described by Section 243.007(a), Local Government Code, who holds a
  license or other permit issued by a municipality or county as
  provided by that section may not:
               (1)  conduct poker gaming in this state; or
               (2)  hold a license issued under this chapter.
  [Sections 2004.059-2004.100 reserved for expansion]
  SUBCHAPTER C. LICENSE TO CONDUCT POKER GAMING
         Sec. 2004.101.  OPERATOR'S LICENSE. (a)  A person may not
  conduct poker gaming in the state unless the person holds a
  charitable operator's license or a commercial operator's license
  issued by the commission. Poker gaming conducted by a commercial
  operator, including a charitable poker tournament conducted by the
  operator to benefit a licensed nonprofit organization, may be
  conducted only on premises operating in accordance with the
  operator's license.  Poker gaming conducted by a charitable
  operator may be conducted only at a location specified in a permit
  authorizing the conduct of a charitable poker tournament.
         (b)  Subsection (a) does not prohibit a person from playing a
  poker game authorized by other state law.
         (c)  A person may not own an equity interest in a location in
  this state on which poker gaming is conducted by a commercial
  operator and for which a commercial operator's license is not in
  effect.
         (d)  A separate commercial operator's license must be
  obtained for each location at which poker gaming is conducted by a
  commercial operator. If the commercial operator is an Indian tribe
  that holds a license issued under Section 2004.103(a)(1)(B), the
  location at which poker gaming is conducted under the license must
  be on the tribe's reservation in this state.
         (e)  The commission by rule shall prescribe the maximum
  number of poker gaming tables a commercial operator may operate at a
  single location licensed by the commission.
         (f)  A separate permit must be obtained for each charitable
  poker tournament conducted by a licensed operator.
         Sec. 2004.102.  COMMERCIAL OPERATOR'S LICENSE APPLICATION.
  (a)  In accordance with commission rules, an applicant for a
  commercial operator's license shall file with the commission an
  application that contains the information identified in
  Subsections (b) and (c), and any additional information the
  commission requires to determine the suitability and eligibility of
  the applicant to conduct poker gaming in this state.
         (b)  The application must include:
               (1)  the name and address of the applicant;
               (2)  the names and addresses of the officers of a
  company applicant;
               (3)  the name and address of the person that owns the
  premises where the applicant intends to conduct poker gaming under
  the license sought;
               (4)  the address of the premises where the applicant
  intends to conduct poker gaming under the license sought;
               (5)  the name and address of the lessor of the building
  in which the premises are located, if the applicant leases or will
  lease the premises at which the applicant intends to conduct poker
  gaming;
               (6)  for a pari-mutuel license holder applicant, the
  number of poker tables requested for the holder's racetrack,
  including the number of tables that are electronic poker tables;
  and
               (7)  a financial statement certified by a certified
  public accountant demonstrating that the applicant holds gross
  capital assets, including land and buildings, of at least $1
  million.
         (c)  An applicant, other than an applicant described by
  Section 2004.103(a)(1)(B), must attach to the application a copy
  of:
               (1)  each license or permit the applicant holds issued
  by the Texas Alcoholic Beverage Commission authorizing the
  applicant to sell or serve distilled spirits for on-premises
  consumption; or
               (2)  the person's pari-mutuel license.
         Sec. 2004.103.  MANDATORY ISSUANCE OF COMMERCIAL OPERATOR'S
  LICENSE. (a)  The commission shall issue a commercial operator's
  license to an applicant that:
               (1)  meets one of the following requirements:
                     (A)  holds:
                           (i)  an alcoholic beverage license or permit
  issued by the Texas Alcoholic Beverage Commission authorizing the
  applicant to sell or serve distilled spirits for on-premises
  consumption; or
                           (ii)  a pari-mutuel license issued by the
  Texas Racing Commission authorizing the applicant to conduct
  wagering on a greyhound race or a horse race; or
                     (B)  is a federally recognized Indian tribe that
  has a reservation in this state;
               (2)  files the application in accordance with this
  chapter;
               (3)  signs the application;
               (4)  pays the required application fee; and
               (5)  meets any additional requirements prescribed by
  the commission.
         (b)  A person may not apply for a license under Subsection
  (a)(1)(A)(i) unless for at least one of the three months preceding
  the date of the application the person paid mixed beverage taxes
  under Subchapter B, Chapter 183, Tax Code, on the gross receipts for
  the premises where the person intends to conduct poker gaming in an
  amount of at least:
               (1)  $7,500 for premises located in a municipality with
  a population of at least 100,000; or
               (2)  $2,500 for premises to which Subdivision (1) does
  not apply.
         (c)  Subsection (b) does not prohibit a person from applying
  for and receiving a commercial operator's license if the person is
  otherwise eligible for the license under Subsection (a)(1)(A)(ii)
  or Subsection (a)(1)(B).
         (d)  The commission shall revoke a commercial operator's
  license issued under Subsection (a)(1)(A) if the operator's
  alcoholic beverage license or permit or pari-mutuel license, as
  applicable, expires or is canceled or revoked.  The Texas Alcoholic
  Beverage Commission shall notify the commission of any expiration
  or cancellation of an alcoholic beverage license or permit held by a
  licensed operator.  The Texas Racing Commission shall notify the
  commission of any expiration or revocation of a pari-mutuel license
  held by a licensed operator.
         (e)  If video surveillance is required under Section
  2004.469, the commission may not issue a commercial operator's
  license to an applicant unless the applicant provides the video
  surveillance equipment required by that section.
         (f)  The commission may adopt rules providing for a person's
  continued suitability to hold a commercial operator's license.
         (g)  The opportunity to hold a commercial operator's license
  is a revocable privilege and not a right or property under the
  United States Constitution or the Texas Constitution. An applicant
  for or holder of a commercial operator's license does not have a
  vested interest or right in a license granted under this chapter.
         Sec. 2004.104.  CHARITABLE OPERATOR'S LICENSE. (a)  In
  accordance with commission rules, an applicant for a charitable
  operator's license shall file with the commission an application
  that contains the information identified in Subsection (b) and any
  additional information the commission requires to determine the
  suitability and eligibility of the applicant to conduct poker
  gaming in this state.
         (b)  The application must include:
               (1)  the name and address of the applicant;
               (2)  the names and addresses of the officers of an
  applicant;
               (3)  the name and address of the person that owns the
  premises where the applicant intends to conduct charitable poker
  gaming under the license sought;
               (4)  the address of the premises where the applicant
  intends to conduct charitable poker gaming under the license
  sought;  and
               (5)  the name and address of the lessor of the building
  in which the premises are located, if the applicant leases or will
  lease the premises at which the applicant intends to conduct
  charitable poker gaming.
         Sec. 2004.105.  DETERMINATION OF SUITABILITY TO HOLD
  CHARITABLE OPERATOR'S LICENSE.  (a)  The commission shall determine
  the suitability of an applicant for or holder of a charitable
  operator's license based on suitability criteria prescribed by the
  commission.  The commission shall adopt the rules and standards
  necessary to ensure that an applicant for a charitable operator's
  license or a charitable operator uses the revenue from a charitable
  poker tournament for bona fide charitable purposes.
         (b)  The burden of proving suitability to receive or hold a
  charitable operator's license is on the applicant or license
  holder.
         (c)  The commission shall issue a charitable operator's
  license to an eligible applicant if the commission determines that
  the applicant is suitable under the commission's criteria.
         (d)  The commission may adopt rules providing for a person's
  continued suitability to hold a charitable operator's license and
  providing for the imposition of sanctions and penalties against a
  person who does not comply with this chapter or rules adopted under
  this chapter.
         (e)  The opportunity to hold a charitable operator's license
  is a revocable privilege and not a right or property under the
  United States Constitution or the Texas Constitution. An applicant
  for or holder of a charitable operator's license does not have a
  vested interest or right in a license granted under this chapter.
         Sec. 2004.106.  NONTRANSFERABILITY.  A commercial
  operator's license applies only to the specific premises location
  identified in the license and is not transferable to another person
  or location.
         Sec. 2004.107.  REGISTRATION OF INTEREST IN OPERATOR. (a)  
  Except as provided by Subsection (b), a person who directly or
  indirectly owns an equity interest or creditor interest in an
  applicant for or holder of a commercial operator's license shall:
               (1)  register and qualify with the commission under
  commission rules; and
               (2)  provide information the commission finds
  necessary to determine the suitability and eligibility of the
  person to retain the interest.
         (b)  The following persons are not required to register or
  qualify under this section:
               (1)  an employee of a licensed operator who is required
  to apply for an employee's license under Subchapter E;
               (2)  an institutional investor; or
               (3)  any other group or class of persons that the
  commission by rule exempts from registration or qualification.
         (c)  The commission shall adopt rules to implement this
  section, including rules establishing procedures for registration
  application, qualification, and renewal.  A registration filed
  under this section must be accompanied by the required application
  fee.
  [Sections 2004.108-2004.150 reserved for expansion]
  SUBCHAPTER D.  NONPROFIT ORGANIZATION LICENSE; CHARITABLE POKER
  TOURNAMENT PERMIT
         Sec. 2004.151.  LICENSE REQUIRED.  (a)  A licensed operator
  may not conduct a charitable poker tournament to benefit a
  nonprofit organization unless the organization holds a license
  issued under this subchapter.
         (b)  A licensed operator shall ensure that each nonprofit
  organization receiving any portion of the net proceeds of a
  charitable poker tournament conducted by the operator holds a
  license issued by the commission under this subchapter.
         Sec. 2004.152.  LICENSE APPLICATION.  (a)  An applicant for a
  nonprofit organization license must:
               (1)  submit an application to the commission on the
  form prescribed by the commission and in accordance with commission
  rules;
               (2)  present sufficient facts relating to the
  applicant's incorporation and organization to enable the
  commission to determine whether the applicant may be licensed under
  this subchapter; and
               (3)  submit the required application fee.
         (b)  An applicant for a nonprofit organization license
  shall:
               (1)  sign the application; and
               (2)  attest under penalties of perjury that the
  information contained in the application is true, correct, and
  complete.
         (c)  The following are adequate evidence of an applicant's
  tax-exempt status:
               (1)  a copy of an Internal Revenue Service letter that
  approves the applicant's exemption from taxation under Section
  501(c)(3), Internal Revenue Code of 1986; or
               (2)  a letter of good standing from a parent
  organization of the applicant that holds an exemption from taxation
  under Section 501(c)(3), Internal Revenue Code of 1986, for both
  the parent organization and the applicant as its affiliate.
         (d)  Not later than the 30th day after the date the
  commission grants an application for a nonprofit organization
  license, the commission shall issue the license to the applicant.
         Sec. 2004.153.  DETERMINATION OF SUITABILITY OF NONPROFIT
  ORGANIZATION LICENSE APPLICANT OR HOLDER. (a)  The commission
  shall determine the suitability of an applicant for or holder of a
  nonprofit organization license based on suitability criteria
  prescribed by the commission to ensure that the applicant is a bona
  fide nonprofit organization and that revenue from a charitable
  poker tournament will be used for bona fide charitable purposes.
         (b)  The burden of proving suitability to receive or hold a
  license is on the applicant or license holder.
         (c)  The commission shall issue a nonprofit organization
  license to an eligible applicant if the commission determines that
  the applicant is suitable under the commission's criteria.
         (d)  The commission may adopt rules providing for a nonprofit
  organization's continued suitability to hold a license under this
  chapter and providing for the imposition of sanctions and penalties
  against an organization that does not comply with this chapter or
  rules adopted under this chapter.
         (e)  The opportunity to hold a nonprofit organization
  license is a revocable privilege and not a right or property under
  the United States Constitution or the Texas Constitution.  An
  applicant for or holder of a nonprofit organization license does
  not have a vested interest or right in a license granted under this
  chapter.
         Sec. 2004.154.  PERMIT FOR CHARITABLE POKER TOURNAMENT.  (a)
  A licensed operator may conduct a charitable poker tournament only
  for which the operator holds a permit issued under this section.
         (b)  A licensed operator may apply for a permit to conduct a
  charitable poker tournament by filing an application with the
  commission on a form prescribed by the commission accompanied by
  the required fee not less than 30 days before the date of the
  charitable poker tournament.
         (c)  The application must include the location, date, and
  hours of the charitable poker tournament and the name of the
  licensed nonprofit organization the tournament will benefit.
         (d)  The application for a charitable poker tournament
  permit must:
               (1)  be submitted in accordance with commission rules;
               (2)  include the address and dimensions of the facility
  where the tournament will occur;
               (3)  include the date and hours of the tournament;
               (4)  include the name of each licensed nonprofit
  organization the tournament will benefit; and
               (5)  include the number of poker tables requested for
  the tournament, including the number of electronic poker tables.
         (e)  An applicant for a charitable poker tournament permit
  shall:
               (1)  sign the application; and
               (2)  attest under penalties of perjury that the
  information contained in the application is true, correct, and
  complete.
         (f)  Not later than the 10th day after the date the
  commission grants an application for a permit, the commission shall
  deliver the permit to the licensed operator. The permit must state
  the location, date, hours, and number of tables authorized for the
  charitable poker tournament. The operator must prominently display
  the permit at the charitable poker tournament.
         (g)  The permit is valid only for the hours, date, and
  location specified by the permit.
         (h)  A licensed operator may only operate the number of poker
  gaming tables specified in the permit at the charitable poker
  tournament.
         Sec. 2004.155.  CHARITABLE POKER TOURNAMENT; NET PROCEEDS.
  (a) A licensed operator may conduct a charitable poker tournament
  for the benefit of a licensed nonprofit organization.
         (b)  A licensed operator shall pay to a licensed nonprofit
  organization all net proceeds from a charitable poker tournament
  not later than the 30th day after the date of the tournament. The
  expenses of conducting the tournament deducted by a licensed
  operator may not exceed 30 percent of gross receipts. The expenses
  must be reasonable or necessary to conduct the poker gaming and may
  include expenses for:
               (1)  advertising, including the cost of printing poker
  gaming gift certificates;
               (2)  security;
               (3)  repairs to equipment and the premises where the
  tournament is conducted;
               (4)  poker gaming equipment and supplies used during
  the tournament;
               (5)  prizes;
               (6)  taxes in accordance with Subchapter I;
               (7)  rental or mortgage and insurance expenses;
               (8)  bookkeeping, legal, or accounting services
  related to the tournament;
               (9)  fees for dealers, cashiers, janitorial services,
  and utility supplies and services;
               (10)  the permit fee; and
               (11)  debit card transaction fees.
         (c)  A licensed nonprofit organization must use the proceeds
  from the charitable poker tournament for its charitable purposes.
         Sec. 2004.156.  DENIAL OR REVOCATION OF NONPROFIT
  ORGANIZATION LICENSE.  (a)  The commission may deny an application
  for or suspend, limit, or revoke a nonprofit organization's license
  for any reasonable cause.
         (b)  If the commission determines that it has reasonable
  grounds to believe that a licensed nonprofit organization might be
  unsuitable to continue to hold the license, for protection of the
  public health, safety, morals, and general welfare of the people of
  this state and of the reputation of this state's poker gaming
  industry, the commission shall conduct an investigation and hearing
  in accordance with Subchapter K and, based on the commission's
  determination, may deny, suspend, limit, or revoke the license.
         (c)  A nonprofit organization that has had a license
  suspended or revoked may not receive, directly or indirectly, any
  proceeds, compensation, consideration, or payment of any kind
  relating to the conduct of a charitable poker tournament, other
  than a tournament that took place before the suspension or
  revocation.
  [Sections 2004.157-2004.200 reserved for expansion]
  SUBCHAPTER E. EMPLOYEE'S LICENSES
         Sec. 2004.201.  DEALER'S LICENSE REQUIRED.  A person may not
  act as a dealer unless the person holds a dealer's license.
         Sec. 2004.202.  ISSUANCE OF DEALER'S LICENSE. (a) A
  licensed operator shall ensure that each dealer employed by the
  operator holds a dealer's license issued by the commission.
         (b)  A dealer's license application must:
               (1)  be submitted in accordance with commission rules;
               (2)  contain the information the commission requires to
  determine the applicant's suitability and eligibility to act as a
  dealer; and
               (3)  be accompanied by the required application fee.
         (c)  An applicant for a dealer's license shall:
               (1)  sign the application; and
               (2)  attest under penalties of perjury that the
  information contained in the application is true, correct, and
  complete.
         (d)  The commission shall conduct a criminal background
  check on each applicant for a dealer's license.
         (e)  Not later than the 60th day after the date the
  commission grants an application for a dealer's license, the
  commission shall issue a dealer's badge to the applicant.  A
  licensed dealer must prominently display on the dealer's person the
  badge issued by the commission at all times when the dealer is on
  the premises of a licensed operator as an employee of the licensed
  operator.
         Sec. 2004.203.  RESIDENCY. A person is eligible to apply for
  and hold a dealer's license without regard to the applicant's
  residency in this state.
         Sec. 2004.204.  DETERMINATION OF SUITABILITY OF DEALER'S
  LICENSE APPLICANT OR HOLDER. (a)  The commission shall determine
  the suitability of an applicant for or holder of a dealer's license
  based on suitability criteria prescribed by the commission to
  ensure that the applicant or dealer:
               (1)  has not been convicted of a felony;
               (2)  has not had a complaint alleging physical
  intimidation filed against the applicant or dealer with a law
  enforcement authority;
               (3)  has sufficient business probity, competence, and
  training or experience in the poker gaming industry to act as a
  dealer; and
               (4)  is otherwise qualified to be licensed.
         (b)  The burden of proving suitability to receive or hold a
  dealer's license is on the applicant or license holder.
         Sec. 2004.205.  DENIAL OR REVOCATION OF DEALER'S LICENSE.
  (a)  The commission may deny an application for or suspend, limit,
  or revoke a dealer's license for any reasonable cause.
         (b)  If the commission determines that it has reasonable
  grounds to believe that a licensed dealer might be unsuitable to
  continue to hold the license, for protection of the public health,
  safety, morals, and general welfare of the people of this state and
  of the reputation of this state's poker gaming industry, the
  commission shall conduct an investigation and hearing as provided
  by Subchapter K and, based on the commission's determination, may
  deny, suspend, limit, or revoke a dealer's license.
         (c)  On the suspension or revocation of a dealer's license,
  the license holder may not provide services in any capacity
  requiring a license under Section 2004.201.
         (d)  A holder of a dealer's license that has been suspended
  or revoked may not:
               (1)  receive, directly or indirectly, any
  compensation, consideration, or payment of any kind relating to the
  conduct of gaming in any capacity requiring a license under Section
  2004.201, other than payment for services rendered before the
  suspension or revocation; or
               (2)  serve or function in a capacity that would require
  a license under Section 2004.201.
         (e)  The receipt and holding of a dealer's license is a
  privilege and is not a right or property under the United States
  Constitution or the Texas Constitution. An applicant for or holder
  of a dealer's license does not have a vested interest or right in a
  license granted under this chapter.
         Sec. 2004.206.  TRAINING PROGRAM FOR LICENSED DEALERS. (a)  
  A licensed dealer shall complete a training program in accordance
  with commission rule.
         (b)  A training program approved by the commission must
  include training related to:
               (1)  the conduct of poker gaming;
               (2)  the administration and operation of poker gaming;
               (3)  the promotion of poker gaming; and
               (4)  gaming awareness, including:
                     (A)  problem or compulsive gambling;
                     (B)  cheating techniques;
                     (C)  underage gaming; and
                     (D)  criminal awareness.
         (c)  The commission by rule shall establish:
               (1)  the content and time frame of the training
  program;
               (2)  information related to training that must be
  reported to the commission; and
               (3)  other training program requirements the
  commission determines are necessary to promote the fair conduct of
  poker gaming and compliance with this chapter.
         Sec. 2004.207.  OTHER EMPLOYEE'S LICENSES.  (a)  The
  commission by rule may establish other employee's licenses the
  commission determines are necessary to protect the public health,
  safety, morals, and general welfare of the people of this state,
  including licenses for principal managers, cage managers, owners,
  and card room service personnel.
         (b)  A person may not engage in any conduct for which the
  commission requires a person to hold a license under this section
  unless the person holds the applicable license.
         (c)  The commission by rule shall prescribe procedures
  governing licenses issued under this section as the commission
  determines appropriate.
  [Sections 2004.208-2004.250 reserved for expansion]
  SUBCHAPTER F. MANUFACTURER'S AND DISTRIBUTOR'S LICENSES
         Sec. 2004.251.  MANUFACTURER'S LICENSE. (a)  A person may
  not engage in any activity related to the poker gaming equipment
  manufacturing industry in this state for which a manufacturer's
  license is required unless the person holds a manufacturer's
  license for that activity.
         (b)  The commission shall adopt rules identifying activities
  related to the design, manufacture, assembly, production, sale,
  lease, marketing, distribution, or repair of poker gaming equipment
  in this state for use in poker gaming authorized under this chapter
  that the commission determines appropriate for licensing under this
  section.
         (c)  A manufacturer's license is personal to the license
  holder and allows the holder to conduct business related to the
  licensed activity with any premises licensed to operate electronic
  poker tables and poker gaming in this state.
         Sec. 2004.252.  DISTRIBUTOR'S LICENSE. (a)  A person may not
  distribute or offer to distribute poker gaming equipment for use in
  poker gaming authorized under this chapter in this state, including
  electronic poker tables, unless the person holds a distributor's
  license under this subchapter.
         (b)  A person must obtain a distributor's license to
  distribute poker gaming equipment in this state to a licensed
  operator for use on premises at which poker gaming is conducted for
  profit.
         (c)  A distributor's license is personal to the license
  holder and allows the holder to conduct business with any premises
  licensed to operate poker gaming in this state.  The license is not
  transferable.
         Sec. 2004.253.  LICENSE APPLICATION. (a)  In accordance
  with commission rules, an applicant for a manufacturer's license or
  distributor's license shall file with the commission an application
  that contains information the commission requires to determine the
  suitability and eligibility of the applicant.
         (b)  The application must be signed by an applicant that is
  an individual or by the presiding officer and the secretary of an
  applicant that is a company. Each signatory shall attest under
  penalties of perjury that the information contained in the
  application is true, correct, and complete.
         (c)  An application for a manufacturer's license or
  distributor's license must be accompanied by the required
  application fee.
         Sec. 2004.254.  SUITABILITY DETERMINATION. (a)  In
  considering the suitability of a company applying for or holding a
  manufacturer's license or distributor's license, the commission
  shall consider the suitability of each principal manager and each
  holder of an equity interest or creditor interest in the company
  applicant to individually receive and hold a manufacturer's license
  or distributor's license based on the suitability standards that
  apply to the company applicant. A person may not hold a
  manufacturer's license or distributor's license if that person
  would be found unsuitable to hold an operator's license.
         (b)  If the commission determines that it has reasonable
  grounds to believe an applicant or license holder is unsuitable to
  hold a manufacturer's license or distributor's license, the
  commission shall conduct an investigation and hearing under
  Subchapter K and, based on the commission's determination, may
  deny, suspend, limit, or revoke the license.  If the applicant is an
  entity other than an individual, the commission may investigate
  equity owners of the applicant who have at least a 10 percent
  ownership in the applicant.
         (c)  On suspension or revocation of a license, the license
  holder may not perform any manufacturing activity or distribution
  activity requiring a license under this chapter. A holder of a
  manufacturer's or distributor's license that has been suspended or
  revoked may not receive, directly or indirectly, compensation,
  consideration, or payment of any kind relating to any manufacturing
  or distribution activity in any capacity requiring a license under
  this chapter, other than payment for goods provided before the
  suspension or revocation.
         (d)  A licensed operator who has entered into a lease with a
  manufacturer or distributor whose license has been suspended or
  revoked may continue to make payments on the lease based on the
  original terms of the lease without modification or may accelerate
  the lease and pay it off, at the sole option of the operator.
         (e)  The burden of proving suitability to receive or hold a
  manufacturer's or distributor's license is on the applicant or
  license holder.
  [Sections 2004.255-2004.300 reserved for expansion]
  SUBCHAPTER G. LICENSE RENEWAL
         Sec. 2004.301.  TEMPORARY LICENSE. (a)  Before issuing a
  license under this chapter, the commission may issue a temporary
  license for a period not to exceed six months and may renew the
  temporary license as many times as the commission determines
  appropriate on the payment of the fee and execution of the bond, if
  required.
         (b)  The commission may issue a temporary license only to a
  person the commission believes will be qualified to hold the
  license based on:
               (1)  the commission's review of the background
  investigations conducted by other state agencies or other
  government agencies in United States or Canadian jurisdictions with
  regulated poker gaming activities; and
               (2)  the commission's determination that the background
  investigations of the applicant failed to reveal anything that
  would cause the applicant not to qualify for a license in this
  state.
         Sec. 2004.302.  TERM; RENEWAL.  (a)  A license issued under
  this chapter expires on the first anniversary of the date of
  issuance.
         (b)  A license holder may annually renew a license by meeting
  the commission's licensing requirements and paying the annual
  license fee.
         (c)  A commercial operator, other than an operator described
  by Section 2004.103(a)(1)(B), must at all times hold:
               (1)  an active alcoholic beverage license or permit
  issued by the Texas Alcoholic Beverage Commission authorizing the
  operator to sell or serve distilled spirits for on-premises
  consumption; or
               (2)  a pari-mutuel license issued by the Texas Racing
  Commission authorizing the applicant to conduct wagering on a
  greyhound race or a horse race.
         (d)  The operator shall submit with each license renewal fee
  a renewal application on a form developed by the commission.
         (e)  A commercial operator shall immediately notify the
  commission on suspension or cancellation by the Texas Alcoholic
  Beverage Commission of any license or permit authorizing the
  operator to sell or serve alcoholic beverages on the premises
  licensed by the commission. The Texas Alcoholic Beverage
  Commission shall notify the commission when it cancels a license or
  permit authorizing an operator to sell or serve alcoholic
  beverages.
         (f)  A commercial operator shall immediately notify the
  commission on cancellation or revocation by the Texas Racing
  Commission of any pari-mutuel license held by the commercial
  operator authorizing the operator to conduct wagering on a
  greyhound race or a horse race.  The Texas Racing Commission shall
  notify the commission when the Texas Racing Commission cancels or
  revokes a pari-mutuel license authorizing an operator to conduct
  wagering on a greyhound race or a horse race.
         (g)  A commercial operator's license under this chapter is
  suspended at any time when any alcoholic beverage license or permit
  held by the operator is suspended.
         (h)  The commission shall adopt rules for temporary
  suspension of a commercial operator's license pending reissuance of
  the license or permit to sell or serve alcoholic beverages on the
  premises licensed by the commission.
  [Sections 2004.303-2004.350 reserved for expansion]
  SUBCHAPTER H. APPLICATION AND LICENSE FEES
         Sec. 2004.351.  APPLICATION FEES. (a)  Except as provided by
  Subsection (b), an applicant for a license required by this chapter
  shall pay an application fee in the amount of:
               (1)  $1,000 for a commercial operator's license;
               (2)  $1,000 for a charitable operator's license;
               (3)  $100 for a nonprofit organization license;
               (4)  $100 for a dealer's license;
               (5)  $250 for a manufacturer's license; or
               (6)  $250 for a distributor's license.
         (b)  The commission may increase an application fee if the
  amount prescribed by Subsection (a) does not cover the commission's
  cost of evaluating the application and issuing a license.
         (c)  Application fees are nonrefundable and must:
               (1)  be in the form prescribed by the commission; and
               (2)  be payable to the commission.
         (d)  The commission shall apply an application fee toward the
  cost of investigating the applicant's suitability for licensing or
  qualification under this chapter. The applicant shall pay any
  costs of investigation incurred in excess of the assessed
  application fee.
         Sec. 2004.352.  LICENSE FEES. A holder of a license issued
  under this chapter shall annually pay the commission a license fee
  in the amount of:
               (1)  $1,000 for a charitable or commercial operator's
  license;
               (2)  $100 for a dealer's license;
               (3)  $250 for a manufacturer's license;
               (4)  $250 for a distributor's license; or
               (5)  $100 for a nonprofit organization license.
  [Sections 2004.353-2004.400 reserved for expansion]
  SUBCHAPTER I.  TAXES
         Sec. 2004.401.  GROSS RECEIPTS TAX. (a)  A tax is imposed on
  the gross receipts received in connection with the premises of a
  commercial operator conducting poker gaming under this chapter.
         (b)  Except as provided by Subsections (c) and (d), the tax
  rate is 18 percent of the gross receipts received for poker gaming
  by a commercial operator.
         (c)  Except as provided by Subsection (d), the tax rate is 16
  percent of the gross receipts received for poker gaming by a
  commercial operator who holds a pari-mutuel license described by
  Section 2004.103(a)(1)(A)(ii).
         (d)  The tax rate is five percent of the gross receipts
  received by a licensed operator during a charitable poker
  tournament.
         Sec. 2004.402.  PAYMENT AND REPORTING OF TAX. (a)  A
  licensed operator must electronically submit a report of each day's
  total gross receipts to the comptroller not later than 5 p.m. on the
  day following the day the gross receipts were collected.
         (b)  The tax is due and payable by the licensed operator to
  the comptroller not later than the deadline provided by Subsection
  (a) for the report required by that subsection. The depository used
  by a licensed operator for deposit of gross receipts taxes due to
  the comptroller must be a licensed financial institution located in
  this state. The comptroller may sweep or debit the licensed
  operator's bank account on a daily basis to collect the gross
  receipts tax due and payable. A licensed operator may not continue
  to conduct any poker gaming activity on the operator's premises if,
  at the time the comptroller sweeps the account, the amount reported
  under Subsection (a) is not available for collection.
         (c)  The report of a tax must be filed under oath on forms
  prescribed by the commission.
         (d)  The comptroller and the commission shall adopt rules for
  the payment of the tax.
         (e)  A licensed operator required to file a tax return with
  the comptroller shall provide a copy of the tax return to the
  commission in the manner prescribed by commission rule.
         (f)  The comptroller shall deposit the revenue collected
  under this section to the credit of the poker gaming revenue fund.
         Sec. 2004.4025.  POKER GAMING REVENUE FUND.  (a) The poker
  gaming revenue fund is established as an account held outside the
  treasury.
         (b)  Money in the poker gaming revenue fund may be used only
  for the following purposes:
               (1)  the payment of costs incurred by this state in the
  regulation of poker gaming under this chapter; and
               (2)  after a sufficient amount is retained in the fund
  to cover the costs provided by Subdivision (1), the balance to be
  transferred on or before the 15th day of each month to the Texas
  Department of Housing and Community Affairs to be used only as
  follows:
                     (A)  50 percent for grants to municipalities,
  counties, and nonprofit organizations to support activities
  relating to:
                           (i)  shelter and services for the homeless
  and the prevention of homelessness;
                           (ii)  renovation of shelters for use as
  homeless shelters;
                           (iii)  assistance to the homeless in
  obtaining permanent housing;
                           (iv)  medical and psychological counseling
  for the homeless; and
                           (v)  the supervision, development, and
  implementation of homeless prevention activities; and
                     (B)  the remainder to the housing trust fund
  established under Section 2306.201, Government Code.
         Sec. 2004.403.  PENALTIES FOR FAILURE TO PAY OR REPORT TAX.
  (a)  A licensed operator that fails to deposit gross receipts tax
  due and payable to the comptroller for the gross receipts collected
  at the operator's premises by the deadline for payment of the tax
  prescribed by Section 2004.402 may not conduct poker gaming at
  those premises until the tax is paid.
         (b)  For an electronic poker table, the comptroller shall:
               (1)  electronically communicate with each electronic
  poker table daily to verify that the software for the table is
  functioning properly;
               (2)  electronically verify that this state has
  collected the gross receipts tax imposed on the gross receipts of
  the electronic poker table;
               (3)  develop rules providing minimum standards for
  electronic poker tables used for charitable gaming activities; and
               (4)  electronically communicate with the table to
  permit the table to be operational that day.
         (c)  If the gross receipts tax for an electronic poker table
  has not been collected or the software for the electronic poker
  table is not functioning properly, the comptroller shall prohibit
  the operation of the electronic poker table by ensuring the table
  does not receive the necessary communication from the comptroller
  to be operational that day.  The licensed operator must give the
  comptroller and the commission assurances that the electronic poker
  table will not open for play on that day or any subsequent day until
  all gross receipts tax, interest, and penalties have been paid. The
  comptroller shall adopt rules related to the assurances that a
  licensed operator must give to the comptroller and commission under
  this subsection.
         (d)  If a person fails to report gross receipts as required
  by this subchapter or fails to pay to the comptroller taxes imposed
  under this subchapter later than the second day after the date the
  report or payment is due, the commission shall compute and
  determine the amount of taxes required to be paid and shall assess a
  penalty equal to five percent of the taxes owed. If the payment is
  not received by the 30th day after the date the gross receipts tax
  is due, the commission shall assess an additional penalty equal to
  five percent of the gross receipts tax.
         (e)  A delinquent tax accrues interest at the rate provided
  by Section 111.060, Tax Code, beginning on the 60th day after the
  tax due date.
         (f)  Interest at the rate of 10 percent a year attaches to a
  delinquency penalty imposed under Subsection (d), beginning on the
  60th day after the date the penalty is imposed.
         Sec. 2004.404.  RECOMPUTATION OF TAX. (a)  If the commission
  is not satisfied with a tax return or the amount of tax required to
  be remitted under this chapter to this state by a licensed operator,
  the commission or the comptroller may compute and determine the
  amount required to be paid on the basis of:
               (1)  the facts contained in the return or report of
  receipts; or
               (2)  any information that the commission or comptroller
  possesses, or that may come into the possession of the commission,
  without regard to the period covered by the information.
         (b)  A licensed operator subject to a tax computed under this
  section may request an investigation and hearing under Subchapter
  K, at which the person may present evidence on the amount of tax
  due.
         (c)  The commission shall conduct an audit of the person's
  accounts as part of the investigation under Section 2004.501.
         Sec. 2004.405.  DETERMINATION IF RETURN NOT MADE. (a)  If a
  licensed operator fails to make a required return or if a person
  conducts poker gaming without a license issued under this chapter,
  the commission shall estimate the gross receipts received by the
  operator or person. The estimate must cover the period:
               (1)  for which the operator failed to make a return; or
               (2)  during which the person conducted poker gaming
  without a license.
         (b)  An estimate under this section must be based on any
  information covering any period that the commission possesses or
  that may come into the possession of the commission.
         (c)  On the basis of the commission's estimate, the
  commission shall compute and determine the amount of taxes imposed
  by this subchapter on those gross receipts and assess a penalty
  equal to 10 percent of that tax amount.
         (d)  One or more determinations may be made under this
  section for one or more periods.
         Sec. 2004.406.  JEOPARDY DETERMINATION. (a) If the
  commission believes that the collection of a gross receipts tax
  required to be paid or the amount of a determination under Section
  2004.405 will be jeopardized by delay, the commission shall make a
  determination of the amount of the tax required to be collected,
  noting the finding of jeopardy on the determination. The
  determined amount is due and payable immediately.
         (b)  If a license holder does not pay the amount specified by
  a determination on or before the 20th day after the date of service
  of the determination on the license holder, the amount becomes
  final at the end of the 20th day unless the license holder files a
  petition for redetermination on or before the 20th day after
  service of notice of the determination.
         (c)  A delinquency penalty of 10 percent of the tax and
  interest at the rate of 10 percent a year attaches to the amount of
  the tax required to be collected.
         Sec. 2004.407.  APPLICATION OF TAX LAWS. Subtitle B, Title
  2, Tax Code, applies to the administration, collection, and
  enforcement of the gross receipts tax imposed under Section
  2004.401 except as modified by this chapter.
         Sec. 2004.408.  DELINQUENCY: SEIZURE AND SALE. (a)  At any
  time before the third anniversary of the date a person becomes
  delinquent in the payment of a gross receipts tax imposed under this
  subchapter, the commission may collect the amount under this
  section.
         (b)  The commission may order the sheriff or constable for
  the jurisdiction in which licensed poker gaming tables for which a
  gross receipts tax is delinquent to conduct the seizure and sale
  authorized by this section. The sheriff or constable may deduct
  reasonable expenses from any amount realized by sale of the
  property.
         (c)  The commission or sheriff or constable shall seize
  personal or real property of the license holder that is not exempt
  from execution under the laws of this state and sell the property at
  public auction to pay the amount of taxes due, any interest or
  penalties due on those taxes, and any expense incurred in
  connection with the seizure and sale. Personal property must be
  seized and sold first, and real property may be seized and sold only
  if the sale of personal property does not produce an amount
  sufficient to pay the total amount of taxes, interest, or penalties
  due. The seizure and sale must be conducted in accordance with
  applicable state law.
         Sec. 2004.409.  SECURITY. (a)  Not later than the fifth day
  after the date the licensed operator receives notice from the
  commission of an order approving the application for an operator's
  license, each operator, to secure payment of the gross receipts tax
  imposed under this subchapter, shall furnish to the commission
  security in the form and amount the commission considers
  appropriate, which may be in the form of:
               (1)  a cash bond;
               (2)  a bond from a surety company chartered or
  authorized to conduct business in this state;
               (3)  certificates of deposit;
               (4)  certificates of savings;
               (5)  United States treasury bonds; or
               (6)  subject to the approval of the commission, an
  assignment of negotiable stocks or bonds.
         (b)  The commission shall set the amount of the security,
  taking into consideration the amount of money that has or is
  expected to become due from the licensed operator, based on the
  number of poker gaming tables to be operated on the operator's
  premises. The commission may adjust the amount of security
  required after the licensed operator begins conducting poker gaming
  on the premises and paying gross receipts taxes.
         (c)  If a license holder fails to pay the gross receipts tax
  imposed under this subchapter, the commission may notify the
  license holder and any surety of the delinquency by jeopardy or
  deficiency determination. If payment is not made when due, the
  commission may order the forfeit of all or part of the security to
  cover the amount due.
         (d)  If the licensed operator ceases to conduct poker gaming
  and relinquishes the operator's license, the commission shall
  authorize the release of all security on a determination that no
  amounts of the gross receipts tax remain due and payable under this
  subchapter.
  [Sections 2004.410-2004.450 reserved for expansion]
  SUBCHAPTER J. REGULATION OF POKER GAMING OPERATIONS
         Sec. 2004.451.  REGULATION OF POKER GAMING OPERATIONS.  The
  commission shall adopt rules applicable to the operation of poker
  gaming at a licensed operator's premises as the commission
  determines necessary for the protection of the public health,
  safety, morals, and general welfare of the people of this state and
  of the reputation of this state's poker gaming industry.
         Sec. 2004.452.  HOURS OF OPERATION.  A licensed operator
  that holds a license or permit issued by the Texas Alcoholic
  Beverage Commission to sell or serve alcoholic beverages for
  on-premises consumption may conduct poker gaming on the premises
  covered by the operator's license only during the hours in which the
  license holder may sell or serve alcoholic beverages under the
  alcoholic beverage license or permit.  A licensed operator that
  does not hold a license or permit issued by the Texas Alcoholic
  Beverage Commission to sell or serve alcoholic beverages for
  on-premises consumption may conduct poker gaming on the premises
  covered by the operator's license at any time.  The hours of
  operation for poker gaming must be clearly posted in the poker
  gaming area.  The hours of operation for a charitable poker
  tournament shall be determined by the commission and be specified
  in the permit.
         Sec. 2004.453.  TABLE LIMITS; TOURNAMENTS.  (a) A licensed
  operator shall establish table limits for each poker gaming table.
         (b)  The licensed operator may conduct tournaments at any
  time and charge a buy-in fee not to exceed $100 and a tournament
  registration fee not to exceed $30.
         Sec. 2004.454.  ELECTRONIC POKER TABLE.  (a)  An electronic
  poker table must:
               (1)  include not fewer than 8 and not more than 10
  player positions that each have:
                     (A)  a central processing unit;
                     (B)  a touch screen;
                     (C)  an International Standards Organization 7816
  smart card reader;
                     (D)  a bill validator with currency verification
  and counterfeit detection to allow players to deposit bank notes or
  vouchers to play a poker game;
                     (E)  a ticket printer to print a voucher with a bar
  code that must be validated to allow a player to redeem the player's
  winnings; and
                     (F)  access to the cash collection box and ticket
  printer without allowing access to any of the table's electronic
  components that contain a central processing unit or any game logic
  components;
               (2)  allow each player to:
                     (A)  view cards dealt to the player and the
  remaining chips and other game information; and
                     (B)  input game decisions;
               (3)  include a video screen in the center of the table
  that displays game information, chips bet by each player, every
  action of the player in real time, and cards dealt to all players;
               (4)  maintain a complete hand history for a period of 30
  days that is accessible to the commission by remote connection or
  from the table with a secure access card from any player position;
               (5)  to quickly settle any dispute, provide a method
  for viewing a visual snapshot of the previous 10 hands dealt at the
  table with a view that includes the players' seats, individual
  cards, wagers, net wins or losses for each hand, collection fees,
  and communal cards;
               (6)  display the collection fee for the game in a
  central location viewable by all players;
               (7)  provide a feature that enables complete recovery
  of a complete game if a power disruption occurs during the hand;
               (8)  allow the commission, at the table or remotely, to
  audit every event and action, including hand history, cash-in,
  cash-out, and rake collection, that has occurred on the electronic
  poker table within the period prescribed by the commission; and
               (9)  allow the commission, using a unique
  commission-controlled access card, to verify at any time the status
  and integrity of the table software to ensure that a modification or
  deletion of a file located on any part of the electronic table has
  not occurred, including on the server, at player positions, or on
  the table's central processing unit.
         (b)  An electronic poker table must use:
               (1)  a controlled central server to deal electronic
  cards to each player in a poker hand and to maintain the player's
  virtual chip stacks, wagers placed, and house fees collected;
               (2)  a cashier system that logs and records all cash
  flows, including each cash-in, cash-out, and house collection, and
  that is used to report that information to the commission; and
               (3)  a remote lock-down function that allows the
  commission to remotely lock down and prevent play indefinitely on
  the table if the operator is delinquent in money owed to the
  commission or is noncompliant with any law of this state.
         Sec. 2004.455.  BANK. A licensed operator shall establish
  on the operator's premises a bank to convert legal United States
  tender into chips or tokens and to convert chips or tokens into
  cash.
         Sec. 2004.456.  USE OF CHIPS OR TOKENS. (a)  All poker
  gaming conducted by a licensed operator shall be conducted using
  chips or tokens approved by the commission or be conducted on an
  electronic poker table approved by the commission.
         (b)  All chips or tokens must bear the logo of the licensed
  operator's premises and must be manufactured in a manner designed
  to substantially decrease the chips' or tokens' susceptibility to
  counterfeiting. The commission may inspect a licensed operator's
  chips or tokens to confirm compliance with this section.
         Sec. 2004.457.  USE OF PLAYING CARDS. (a)  Poker gaming
  conducted by a licensed operator shall be played with one or more
  poker industry standard poker card decks or, for an electronic
  poker table, on an electronic poker table approved by the
  commission that displays cards.
         (b)  Each poker card deck used in poker gaming must be sealed
  with a label indicating the deck was manufactured or distributed by
  a licensed manufacturer or distributor.
         (c)  Not more than 50 separate poker hands may be played with
  the same poker card deck.
         (d)  Each poker card deck must be monitored and cataloged in
  a log that documents the exact location of the cards on a licensed
  operator's premises.
         Sec. 2004.458.  RULES OF PLAY.  All poker rules used in poker
  gaming conducted by a licensed operator shall be submitted to and
  approved by the commission.
         Sec. 2004.459.  BOND REQUIREMENT. (a)  Each employee of a
  licensed operator who handles cash, other than an employee employed
  to sell or serve alcoholic beverages, must be bonded.
         (b)  For each employee required to comply with Subsection
  (a), a licensed operator shall:
               (1)  submit to the commission a copy of the certificate
  evidencing that the employee has obtained a fidelity bond from a
  surety company chartered or authorized to conduct business in this
  state; and
               (2)  post a copy of the certificate in a conspicuous
  location on the operator's premises.
         Sec. 2004.460.  BADGES. (a)  During the operation of poker
  gaming, each individual licensed under this chapter shall wear in a
  prominently visible location on the individual's person a numbered
  badge issued by the commission.
         (b)  An individual who ceases employment with a licensed
  operator shall immediately surrender the individual's badge to the
  operator. Not later than the 10th day after the date the individual
  surrenders the badge, the licensed operator shall:
               (1)  on a form adopted by the commission notify the
  commission in writing of a change in status of the individual; and
               (2)  submit the surrendered badge to the commission.
         (c)  The badge must prominently display on the front of the
  badge:
               (1)  capital letters identifying the license held by
  the individual;
               (2)  the first name of the individual;
               (3)  the picture of the individual submitted with the
  individual's license application;
               (4)  the badge number; and
               (5)  the expiration date of the license.
         (d)  The full name of the license holder, along with the type
  of license, must be printed on the reverse side of the badge.
         Sec. 2004.461.  BONUS PROGRAMS.  (a)  The commission by rule
  shall establish promotion bonus programs for bad beat hands and
  other bonus programs.  The programs may be statewide or limited to
  individual premises.
         (b)  Each licensed operator shall:
               (1)  collect promotion bonus fees in accordance with
  commission rule; and
               (2)  award a bonus that does not exceed $250 to the
  player who wins the bonus.
         (c)  The amount awarded under Subsection (b)(2) shall be
  deducted from the daily promotion bonus fee that would otherwise be
  remitted to this state.
         (d)  The commission shall award to the winning player of a
  bonus program any amount that exceeds $250.
         (e)  A distributor may collect from the commission an
  administrative fee, not to exceed 20 percent of the promotion bonus
  fee paid to a winning player.
         (f)  A promotion bonus program for bad beat hands or any
  other bonus program may not be offered for a charitable poker
  tournament.
         Sec. 2004.462.  COLLECTION FEE.  (a)  Each licensed operator
  shall collect a collection fee on each poker hand played.  The
  collection fee may not exceed 10 percent of the communal pot in each
  hand of poker played, with a maximum of $4 per hand.
         (b)  The commission shall adopt rules necessary to
  administer this section.
         Sec. 2004.463.  PROMOTION BONUS FEE.  (a)  A promotion bonus
  fee may not exceed $1 per hand.
         (b)  The promotion bonus fee shall be remitted to this state,
  after deducting the gross receipts tax, the fee used for bonus
  programs, and administrative fees not to exceed 20 percent of the
  promotion bonus fee.
         Sec. 2004.464.  CONTRIBUTION TO PURSE FUND. (a) A
  pari-mutuel license holder described by Section
  2004.103(a)(1)(A)(ii) that conducts poker gaming in this state
  shall deposit in a purse fund two percent of the license holder's
  gross receipts from that poker gaming.
         (b)  Money in the purse fund may only be expended in
  accordance with rules adopted by the Texas Racing Commission under
  Section 18.09, Texas Racing Act (Article 179e, Vernon's Texas Civil
  Statutes).
         Sec. 2004.465.  REPORTING REQUIREMENTS. (a)  A licensed
  operator shall keep books and records in a manner that clearly shows
  the total amount of gross receipts and total deposits made by all
  poker gaming players.
         (b)  The books and records kept by a licensed operator
  relating to poker gaming operations are not public information, and
  publication and dissemination of the materials by the commission
  are prohibited. The commission may publish and disseminate the
  total gross receipts of each licensed operator at the frequency and
  in the level of detail the commission considers appropriate.
         (c)  A licensed operator that is not an individual shall file
  a report of each change of the operator's officers and directors
  with the commission. The commission shall, not later than the 90th
  day after the date of the change, approve or disapprove the change.
  During the 90-day period, the officer or director is entitled to
  exercise the powers of the position to which the officer or director
  was elected or appointed.
         (d)  The commission may require that a licensed operator
  provide the commission with a copy of the operator's federal income
  tax return not later than the 30th day after the date the return is
  filed with the federal government. The federal income tax returns
  submitted to the commission are not public information, and
  publication and dissemination of the materials by the commission
  are prohibited.
         Sec. 2004.466.  EXCLUSION OF PERSONS. (a)  The commission by
  rule shall provide for the maintenance of a list of persons who are
  to be excluded or ejected from poker gaming premises. The list may
  include a person whose presence in poker gaming premises is
  determined by the commission to pose a threat to the interests of
  this state, to licensed poker gaming, or to both.
         (b)  In making a determination under this section, the
  commission may consider any:
               (1)  prior conviction of a crime that is a felony in
  this state or under the laws of the United States or a crime
  involving moral turpitude or a violation of the gaming laws of a
  state or the United States; or
               (2)  violation of or conspiracy to violate the
  provisions of this chapter relating to:
                     (A)  the failure to disclose an interest in a
  licensed operator;
                     (B)  wilful evasion of a fee or a tax; or
                     (C)  a notorious or unsavory reputation that would
  adversely affect public confidence and trust that the poker gaming
  industry is free from criminal or corruptive elements.
         Sec. 2004.467.  INTERNAL AUDIT AND CONTROL SYSTEMS. (a)  A
  licensed operator shall adopt an internal control system that
  provides for:
               (1)  the safeguarding of its assets and revenues, which
  must include means for the recording of cash transactions and
  balances and evidences of indebtedness; and
               (2)  the provision of reliable records, accounts, and
  reports of transactions, operations, and events, including reports
  to the director and the commission.
         (b)  The internal control system must be designed to
  reasonably ensure that:
               (1)  assets are safeguarded;
               (2)  financial records are accurate and reliable;
               (3)  transactions are performed only in accordance with
  management's general or specific authorization;
               (4)  transactions are recorded adequately to permit
  proper reporting of poker gaming revenue and of fees and taxes and
  to maintain accountability for assets;
               (5)  access to assets is permitted only in accordance
  with the licensed operator's specific authorization;
               (6)  recorded accountability for assets is compared
  with actual assets at reasonable intervals and appropriate action
  is taken with respect to any discrepancies; and
               (7)  functions, duties, and responsibilities are
  appropriately segregated and performed in accordance with sound
  practices by competent, qualified personnel.
         (c)  A licensed operator or an applicant for an operator's
  license shall describe, in a manner approved or required by the
  director, the licensed operator's or applicant's administrative and
  accounting procedures in detail in a written system of internal
  control. A licensed operator or applicant for an operator's
  license shall submit a copy of the written system. A written system
  must include:
               (1)  an organizational chart depicting appropriate
  segregation of duties and responsibilities;
               (2)  a description of the duties and responsibilities
  of each position shown on the organizational chart;
               (3)  a detailed narrative description of the
  administrative and accounting procedures designed to satisfy the
  requirements of Section 2004.402(a);
               (4)  a written statement signed by the licensed
  operator or applicant's chief financial officer or by the licensed
  operator or applicant, if an individual, attesting that the system
  satisfies the requirements of this section;
               (5)  if the written system is submitted by an
  applicant, a letter from an independent certified public accountant
  stating that the applicant's written system has been reviewed by
  the certified public accountant and complies with the requirements
  of this section; and
               (6)  other items the director may require.
         (d)  The commission shall adopt minimum standards for
  internal control procedures.
         (e)  For an electronic poker table, the internal control
  system records required under this section must be created and
  maintained by the electronic poker table system. The system must:
               (1)  create an audit trail that records any changes,
  modifications, or deletions of any records required by this
  section;
               (2)  allow the commission to audit the accuracy of and
  to authenticate any data included in the records; and
               (3)  allow the commission to verify, remotely and at
  the table using a secure access card from any player position,
  whether any files associated with the table have been modified,
  hidden, compromised, or deleted.
         Sec. 2004.468.  AGE REQUIREMENTS. A person younger than 21
  years of age may not:
               (1)  play, be allowed to play, place wagers, or collect
  a communal pot, personally or through an agent, or be present during
  poker gaming at any premises authorized under this chapter; or
               (2)  be employed as a poker gaming employee.
         Sec. 2004.469.  VIDEO SURVEILLANCE AND DISPUTE RESOLUTION.
  (a)  Except as provided by Subsection (b) or by commission rule for
  a charitable poker tournament, video surveillance of the poker
  gaming conducted at each poker gaming table shall be provided by the
  licensed operator. At least two video surveillance cameras must be
  dedicated to each poker gaming table.  The video cameras must have a
  clear, unobstructed view of the communal cards, chips, and dealers' 
  hands.  The video records must be maintained for at least 30 days
  unless a notice is received from the commission under Subsection
  (d), in which case the video surveillance tape recording must be
  maintained until the commission notifies the operator that the
  dispute has been resolved.
         (b)  Video surveillance is not required if all the poker
  gaming tables used on the premises licensed by the commission are
  electronic poker tables approved by the commission.
         (c)  If a player at a poker gaming table disputes the
  decision of the dealer regarding the final disposition of an
  individual game, the player may file a complaint with the licensed
  operator. The licensed operator shall attempt to resolve a gaming
  dispute immediately on receiving a complaint.
         (d)  Players in a poker game must make a formal complaint of
  the dispute to the commission by the end of the next business day
  following the date of the poker game. The commission shall notify
  the licensed operator immediately of the complaint, and the
  operator shall send to the commission a copy of any video recording
  related to the complaint.
         (e)  The commission shall adopt rules and develop forms for
  use by players for resolution of complaints submitted by players
  under this section.
         (f)  The commission shall establish rules for surveillance
  at charitable poker tournaments.
         Sec. 2004.470.  QUESTIONING AND DETENTION OF PERSONS. A
  licensed operator or an employee of the operator may question any
  person on the poker gaming premises who is suspected of violating
  this chapter. The licensed operator or the operator's employee is
  not criminally or civilly liable:
               (1)  as a result of the questioning; or
               (2)  for reporting the person suspected of the
  violation to the director or law enforcement authorities.
         Sec. 2004.471.  SERVICE OF COMPLIMENTARY ALCOHOLIC
  BEVERAGES PROHIBITED. A licensed operator may not serve
  complimentary alcoholic beverages to a player on the operator's
  poker gaming premises.
  [Sections 2004.472-2004.500 reserved for expansion]
  SUBCHAPTER K. ENFORCEMENT
         Sec. 2004.501.  INVESTIGATION. The commission may conduct
  an appropriate investigation to:
               (1)  determine whether this chapter or a commission
  rule was violated;
               (2)  determine facts, conditions, practices, or
  matters the commission considers necessary or proper to aid in the
  enforcement of a law or rule;
               (3)  aid in adopting rules;
               (4)  secure information as a basis for recommending
  legislation relating to this chapter; and
               (5)  determine whether a license holder is able to meet
  the license holder's financial obligations, including all
  financial obligations imposed by this chapter, as they become due.
         Sec. 2004.502.  AUDIT.  The commission may conduct an audit
  of a license holder's books and records as part of the
  investigation. If a recomputation of tax under Section 2004.404 is
  at issue, the commission shall conduct an audit.
         Sec. 2004.503.  COMPLAINT.  (a)  If after an investigation
  the commission is satisfied that a license, registration, finding
  of suitability, or prior approval by the commission of a
  transaction for which approval was required or permitted under this
  chapter should be limited, conditioned, suspended, or revoked, or
  that a fine should be imposed, the executive director shall
  initiate a hearing by filing a complaint with the commission and
  transmit a summary of evidence that bears on the matter and the
  transcript of testimony at an investigative hearing conducted by or
  on behalf of the executive director regarding the matter. The
  complaint must:
               (1)  be a written statement of charges that sets forth
  in ordinary and concise language the acts or omissions with which
  the respondent is charged;
               (2)  specify the statute or rule that the respondent is
  alleged to have violated;
               (3)  contain a factual allegation; and
               (4)  not consist merely of charges raised on the
  language of the statute or rule.
         (b)  On the filing of the complaint, the executive director
  shall serve a copy of the complaint on the respondent either
  personally or by registered or certified mail at the respondent's
  address on file with the executive director.
         (c)  The respondent must file an answer with the executive
  director not later than the 30th day after the date of the service
  of the complaint.
         Sec. 2004.504.  HEARING.  (a)  On receipt of a complaint
  under this subchapter, the commission shall review all matter
  presented in support of the complaint and shall appoint a hearing
  examiner to conduct further proceedings.
         (b)  The hearing examiner shall conduct proceedings under
  Chapter 2001, Government Code. After the proceedings, the hearing
  examiner may recommend that the commission take any appropriate
  action, including revocation, suspension, limitation, or
  conditioning of a license, finding of suitability, or prior
  approval, or imposition of a fine not to exceed $5,000 for each
  violation.
         (c)  The commission shall review the recommendation. The
  commission may remand the case to the hearing examiner for
  presentation of additional evidence on a showing of good cause as to
  why the evidence could not have been presented at the previous
  hearing.
         (d)  The commission shall accept, reject, or modify the
  recommendation.
         (e)  If the commission limits, conditions, suspends, or
  revokes a license, finding of suitability, or prior approval, or
  imposes a fine, the commission shall issue a written order.
         (f)  A limitation, condition, revocation, suspension, or
  fine imposed is effective according to its terms until reversed
  following judicial review, except that the commission may stay its
  order pending a rehearing or judicial review on terms and
  conditions the commission considers proper.
         Sec. 2004.505.  JUDICIAL REVIEW.  Judicial review of an
  order or decision of the commission may be made under Chapter 2001,
  Government Code. Judicial review is under the substantial evidence
  rule.
         Sec. 2004.506.  PRIVILEGED DOCUMENTS. (a)  A communication
  or document of an applicant or license holder that is required by
  law or commission rule or by a subpoena issued by the commission and
  that is to be made or transmitted to the commission is privileged
  and does not impose liability for defamation or constitute a ground
  for recovery in a civil action.
         (b)  If a document or communication contains information
  that is privileged, the privilege is not waived or lost because the
  document or communication is disclosed to the commission.
         (c)  Notwithstanding the powers granted to the commission by
  this chapter, the commission:
               (1)  may not release or disclose privileged
  information, documents, or communications provided by an applicant
  or license holder and required by a court order after timely notice
  of the proceedings has been given to the applicant or license holder
  without the prior written consent of the applicant or license
  holder;
               (2)  shall maintain all privileged information,
  documents, and communications in a secure place accessible only to
  commission members and the executive director; and
               (3)  shall adopt procedures to protect the privileged
  nature of information, documents, and communications provided by an
  applicant or license holder.
         Sec. 2004.507.  RELEASE OF CONFIDENTIAL INFORMATION. (a)  
  An application to a court for an order requiring the commission to
  release any confidential information shall be made only on a
  written motion delivered not later than the 10th day before the date
  of application to the commission, the attorney general, and all
  persons who may be affected by the entry of the order.
         (b)  Copies of the motion and all papers filed in support of
  the motion shall be served with the notice by delivering a copy in
  person or by certified mail to the last known address of the person
  to be served.
         Sec. 2004.508.  EMERGENCY ORDERS. (a) The commission may
  issue an emergency order to:
               (1)  suspend, limit, or condition a license or finding
  of suitability; or
               (2)  require a licensed operator to keep an individual
  license holder from the premises or to not pay the holder any
  remuneration for services or any profits, income, or accruals on
  the licensed operator's investment in the premises.
         (b)  An emergency order may be issued only if the commission
  determines that:
               (1)  a license holder or person found suitable has
  wilfully failed to report, pay, or truthfully account for a fee,
  tax, or other amount imposed under this chapter or wilfully
  attempted in any manner to evade or defeat a fee, tax, or other
  payment;
               (2)  a license holder cheated at a poker game; or
               (3)  the action is necessary for the immediate
  preservation of the public peace, health, safety, morals, good
  order, or general welfare.
         (c)  The emergency order must state the grounds on which it
  is issued, including a statement of facts constituting the alleged
  emergency necessitating the action.
         (d)  An emergency order may be issued only with the approval
  of and under the signature of a majority of the commission members.
         (e)  An emergency order is effective immediately on issuance
  and service on the license holder or resident agent of the license
  holder, an employee, or, in cases involving registration or
  findings of suitability, the person or entity involved or resident
  agent of the entity involved. An emergency order may suspend,
  limit, condition, or take other action in relation to the license,
  registration, or suitability finding of one or more persons in an
  operation without affecting other individual license holders or
  persons subject to a suitability finding. An emergency order
  remains effective until further order of the commission or final
  disposition of the case.
         (f)  Not later than the fifth day after the date of issuance
  of an emergency order, the executive director shall file a
  complaint and serve it on the person involved.  The person against
  whom the emergency order has been issued and served is entitled to a
  hearing before the commission and to judicial review of the
  decision and order of the commission under Chapter 2001, Government
  Code. Judicial review is under the substantial evidence rule.
         Sec. 2004.509.  ACCESS TO CRIMINAL HISTORY RECORD
  INFORMATION. (a)  The commission, the executive director, and the
  director are entitled to conduct an investigation of and 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 licensed operator or an applicant for an
  operator's license;
               (2)  a person required to be named in a license
  application;
               (3)  an employee of a licensed operator, if the
  employee is or will be directly involved in poker gaming
  operations;
               (4)  a person who manufactures or distributes poker
  gaming equipment, or a representative of a person who manufactures
  or distributes poker gaming equipment or supplies offered to a
  poker card room;
               (5)  a dealer or other employee license holder or
  applicant;
               (6)  a registered owner of an equity or creditor
  interest in a licensed operator or an applicant for such a
  registration;
               (7)  a licensed nonprofit organization or an applicant
  for a nonprofit organization license; or
               (8)  if a person described in another subdivision of
  this subsection 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 poker
  gaming-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 providing services to a poker card room.
         (b)  On each anniversary of the date of issuance of an
  operator's license, the commission shall obtain criminal history
  record information maintained by the Department of Public Safety on
  the licensed operator and on each holder of a 10 percent or greater
  equity or creditor interest in the licensed operator.
         (c)  Not later than the first anniversary after the date of
  each license renewal, the commission shall obtain criminal history
  record information maintained by the Department of Public Safety on
  each licensed dealer or other employee, manufacturer, or
  distributor.
         Sec. 2004.510.  FINGERPRINTS. The commission may deny an
  application for a license or the commission may suspend or revoke a
  license or certificate of registration if the applicant fails on
  request to provide a complete legible set of fingerprints of a
  person required to be named in a license application.
         Sec. 2004.511.  DEPARTMENT OF PUBLIC SAFETY ASSISTANCE;
  COSTS OF INVESTIGATION. (a)  The executive director or the director
  may request the cooperation of the Department of Public Safety to
  perform a background investigation of a person listed in Section
  2004.509. The commission shall reimburse the department for the
  actual cost of an investigation.
         (b)  The executive director may require a person who is
  subject to investigation to pay all costs of the investigation and
  to provide any information, including fingerprints, necessary to
  carry out the investigation or facilitate access to state or
  federal criminal history record information. Payments made to the
  executive director under this subsection shall be deposited in the
  general revenue fund and may be used only to reimburse the
  commission or the Department of Public Safety for the actual costs
  of an investigation.
         (c)  Unless otherwise prohibited by law, the Department of
  Public Safety may retain any record or information submitted to it
  under this section. The department shall notify the executive
  director or the director of any change in information provided to
  the executive director or the director when the department learns
  of the change.
  [Sections 2004.512-2004.550 reserved for expansion]
  SUBCHAPTER L. PENALTIES AND OFFENSES
         Sec. 2004.551.  FAILURE TO PAY FEES. (a)  License fees and
  other fees required by this chapter must be paid to the commission
  on or before the dates provided by law for each fee.
         (b)  A person failing to timely pay a fee when due shall pay
  in addition a penalty of not less than $50 or 25 percent of the
  amount due, whichever is greater. The penalty may not exceed $1,000
  if the fee is less than 10 days late and may not exceed $5,000 under
  any circumstances. The penalty shall be collected in the same
  manner as other charges, license fees, and penalties under this
  chapter.
         Sec. 2004.552.  FAILURE TO REPORT, PAY, OR ACCOUNT FOR FEE.
  (a)  A person commits an offense if the person wilfully fails to
  report, pay, or truthfully account for a fee imposed under this
  chapter or wilfully attempts in any manner to evade or defeat a fee.
         (b)  An offense under this section is a Class A misdemeanor.
         Sec. 2004.553.  FRAUD. (a)  A person commits an offense if
  the person knowingly:
               (1)  alters or misrepresents the outcome of a poker
  game on which wagers have been made after the outcome is made sure
  but before it is revealed to the players;
               (2)  places, increases, or decreases a bet or
  determines the course of play after acquiring knowledge, not
  available to all players, of the outcome of the game or an event
  that affects the outcome of the game or that is the subject of the
  bet or aids anyone in acquiring such knowledge for the purpose of
  placing, increasing, or decreasing a bet or determining the course
  of play contingent on that event or outcome;
               (3)  claims, collects, or takes, or attempts to claim,
  collect, or take, money or anything of value in or from a poker
  game, with intent to defraud, without having made a wager
  contingent on the poker game, or claims, collects, or takes an
  amount greater than the amount won;
               (4)  induces another to go to a place where poker gaming
  is being conducted or operated in violation of this chapter, with
  the intent that the other person play or participate in that poker
  gaming; or
               (5)  manipulates, with the intent to cheat, a component
  of poker gaming equipment in a manner contrary to the designed and
  normal operational purpose for the component, with knowledge that
  the manipulation affects the conduct or outcome of a poker game or
  with knowledge of an event that affects the outcome of the game.
         (b)  An offense under this section is a felony of the third
  degree.
         Sec. 2004.554.  USE OF PROHIBITED DEVICES. (a)  A person
  commits an offense if the person, at a premises of a licensed
  operator, uses or possesses with the intent to use a device, other
  than a device customarily used in the conduct of poker gaming, to
  assist in:
               (1)  projecting the outcome of a poker game; or
               (2)  analyzing the probability of the occurrence of an
  event relating to the game.
         (b)  An offense under this section is a felony of the third
  degree.
         Sec. 2004.555.  USE OF COUNTERFEIT OR UNAUTHORIZED CHIPS,
  TOKENS, PLAYING CARDS, OR OTHER DEVICES. (a)  A person commits an
  offense if the person knowingly uses counterfeit chips, tokens, or
  playing cards in a poker game.
         (b)  A person commits an offense if the person, in playing a
  poker game designed to be played with chips or tokens approved by
  the commission:
               (1)  knowingly uses a chip or token other than a chip or
  token approved by the commission; or
               (2)  uses any device or other means to violate the
  provisions of this chapter.
         (c)  A person, other than an authorized employee of a
  licensed operator acting in furtherance of the person's employment
  in an establishment, commits an offense if the person knowingly has
  on the person's body or in the person's possession on or off the
  premises where poker gaming is conducted a device intended to be
  used to violate the provisions of this chapter.
         (d)  A person, other than an authorized employee of a
  licensed operator acting in furtherance of the person's employment
  in an establishment, commits an offense if the person knowingly has
  on the person's body or in the person's possession on or off the
  premises a key or device known to have been designed for the purpose
  of and suitable for opening, entering, or affecting the operation
  of a poker gaming table, a drop box, or an electronic or mechanical
  device connected to the table or box or for removing money or other
  contents from the table or box.
         (e)  Possession of more than one of the devices, equipment,
  products, or materials described in this section permits a
  rebuttable inference that the possessor intended to use them for
  cheating.
         (f)  An offense under this section is a felony of the third
  degree.
         Sec. 2004.556.  CHEATING. (a)  A person commits an offense
  if the person knowingly cheats at any poker game.
         (b)  An offense under this section is a state jail felony.
         Sec. 2004.557.  UNAUTHORIZED OPERATION OF POKER GAMING
  TABLES.  (a)  A person commits an offense if the person operates
  poker gaming tables without a license issued by the commission.
         (b)  A person commits an offense if the person operates more
  than four poker gaming tables at the premises of a licensed
  operator.
         (c)  An offense under this section is a state jail felony.
         Sec. 2004.558.  POSSESSION OF UNLAWFUL DEVICES. (a)  A
  person commits an offense if the person knowingly possesses any
  poker gaming device that has been manufactured, sold, or
  distributed in violation of this chapter.
         (b)  An offense under this section is a Class A misdemeanor.
         Sec. 2004.559.  UNLAWFUL MANUFACTURE, SALE, OR DISTRIBUTION
  OF POKER GAMING EQUIPMENT. (a)  A person commits an offense if the
  person manufactures, sells, or distributes electronic poker
  tables, cards, chips, or a device intended for use in violating this
  chapter.
         (b)  A person commits an offense if the person marks, alters,
  or otherwise modifies any electronic poker tables, cards, chips,
  tokens, or poker gaming device in a manner that:
               (1)  affects the result of a wager by determining win or
  loss; or
               (2)  alters the normal criteria of random selection
  that affect the operation of a game or determine the outcome of a
  game.
         (c)  A person commits an offense if the person instructs
  another person in cheating or in the use of a device for cheating at
  any poker game authorized to be conducted at the premises of a
  licensed operator, with the knowledge or intent that the
  information or use may be employed to violate this chapter.
         (d)  An offense under this section is a felony of the third
  degree.
         Sec. 2004.560.  REPORTING PENALTIES. (a)  A person commits
  an offense if the person, in a license application, in a book or
  record required to be maintained by this chapter or a rule adopted
  under this chapter, or in a report required to be submitted by this
  chapter or a rule adopted under this chapter:
               (1)  makes a statement or entry that the person knows to
  be false or misleading; or
               (2)  knowingly fails to maintain or make an entry the
  person knows is required to be maintained or made.
         (b)  A person commits an offense if the person knowingly
  refuses to produce for inspection by the executive director a book,
  record, or document required to be maintained or made by this
  chapter or a rule adopted under this chapter.
         (c)  An offense under this section is a Class A misdemeanor.
         Sec. 2004.561.  GAMING BY MINORS. (a)  A person commits an
  offense if the person knowingly permits an individual that the
  person knows is younger than 21 years of age to participate in poker
  gaming at premises at which poker gaming is conducted under a
  license issued under this chapter.
         (b)  An individual younger than 21 years of age commits an
  offense if the individual participates in poker gaming at premises
  at which poker gaming is conducted under a license issued under this
  chapter.
         (c)  An offense under this section is a Class C misdemeanor.
         Sec. 2004.562.  GENERAL PENALTY; CONSPIRACY. (a)  A person
  commits an offense if the person knowingly or wilfully violates,
  attempts to violate, or conspires to violate a provision of this
  chapter specifying a prohibited act.
         (b)  Unless another penalty is specified for the offense, an
  offense under this section is a Class A misdemeanor.
         SECTION 2.  Section 47.02(c), Penal Code, is amended to read
  as follows:
         (c)  It is a defense to prosecution under this section that
  the actor reasonably believed that the conduct:
               (1)  was permitted under Chapter 2001, Occupations
  Code;
               (2)  was permitted under Chapter 2002, Occupations
  Code;
               (3)  consisted entirely of participation in the state
  lottery authorized by the State Lottery Act (Chapter 466,
  Government Code);
               (4)  was permitted under the Texas Racing Act (Article
  179e, Vernon's Texas Civil Statutes); [or]
               (5)  consisted entirely of participation in a drawing
  for the opportunity to participate in a hunting, fishing, or other
  recreational event conducted by the Parks and Wildlife Department;
  or
               (6)  was permitted under Chapter 2004, Occupations
  Code.
         SECTION 3.  Section 47.06(f), Penal Code, is amended to read
  as follows:
         (f)  It is a defense to prosecution under Subsection (a) or
  (c) that the person owned, manufactured, transferred, or possessed
  the gambling device, equipment, or paraphernalia for the sole
  purpose of shipping it:
               (1)  to the premises of a licensed operator under
  Chapter 2004, Occupations Code, at which poker gaming may be
  conducted under the license; or
               (2)  to another jurisdiction where the possession or
  use of the device, equipment, or paraphernalia was legal.
         SECTION 4.  Section 47.09(a), Penal Code, is amended to read
  as follows:
         (a)  It is a defense to prosecution under this chapter that
  the conduct:
               (1)  was authorized under:
                     (A)  Chapter 2001, Occupations Code;
                     (B)  Chapter 2002, Occupations Code; [or]
                     (C)  the Texas Racing Act (Article 179e, Vernon's
  Texas Civil Statutes); or
                     (D)  Chapter 2004, Occupations Code;
               (2)  consisted entirely of participation in the state
  lottery authorized by Chapter 466, Government Code; or
               (3)  was a necessary incident to the operation of the
  state lottery and was directly or indirectly authorized by:
                     (A)  Chapter 466, Government Code;
                     (B)  the lottery division of the Texas Lottery
  Commission;
                     (C)  the Texas Lottery Commission; or
                     (D)  the director of the lottery division of the
  Texas Lottery Commission.
         SECTION 5.  Subchapter H, Chapter 151, Tax Code, is amended
  by adding Section 151.356 to read as follows:
         Sec. 151.356.  ELECTRONIC AND ELECTROMECHANICAL GAMING
  DEVICES.  An electronic or electromechanical gaming device that is
  intended to be used to conduct poker gaming under Chapter 2004,
  Occupations Code, is exempt from the tax imposed by this chapter and
  from the other provisions of this chapter.
         SECTION 6.  Section 411.108, Government Code, is amended by
  adding Subsection (a-1) and amending Subsection (b) to read as
  follows:
         (a-1)  The Texas Lottery Commission is entitled to obtain
  from the department criminal history record information maintained
  by the department that relates to a person for whom the commission
  may request criminal history record information under Section
  2004.509, Occupations Code.
         (b)  Criminal history record information obtained by the
  commission under Subsection (a) or (a-1) may not be released or
  disclosed to any person except on court order or as provided by
  Subsection (c).
         SECTION 7.  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; or
               (3)  a licensed operator or other license holder under
  Chapter 2004, Occupations Code.
         SECTION 8.  Article 18, Texas Racing Act (Article 179e,
  Vernon's Texas Civil Statutes), is amended by adding Section 18.09
  to read as follows:
         Sec. 18.09.  POKER GAMING PURSE PROCEEDS. (a) To protect the
  public and ensure continued support for the racing industry in this
  state, the commission shall adopt rules to establish procedures
  governing the deposit, accounting, audit, investment, and use of
  money required to be deposited into a purse fund under Section
  2004.464, Occupations Code.
         (b)  Other than limited administrative expenses authorized
  by commission rule, the money deposited into a purse fund under
  Section 2004.464, Occupations Code, may be used only to promote the
  racing industry in this state by providing money for competitive
  purses.
         SECTION 9.  Not later than January 1, 2010, the Texas Lottery
  Commission shall adopt the rules, develop the applications and
  forms, and establish the procedures necessary to implement Chapter
  2004, Occupations Code, as added by this Act.
         SECTION 10.  This Act takes effect September 1, 2009.