Texas 2009 - 81st Regular

Texas House Bill HB4062 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R11641 YDB-F
2	2	By: Gonzalez Toureilles H.B. No. 4062
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to authorizing the operation of video lottery games by
8	8	licensed horse and greyhound racetrack operators, to providing a
9	9	defense for the operation of video lottery by Indian tribes, to the
10	10	authority of the Texas Lottery Commission and the Texas Racing
11	11	Commission, and to the conduct of gambling in this state; providing
12	12	penalties.
13	13	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
14	14	SECTION 1. Section 466.002, Government Code, is amended by
15	15	amending Subdivisions (2) through (10) and adding Subdivisions (11)
16	16	through (35) to read as follows:
17	17	(2) "Communication technology" means the methods used
18	18	and the components employed to facilitate the transmission of
19	19	information, including transmission and reception systems that
20	20	transmit information through wire, cable, radio, microwave, light,
21	21	optics, or computer data networks.
22	22	(3) "Director" means a [the] director employed by the
23	23	executive director under Section 467.031 [of the division].
24	24	(4) "Disable," with respect to video lottery
25	25	terminals, means the process that causes a video lottery terminal
26	26	to cease functioning on issuance of a shutdown command from the
27	27	video lottery central system.
28	28	(5) "Distribute," with respect to a video lottery
29	29	terminal, an electronic computer component of a video lottery
30	30	terminal, the cabinet in which a video lottery terminal is housed,
31	31	video lottery equipment, or video lottery game software intended
32	32	for use or play in this state, means the sale, lease, marketing,
33	33	offer, or other disposition of any of those items.
34	34	(6) [(3)] "Division" means the lottery division
35	35	established by the commission under Chapter 467.
36	36	(7) "Electronic storage medium," with respect to video
37	37	lottery, means the electronic medium on which the operation
38	38	software for a game playable on a video lottery terminal is stored
39	39	in the form of erasable programmable read only memory, data storage
40	40	devices typically considered alterable but through software or
41	41	hardware means have been rendered unalterable, compact disc-read
42	42	only memory, flash random access memory, or other technology medium
43	43	the commission approves for use in or with a video lottery terminal.
44	44	(8) [(4)] "Executive director" means the executive
45	45	director of the commission.
46	46	(9) "House-banked game" means a game of chance in
47	47	which:
48	48	(A) the house plays as a participant;
49	49	(B) the house competes against all players,
50	50	collects from all losers, and pays all winners; and
51	51	(C) the house has an opportunity to win.
52	52	(10) "Indian lands" means land described by Section
53	53	47(f), Article III, Texas Constitution.
54	54	(11) "Institutional investor" means:
55	55	(A) a state or federal government pension plan;
56	56	or
57	57	(B) any of the following that meets the
58	58	requirements of a "qualified institutional buyer" as defined in
59	59	Rule 144A, Securities Act of 1933 (15 U.S.C. Sections 77a-77aa),
60	60	and the rules and regulations adopted under that rule by the United
61	61	States Securities and Exchange Commission:
62	62	(i) a bank as defined by Section 3(a)(6),
63	63	Securities Exchange Act of 1934 (15 U.S.C. Section 78c), and the
64	64	rules and regulations adopted under that act by the United States
65	65	Securities and Exchange Commission;
66	66	(ii) an insurance company as defined by
67	67	Section 2(a)(17), Investment Company Act of 1940 (15 U.S.C. Section
68	68	80a-2);
69	69	(iii) an investment company registered
70	70	under Section 8, Investment Company Act of 1940 (15 U.S.C. Section
71	71	80a-8);
72	72	(iv) an employee benefit plan or pension
73	73	fund subject to the Employee Retirement Income Security Act of 1974
74	74	(29 U.S.C. Section 1001 et seq.), excluding an employee benefit
75	75	plan or pension fund sponsored by a publicly traded corporation
76	76	registered with the Securities and Exchange Commission;
77	77	(v) a group composed entirely of persons
78	78	specified by this subdivision; or
79	79	(vi) any other person the commission
80	80	recognizes as an institutional investor for reasons consistent with
81	81	the policies expressed in this chapter.
82	82	(12) [(5)] "Lottery" means the state lottery
83	83	established and operated in accordance with the Texas Constitution
84	84	under this chapter and includes the operation of a state-controlled
85	85	video lottery system [procedures operated by the state under this
86	86	chapter through which prizes are awarded or distributed by chance
87	87	among persons who have paid, or unconditionally agreed to pay, for a
88	88	chance or other opportunity to receive a prize].
89	89	(13) [(6)] "Lottery game" means an activity conducted
90	90	lawfully and in accordance with the Texas Constitution and this
91	91	chapter that is controlled by this state as part of the lottery and
92	92	through which prizes are awarded or distributed by chance to
93	93	persons who have paid or unconditionally agreed to pay, or who
94	94	otherwise participate in a game, for a chance or other opportunity
95	95	to receive a prize [includes a lottery activity].
96	96	(14) [(7)] "Lottery operator" means a person selected
97	97	under Section 466.014(b) to operate a lottery game.
98	98	(15) "Manufacture," with respect to a video lottery
99	99	terminal, an electronic computer component of a video lottery
100	100	terminal, the cabinet in which a video lottery terminal is housed,
101	101	video lottery equipment, or video lottery game software intended
102	102	for use or play in this state, means to design, assemble, fabricate,
103	103	produce, program, or make modifications to any of those items.
104	104	(16) "Net terminal income" means the total amount of
105	105	money paid to play video lottery games less the value of all credits
106	106	redeemed, including any progressive prizes and bonuses, by the
107	107	players of the video lottery games. Promotional prizes unrelated
108	108	to video lottery game wagers that are offered by a video lottery
109	109	retailer or video lottery manager may not be deducted or otherwise
110	110	considered credits redeemed for money by players for the purpose of
111	111	determining net terminal income.
112	112	(17) "Pari-mutuel license holder" means a person
113	113	licensed to conduct wagering on a greyhound race or a horse race
114	114	under the Texas Racing Act (Article 179e, Vernon's Texas Civil
115	115	Statutes).
116	116	(18) "Person" means, for purposes of video lottery
117	117	operations, any natural person, corporation, association, trust,
118	118	partnership, limited partnership, joint venture, subsidiary, or
119	119	other entity, regardless of its form, structure, or nature.
120	120	(19) [(8)] "Player" means a person who contributes any
121	121	part of the consideration for a ticket or to play a video lottery
122	122	game under this chapter.
123	123	(20) "Racetrack" means a racetrack as defined by
124	124	Section 1.03(25), Texas Racing Act (Article 179e, Vernon's Texas
125	125	Civil Statutes).
126	126	(21) [(9)] "Sales agent" or "sales agency" means a
127	127	person licensed under this chapter to sell tickets.
128	128	(22) "Slot machine" means a mechanical, electrical, or
129	129	other type of device, contrivance, or machine not connected to the
130	130	video lottery central system that plays or operates on insertion of
131	131	a coin, currency, token, or similar object or on payment of any
132	132	other consideration, and the play or operation of which, through
133	133	the skill of the operator, by chance, or both, may deliver to the
134	134	person playing or operating the machine, or entitle the person to
135	135	receive, cash, premiums, merchandise, tokens, or any other thing of
136	136	value, whether the payoff is made automatically from the machine or
137	137	in any other manner. The term does not include any equipment,
138	138	machine, technological aid, or other device used or authorized in
139	139	connection with the play of bingo under Chapter 2001, Occupations
140	140	Code.
141	141	(23) "Substantial interest holder" means any of the
142	142	following that is not a bona fide lender, bank, or other authorized
143	143	or licensed lending institution that holds a mortgage or other lien
144	144	acquired in the ordinary course of business or a vendor of the
145	145	applicant or license holder that is not otherwise a substantial
146	146	business holder:
147	147	(A) a person who directly, indirectly, or
148	148	beneficially owns any interest in a privately owned corporation,
149	149	association, trust, partnership, limited partnership, joint
150	150	venture, subsidiary, or other entity, regardless of its form,
151	151	structure, or nature;
152	152	(B) a person who directly, indirectly, or
153	153	beneficially owns 10 percent or more of any publicly owned
154	154	corporation, association, trust, partnership, limited partnership,
155	155	joint venture, subsidiary, or other entity, regardless of its form,
156	156	structure, or nature;
157	157	(C) a person associated with an applicant or
158	158	license holder who the commission determines has the power or
159	159	authority to:
160	160	(i) control the activities of the applicant
161	161	or license holder; or
162	162	(ii) elect or select the executive
163	163	director, the managers, the partners, or a majority of the board of
164	164	directors of the applicant or license holder; and
165	165	(D) any key personnel of a video lottery retailer
166	166	or video lottery manager, including an executive director, officer,
167	167	director, manager, member, partner, limited partner, executive,
168	168	employee, or agent, who the commission determines has the power to
169	169	exercise significant influence over decisions concerning any part
170	170	of the applicant's or license holder's business operation.
171	171	(24) [(10)] "Ticket" means any tangible evidence
172	172	issued to provide participation in a lottery game authorized by
173	173	this chapter other than a video lottery game.
174	174	(25) "Video lottery central system" means the system
175	175	of procedures and facilities operated and controlled by the
176	176	commission that is designed to link together all video lottery
177	177	terminals operated in this state and allows the commission to
178	178	continuously monitor the activity of each video lottery terminal
179	179	and to disable any video lottery terminal in this state.
180	180	(26) "Video lottery central system provider" means a
181	181	person that, under a contract with the commission, provides the
182	182	video lottery central system.
183	183	(27) "Video lottery equipment" means:
184	184	(A) a video lottery terminal;
185	185	(B) equipment, a component, or a contrivance used
186	186	remotely or directly in connection with a video lottery terminal
187	187	to:
188	188	(i) affect the reporting of gross revenue
189	189	and other accounting information, including a device for weighing
190	190	and counting money;
191	191	(ii) provide accounting, player tracking,
192	192	bonuses, and in-house or wide-area prizes;
193	193	(iii) monitor video lottery terminal
194	194	operations; and
195	195	(iv) provide for the connection of video
196	196	lottery terminals to the video lottery central system; or
197	197	(C) any other communications technology or
198	198	equipment necessary for the operation of a video lottery terminal.
199	199	(28) "Video lottery game" means an
200	200	electromechanically or electronically simulated game displayed on
201	201	a video lottery terminal the outcome of which is determined solely
202	202	by chance based on a computer-generated random selection of winning
203	203	combinations of symbols or numbers other than typical roulette,
204	204	dice, or baccarat game themes associated with casino gambling,
205	205	except that game themes displaying symbols that appear to roll on
206	206	drums to simulate a classic casino slot machine or themes of other
207	207	card games and keno may be used.
208	208	(29) "Video lottery manager" means a person who is
209	209	licensed by the commission under this chapter to manage a video
210	210	lottery terminal establishment.
211	211	(30) "Video lottery retailer" means a racetrack or the
212	212	operator of the premises of a pari-mutuel license holder at which a
213	213	video lottery terminal establishment is located and that holds a
214	214	video lottery retailer license under Subchapter K.
215	215	(31) "Video lottery system" has the meaning assigned
216	216	to that term by Section 47a, Article III, Texas Constitution.
217	217	(32) "Video lottery terminal" means an interactive
218	218	electronic device that is capable of displaying video lottery
219	219	games.
220	220	(33) "Video lottery terminal establishment" means
221	221	premises at which the operation of video lottery terminals is
222	222	authorized by the commission under this chapter in accordance with
223	223	a license.
224	224	(34) "Video lottery terminal provider" means a person
225	225	in the business of manufacturing or distributing video lottery
226	226	terminals in this state.
227	227	(35) "Video lottery ticket" means the evidence issued
228	228	by a video lottery terminal to reflect a credit balance from the
229	229	play of a video lottery game.
230	230	SECTION 2. Section 466.003(b), Government Code, is amended
231	231	to read as follows:
232	232	(b) Any [A] contract or authorized agreement between the
233	233	division and a lottery operator, the video lottery central system
234	234	provider, a video lottery terminal provider, or a manufacturer or
235	235	distributor of video lottery games under Section 466.014(b) must
236	236	contain a provision allowing the contract or authorized agreement
237	237	to be terminated without penalty should the division be abolished
238	238	unless another state agency is assigned to regulate all video
239	239	lottery game activity as required by this chapter.
240	240	SECTION 3. Section 466.004(a), Government Code, is amended
241	241	to read as follows:
242	242	(a) A political subdivision of this state may not impose:
243	243	(1) a tax on the sale of a ticket;
244	244	(2) a tax on the payment of a prize under this chapter;
245	245	[or]
246	246	(3) an ad valorem tax on tickets;
247	247	(4) a tax, fee, or other assessment on consideration
248	248	paid to play a video lottery game; or
249	249	(5) a tax or fee for attendance or admission to a video
250	250	lottery establishment or a racetrack at which a video lottery
251	251	establishment is located unless specifically authorized by
252	252	statute.
253	253	SECTION 4. Section 466.014, Government Code, is amended to
254	254	read as follows:
255	255	Sec. 466.014. POWERS AND DUTIES OF COMMISSION AND EXECUTIVE
256	256	DIRECTOR; CONTRACT AUTHORITY. (a) The commission and executive
257	257	director have broad authority and shall exercise strict control and
258	258	close supervision over [all] lottery games [conducted in this
259	259	state] to promote and ensure integrity, security, honesty, and
260	260	fairness in the operation and administration of the lottery.
261	261	(b) The executive director may contract with or employ a
262	262	person to perform a function, activity, or service in connection
263	263	with the operation of the lottery as prescribed by the executive
264	264	director. A contract relating to the operation of video lottery
265	265	must be consistent with Subchapter K. Except as provided by this
266	266	subsection, a [A] person with whom the executive director contracts
267	267	to operate a lottery game must be eligible for a sales agent license
268	268	under Section 466.155. A person with whom the executive director
269	269	contracts to provide the video lottery central system must be
270	270	eligible under the same standards as those applicable to the
271	271	registration or approval by the commission of a video lottery
272	272	terminal provider in accordance with Subchapter K.
273	273	(c) The executive director may award a contract for lottery
274	274	supplies, equipment, or services, including a contract under
275	275	Subsection (b), pending the completion of any investigation and
276	276	licensing, registration, or other affirmative regulatory approval
277	277	authorized or required by this chapter. A contract awarded under
278	278	this subsection must include a provision permitting the executive
279	279	director to terminate the contract without penalty if the
280	280	investigation reveals that the person to whom the contract is
281	281	awarded would not be eligible for a sales agent license under
282	282	Section 466.155 or with regard to video lottery does not satisfy the
283	283	applicable requirements for licensing, registration, or other
284	284	affirmative regulatory approval under Subchapter K.
285	285	SECTION 5. Section 466.015(b), Government Code, is amended
286	286	to read as follows:
287	287	(b) The commission shall adopt rules to the extent they are
288	288	not inconsistent with Chapters 551 and 552 governing the:
289	289	(1) security for the lottery and the commission,
290	290	including the development of an internal security plan;
291	291	(2) apportionment of the total revenues from the sale
292	292	of tickets and from all other sources in the amounts provided by
293	293	this chapter;
294	294	(3) enforcement of prohibitions on the sale of tickets
295	295	to or by an individual younger than 18 years of age or the sale of a
296	296	video lottery game to or by an individual younger than 21 years of
297	297	age; [and]
298	298	(4) enforcement of prohibitions on a person playing a
299	299	lottery game by telephone; and
300	300	(5) enforcement of prohibitions provided by law on the
301	301	sale of any purchase or play of a video lottery game.
302	302	SECTION 6. Section 466.017, Government Code, is amended to
303	303	read as follows:
304	304	Sec. 466.017. AUDITS. (a) The commission [executive
305	305	director] shall provide for a certified public accountant to
306	306	conduct an independent audit of the commission's annual financial
307	307	statements in accordance with generally accepted auditing
308	308	standards that requires the accountant to express an opinion on the
309	309	conformity of the financial statements with generally accepted
310	310	accounting principles [for each fiscal year of all accounts and
311	311	transactions of the lottery]. The certified public accountant may
312	312	not have[, as determined by the executive director,] a significant
313	313	financial interest in a sales agent, lottery vendor, [or] lottery
314	314	operator, video lottery manager, video lottery retailer, video
315	315	lottery terminal provider, or video lottery central system
316	316	provider. The certified public accountant shall present an audit
317	317	report to the executive director, the commission, the governor, the
318	318	comptroller, and the legislature not later than the 30th day after
319	319	the submission date for the annual financial report required by the
320	320	General Appropriations Act. [The report must contain
321	321	recommendations to enhance the earnings capability of the lottery
322	322	and improve the efficiency of lottery operations.] The state
323	323	auditor may review the results of and working papers related to the
324	324	audit.
325	325	(b) The records of a [Each] lottery operator, sales agent,
326	326	video lottery manager, video lottery retailer, video lottery
327	327	terminal provider, or video lottery central system provider
328	328	[operator's and sales agent's records] are subject to audit by the
329	329	commission and the state auditor. For the purpose of carrying out
330	330	this chapter, the executive director or state auditor may examine
331	331	all books, records, papers, or other objects that the executive
332	332	director or state auditor determines are necessary for conducting a
333	333	complete examination under this chapter and may also examine under
334	334	oath any officer, director, or employee of a lottery operator, [or]
335	335	sales agent, video lottery manager, video lottery retailer, video
336	336	lottery terminal provider, or video lottery central system
337	337	provider. The executive director or state auditor may conduct an
338	338	examination at the principal office or any other office of the
339	339	person subject to the audit [lottery operator or sales agent] or may
340	340	require the person [lottery operator or sales agent] to produce the
341	341	records at the office of the commission or state auditor. If a
342	342	sales agent, video lottery manager, video lottery retailer, video
343	343	lottery terminal provider, or video lottery central system provider
344	344	refuses to permit an examination or to answer any question
345	345	authorized by this subsection, the executive director may summarily
346	346	suspend the license or registration of the sales agent, video
347	347	lottery manager, video lottery retailer, or video lottery terminal
348	348	provider under Section 466.160 or Subchapter K until the
349	349	examination is completed as required. Section 321.013(h) does not
350	350	apply to an audit of a lottery operator, [or] sales agent, video
351	351	lottery manager, video lottery retailer, video lottery terminal
352	352	provider, or video lottery central system provider.
353	353	SECTION 7. Section 466.018, Government Code, is amended to
354	354	read as follows:
355	355	Sec. 466.018. INVESTIGATIONS. The attorney general, the
356	356	district attorney for Travis County, or the district attorney,
357	357	criminal district attorney, or county attorney performing the
358	358	duties of district attorney for the county in which the violation or
359	359	alleged violation occurred may investigate a violation or alleged
360	360	violation of this chapter and of the penal laws of this state by the
361	361	commission or its employees, a sales agent, a lottery vendor, [or] a
362	362	lottery operator, a video lottery manager, a video lottery
363	363	retailer, a video lottery terminal provider, or a video lottery
364	364	central system provider.
365	365	SECTION 8. Sections 466.020(c), (d), and (e), Government
366	366	Code, are amended to read as follows:
367	367	(c) A security officer or investigator employed by the
368	368	department of security or a peace officer who is working in
369	369	conjunction with the commission or the Department of Public Safety
370	370	in the enforcement of this chapter may:
371	371	(1) [,] without a search warrant, [may] search and
372	372	seize a lottery vending machine, lottery computer terminal, video
373	373	lottery terminal, or other lottery or gaming equipment that is
374	374	located on premises for which a person holds a sales agent, video
375	375	lottery retailer, or video lottery manager license issued under
376	376	this chapter; or
377	377	(2) seize a lottery vending machine, lottery computer
378	378	terminal, video lottery terminal, or other lottery or gaming
379	379	equipment that is being used or is in the possession of any person
380	380	in violation of this chapter.
381	381	(d) The Department of Public Safety or any other state or
382	382	local law enforcement agency in this state, at the commission's
383	383	request and in accordance with an interagency agreement, shall
384	384	perform a full criminal background investigation of a prospective
385	385	deputy or investigator of the department of security. The
386	386	commission shall reimburse the agency [Department of Public Safety]
387	387	for the actual costs of an investigation.
388	388	(e) At least once every two years, the executive director
389	389	shall employ an independent firm that is experienced in security,
390	390	including computer security and systems security, to conduct a
391	391	comprehensive study of all aspects of lottery security, including:
392	392	(1) lottery personnel security;
393	393	(2) sales agent security;
394	394	(3) lottery operator and vendor security;
395	395	(4) security against ticket counterfeiting and
396	396	alteration and other means of fraudulent winning;
397	397	(5) security of lottery drawings;
398	398	(6) lottery computer, data communications, database,
399	399	and systems security;
400	400	(7) lottery premises and warehouse security;
401	401	(8) security of distribution of tickets;
402	402	(9) security of validation and payment procedures;
403	403	(10) security involving unclaimed prizes;
404	404	(11) security aspects of each lottery game;
405	405	(12) security against the deliberate placement of
406	406	winning tickets in lottery games that involve preprinted winning
407	407	tickets by persons involved in the production, storage,
408	408	transportation, or distribution of tickets; [and]
409	409	(13) security of video lottery retailers, video
410	410	lottery managers, video lottery terminal providers, and video
411	411	lottery central system providers; and
412	412	(14) other security aspects of lottery operations,
413	413	including video lottery game operations.
414	414	SECTION 9. Section 466.022, Government Code, is amended by
415	415	amending Subsection (b) and adding Subsections (c), (d), (e), and
416	416	(f) to read as follows:
417	417	(b) In addition to commission records excepted from
418	418	disclosure under Chapter 552, the following information is
419	419	confidential and is exempt from disclosure:
420	420	(1) security plans and procedures of the commission
421	421	designed to ensure the integrity and security of the operation of
422	422	the lottery;
423	423	(2) information of a nature that is designed to ensure
424	424	the integrity and security of the selection of winning tickets or
425	425	numbers in the lottery, other than information describing the
426	426	general procedures for selecting winning tickets or numbers; [and]
427	427	(3) the street address and telephone number of a prize
428	428	winner, if the prize winner has not consented to the release of the
429	429	information; and
430	430	(4) information relating to all system operations of
431	431	video lottery games, including the operation of the video lottery
432	432	system, security related to video lottery games, and commission
433	433	plans and procedures intended to ensure the integrity and security
434	434	of the operation of video lottery games.
435	435	(c) Information that is confidential under Subsection
436	436	(b)(4) includes information and data that:
437	437	(1) are furnished to the commission under Subchapter K
438	438	or that may be otherwise obtained by the commission from any source;
439	439	(2) pertain to an applicant's criminal record,
440	440	antecedents, and background and are furnished to or obtained by the
441	441	commission from any source, including information obtained by the
442	442	commission under Section 411.108(d);
443	443	(3) are provided to the commission, a commission
444	444	employee, or an investigator acting on behalf of the commission by a
445	445	governmental agency or an informer or on the assurance that the
446	446	information will be held in confidence and treated as confidential;
447	447	(4) are obtained by the commission from a video
448	448	lottery manager, video lottery retailer, video lottery terminal
449	449	provider, or video lottery central system provider; or
450	450	(5) are prepared or obtained by an agent or employee of
451	451	the commission relating to a license, certificate of registration,
452	452	or renewal application, a finding of suitability, or any other
453	453	affirmative regulatory approval required under Subchapter K.
454	454	(d) Information that qualifies as confidential under
455	455	Subsection (b)(4) may be disclosed in whole or in part only as
456	456	necessary to administer this chapter or under a court order. The
457	457	commission, subject to appropriate procedures, may disclose the
458	458	information and data to an authorized agent of a political
459	459	subdivision of this state, the United States, another state or a
460	460	political subdivision of another state, a tribal law enforcement
461	461	agency, or the government of a foreign country.
462	462	(e) For the annual report required under Section 466.016,
463	463	the commission may disclose a compilation of statistical
464	464	information that is otherwise confidential under Subsection (b)(4)
465	465	if the compilation does not disclose the identity of an applicant,
466	466	license or registration holder, or video lottery establishment.
467	467	(f) Notwithstanding any other provision of state law, the
468	468	information provided under Subsection (d) or (e) may not otherwise
469	469	be disclosed without specific commission authorization.
470	470	SECTION 10. Section 466.024, Government Code, is amended to
471	471	read as follows:
472	472	Sec. 466.024. PROHIBITED GAMES. (a) The executive
473	473	director, [or] a lottery operator, a video lottery manager, a video
474	474	lottery retailer, a video lottery terminal provider, or a video
475	475	lottery central system provider may not establish or operate a
476	476	lottery game in which the winner is chosen on the basis of the
477	477	outcome of a live sports event.
478	478	(b) The [commission shall adopt rules prohibiting the]
479	479	operation of any game using a video lottery machine or other
480	480	gambling device that is not connected to the video lottery central
481	481	system and regulated by this state as required by Section 47a,
482	482	Article III, Texas Constitution, and this chapter is prohibited
483	483	[machine].
484	484	(c) In this section, "sports[:
485	485	[(1) "Sports] event" means a football, basketball,
486	486	baseball, or similar game, or a horse or dog race on which
487	487	pari-mutuel wagering is allowed.
488	488	[(2) "Video lottery machine" or "machine" means any
489	489	electronic video game machine that, upon insertion of cash, is
490	490	available to play or simulate the play of a video game, including
491	491	video poker, keno, and blackjack, using a video display and
492	492	microprocessors in which the player may receive free games or
493	493	credits that can be redeemed for cash, coins, or tokens, or that
494	494	directly dispenses cash, coins, or tokens.]
495	495	SECTION 11. Section 466.025, Government Code, is amended to
496	496	read as follows:
497	497	Sec. 466.025. REPORTS OF TICKETS SOLD, NET TERMINAL INCOME,
498	498	AND PRIZES AWARDED. For each lottery game, other than a video
499	499	lottery game, after the last date on which a prize may be claimed
500	500	under Section 466.408(d), the director shall prepare a report that
501	501	shows the total number of tickets sold and the number and amounts of
502	502	prizes awarded in the game. The report must be available for public
503	503	inspection. For video lottery games, the director shall prepare a
504	504	weekly report that shows net terminal income for the preceding
505	505	week.
506	506	SECTION 12. Section 466.103(a), Government Code, is amended
507	507	to read as follows:
508	508	(a) Except as provided by Subsection (b), the executive
509	509	director may not award a contract for the purchase or lease of
510	510	facilities, goods, or services related to lottery operations to a
511	511	person who:
512	512	(1) would be denied a license as a sales agent under
513	513	Section 466.155; or
514	514	(2) with regard to video lottery equipment:
515	515	(A) is not a registered video lottery terminal
516	516	provider if registration is required; or
517	517	(B) would be deemed unsuitable to be a video
518	518	lottery terminal provider under Subchapter K.
519	519	SECTION 13. Section 466.151(b), Government Code, is amended
520	520	to read as follows:
521	521	(b) The executive director may establish a provisional
522	522	license or other classes of licenses necessary to regulate and
523	523	administer the quantity and type of lottery games provided at each
524	524	licensed location of a sales agent.
525	525	SECTION 14. Subchapter E, Chapter 466, Government Code, is
526	526	amended by adding Section 466.206 to read as follows:
527	527	Sec. 466.206. CRIMINAL HISTORY INVESTIGATION FOR VIDEO
528	528	LOTTERY. Except as otherwise provided by this section, Sections
529	529	466.020 and 466.201, and Subchapter K, a criminal history
530	530	investigation of a video lottery retailer, video lottery manager,
531	531	video lottery terminal provider, or video lottery central system
532	532	provider is governed by commission rules adopted under Subchapter
533	533	K. As applicable, the commission shall consider information
534	534	obtained through a criminal history investigation conducted under
535	535	the Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes).
536	536	SECTION 15. Section 466.252, Government Code, is amended to
537	537	read as follows:
538	538	Sec. 466.252. PLAYER [PURCHASE OF TICKET] AGREEMENT TO
539	539	ABIDE BY RULES AND INSTRUCTIONS. (a) By purchasing a ticket in a
540	540	particular lottery game or participating as a player in a lottery
541	541	game, a player agrees to abide by and be bound by the commission's
542	542	rules and instructions, including the rules or instructions
543	543	applicable to the particular lottery game involved. The player
544	544	also acknowledges that the determination of whether the player is a
545	545	valid winner is subject to:
546	546	(1) the commission's rules, instructions, and claims
547	547	procedures, including those developed for the particular lottery
548	548	game involved; [and]
549	549	(2) any validation tests established by the commission
550	550	for the particular lottery game involved; and
551	551	(3) the limitations and other provisions prescribed by
552	552	this chapter.
553	553	(b) If the lottery uses tickets, an abbreviated form of the
554	554	rules or a reference to the rules may appear on the tickets.
555	555	SECTION 16. Section 466.3011, Government Code, is amended
556	556	to read as follows:
557	557	Sec. 466.3011. VENUE. Venue is proper in Travis County or
558	558	any county in which venue is proper under Chapter 13, Code of
559	559	Criminal Procedure, for:
560	560	(1) an offense under this chapter;
561	561	(2) an offense under the Penal Code, if the accused:
562	562	(A) is a lottery operator, lottery vendor, sales
563	563	agent, video lottery manager, video lottery retailer, video lottery
564	564	terminal provider, video lottery central system provider, or
565	565	employee of the division; and
566	566	(B) is alleged to have committed the offense
567	567	while engaged in lottery activities, including video lottery
568	568	activities; or
569	569	(3) an offense that involves property consisting of or
570	570	including lottery tickets under Title 7 or 11, Penal Code.
571	571	SECTION 17. Subchapter G, Chapter 466, Government Code, is
572	572	amended by adding Section 466.3031 to read as follows:
573	573	Sec. 466.3031. UNAUTHORIZED OPERATION, USE, OR POSSESSION
574	574	OF VIDEO LOTTERY TERMINAL. (a) A person may not operate, use, or
575	575	possess a video lottery terminal unless the operation, use, or
576	576	possession is expressly authorized by this chapter or other law.
577	577	(b) Except for transport to or from a video lottery
578	578	establishment and as provided by this chapter or other law, a person
579	579	commits an offense if the person operates, uses, or possesses any
580	580	video lottery terminal that is not at all times connected to the
581	581	video lottery central system or that does not generate revenue for
582	582	this state, except funds retained by the commission to pay
583	583	administrative costs. An offense under this subsection is a felony
584	584	of the third degree.
585	585	(c) Notwithstanding Subsection (b), a video lottery
586	586	retailer, video lottery manager, or registered or approved video
587	587	lottery terminal provider may store or possess a video lottery
588	588	terminal as authorized by the commission, and the commission may
589	589	possess video lottery terminals for study and evaluation.
590	590	SECTION 18. Section 466.305(a), Government Code, is amended
591	591	to read as follows:
592	592	(a) A sales agent, video lottery manager, or video lottery
593	593	retailer, or an employee of a sales agent, video lottery manager, or
594	594	video lottery retailer, commits an offense if the person
595	595	intentionally or knowingly sells a ticket to another person or
596	596	allows the person to play or conduct a game on a video lottery
597	597	terminal by extending credit or lending money to the person to
598	598	enable the person to purchase the ticket or play the game.
599	599	SECTION 19. The heading to Section 466.3051, Government
600	600	Code, is amended to read as follows:
601	601	Sec. 466.3051. SALE [OF TICKET] TO OR PURCHASE OF LOTTERY
602	602	TICKET BY PERSON YOUNGER THAN 18; PLAY OF VIDEO LOTTERY GAME BY
603	603	PERSON YOUNGER THAN 21 [YEARS OF AGE].
604	604	SECTION 20. Section 466.3051, Government Code, is amended
605	605	by adding Subsections (a-1) and (b-1) and amending Subsections (b)
606	606	through (f) to read as follows:
607	607	(a-1) A video lottery manager, a video lottery retailer, or
608	608	an employee of a video lottery manager or video lottery retailer
609	609	commits an offense if the person intentionally or knowingly allows
610	610	a person younger than 21 years of age to play a video lottery game.
611	611	(b) An individual who is younger than 18 years of age
612	612	commits an offense if the individual:
613	613	(1) purchases a lottery ticket; or
614	614	(2) falsely represents the individual to be 18 years
615	615	of age or older by displaying evidence of age that is false or
616	616	fraudulent or misrepresents in any way the individual's age in
617	617	order to purchase a lottery ticket.
618	618	(b-1) An individual who is younger than 21 years of age
619	619	commits an offense if the individual:
620	620	(1) plays a video lottery game; or
621	621	(2) falsely represents the individual to be 21 years
622	622	of age or older by displaying evidence of age that is false or
623	623	fraudulent or misrepresents in any way the individual's age in
624	624	order to play a video lottery game.
625	625	(c) A person 18 years of age or older may purchase a lottery
626	626	ticket to give as a gift to another person, including an individual
627	627	younger than 18 years of age.
628	628	(d) It is a defense to the application of Subsection (b)
629	629	that the individual younger than 18 years of age is participating in
630	630	an inspection or investigation on behalf of the commission or other
631	631	appropriate governmental entity regarding compliance with this
632	632	section. It is a defense to the application of Subsection (b-1) that
633	633	the individual younger than 21 years of age is participating in an
634	634	inspection or investigation on behalf of the commission or other
635	635	appropriate governmental entity regarding compliance with this
636	636	section.
637	637	(e) An offense under Subsection (a) or (a-1) is a Class C
638	638	misdemeanor.
639	639	(f) An offense under Subsection (b) or (b-1) is punishable
640	640	by a fine not to exceed $250.
641	641	SECTION 21. Section 466.306, Government Code, is amended to
642	642	read as follows:
643	643	Sec. 466.306. FORGERY; ALTERATION OF TICKET. (a) A person
644	644	commits an offense if the person intentionally or knowingly alters
645	645	or forges a ticket or video lottery ticket.
646	646	(b) An offense under this section is a felony of the third
647	647	degree unless it is shown on the trial of the offense that the prize
648	648	alleged to be authorized by the ticket or video lottery ticket
649	649	forged or altered is greater than $10,000, in which event the
650	650	offense is a felony of the second degree.
651	651	SECTION 22. Section 466.309(a), Government Code, is amended
652	652	to read as follows:
653	653	(a) A person commits an offense if the person intentionally
654	654	or knowingly tampers with, damages, defaces, or renders inoperable
655	655	any vending machine, electronic computer terminal, video lottery
656	656	terminal or other video lottery equipment, or other mechanical
657	657	device used in a lottery game.
658	658	SECTION 23. The heading to Section 466.317, Government
659	659	Code, is amended to read as follows:
660	660	Sec. 466.317. PROHIBITION AGAINST SALE OF CERTAIN LOTTERY
661	661	TICKETS OR OPERATION OF CERTAIN VIDEO LOTTERY SYSTEMS.
662	662	SECTION 24. Section 466.317, Government Code, is amended by
663	663	adding Subsection (a-1) and amending Subsection (c) to read as
664	664	follows:
665	665	(a-1) A person may not control or operate a video lottery
666	666	system in this state except as provided by this chapter or other
667	667	law.
668	668	(c) A person commits an offense if the person violates this
669	669	section. An offense under this section is a felony of the third
670	670	degree [Class A misdemeanor].
671	671	SECTION 25. Section 466.355(a), Government Code, is amended
672	672	to read as follows:
673	673	(a) The state lottery account is a special account in the
674	674	general revenue fund. The account consists of all revenue received
675	675	from the sale of tickets, license and application fees under this
676	676	chapter, other than Subchapter K, and all money credited to the
677	677	account from any other fund or source under law. Interest earned by
678	678	the state lottery account shall be deposited in the unobligated
679	679	portion of the general revenue fund.
680	680	SECTION 26. Subchapter H, Chapter 466, Government Code, is
681	681	amended by adding Section 466.360 to read as follows:
682	682	Sec. 466.360. VIDEO LOTTERY TERMINAL REVENUE. Revenue
683	683	generated from the operation of video lottery terminals is governed
684	684	by Subchapter K and commission rules.
685	685	SECTION 27. Section 466.402, Government Code, is amended by
686	686	adding Subsection (e) to read as follows:
687	687	(e) This section does not apply to the payment of prizes for
688	688	video lottery games governed by Subchapter K.
689	689	SECTION 28. Chapter 466, Government Code, is amended by
690	690	adding Subchapter K to read as follows:
691	691	SUBCHAPTER K. VIDEO LOTTERY
692	692	Sec. 466.501. LEGISLATIVE FINDINGS AND DECLARATIONS. The
693	693	legislature finds and declares the following:
694	694	(1) The purpose and intent of this subchapter is to
695	695	carry out the intent of the voters as established by the approval of
696	696	Section 47a, Article III, Texas Constitution, to expand the
697	697	revenue-generating ability of the state lottery by authorizing this
698	698	state to operate a video lottery system consistent with public
699	699	policy strictly limiting the expansion of gambling in this state.
700	700	(2) Except as expressly permitted under other law, the
701	701	people of this state intend to allow only state-regulated video
702	702	lottery games to be conducted in this state and only in locations at
703	703	which pari-mutuel wagering is conducted at racetracks.
704	704	(3) The video lottery games operated at racetracks
705	705	under this subchapter are regulated by this state in a manner that
706	706	allows this state to continuously monitor all video lottery
707	707	terminals and to disable any video lottery terminal for the
708	708	protection of the public and this state.
709	709	(4) Through the video lottery system this state will
710	710	monitor the network of video lottery terminals to ensure maximum
711	711	security unique to state-regulated gambling. Except as may
712	712	otherwise be provided by state or federal law governing gaming on
713	713	Indian lands, each operating video lottery terminal in this state
714	714	will be connected to a video lottery central system.
715	715	(5) Limited gaming is intended to enhance live horse
716	716	and greyhound racing, breeding programs, entertainment, and
717	717	employment in tourism and agricultural industries of Texas and to
718	718	assist this state's horse and greyhound racing industry, support
719	719	programs intended to foster and promote horse and greyhound
720	720	breeding, and improve the living and working conditions of
721	721	personnel who work and reside in and around the stable and backside
722	722	areas of racetracks.
723	723	(6) In authorizing only a state-regulated and
724	724	state-operated video lottery central system and state-regulated
725	725	video lottery terminals in limited locations and continuing the
726	726	general prohibition on gambling in this state as a matter of public
727	727	policy, this state is protecting the state's legitimate interests
728	728	by restricting such activity. By limiting the operation of video
729	729	lottery terminals to those connected to the state-regulated video
730	730	lottery system on certain land with certain types of games, the
731	731	legislature seeks to foster this state's legitimate sovereign
732	732	interest in regulating the growth of gambling activities in this
733	733	state.
734	734	(7) This subchapter is game-specific and may not be
735	735	construed to allow the operation of any other form of gambling
736	736	unless specifically allowed by this subchapter. This subchapter
737	737	does not allow the operation of dice games, roulette wheels,
738	738	house-banked games, including house-banked card games, or games in
739	739	which winners are determined by the outcome of a live sports contest
740	740	that are expressly prohibited under other state law.
741	741	Sec. 466.502. CONSTRUCTION; APPLICABILITY OF OTHER LAWS.
742	742	(a) This subchapter applies uniformly throughout this state and
743	743	all political subdivisions of this state.
744	744	(b) To the extent of any inconsistency between Chapter 2003
745	745	and this subchapter or a commission rule governing video lottery
746	746	terminals, this subchapter or the commission rule controls in all
747	747	matters related to video lottery terminals.
748	748	(c) Video lottery equipment operated under commission
749	749	authority and this subchapter is exempt from 15 U.S.C. Section
750	750	1172.
751	751	Sec. 466.503. CONDUCT RELATED TO OPERATION OF VIDEO LOTTERY
752	752	TERMINALS BY INDIAN TRIBES. Notwithstanding any provision of this
753	753	chapter, conduct authorized in connection with video lottery
754	754	terminals under this subchapter, including conduct in which a
755	755	person who holds a license or certificate of registration under
756	756	this subchapter is permitted to engage under the license or
757	757	registration, is also authorized for the conduct of video lottery
758	758	terminals by Indian tribes that is permitted under other law.
759	759	[Section 466.504 reserved for expansion]
760	760	Sec. 466.505. AUTHORITY TO OPERATE VIDEO LOTTERY SYSTEM.
761	761	The commission may implement and operate a video lottery system and
762	762	regulate the operation of video lottery terminals at racetracks in
763	763	accordance with this subchapter and the Texas Racing Act (Article
764	764	179e, Vernon's Texas Civil Statutes). This subchapter supersedes
765	765	any conflicting or inconsistent provision of the Texas Racing Act
766	766	(Article 179e, Vernon's Texas Civil Statutes) or other state law.
767	767	Sec. 466.506. VIDEO LOTTERY GAMES; STATE OWNERSHIP AND
768	768	PROPRIETARY INTEREST. For purposes of this subchapter, this state
769	769	may acquire a proprietary interest in video lottery game software
770	770	through:
771	771	(1) ownership of the software; or
772	772	(2) an exclusive product license agreement with a
773	773	provider in which the provider retains copyrighted ownership of the
774	774	software but the license granted to this state is nontransferable
775	775	and authorizes this state to operate the software program, solely
776	776	for the state's own use, on the video lottery central system and
777	777	video lottery terminals connected to the video lottery central
778	778	system.
779	779	Sec. 466.507. STATE CONTROL OF VIDEO LOTTERY SYSTEM. (a)
780	780	In accordance with Section 47a, Article III, Texas Constitution,
781	781	the commission shall control and regulate the video lottery system
782	782	and the video lottery central system through which this state has
783	783	the exclusive and unilateral ability to monitor activity of video
784	784	lottery terminals and remotely disable video lottery terminals for
785	785	the public safety, health, and welfare or the preservation of the
786	786	integrity of the lottery and to prevent any financial loss to this
787	787	state.
788	788	(b) This section does not affect or restrict the ability of
789	789	a video lottery manager or video lottery retailer to monitor
790	790	activity of video lottery terminals and to disable video lottery
791	791	terminals in accordance with commission rules.
792	792	(c) The commission may disable a video lottery terminal if a
793	793	video lottery retailer's or video lottery manager's license is
794	794	revoked, surrendered, or summarily suspended under this subchapter
795	795	and to prevent any financial loss to this state.
796	796	[Sections 466.508-466.509 reserved for expansion]
797	797	Sec. 466.510. VIDEO LOTTERY CENTRAL SYSTEM. (a) The
798	798	commission shall establish or cause to be established a video
799	799	lottery central system to link all video lottery terminals in the
800	800	video lottery system. The video lottery central system must
801	801	provide the auditing, security, and other information required by
802	802	the commission.
803	803	(b) The commission shall provide to a registered video
804	804	lottery terminal provider or an applicant applying for registration
805	805	as a video lottery terminal provider the protocol documentation
806	806	data necessary to enable the provider's or applicant's video
807	807	lottery terminals to communicate with the commission's video
808	808	lottery central system for transmission of auditing program
809	809	information and for activation and disabling of video lottery
810	810	terminals.
811	811	(c) The video lottery central system design may not limit or
812	812	preclude potential providers from providing state-of-the-art,
813	813	industry-standard video lottery terminals and associated equipment
814	814	such as player tracking systems, accounting systems, progressive
815	815	systems, and bonusing systems, except for providers that fail to
816	816	meet registration or approval specifications established by the
817	817	commission.
818	818	(d) The commission may contract with a video lottery central
819	819	system provider to establish the video lottery central system.
820	820	Sec. 466.511. VIDEO LOTTERY TERMINAL PROVIDER:
821	821	REGISTRATION OR APPROVAL REQUIRED. (a) A person may not
822	822	manufacture or distribute video lottery equipment for use or play
823	823	in this state unless the person is registered as a video lottery
824	824	terminal provider or is otherwise approved by the commission to
825	825	manufacture or distribute video lottery equipment in this state. A
826	826	video lottery retailer may also hold a license as a video lottery
827	827	terminal provider under this section.
828	828	(b) Unless suspended or revoked, the registration or
829	829	approval expires on the date specified by the commission, which may
830	830	not be later than the 10th anniversary of the date of the
831	831	registration or approval. A person may renew an unexpired
832	832	registration or approval by paying the required renewal fee and
833	833	complying with the requirements of this subchapter and commission
834	834	rule.
835	835	(c) To be eligible for registration or commission approval
836	836	as required by this section, an applicant must satisfy all
837	837	applicable requirements under this subchapter.
838	838	Sec. 466.512. VIDEO LOTTERY TERMINAL PROVIDER: APPLICATION;
839	839	CHANGE IN INFORMATION. (a) The commission shall adopt rules
840	840	governing the registration or approval of video lottery terminal
841	841	providers and the information an applicant must provide to the
842	842	commission. The rules must require the application and any other
843	843	form or document submitted to the commission by or on behalf of the
844	844	applicant to determine the applicant's qualification under this
845	845	section to be sworn to or affirmed before an officer qualified to
846	846	administer oaths.
847	847	(b) The applicant must demonstrate the ability to comply
848	848	with all manufacturing, quality control, and operational
849	849	restrictions imposed on authorized video lottery equipment,
850	850	patented or otherwise restricted video lottery games, or other
851	851	video lottery equipment that the applicant seeks to manufacture or
852	852	distribute for use in this state. The registration or approval
853	853	process must include an on-site review of the applicant's
854	854	manufacturing equipment and process for each separate type of
855	855	authorized video lottery equipment to ensure compliance with the
856	856	requirements of this chapter and commission rules.
857	857	(c) Not later than the 30th day after the date of any change
858	858	in the information submitted on or with the application form, the
859	859	applicant shall notify the commission of the change, including a
860	860	change that occurs after the registration or other commission
861	861	approval has been granted.
862	862	(d) The applicant shall comply with all federal and state
863	863	laws, local ordinances, and rules.
864	864	Sec. 466.513. VIDEO LOTTERY TERMINAL PROVIDER: APPLICATION
865	865	FEE. (a) An applicant seeking registration or approval or renewal
866	866	of registration or approval as a video lottery terminal provider
867	867	must pay a nonrefundable application fee in the amount prescribed
868	868	by commission rule that is sufficient to pay the costs to the
869	869	commission of administering and licensing video lottery terminals.
870	870	(b) Application fees paid under this section shall be
871	871	retained by the commission and may be used only to defray costs
872	872	incurred in the administration and enforcement of this chapter
873	873	relating to the operation of video lottery terminals.
874	874	[Sections 466.514-466.519 reserved for expansion]
875	875	Sec. 466.520. VIDEO LOTTERY RETAILER OR VIDEO LOTTERY
876	876	MANAGER LICENSE REQUIRED. (a) Except as specifically provided by
877	877	other law, a person may not own or operate a video lottery terminal
878	878	if the person does not satisfy the requirements of this subchapter
879	879	and is not licensed by the commission to act as a video lottery
880	880	retailer or video lottery manager.
881	881	(b) Unless suspended or revoked, a video lottery retailer
882	882	license expires on the same date the retailer's racetrack or
883	883	pari-mutuel license issued under the Texas Racing Act (Article
884	884	179e, Vernon's Texas Civil Statutes) expires.
885	885	Sec. 466.521. VIDEO LOTTERY RETAILER OR VIDEO LOTTERY
886	886	MANAGER: APPLICATION AND QUALIFICATION. (a) An applicant for a
887	887	video lottery retailer or video lottery manager license must:
888	888	(1) hold a valid racetrack or pari-mutuel license
889	889	granted by the Texas Racing Commission under the Texas Racing Act
890	890	(Article 179e, Vernon's Texas Civil Statutes);
891	891	(2) have a valid and executed contract with a
892	892	racetrack that satisfies the requirements of Subdivision (1) to act
893	893	as a video lottery manager for the racetrack subject to licensing
894	894	under this subchapter;
895	895	(3) demonstrate to the commission's satisfaction that
896	896	the applicant seeks to act as a video lottery manager for a
897	897	federally recognized Indian tribe; or
898	898	(4) have been determined by the Texas Racing
899	899	Commission or its designee to be qualified to hold a racetrack or
900	900	pari-mutuel license under the Texas Racing Act (Article 179e,
901	901	Vernon's Texas Civil Statutes).
902	902	(b) Each officer, partner, director, key employee,
903	903	substantial interest holder, video lottery game operation
904	904	employee, and owner of video lottery game operations must be
905	905	eligible and maintain eligibility in accordance with this
906	906	subchapter to be involved in video lottery games in this state.
907	907	(c) The commission shall adopt rules to implement this
908	908	section.
909	909	(d) The commission shall issue a video lottery retailer or
910	910	manager license to an applicant who meets the criteria established
911	911	by the commission rules.
912	912	Sec. 466.522. VIDEO LOTTERY RETAILER OR VIDEO LOTTERY
913	913	MANAGER: APPLICATION FEE. (a) An applicant for a video lottery
914	914	retailer or video lottery manager license shall submit a
915	915	nonrefundable application processing fee in the amount prescribed
916	916	by commission rule that is sufficient and reasonable to pay the
917	917	costs of determining the applicant's eligibility, not to exceed
918	918	$5,000.
919	919	(b) An application may not be processed until the applicant
920	920	pays the application fee. If the application fee is not received by
921	921	the 30th day after the date the commission notifies the applicant of
922	922	the amount of the fee, the application is considered withdrawn and
923	923	may not be considered by the commission.
924	924	[Sections 466.523-466.524 reserved for expansion]
925	925	Sec. 466.525. VIDEO LOTTERY TERMINAL ESTABLISHMENT
926	926	LICENSE: REQUIREMENTS; LOCATION. (a) An applicant for a video
927	927	lottery terminal establishment license must ensure that the
928	928	facility for the establishment will comply with all applicable
929	929	building codes and rules of the commission. The rules adopted by
930	930	the commission relating to facilities for video lottery
931	931	establishments must relate solely to this state's interest in the
932	932	operation of video lottery terminals.
933	933	(b) A video lottery terminal establishment shall provide
934	934	office space for the commission sufficient for at least one
935	935	commission employee.
936	936	(c) An applicant for a video lottery terminal establishment
937	937	license or a license holder shall provide the information required
938	938	by commission rule relating to the applicant's or license holder's
939	939	video lottery terminal establishment and update the information at
940	940	least annually.
941	941	(d) The commission may not issue a video lottery terminal
942	942	establishment license to a racetrack if a property line of the
943	943	licensed premises of the racetrack is located within one-half mile
944	944	of the property line of a public school. This subsection does not
945	945	apply to a racetrack that was located within one-half mile of a
946	946	public school on the first day racing operations commenced at the
947	947	racetrack.
948	948	(e) Notwithstanding Section 466.155, the commission may not
949	949	deny, suspend, or revoke a license under this subchapter based on
950	950	the fact that a video lottery terminal establishment or a proposed
951	951	video lottery terminal establishment is a location for which a
952	952	person holds a wine and beer retailer's permit, mixed beverage
953	953	permit, mixed beverage late hours permit, private club registration
954	954	permit, or private club late hours permit, issued under Chapter 25,
955	955	28, 29, 32, or 33, Alcoholic Beverage Code.
956	956	(f) A video lottery terminal establishment may be located
957	957	only at the premises of a licensed racetrack.
958	958	Sec. 466.526. LICENSE HOLDER AS SALES AGENT. The holder of
959	959	a video lottery retailer or video lottery manager license may
960	960	operate as a sales agent for lottery tickets in accordance with this
961	961	chapter.
962	962	Sec. 466.527. TERM; RENEWAL ELIGIBILITY. (a) Unless
963	963	suspended or revoked, a license, certificate of registration,
964	964	finding of suitability, or other affirmative regulatory approval
965	965	issued under this subchapter, other than a video lottery retailer
966	966	license, expires on the date specified in the license, certificate,
967	967	finding, or approval, which may not be later than the 10th
968	968	anniversary of the date of issuance.
969	969	(b) A video lottery retailer license is valid for the same
970	970	term as a racetrack or pari-mutuel license and until suspended or
971	971	revoked. The commission may charge an annual fee not to exceed
972	972	$50,000 to the holder of a video lottery retailer license.
973	973	(c) To be eligible for renewal of a license, certificate of
974	974	registration, finding of suitability, or other affirmative
975	975	regulatory approval, an applicant must satisfy all applicable
976	976	requirements under this subchapter.
977	977	Sec. 466.528. RULES FOR ADDITIONAL QUALIFICATIONS. The
978	978	commission by rule may establish other license, certificate,
979	979	finding of suitability, or approval qualifications the commission
980	980	determines are in the public interest and consistent with the
981	981	declared policy of this state.
982	982	Sec. 466.529. APPLICATION AS REQUEST FOR CHARACTER
983	983	DETERMINATION. An application under this subchapter to receive or
984	984	renew a license, certificate of registration, finding of
985	985	suitability, or other affirmative regulatory approval constitutes
986	986	a request for a determination of the applicant's general character,
987	987	integrity, and ability to participate or engage in or be associated
988	988	with the operation of video lottery terminals.
989	989	Sec. 466.530. IMMUNITY FOR STATEMENT MADE IN PROCEEDING OR
990	990	INVESTIGATION. Any written or oral statement made in the course of
991	991	an official commission proceeding or investigative activities
992	992	related to an application for commission licensing, registration,
993	993	suitability determination, or other affirmative regulatory
994	994	approval under this subchapter, by any member or agent or any
995	995	witness testifying under oath, that is relevant to the purpose of
996	996	the proceeding is absolutely privileged and does not impose
997	997	liability for defamation or constitute a ground for recovery in any
998	998	civil action.
999	999	Sec. 466.531. SUITABILITY FINDING. To promote the
1000	1000	integrity and security of the lottery, the commission in its
1001	1001	discretion may require a suitability finding for any person doing
1002	1002	business with or in relation to the operation of video lottery
1003	1003	terminals who is not otherwise required to obtain a license,
1004	1004	registration, or approval from the commission for the person's
1005	1005	video lottery-related operations.
1006	1006	Sec. 466.532. SUMMARY SUSPENSION OF VIDEO LOTTERY RETAILER
1007	1007	OR VIDEO LOTTERY MANAGER LICENSE; TERMINAL DISABLED. (a) The
1008	1008	commission may summarily suspend the license of a video lottery
1009	1009	retailer or video lottery manager without notice or hearing if the
1010	1010	commission finds the action is necessary to maintain the integrity,
1011	1011	security, honesty, or fairness of the operation or administration
1012	1012	of the lottery or to prevent financial loss to this state and:
1013	1013	(1) the license holder fails to deposit money received
1014	1014	from video lottery terminal operations as required by this
1015	1015	subchapter or commission rule;
1016	1016	(2) an event occurs that would render the license
1017	1017	holder ineligible for a license under this subchapter;
1018	1018	(3) the license holder refuses to allow the
1019	1019	commission, the commission's agents, or the state auditor, or their
1020	1020	designees, to examine the license holder's books, records, papers,
1021	1021	or other objects under Section 466.017; or
1022	1022	(4) the executive director learns the license holder
1023	1023	failed to disclose information that would, if disclosed, render the
1024	1024	video lottery retailer or video lottery manager ineligible for a
1025	1025	license under this subchapter.
1026	1026	(b) A summary suspension under this section must comply with
1027	1027	the notice and procedure requirements provided by Section 466.160.
1028	1028	(c) The commission may disable a video lottery terminal
1029	1029	operated by a license holder under this subchapter at the time:
1030	1030	(1) a proceeding to summarily suspend the license is
1031	1031	initiated;
1032	1032	(2) the commission discovers the license holder failed
1033	1033	to deposit money received from video lottery terminal operations as
1034	1034	required if the license is being summarily suspended under this
1035	1035	section; or
1036	1036	(3) an act or omission occurs that, under commission
1037	1037	rules, justifies the termination of video lottery terminal
1038	1038	operations to:
1039	1039	(A) protect the integrity of the lottery or the
1040	1040	public health, welfare, or safety; or
1041	1041	(B) prevent financial loss to this state.
1042	1042	(d) The commission shall immediately disable a video
1043	1043	lottery terminal if necessary to protect the public health,
1044	1044	welfare, or safety.
1045	1045	Sec. 466.533. LICENSING, REGISTRATION, SUITABILITY, AND
1046	1046	REGULATORY APPROVAL AS REVOCABLE PERSONAL PRIVILEGES. (a) The
1047	1047	purchaser or successor of a person who holds a license,
1048	1048	registration, finding of suitability, or other affirmative
1049	1049	regulatory approval under this subchapter must independently
1050	1050	qualify for a license, registration, suitability, or approval
1051	1051	required by this subchapter.
1052	1052	(b) The following acts void the license, registration,
1053	1053	finding of suitability, or other affirmative regulatory approval of
1054	1054	the holder unless approved in advance by the commission:
1055	1055	(1) the transfer, sale, or other disposition of an
1056	1056	interest in the holder that results in a change in the identity of a
1057	1057	substantial interest holder; or
1058	1058	(2) the sale of the assets of the holder, other than
1059	1059	assets bought and sold in the ordinary course of business, or any
1060	1060	interest in the assets, to any person not already determined to have
1061	1061	met the applicable qualifications of this subchapter.
1062	1062	[Section 466.534 reserved for expansion]
1063	1063	Sec. 466.535. CAPITAL INVESTMENTS AND IMPROVEMENT
1064	1064	REQUIREMENTS FOR VIDEO LOTTERY TERMINAL ESTABLISHMENT. A video
1065	1065	lottery retailer or video lottery manager shall provide all
1066	1066	necessary capital investments and required improvements at a video
1067	1067	lottery terminal establishment operated by the retailer or manager.
1068	1068	Sec. 466.536. VIDEO LOTTERY TERMINAL. The commission shall
1069	1069	provide all video lottery retailers or video lottery managers with
1070	1070	a list of registered video lottery terminal providers, video
1071	1071	lottery games, and video lottery terminals authorized for operation
1072	1072	under this subchapter.
1073	1073	Sec. 466.537. VIDEO LOTTERY TERMINAL: DISTRIBUTION AND
1074	1074	COMMISSION APPROVAL. (a) A video lottery terminal provider may not
1075	1075	distribute a video lottery terminal or other video lottery
1076	1076	equipment for placement at a video lottery terminal establishment
1077	1077	in this state unless the video lottery terminal has been approved by
1078	1078	the commission.
1079	1079	(b) Only a video lottery terminal provider registered with
1080	1080	or approved by the commission may apply for approval of a video
1081	1081	lottery terminal or other video lottery equipment.
1082	1082	(c) Not later than the 10th day before the date of shipment
1083	1083	to a location in this state, a video lottery terminal provider shall
1084	1084	file a report with the commission itemizing all video lottery
1085	1085	terminals and other video lottery equipment to be provided to a
1086	1086	video lottery retailer or video lottery manager in the shipment.
1087	1087	Sec. 466.538. VIDEO LOTTERY TERMINAL: TESTING; REPORT. (a)
1088	1088	A video lottery terminal provider shall submit two copies of
1089	1089	terminal illustrations, schematics, block diagrams, circuit
1090	1090	analysis, technical and operation manuals, and any other
1091	1091	information requested by the commission for the purpose of
1092	1092	analyzing and testing the video lottery terminal or other video
1093	1093	lottery equipment.
1094	1094	(b) The commission may require a working model of a video
1095	1095	lottery terminal to be provided to the commission unless the video
1096	1096	lottery terminal provider provides a certification from an
1097	1097	independent, commission-approved testing laboratory that the video
1098	1098	lottery terminal is compatible with the state's video lottery
1099	1099	system and functions as required by the commission.
1100	1100	Sec. 466.539. VIDEO LOTTERY TERMINAL: INSTALLATION;
1101	1101	MODIFICATION REQUEST. (a) A video lottery terminal provider is
1102	1102	responsible for the assembly and installation of all video lottery
1103	1103	terminals and related video lottery equipment.
1104	1104	(b) A video lottery terminal provider, video lottery
1105	1105	retailer, or video lottery manager may not change the assembly or
1106	1106	operational functions of a video lottery terminal authorized by the
1107	1107	commission for placement in this state unless a request for
1108	1108	modification of an existing video lottery terminal prototype is
1109	1109	approved by the commission. The request must contain:
1110	1110	(1) a detailed description of the type of change;
1111	1111	(2) a detailed description of the reasons for the
1112	1112	change; and
1113	1113	(3) technical documentation of the change.
1114	1114	(c) A video lottery terminal approved by the commission for
1115	1115	placement at a video lottery terminal establishment must conform to
1116	1116	the specifications of the video lottery terminal prototype tested
1117	1117	or approved by the commission.
1118	1118	Sec. 466.540. VIDEO LOTTERY TERMINAL REMOVAL. (a) If any
1119	1119	video lottery terminal that has not been approved by the commission
1120	1120	is distributed by a video lottery terminal provider or operated by a
1121	1121	video lottery retailer or video lottery manager or if an approved
1122	1122	video lottery terminal malfunctions, the commission shall require
1123	1123	the terminal to be removed from use and play.
1124	1124	(b) The commission may order that an unapproved terminal be
1125	1125	seized and destroyed.
1126	1126	(c) The commission may suspend or revoke the license of a
1127	1127	video lottery retailer or video lottery manager or the registration
1128	1128	of a video lottery terminal provider for the distribution,
1129	1129	possession, or operation of an unauthorized video lottery terminal.
1130	1130	(d) A video lottery retailer or video lottery manager may
1131	1131	retain on the premises of a video lottery establishment a number of
1132	1132	machines that the retailer or manager determines is necessary for
1133	1133	spare parts or repair purposes or as replacements. The retailer or
1134	1134	manager must provide to the commission each month a list of the
1135	1135	terminals retained under this subsection.
1136	1136	Sec. 466.541. VIDEO LOTTERY TERMINAL SPECIFICATIONS. (a)
1137	1137	The commission shall adopt rules for approval of video lottery
1138	1138	terminals, including requirements for video lottery game tickets,
1139	1139	maximum and minimum payout, and maximum wagers.
1140	1140	(b) A commission-approved video lottery terminal must meet
1141	1141	the following minimum specifications:
1142	1142	(1) the terminal must:
1143	1143	(A) operate through a player's insertion of a
1144	1144	coin, currency, voucher, or token into the video lottery terminal
1145	1145	that causes the video lottery terminal to display credits that
1146	1146	entitle the player to select one or more symbols or numbers or cause
1147	1147	the video lottery terminal to randomly select symbols or numbers;
1148	1148	(B) allow the player to win additional game play
1149	1149	credits, coins, or tokens based on game rules that establish the
1150	1150	random selection of winning combinations of symbols or numbers and
1151	1151	the number of free play credits, coins, or tokens to be awarded for
1152	1152	each winning combination; and
1153	1153	(C) allow the player at any time to clear all game
1154	1154	play credits and receive a video lottery ticket or other
1155	1155	representation of credits entitling the player to receive the cash
1156	1156	value of those credits;
1157	1157	(2) a surge protector must be installed on the
1158	1158	electrical power supply line to each video lottery terminal, a
1159	1159	battery or equivalent power backup for the electronic meters must
1160	1160	be capable of maintaining the accuracy of all accounting records
1161	1161	and video lottery terminal status reports for a period of 180 days
1162	1162	after power is disconnected from the video lottery terminal, and
1163	1163	the power backup device must be in the compartment specified in
1164	1164	Subdivision (4);
1165	1165	(3) the operation of each video lottery terminal may
1166	1166	not be adversely affected by any static discharge or other
1167	1167	electromagnetic interference;
1168	1168	(4) the main logic boards of all electronic storage
1169	1169	mediums must be located in a separate compartment in or from the
1170	1170	video lottery terminal that is locked and sealed by the commission;
1171	1171	(5) the instructions for play of each game must be
1172	1172	displayed on the video lottery terminal face or screen, including a
1173	1173	display detailing the credits awarded for the occurrence of each
1174	1174	possible winning combination of numbers or symbols;
1175	1175	(6) communication equipment and devices must be
1176	1176	installed to enable each video lottery terminal to communicate with
1177	1177	the video lottery central system through the use of a
1178	1178	communications protocol provided by the commission to each
1179	1179	registered video lottery terminal provider, which must include
1180	1180	information retrieval and programs to activate and disable the
1181	1181	terminal; and
1182	1182	(7) a video lottery terminal may be operated only if
1183	1183	connected to the video lottery central system, and play on the
1184	1184	terminal may not be conducted unless the terminal is connected to
1185	1185	the video lottery central system.
1186	1186	Sec. 466.542. VIDEO LOTTERY TERMINALS: HOURS OF OPERATION;
1187	1187	COMMUNICATION; LOCATION. (a) Except as otherwise provided by the
1188	1188	commission, the hours of operation for video lottery terminals are
1189	1189	subject to restrictions only as provided by commission rules.
1190	1190	(b) The commission by rule may prescribe restrictions on the
1191	1191	hours of video lottery terminal operations for purposes of
1192	1192	accounting for and collecting revenue generated by video lottery
1193	1193	terminal operations and performing other operational services on
1194	1194	the video lottery system.
1195	1195	(c) Communication between the video lottery central system
1196	1196	and each video lottery terminal must be continuous and on a
1197	1197	real-time basis as prescribed by the commission.
1198	1198	(d) Except as provided by commission rule, placement or
1199	1199	movement of video lottery terminals in a video lottery terminal
1200	1200	establishment must be consistent with a video lottery terminal
1201	1201	establishment floor plan filed with the commission.
1202	1202	Sec. 466.543. VIDEO LOTTERY TERMINAL: TRANSPORT;
1203	1203	DISPOSITION OF OBSOLETE TERMINAL. (a) The transportation and
1204	1204	movement of video lottery terminals into or within this state is
1205	1205	prohibited, except as permitted by this subchapter and approved by
1206	1206	the commission.
1207	1207	(b) An obsolete video lottery terminal or a video lottery
1208	1208	terminal that is no longer in operation must be promptly reported to
1209	1209	the commission.
1210	1210	[Section 466.544 reserved for expansion]
1211	1211	Sec. 466.545. TRAVEL AND INVESTIGATION COSTS. The
1212	1212	commission shall pay the travel and investigative expenses incurred
1213	1213	under this subchapter from money appropriated to the commission.
1214	1214	Sec. 466.546. CONSENT TO COMMISSION DETERMINATION. (a) An
1215	1215	application for a license, certificate of registration, finding of
1216	1216	suitability, or other affirmative regulatory approval under this
1217	1217	subchapter constitutes a request to the commission for a decision
1218	1218	on the applicant's general suitability, character, integrity, and
1219	1219	ability to participate or engage in or be associated with the
1220	1220	lottery in the manner or position sought.
1221	1221	(b) By filing an application with the commission, the
1222	1222	applicant specifically consents to the commission's decision at the
1223	1223	commission's election when the application, after filing, becomes
1224	1224	moot for any reason other than death.
1225	1225	Sec. 466.547. ABSOLUTE AUTHORITY OF COMMISSION. To protect
1226	1226	the integrity of the lottery or the public health, welfare, or
1227	1227	safety, or to prevent financial loss to this state, the commission
1228	1228	has full and absolute power and authority, subject to Chapter 2001,
1229	1229	Government Code, to:
1230	1230	(1) deny any application or limit, condition,
1231	1231	restrict, revoke, or suspend any license, registration, finding of
1232	1232	suitability, or other affirmative regulatory approval; and
1233	1233	(2) fine any person licensed, registered, found
1234	1234	suitable, or approved for cause.
1235	1235	Sec. 466.548. INSTITUTIONAL INVESTOR. The commission shall
1236	1236	adopt rules regarding a finding of suitability for an institutional
1237	1237	investor in a person licensed under this subchapter.
1238	1238	[Sections 466.549-466.550 reserved for expansion]
1239	1239	Sec. 466.551. EFFECT OF DENIAL OF LICENSE OR REGISTRATION.
1240	1240	(a) A person whose application for a license or registration has
1241	1241	been denied may not have any interest in or association with a video
1242	1242	lottery retailer or video lottery manager or any other business
1243	1243	conducted in connection with video lottery without prior approval
1244	1244	of the commission.
1245	1245	(b) Any contract between a person holding a license or
1246	1246	registration and a person denied a license or registration must be
1247	1247	terminated immediately on receipt of notice from the commission.
1248	1248	If the person denied a license or registration has previously been
1249	1249	granted a temporary license or registration, the temporary license
1250	1250	or registration expires immediately on denial of the permanent
1251	1251	license or registration.
1252	1252	(c) Except as otherwise authorized by the commission, a
1253	1253	person denied a license or registration may not reapply for any
1254	1254	license or registration before the second anniversary of the date
1255	1255	of the denial.
1256	1256	[Section 466.552 reserved for expansion]
1257	1257	Sec. 466.553. PRACTICE BY VIDEO LOTTERY RETAILER OR VIDEO
1258	1258	LOTTERY MANAGER. A video lottery retailer or video lottery manager
1259	1259	must:
1260	1260	(1) be aware of patron conditions and prohibit play by
1261	1261	visibly intoxicated patrons;
1262	1262	(2) comply with state alcoholic beverage control laws;
1263	1263	(3) at all times maintain sufficient change and cash
1264	1264	in denominations accepted by video lottery terminals;
1265	1265	(4) promptly report all video lottery terminal
1266	1266	malfunctions and down-time;
1267	1267	(5) install, post, and display prominently any
1268	1268	material required by the commission;
1269	1269	(6) prohibit illegal gambling and any related
1270	1270	paraphernalia;
1271	1271	(7) except as otherwise provided by this subchapter,
1272	1272	at all times prohibit money lending or other extensions of credit at
1273	1273	the video lottery terminal establishment;
1274	1274	(8) supervise employees and activities to ensure
1275	1275	compliance with all commission rules and this subchapter;
1276	1276	(9) maintain continuous camera coverage of all aspects
1277	1277	of video lottery game operations, including video lottery
1278	1278	terminals; and
1279	1279	(10) maintain an entry log for each video lottery
1280	1280	terminal on the premises of the video lottery terminal
1281	1281	establishment and maintain and submit complete records on receipt
1282	1282	of each video lottery terminal on the premises as determined by the
1283	1283	commission.
1284	1284	Sec. 466.554. RACETRACK REQUIREMENTS. (a) A video lottery
1285	1285	retailer at all times must hold a valid racetrack or pari-mutuel
1286	1286	wagering license issued by the Texas Racing Commission.
1287	1287	(b) A video lottery retailer that meets the qualifications
1288	1288	of Section 466.521(a)(1) or (4) is considered to meet the
1289	1289	requirements of this section.
1290	1290	[Section 466.555 reserved for expansion]
1291	1291	Sec. 466.556. PRIZE RULES. The commission shall adopt
1292	1292	rules governing:
1293	1293	(1) the range of amounts a player may be charged to
1294	1294	play each video lottery game; and
1295	1295	(2) the range of prizes and credits that may be awarded
1296	1296	to the player of a video lottery game.
1297	1297	Sec. 466.557. VIDEO LOTTERY CENTRAL SYSTEM: COMMUNICATION
1298	1298	TECHNOLOGY. The video lottery central system provider shall pay
1299	1299	for the installation and operation of commission-approved
1300	1300	communication technology to provide communication between each
1301	1301	video lottery terminal and the video lottery central system.
1302	1302	Sec. 466.558. RESPONSIBILITY FOR VIDEO LOTTERY GAME
1303	1303	OPERATIONS. (a) A video lottery retailer or a video lottery
1304	1304	manager, if applicable, is responsible for the management of video
1305	1305	lottery game operations, including:
1306	1306	(1) the validation and payment of prizes,
1307	1307	determination of game themes, prizes, bonuses, progressives,
1308	1308	number and placement of video lottery terminals, and individual pay
1309	1309	out percentage settings; and
1310	1310	(2) the management of cashiers, food and beverage
1311	1311	workers, floor workers, security personnel, the security system,
1312	1312	building completion, janitorial services, landscaping design, and
1313	1313	maintenance.
1314	1314	(b) Nothing in Subsection (a) limits the authority of the
1315	1315	commission, the Department of Public Safety, or another law
1316	1316	enforcement agency to administer and enforce this chapter as
1317	1317	related to video lottery.
1318	1318	(c) In addition to other requirements under this chapter
1319	1319	relating to video lottery, a video lottery retailer or a video
1320	1320	lottery manager at all times shall:
1321	1321	(1) operate only video lottery terminals that are
1322	1322	distributed by a registered video lottery terminal provider and
1323	1323	provide a secure location for the placement, operation, and play of
1324	1324	the video lottery terminals;
1325	1325	(2) prevent any person from tampering with or
1326	1326	interfering with the operation of a video lottery terminal;
1327	1327	(3) ensure that communication technology from the
1328	1328	video lottery central system to the video lottery terminals is
1329	1329	connected at all times and prevent any person from tampering or
1330	1330	interfering with the operation of the connection;
1331	1331	(4) ensure that video lottery terminals are in the
1332	1332	sight and control of designated employees of the video lottery
1333	1333	retailer or video lottery manager and in the sight of video cameras
1334	1334	as required under this subchapter;
1335	1335	(5) ensure that video lottery terminals are placed and
1336	1336	remain placed in the locations in the video lottery terminal
1337	1337	establishment that are consistent with the retailer's or manager's
1338	1338	floor plan;
1339	1339	(6) monitor video lottery terminals to prevent access
1340	1340	to or play by persons who are under 21 years of age or who are
1341	1341	visibly intoxicated;
1342	1342	(7) pay all credits won by a player on presentment of a
1343	1343	valid winning video lottery game ticket;
1344	1344	(8) install, post, and display prominently at the
1345	1345	licensed location redemption information and other informational
1346	1346	or promotional materials as required by the commission;
1347	1347	(9) maintain general liability insurance coverage for
1348	1348	the video lottery terminal establishment and all video lottery
1349	1349	terminals in the amounts required by the commission;
1350	1350	(10) assume liability for money lost or stolen from
1351	1351	any video lottery terminal; and
1352	1352	(11) annually submit an audited financial statement to
1353	1353	the commission in accordance with generally accepted accounting
1354	1354	principles.
1355	1355	[Section 466.559 reserved for expansion]
1356	1356	Sec. 466.560. TECHNICAL STANDARDS FOR VIDEO LOTTERY
1357	1357	EQUIPMENT. The commission by rule shall establish minimum
1358	1358	technical standards for video lottery equipment that may be
1359	1359	operated in this state.
1360	1360	Sec. 466.561. INCIDENT REPORTS. (a) A video lottery
1361	1361	retailer or video lottery manager shall record all unusual
1362	1362	occurrences related to gaming activity in a video lottery terminal
1363	1363	establishment operated by the retailer or manager.
1364	1364	(b) A video lottery retailer or video lottery manager shall
1365	1365	assign each material incident, without regard to materiality, a
1366	1366	sequential number and, at a minimum, provide the following
1367	1367	information in a permanent record prepared in accordance with
1368	1368	commission rules to ensure the integrity of the record:
1369	1369	(1) the number assigned to the incident;
1370	1370	(2) the date and time of the incident;
1371	1371	(3) the nature of the incident;
1372	1372	(4) each person involved in the incident; and
1373	1373	(5) the name of the employee or other agent of the
1374	1374	video lottery retailer or video lottery manager who investigated
1375	1375	the incident.
1376	1376	Sec. 466.562. EXCLUSION OF PERSONS. (a) The commission
1377	1377	shall compile a list of persons that a video lottery retailer or
1378	1378	video lottery manager must bar from a video lottery terminal
1379	1379	establishment based on a person's criminal history or association
1380	1380	with criminal offenders or because the person poses a threat to the
1381	1381	integrity of the lottery.
1382	1382	(b) A video lottery retailer or video lottery manager shall
1383	1383	employ the retailer's or manager's best efforts to exclude such
1384	1384	persons from entry into the establishment.
1385	1385	(c) A video lottery retailer or video lottery manager may
1386	1386	exclude a person for any reason not related to the person's race,
1387	1387	sex, national origin, physical disability, or religion.
1388	1388	(d) A person who believes the person may be playing video
1389	1389	lottery games on a compulsive basis may request that the person's
1390	1390	name be placed on the list compiled by the commission under
1391	1391	Subsection (a).
1392	1392	(e) All video lottery game employees shall receive training
1393	1393	in identifying players with a compulsive playing problem. Signs
1394	1394	and other materials shall be readily available to direct compulsive
1395	1395	players to agencies that offer appropriate counseling.
1396	1396	Sec. 466.563. REPORT ON LITIGATION. (a) A video lottery
1397	1397	retailer or video lottery manager shall report to the commission
1398	1398	any litigation relating to the retailer's or manager's video
1399	1399	lottery terminal establishment, including a criminal proceeding, a
1400	1400	proceeding involving an issue related to racing activities that
1401	1401	impact video lottery operations, or a matter related to character
1402	1402	or reputation relevant to a person's suitability under this
1403	1403	subchapter.
1404	1404	(b) The report required under Subsection (a) must be filed
1405	1405	not later than the fifth day after acquiring knowledge of the
1406	1406	litigation.
1407	1407	Sec. 466.564. COMMISSION APPROVAL REQUIRED FOR PROCEDURES
1408	1408	AND ACCOUNTING CONTROLS. (a) The commission's approval is
1409	1409	required for all internal procedures and accounting controls of a
1410	1410	video lottery retailer or video lottery manager.
1411	1411	(b) The commission by rule shall establish general
1412	1412	accounting and auditing requirements and internal control
1413	1413	standards for video lottery retailers and video lottery managers.
1414	1414	[Section 466.565 reserved for expansion]
1415	1415	Sec. 466.566. VIDEO LOTTERY TERMINAL EVENTS. A video
1416	1416	lottery retailer or video lottery manager shall keep a record of
1417	1417	video lottery terminal events. The commission by rule shall
1418	1418	determine what constitutes a video lottery terminal event for
1419	1419	purposes of this section.
1420	1420	Sec. 466.567. EMPLOYEE REPORTING. (a) On or before the
1421	1421	15th day of each month, a video lottery retailer or video lottery
1422	1422	manager shall submit to the commission an employee report for the
1423	1423	video lottery terminal establishment operated by the retailer or
1424	1424	manager. For each employee of the retailer or manager, the report
1425	1425	must provide the employee's name, job title, date of birth, and
1426	1426	social security number.
1427	1427	(b) The employee report is confidential and may not be
1428	1428	disclosed except under commission order or in accordance with
1429	1429	Section 466.022(d).
1430	1430	(c) The commission may conduct criminal history
1431	1431	investigations for employees of video lottery retailers and video
1432	1432	lottery managers.
1433	1433	(d) The commission may prohibit an employee from performing
1434	1434	any act relating to video lottery terminals if the commission finds
1435	1435	that an employee has:
1436	1436	(1) committed, attempted, or conspired to commit any
1437	1437	act prohibited by this chapter;
1438	1438	(2) concealed or refused to disclose any material fact
1439	1439	in any commission investigation;
1440	1440	(3) committed, attempted, or conspired to commit
1441	1441	larceny or embezzlement;
1442	1442	(4) been convicted in any jurisdiction of an offense
1443	1443	involving or relating to gambling;
1444	1444	(5) accepted employment in a position for which
1445	1445	commission approval is required after commission approval was
1446	1446	denied for a reason involving personal unsuitability or after
1447	1447	failing to apply for a license or approval on commission request;
1448	1448	(6) been prohibited under color of governmental
1449	1449	authority from being present on the premises of any gaming
1450	1450	establishment or any establishment where pari-mutuel wagering is
1451	1451	conducted for any reason relating to improper gambling activity or
1452	1452	for any illegal act;
1453	1453	(7) wilfully defied any legislative investigative
1454	1454	committee or other officially constituted body acting on behalf of
1455	1455	the United States or any state, county, or municipality that sought
1456	1456	to investigate alleged or potential crimes relating to gaming,
1457	1457	corruption of public officials, or any organized criminal
1458	1458	activities; or
1459	1459	(8) been convicted of any felony or any crime
1460	1460	involving moral turpitude.
1461	1461	(e) The commission may prohibit an employee from performing
1462	1462	any act relating to video lottery terminals based on a revocation or
1463	1463	suspension of any gaming or wagering license, certificate of
1464	1464	registration, finding of suitability, or other affirmative
1465	1465	regulatory approval or for any other reason the commission finds
1466	1466	appropriate, including a refusal by a regulatory authority to issue
1467	1467	a license, certificate of registration, finding of suitability, or
1468	1468	other affirmative regulatory approval for the employee to engage in
1469	1469	or be involved with the lottery or with regulated gaming or
1470	1470	pari-mutuel wagering in any jurisdiction.
1471	1471	(f) In this section, "employee" includes any person
1472	1472	connected directly with or compensated by an applicant or license
1473	1473	holder as an agent, personal representative, consultant, or
1474	1474	independent contractor for activities directly related to video
1475	1475	lottery operations in this state.
1476	1476	Sec. 466.568. REPORT OF VIOLATIONS. A person who holds a
1477	1477	license, certificate of registration, finding of suitability, or
1478	1478	other affirmative regulatory approval under this subchapter shall
1479	1479	immediately report a violation or suspected violation of this
1480	1480	chapter or a rule adopted under this chapter by any holder of a
1481	1481	license, certificate of registration, finding of suitability, or
1482	1482	other affirmative regulatory approval, by an employee of the
1483	1483	holder, or by any person on the premises of a video lottery terminal
1484	1484	establishment, whether or not associated with the holder.
1485	1485	Sec. 466.569. SECURITY. (a) In addition to the security
1486	1486	provisions applicable under Section 466.020, a video lottery
1487	1487	retailer or video lottery manager shall comply with the following
1488	1488	security procedures:
1489	1489	(1) all video lottery terminals must be continuously
1490	1490	monitored through the use of a closed-circuit television system
1491	1491	that records activity for a continuous 24-hour period and all video
1492	1492	tapes or other media used to store video images shall be retained
1493	1493	for at least 30 days and made available to the commission on
1494	1494	request;
1495	1495	(2) access to video lottery terminal areas shall be
1496	1496	restricted to persons who are at least 21 years of age;
1497	1497	(3) the video lottery retailer or video lottery
1498	1498	manager must provide to the commission a security plan for the
1499	1499	retailer or manager's video lottery operations that includes a
1500	1500	floor plan of the area where video lottery terminals are to be
1501	1501	operated showing video lottery terminal locations and security
1502	1502	camera mount locations; and
1503	1503	(4) each license holder shall employ at least the
1504	1504	minimum number of private security personnel the commission
1505	1505	determines is necessary to provide for safe and approved operation
1506	1506	of the video lottery terminal establishment and the safety and
1507	1507	well-being of the players.
1508	1508	(b) Private security personnel must be present during all
1509	1509	hours of operation at each video lottery terminal establishment.
1510	1510	(c) An agent or employee of the commission or the Department
1511	1511	of Public Safety or other law enforcement personnel may be present
1512	1512	at a video lottery terminal establishment at any time.
1513	1513	(d) The commission may adopt rules to impose additional
1514	1514	surveillance and security requirements related to video lottery
1515	1515	terminal establishments and the operation of video lottery
1516	1516	terminals.
1517	1517	Sec. 466.570. VIDEO LOTTERY TERMINAL ESTABLISHMENT:
1518	1518	COMMISSION RIGHT TO ENTER. The commission, the commission's
1519	1519	representative, the Texas Racing Commission, or a representative of
1520	1520	the Texas Racing Commission, after displaying appropriate
1521	1521	identification and credentials, has the free and unrestricted right
1522	1522	to enter the premises of a video lottery terminal establishment and
1523	1523	to enter any other locations involved in operation or support of
1524	1524	video lottery at all times to examine the systems and to inspect and
1525	1525	copy the records of a video lottery retailer or video lottery
1526	1526	manager pertaining to the operation of video lottery.
1527	1527	[Sections 466.571-466.586 reserved for expansion]
1528	1528	Sec. 466.587. INDEMNIFICATION REQUIREMENTS. The holder of
1529	1529	a license, certificate of registration, finding of suitability, or
1530	1530	other affirmative regulatory approval shall indemnify and hold
1531	1531	harmless this state, the commission, and all officers and employees
1532	1532	of this state and the commission from any and all claims which may
1533	1533	be asserted against the holder, the commission, this state, and the
1534	1534	members, officers, employees, and authorized agents of this state
1535	1535	or the commission arising from the holder's participation in the
1536	1536	video lottery system authorized under this subchapter.
1537	1537	Sec. 466.588. LIABILITY FOR CREDIT AWARDED OR DENIED;
1538	1538	PLAYER DISPUTE. (a) This state and the commission are not liable
1539	1539	for any video lottery terminal malfunction or error by a video
1540	1540	lottery retailer, video lottery manager, or video lottery terminal
1541	1541	provider that causes credit to be wrongfully awarded or denied to
1542	1542	players.
1543	1543	(b) Any dispute arising between a player and a video lottery
1544	1544	retailer or video lottery manager shall be resolved by the
1545	1545	commission as follows:
1546	1546	(1) if the fair market value of the prize is less than
1547	1547	$1,000, the dispute shall be resolved in accordance with the
1548	1548	commission-approved written policies of the video lottery retailer
1549	1549	or video lottery manager and without any relief available from the
1550	1550	commission or this state; or
1551	1551	(2) if the fair market value of the prize is $1,000 or
1552	1552	more, the dispute shall be resolved by the commission in the
1553	1553	commission's sole discretion in accordance with commission rules.
1554	1554	(c) A court of this state does not have jurisdiction to
1555	1555	review the decision of the commission resolving a dispute between a
1556	1556	player and a video lottery retailer, video lottery manager, or
1557	1557	video lottery terminal provider.
1558	1558	Sec. 466.589. STATE VIDEO LOTTERY ACCOUNT. (a) The
1559	1559	commission shall deposit funds received under this subchapter to
1560	1560	the state video lottery account. The state video lottery account is
1561	1561	a special account in the general revenue fund. The account consists
1562	1562	of all revenue received by this state from the operation of video
1563	1563	lottery terminals.
1564	1564	(a-1) Except as provided by Subsection (b), all revenue
1565	1565	received by this state from the operation of the video lottery
1566	1566	system shall be distributed solely to reimburse the commission
1567	1567	until the $5 million authorized under this subsection is repaid to
1568	1568	the state lottery account. From funds previously appropriated to
1569	1569	the commission for the state fiscal biennium ending August 31,
1570	1570	2011, and notwithstanding Section 466.355(b), the commission is
1571	1571	authorized to expend an amount not to exceed $5 million from the
1572	1572	state lottery account during that biennium to establish the video
1573	1573	lottery system in accordance with this chapter. From revenue
1574	1574	deposited in the state video lottery account during that biennium,
1575	1575	the commission is hereby appropriated the amount necessary to
1576	1576	reimburse the state lottery account for the total amount of funds
1577	1577	expended to establish the video lottery system from the
1578	1578	appropriation to the state lottery account, and the commission
1579	1579	shall deposit that amount to the state lottery account. This
1580	1580	subsection expires January 1, 2013.
1581	1581	(b) An amount not to exceed one percent of the net terminal
1582	1582	income received by this state under Section 466.590 shall be
1583	1583	allocated to the commission to defray expenses incurred in
1584	1584	administering this chapter related to video lottery, including
1585	1585	expenses incurred to operate the video lottery central system. All
1586	1586	money allocated to the commission under this subsection may be
1587	1587	retained by the commission to defray expenses of administering this
1588	1588	chapter related to video lottery and shall be deposited in the state
1589	1589	video lottery account.
1590	1590	Sec. 466.590. ALLOCATION OF NET TERMINAL INCOME; TRANSFER
1591	1591	OF MONEY. (a) Net terminal income derived from the operation of
1592	1592	video lottery games in this state is allocated as follows:
1593	1593	(1) a portion of the net terminal income generated in
1594	1594	each calendar year shall be remitted to this state by the video
1595	1595	lottery retailer or video lottery manager in an amount equal to 35
1596	1596	percent of the net terminal income for that year; and
1597	1597	(2) the remainder shall be retained by the video
1598	1598	lottery retailer or video lottery manager.
1599	1599	(b) Ten million dollars of the net terminal income received
1600	1600	by this state under Subsection (a) shall annually in equal monthly
1601	1601	installments be transferred to the Texas Racing Commission to be
1602	1602	expended solely for the treatment of compulsive gamblers and the
1603	1603	promotion of responsible gaming.
1604	1604	(c) One percent of the net terminal income received by this
1605	1605	state under Subsection (a) shall be transferred to the Equine
1606	1606	Research Program at the College of Veterinary Medicine at Texas A&M
1607	1607	University for use in equine research under Subchapter F, Chapter
1608	1608	88, Education Code.
1609	1609	(d) Ten million dollars of the net terminal income received
1610	1610	by this state under Subsection (a) shall annually in equal monthly
1611	1611	installments be transferred to the criminal justice planning fund
1612	1612	for use by the criminal justice division of the governor's office to
1613	1613	be used to prosecute offenses under Chapter 47, Penal Code.
1614	1614	(d-1) Three percent of the net terminal income received by
1615	1615	this state under Subsection (a) shall be used to fund the
1616	1616	performance horse development fund, administered by the Texas
1617	1617	Racing Commission to fund a broad spectrum of the horse industry
1618	1618	outside the racing industry and to develop the agriculture industry
1619	1619	in this state. Money from the fund is allocated annually as
1620	1620	follows:
1621	1621	(1) 40 percent of the fund to American Quarter Horse
1622	1622	Association sanctioned events;
1623	1623	(2) 20 percent to National Cutting Horse Association
1624	1624	sanctioned events;
1625	1625	(3) 20 percent to American Paint Horse sanctioned
1626	1626	events; and
1627	1627	(4) 20 percent to the Department of Agriculture to
1628	1628	promote the agricultural industry in this state.
1629	1629	(d-2) The Texas Racing Commission may adopt rules to
1630	1630	administer this section.
1631	1631	(e) The commission shall require a video lottery retailer or
1632	1632	video lottery manager to establish a separate electronic funds
1633	1633	transfer account for depositing money from video lottery terminal
1634	1634	operations, making payments to the commission or its designee, and
1635	1635	receiving payments from the commission or its designee.
1636	1636	(f) A video lottery retailer or video lottery manager may
1637	1637	not make payments to the commission in cash. As authorized by the
1638	1638	commission, a video lottery retailer or video lottery manager may
1639	1639	make payments to the commission by cashier's check.
1640	1640	(g) The commission at least weekly shall transfer this
1641	1641	state's share of net terminal income of a video lottery retailer or
1642	1642	video lottery manager to the commission through the electronic
1643	1643	transfer of the money.
1644	1644	(h) The commission by rule shall establish the procedures
1645	1645	for:
1646	1646	(1) depositing money from video lottery terminal
1647	1647	operations into electronic funds transfer accounts; and
1648	1648	(2) handling money from video lottery terminal
1649	1649	operations.
1650	1650	(i) Unless otherwise directed by the commission, a video
1651	1651	lottery retailer or a video lottery manager shall maintain in its
1652	1652	account this state's share of the net terminal income from the
1653	1653	operation of video lottery terminals, to be electronically
1654	1654	transferred by the commission on dates established by the
1655	1655	commission. On a license holder's failure to maintain this
1656	1656	balance, the commission may disable all of a license holder's video
1657	1657	lottery terminals until full payment of all amounts due is made.
1658	1658	Interest shall accrue on any unpaid balance at a rate consistent
1659	1659	with the amount charged under Section 111.060, Tax Code. The
1660	1660	interest shall begin to accrue on the date payment is due to the
1661	1661	commission.
1662	1662	(j) In the commission's sole discretion, rather than
1663	1663	disable a license holder's video lottery terminals under Subsection
1664	1664	(i), the commission may elect to impose a fine on a license holder
1665	1665	in an amount determined by the commission not to exceed $250,000 for
1666	1666	each violation. If the license holder fails to remedy the
1667	1667	violation, including payment of any amounts assessed by or due to
1668	1668	this state, within 30 days, the commission may disable the license
1669	1669	holder's video lottery terminals or use any other means for
1670	1670	collection as provided by the penalty chart established by the
1671	1671	commission.
1672	1672	(k) A video lottery retailer or video lottery manager is
1673	1673	solely responsible for resolving any income discrepancies between
1674	1674	actual money collected and the net terminal income reported by the
1675	1675	video lottery central system. Unless an accounting discrepancy is
1676	1676	resolved in favor of the video lottery retailer or video lottery
1677	1677	manager, the commission may not make any credit adjustments. Any
1678	1678	accounting discrepancies which cannot otherwise be resolved shall
1679	1679	be resolved in favor of the commission.
1680	1680	(l) A video lottery retailer and video lottery manager shall
1681	1681	remit payment as directed by the commission if the electronic
1682	1682	transfer of money is not operational or the commission notifies the
1683	1683	license holder that other remittance is required. The license
1684	1684	holder shall report this state's share of net terminal income, and
1685	1685	remit the amount generated from the terminals during the reporting
1686	1686	period.
1687	1687	Sec. 466.591. COMMISSION EXAMINATION OF FINANCIAL RECORDS.
1688	1688	The commission may examine all accounts, bank accounts, financial
1689	1689	statements, and records in the possession or control of a person
1690	1690	licensed under this subchapter or in which the license holder has an
1691	1691	interest. The license holder must authorize and direct all third
1692	1692	parties in possession or in control of the accounts or records to
1693	1693	allow examination of any of those accounts or records by the
1694	1694	commission.
1695	1695	Sec. 466.592. FINANCIAL INFORMATION REQUIRED. (a) A video
1696	1696	lottery retailer or video lottery manager shall furnish to the
1697	1697	commission all information and bank authorizations required to
1698	1698	facilitate the timely transfer of money to the commission.
1699	1699	(b) A video lottery retailer or video lottery manager must
1700	1700	provide the commission advance notice of any proposed account
1701	1701	changes in information and bank authorizations to assure the
1702	1702	uninterrupted electronic transfer of money.
1703	1703	(c) The commission is not responsible for any interruption
1704	1704	or delays in the transfer of money. The video lottery retailer or
1705	1705	video lottery manager is responsible for any interruption or delay
1706	1706	in the transfer of money.
1707	1707	Sec. 466.593. DEDUCTIONS FROM VIDEO LOTTERY PROCEEDS AT
1708	1708	RACETRACKS. (a) The pari-mutuel license holder that owns or
1709	1709	operates a racetrack at which video lottery games are conducted
1710	1710	under this subchapter and the officially recognized horsemen's
1711	1711	organization representing the horsemen at the racetrack or the
1712	1712	state breed registry representing the greyhound breeders at the
1713	1713	racetrack shall enter into a written agreement to allocate a
1714	1714	percentage of net terminal income retained by the license holder to
1715	1715	be used for purses, accredited Texas Bred Incentive programs, and
1716	1716	administrative costs.
1717	1717	(b) Unless otherwise agreed to under Subsection (a) by the
1718	1718	pari-mutuel license holder that owns or operates a horse racetrack
1719	1719	at which video lottery games are conducted under this subchapter
1720	1720	and the officially recognized horsemen's organization representing
1721	1721	the horsemen at the racetrack, the license holder shall allocate a
1722	1722	percentage determined by the Texas Racing Commission of the net
1723	1723	terminal income generated from the operation of video lottery
1724	1724	terminals at the racetrack to purses. The percentage must be
1725	1725	sufficient to ensure the purses at the racetrack are nationally
1726	1726	competitive and may not be less than 6.5 percent or more than 12
1727	1727	percent of the net terminal income generated from the operation of
1728	1728	terminals at the racetrack.
1729	1729	(c) Unless otherwise agreed to under Subsection (a) by the
1730	1730	pari-mutuel license holder that owns or operates a greyhound
1731	1731	racetrack at which video lottery games are conducted under this
1732	1732	subchapter and the state breed registry representing the greyhound
1733	1733	breeders at the racetrack, the license holder shall allocate a
1734	1734	percentage determined by the Texas Racing Commission of the net
1735	1735	terminal income generated from the operation of video lottery
1736	1736	terminals at the racetrack to purses. The percentage must be
1737	1737	sufficient to ensure the purses at the racetrack are nationally
1738	1738	competitive and may not be less than 6.5 percent or more than 12
1739	1739	percent of the net terminal income generated from the operation of
1740	1740	terminals at the racetrack.
1741	1741	(d) The Texas Racing Commission shall adopt rules to
1742	1742	administer this section. A matter considered by the commission
1743	1743	under this section is a contested case under Chapter 2001,
1744	1744	Government Code, and requires a public hearing.
1745	1745	(e) The state breed registry may allocate up to 50 percent
1746	1746	of the amount received under Subsection (c) for Texas breeder
1747	1747	awards.
1748	1748	[Section 466.594 reserved for expansion]
1749	1749	Sec. 466.595. LIABILITY OF VIDEO LOTTERY RETAILER AND VIDEO
1750	1750	LOTTERY MANAGER. (a) A video lottery retailer, video lottery
1751	1751	manager, or both, are jointly and severally liable to the
1752	1752	commission for the state's share of net terminal income.
1753	1753	(b) Net terminal income received by the video lottery
1754	1754	retailer or video lottery manager is held in trust for the benefit
1755	1755	of this state before delivery of the state's share to the commission
1756	1756	or electronic transfer to the state treasury, and the video lottery
1757	1757	retailer or video lottery manager, or both, are jointly and
1758	1758	severally liable to the commission for the full amount of the money
1759	1759	held in trust.
1760	1760	(c) If the video lottery retailer or video lottery manager
1761	1761	is not an individual, each officer, director, or owner of the video
1762	1762	lottery retailer or video lottery manager is personally liable to
1763	1763	the commission for the full amount of the money held in trust,
1764	1764	except that shareholders of a publicly held corporation shall be
1765	1765	liable in an amount not to exceed the value of their equity
1766	1766	investment.
1767	1767	Sec. 466.596. PRIZE PAYMENT AND REDEMPTION. (a) Payment of
1768	1768	prizes is the sole and exclusive responsibility of the video
1769	1769	lottery retailer or video lottery manager. A prize may not be paid
1770	1770	by the commission or this state except as otherwise authorized.
1771	1771	(b) Nothing in this subchapter limits the ability of a video
1772	1772	lottery retailer or video lottery manager to provide promotional
1773	1773	prizes in addition to prize payouts regulated by the commission.
1774	1774	(c) A video lottery ticket must be redeemed not later than
1775	1775	the 180th day following the date of issuance. If a claim is not made
1776	1776	for prize money on or before the 180th day after the date on which
1777	1777	the video lottery ticket was issued, the prize money becomes the
1778	1778	property of the video lottery terminal establishment.
1779	1779	(d) The commission shall enact rules consistent with this
1780	1780	section governing the use and redemption of prizes and credits
1781	1781	recorded on electronic player account records, such as players'
1782	1782	club cards and smart cards.
1783	1783	Sec. 466.597. REVOCATION OF LICENSE, REGISTRATION,
1784	1784	SUITABILITY FINDING, OR OTHER REGULATORY APPROVAL. (a) The
1785	1785	commission shall revoke or suspend a license, certificate of
1786	1786	registration, finding of suitability, or other affirmative
1787	1787	regulatory approval issued under this subchapter if the holder at
1788	1788	any time fails to meet the eligibility requirements set forth in
1789	1789	this subchapter.
1790	1790	(b) Failure to timely remit revenue generated by video
1791	1791	lottery terminals to the commission or any tax or other fee owed to
1792	1792	this state as demonstrated by report from the applicable taxing
1793	1793	authority or to timely file any report or information required
1794	1794	under this subchapter as a condition of any license, certificate of
1795	1795	registration, finding of suitability, or other affirmative
1796	1796	regulatory approval issued under this subchapter may be grounds for
1797	1797	suspension or revocation, or both, of a license, registration,
1798	1798	suitability, or approval issued under this subchapter.
1799	1799	Sec. 466.598. HEARING FOR REVOCATION OR SUSPENSION. (a)
1800	1800	Before the commission revokes or suspends a video lottery terminal
1801	1801	provider's registration or video lottery retailer's or video
1802	1802	lottery manager's license, or imposes monetary penalties for a
1803	1803	violation of this subchapter, the commission shall provide written
1804	1804	notification to the license or certificate of registration holder
1805	1805	of the revocation, the period of suspension, or the monetary
1806	1806	penalty. The notice shall include:
1807	1807	(1) the effective date of the revocation or the period
1808	1808	of suspension or the amount of the monetary penalty, as applicable;
1809	1809	(2) each reason for the revocation, suspension, or
1810	1810	penalty;
1811	1811	(3) an explanation of the evidence supporting the
1812	1812	reasons;
1813	1813	(4) an opportunity to present the license or
1814	1814	registration holder's position in response on or before the 15th
1815	1815	day after the effective date of the revocation; and
1816	1816	(5) a statement explaining the person's right to an
1817	1817	administrative hearing to determine whether the revocation,
1818	1818	suspension, or penalty is warranted.
1819	1819	(b) The commission shall adopt rules to implement this
1820	1820	section.
1821	1821	[Sections 466.599-466.600 reserved for expansion]
1822	1822	Sec. 466.601. ABSOLUTE PRIVILEGE OF REQUIRED
1823	1823	COMMUNICATIONS AND DOCUMENTS. (a) Any communication, document, or
1824	1824	record of a video lottery central system provider, video lottery
1825	1825	terminal provider, video lottery retailer, or video lottery
1826	1826	manager, an applicant, or a holder of a license, certificate of
1827	1827	registration, finding of suitability, or other affirmative
1828	1828	regulatory approval that is made or transmitted to the commission
1829	1829	or any of its employees to comply with any law, including a rule of
1830	1830	the commission, to comply with a subpoena issued by the commission,
1831	1831	or to assist the commission or its designee in the performance of
1832	1832	their respective duties is absolutely privileged, does not impose
1833	1833	liability for defamation, and is not a ground for recovery in any
1834	1834	civil action.
1835	1835	(b) If a communication, document, or record provided under
1836	1836	Subsection (a) contains any information that is privileged under
1837	1837	state law, that privilege is not waived or lost because the
1838	1838	communication, document, or record is disclosed to the commission
1839	1839	or any of the commission's employees.
1840	1840	(c) The commission shall maintain all privileged
1841	1841	information, communications, documents, and records in a secure
1842	1842	place as determined in the commission's sole discretion that is
1843	1843	accessible only to members of the commission and authorized
1844	1844	commission employees.
1845	1845	Sec. 466.602. INTELLECTUAL PROPERTY RIGHTS OF COMMISSION.
1846	1846	The legislature finds and declares that the commission has the
1847	1847	right to establish ownership of intellectual property rights for
1848	1848	all lottery products, including video lottery terminals and related
1849	1849	video lottery equipment.
1850	1850	SECTION 29. Section 467.001, Government Code, is amended by
1851	1851	amending Subdivision (9) and adding Subdivision (12) to read as
1852	1852	follows:
1853	1853	(9) "Person that has a significant financial interest
1854	1854	in the lottery" means:
1855	1855	(A) a person or a board member, officer, trustee,
1856	1856	or general partner of a person that manufactures, distributes,
1857	1857	sells, or produces lottery equipment, video lottery equipment,
1858	1858	video lottery games, video lottery central systems, supplies,
1859	1859	services, or advertising;
1860	1860	(B) an employee of a video lottery terminal
1861	1861	provider, video lottery central system provider, or person that
1862	1862	manufactures, distributes, sells, or produces lottery equipment,
1863	1863	supplies, services, or advertising or video lottery equipment or
1864	1864	games and that employee is directly involved in the manufacturing,
1865	1865	distribution, selling, or production of lottery equipment,
1866	1866	supplies, services, or advertising or video lottery equipment or
1867	1867	games;
1868	1868	(C) a person or a board member, officer, trustee,
1869	1869	or general partner of a person that has made a bid to operate the
1870	1870	lottery in the preceding two years or that intends to make a bid to
1871	1871	operate the lottery or an employee of the person if the employee is
1872	1872	directly involved in making the bid; or
1873	1873	(D) a sales agent, video lottery retailer, video
1874	1874	lottery manager, video lottery terminal provider, or video lottery
1875	1875	central system provider.
1876	1876	(12) "Video lottery central system," "video lottery
1877	1877	equipment," "video lottery game," "video lottery manager," "video
1878	1878	lottery retailer," and "video lottery terminal provider" have the
1879	1879	meanings assigned by Section 466.002.
1880	1880	SECTION 30. Section 467.031, Government Code, is amended to
1881	1881	read as follows:
1882	1882	Sec. 467.031. DIVISIONS; DIRECTOR; CONTRACT. The
1883	1883	commission shall establish separate divisions to oversee bingo and
1884	1884	the state lottery. The commission shall employ a director to
1885	1885	oversee video lottery and shall enter into an intra-agency
1886	1886	agreement with the Texas Racing Commission for the Texas Racing
1887	1887	Commission to be responsible for performing the inspections and
1888	1888	regulatory functions specified in the agreement at racetracks on
1889	1889	behalf of the Texas Lottery Commission.
1890	1890	SECTION 31. Section 467.035(a), Government Code, is amended
1891	1891	to read as follows:
1892	1892	(a) The commission may not employ or continue to employ a
1893	1893	person who owns a financial interest in:
1894	1894	(1) a bingo commercial lessor, bingo distributor, or
1895	1895	bingo manufacturer; or
1896	1896	(2) a lottery sales agency, [or] a lottery operator, a
1897	1897	video lottery retailer, a video lottery manager, a video lottery
1898	1898	terminal provider, a video lottery central system provider, or a
1899	1899	manufacturer of video lottery games.
1900	1900	SECTION 32. Section 467.108, Government Code, is amended to
1901	1901	read as follows:
1902	1902	Sec. 467.108. REPRESENTATION BY FORMER OFFICER OR
1903	1903	EMPLOYEE. (a) A former commission member, former executive
1904	1904	director, or former director may not:
1905	1905	(1) [for compensation,] represent a person, either
1906	1906	with or without compensation, [that has made or intends to make a
1907	1907	bid to operate the lottery] before the commission before the fifth
1908	1908	[second] anniversary of the date that the person's service in
1909	1909	office or employment with the commission ceases;
1910	1910	(2) represent any person or receive compensation for
1911	1911	services rendered on behalf of any person regarding a particular
1912	1912	matter in which the former officer or employee participated during
1913	1913	the period of service or employment with the commission, either
1914	1914	through personal involvement or because the matter was within the
1915	1915	scope of the officer's or employee's official responsibility; or
1916	1916	(3) [for compensation] communicate on behalf of any
1917	1917	person, whether compensated or not compensated, directly with a
1918	1918	member of the legislative branch to influence legislation on behalf
1919	1919	of a person that has any [a significant financial] interest in the
1920	1920	lottery, before the fifth [second] anniversary of the date that the
1921	1921	person's service in office or employment with the commission
1922	1922	ceases.
1923	1923	(b) A person commits an offense if the person violates this
1924	1924	section. An offense under this section is a felony of the third
1925	1925	degree [Class A misdemeanor].
1926	1926	SECTION 33. Section 411.108, Government Code, is amended by
1927	1927	adding Subsection (d) to read as follows:
1928	1928	(d) The Texas Lottery Commission may obtain from the
1929	1929	department, subject to an interagency agreement entered into under
1930	1930	Section 466.020(d) or 466.206, criminal history record information
1931	1931	maintained by the department that relates to any natural person,
1932	1932	corporation, association, trust, partnership, limited partnership,
1933	1933	joint venture, government, subsidiary, or other entity, regardless
1934	1934	of its form, structure, or nature that the commission has the
1935	1935	authority to investigate under Chapter 466 as related to the
1936	1936	commission's operation and oversight of video lottery. Criminal
1937	1937	history record information obtained by the commission under this
1938	1938	subsection may be released or disclosed only as provided in
1939	1939	Sections 466.022(d) and 466.206.
1940	1940	SECTION 34. Section 47.01(4), Penal Code, is amended to
1941	1941	read as follows:
1942	1942	(4) "Gambling device" means any electronic,
1943	1943	electromechanical, or mechanical contrivance not excluded under
1944	1944	Paragraph (B) that for a consideration affords the player an
1945	1945	opportunity to obtain anything of value, the award of which is
1946	1946	determined solely or partially by chance, even though accompanied
1947	1947	by some skill, whether or not the prize is automatically paid by the
1948	1948	contrivance. The term:
1949	1949	(A) includes, but is not limited to, gambling
1950	1950	device versions of bingo, keno, blackjack, lottery, roulette, video
1951	1951	poker, slot machines, or similar electronic, electromechanical, or
1952	1952	mechanical games, or facsimiles thereof, that operate by chance or
1953	1953	partially so, that as a result of the play or operation of the game
1954	1954	award credits or free games, and that record the number of free
1955	1955	games or credits so awarded and the cancellation or removal of the
1956	1956	free games or credits; and
1957	1957	(B) does not include any electronic,
1958	1958	electromechanical, or mechanical contrivance designed, made, and
1959	1959	adapted solely for bona fide amusement purposes if:
1960	1960	(i) the contrivance rewards the player
1961	1961	exclusively with noncash merchandise prizes, toys, or novelties, or
1962	1962	a representation of value redeemable for those items, that have a
1963	1963	wholesale value available from a single play of the game or device
1964	1964	of not more than 10 times the amount charged to play the game or
1965	1965	device once or $5, whichever is less;
1966	1966	(ii) any merchandise or a representation of
1967	1967	value received by a player may be exchanged only at the same
1968	1968	business and business location at which the contrivance operated by
1969	1969	the player is located and may not be exchanged for a gift
1970	1970	certificate or similar conveyance that is redeemable at another
1971	1971	business or business location; and
1972	1972	(iii) the contrivance or device does not
1973	1973	resemble a slot machine or any other casino game.
1974	1974	SECTION 35. Section 47.06(e), Penal Code, is amended to
1975	1975	read as follows:
1976	1976	(e) An offense under this section is a felony of the third
1977	1977	degree [Class A misdemeanor].
1978	1978	SECTION 36. Section 47.09, Penal Code, is amended by
1979	1979	amending Subsection (a) and adding Subsection (c) to read as
1980	1980	follows:
1981	1981	(a) It is a defense to prosecution under this chapter that
1982	1982	the conduct:
1983	1983	(1) was authorized under:
1984	1984	(A) Chapter 2001, Occupations Code;
1985	1985	(B) Chapter 2002, Occupations Code; or
1986	1986	(C) the Texas Racing Act (Article 179e, Vernon's
1987	1987	Texas Civil Statutes);
1988	1988	(2) consisted entirely of participation in gambling or
1989	1989	other gaming activity that:
1990	1990	(A) is or may be permitted under the Indian
1991	1991	Gaming Regulatory Act (18 U.S.C. Section 1166 et seq. and 25 U.S.C.
1992	1992	Section 2701 et seq.), without regard to whether the gambling or
1993	1993	gaming activity is conducted by an Indian tribe to which that Act
1994	1994	applies; and
1995	1995	(B) is conducted:
1996	1996	(i) by an Indian tribe or tribal
1997	1997	organization that was included on the January 30, 1998, list of
1998	1998	recognized Indian tribes by the United States secretary of the
1999	1999	interior as required under 25 U.S.C. Section 479a-1; and
2000	2000	(ii) on premises designated by the tribe or
2001	2001	tribal organization for that gambling or other gaming activity on
2002	2002	land that was held in trust or recognized as tribal land of that
2003	2003	tribe or tribal organization by the federal government on January
2004	2004	1, 1998;
2005	2005	(3) was a necessary incident to activity described by
2006	2006	Subdivision (2);
2007	2007	(4) consisted entirely of participation in the state
2008	2008	lottery, including the video lottery system, authorized by Chapter
2009	2009	466, Government Code; or
2010	2010	(5) [(3)] was a necessary incident to the operation of
2011	2011	the state lottery, including the video lottery system, and was
2012	2012	directly or indirectly authorized by:
2013	2013	(A) Chapter 466, Government Code;
2014	2014	(B) the lottery division of the Texas Lottery
2015	2015	Commission;
2016	2016	(C) the Texas Lottery Commission; or
2017	2017	(D) the director of the lottery division of the
2018	2018	Texas Lottery Commission.
2019	2019	(c) Subsection (a)(3) applies to a person manufacturing,
2020	2020	distributing, possessing, or operating a gambling device with the
2021	2021	authorization of the Texas Lottery Commission under Subchapter K,
2022	2022	Chapter 466, Government Code.
2023	2023	SECTION 37. Chapter 47, Penal Code, is amended by adding
2024	2024	Section 47.095 to read as follows:
2025	2025	Sec. 47.095. INTERSTATE OR FOREIGN COMMERCE DEFENSE. It is
2026	2026	a defense to prosecution under this chapter that a person sells,
2027	2027	leases, transports, possesses, stores, or manufactures a gambling
2028	2028	device with the authorization of the Texas Lottery Commission under
2029	2029	Subchapter K, Chapter 466, Government Code, or on behalf of an
2030	2030	Indian tribe in connection with activity described by Section
2031	2031	47.09(a)(2) for transportation in interstate or foreign commerce.
2032	2032	SECTION 38. (a) As soon as practicable after the
2033	2033	constitutional amendment to authorize video lottery games by
2034	2034	licensed racetrack operators proposed by the 81st Legislature,
2035	2035	Regular Session, 2009, is approved by the voters and becomes
2036	2036	effective, the Texas Lottery Commission and the Texas Racing
2037	2037	Commission shall adopt the rules necessary to implement video
2038	2038	lottery in accordance with Subchapter K, Chapter 466, Government
2039	2039	Code, as added by this Act.
2040	2040	(b) Before the proposed constitutional amendment is
2041	2041	submitted to the voters, the Texas Lottery Commission may expend
2042	2042	money from the commission's appropriation for the 2010-2011 state
2043	2043	fiscal biennium for purposes of conducting pre-implementation
2044	2044	activities to establish the state video lottery system in
2045	2045	accordance with Subchapter K, Chapter 466, Government Code, as
2046	2046	added by this Act. Notwithstanding Section 466.355, Government
2047	2047	Code, the money authorized to be expended under this section may be
2048	2048	withdrawn from the state lottery account and considered a part of
2049	2049	the transfer of funds from the state lottery account authorized
2050	2050	under Section 466.589, Government Code, as added by this Act, to
2051	2051	fund the establishment of the state video lottery system.
2052	2052	SECTION 39. The change in law made by this Act applies only
2053	2053	to an offense committed on or after the effective date of this Act.
2054	2054	An offense committed before the effective date of this Act is
2055	2055	covered by the law in effect when the offense was committed, and the
2056	2056	former law is continued in effect for that purpose. For purposes of
2057	2057	this section, an offense was committed before the effective date of
2058	2058	this Act if any element of the offense was committed before that
2059	2059	date.
2060	2060	SECTION 40. Sections 1 through 37 and 39 of this Act take
2061	2061	effect on the date the constitutional amendment authorizing a video
2062	2062	lottery system to operate video lottery games at certain horse and
2063	2063	greyhound racetracks and providing that federally recognized
2064	2064	Indian tribes are not prohibited from conducting gaming on certain
2065	2065	Indian lands proposed by the 81st Legislature, Regular Session,
2066	2066	2009, becomes effective. Section 38 of this Act and this section
2067	2067	take effect immediately if this Act receives a vote of two-thirds of
2068	2068	all the members elected to each house, as provided by Section 39,
2069	2069	Article III, Texas Constitution. If this Act does not receive the
2070	2070	vote necessary for immediate effect, Section 38 of this Act and this
2071	2071	section take effect September 1, 2009.