Texas House Bill HB2424 Introduced / Bill

                    82R8797 YDB-D
 By: Thompson H.B. No. 2424


 A BILL TO BE ENTITLED
 AN ACT
 relating to the operation of video gaming by authorized
 organizations and commercial operators that are licensed to conduct
 bingo or lease bingo premises; providing penalties.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 SECTION 1.  The legislature finds and declares that:
 (1)  the purpose and intent of this Act is to carry out
 the intent of the voters as established by the approval of Section
 47a, Article III, Texas Constitution, to expand the
 revenue-generating ability of this state by authorizing the
 operation of video gaming consistent with public policy strictly
 limiting the expansion of gambling in this state;
 (2)  except as expressly authorized under other law,
 the people of this state intend to allow only state-regulated video
 gaming games to be conducted in this state and only in locations at
 which bingo is conducted by authorized charitable organizations;
 (3)  the video gaming games operated under this Act are
 regulated by this state in a manner that allows this state to
 monitor, both routinely and randomly, all video gaming terminals
 and to direct the disabling of any video gaming terminal for the
 protection of the public and this state;
 (4)  through network operating centers or a video
 gaming system, this state will monitor video gaming terminals to
 ensure maximum security unique to state-regulated gambling. Except
 as may otherwise be provided by state or federal law governing
 gaming on Indian lands, each operating video gaming terminal in
 this state will be connected to a network operating center or a
 state-regulated video gaming system;
 (5)  in authorizing only state-regulated video gaming
 terminals in limited locations and continuing the general
 prohibition on gambling in this state as a matter of public policy,
 this state is protecting the state's legitimate interests by
 restricting such activity.  By limiting the operation of video
 gaming terminals to those connected to a network operating center
 or a state-regulated video gaming system on certain land with
 certain types of games, the legislature seeks to foster this
 state's legitimate sovereign interest in regulating the growth of
 gambling activities in this state;
 (6)  this Act is game-specific and may not be construed
 to allow the operation of any other form of gambling unless
 specifically allowed by Chapter 2001A, Occupations Code, as added
 by this Act.  This Act does not allow the operation of dice games,
 roulette wheels, house-banked games, including house-banked card
 games, or games in which winners are determined by the outcome of a
 live sports contest that are expressly prohibited under other state
 law;
 (7)  in light of the financial crisis facing this
 state, the Texas Lottery Commission is authorized to commence
 implementation and authorization of video gaming in accordance with
 Chapter 2001A, Occupations Code, as added by this Act, at the
 earliest possible date, consistent with legislative directive; and
 (8)  the financial crisis facing this state constitutes
 an imminent peril to public welfare, requiring the rapid adoption
 of rules and authorization for the Texas Lottery Commission to
 conduct certain pre-implementation activities related to
 regulating video gaming to ensure:
 (A)  that the increase in state revenue from the
 portion of gross gaming income transferred to the state is realized
 as soon as possible to lessen the financial crisis faced by this
 state;
 (B)  that video gaming is fairly conducted and the
 charitable proceeds derived from it are used for an authorized
 purpose; and
 (C)  the integrity, security, and fairness of
 video gaming.
 SECTION 2.  Subtitle A, Title 13, Occupations Code, is
 amended by adding Chapter 2001A to read as follows:
 CHAPTER 2001A. VIDEO GAMING BY LICENSED AUTHORIZED ORGANIZATIONS
 AND LICENSED COMMERCIAL LESSORS
 SUBCHAPTER A. GENERAL PROVISIONS
 Sec. 2001A.001.  DEFINITIONS.  In this chapter:
 (1)  "Commission" means the Texas Lottery Commission.
 (2)  "Crime of moral turpitude" has the meaning
 assigned by Section 2001.002.
 (3)  "Director" means the director of charitable bingo
 operations of the commission.
 (4)  "Disable," with respect to video gaming terminals,
 means the process that causes a video gaming terminal to cease
 functioning on issuance of a shutdown command from a network
 operating center or site controller.
 (5)  "Distribute," with respect to video gaming
 terminals, means the sale, lease, marketing, offer, or other
 disposition of a video gaming terminal, an electronic computer
 component of a video gaming terminal, the cabinet in which a video
 gaming terminal is housed, video gaming equipment, or video gaming
 game software intended for use or play in this state.
 (6)  "Gross gaming income" means the total amount of
 money paid to play video gaming games less the value of all credits
 redeemed, including any progressive prizes and bonuses, by the
 players of the video gaming games. Promotional prizes unrelated to
 video gaming game wagers that are offered by a video gaming retailer
 may not be deducted or otherwise considered credits redeemed for
 money by players for the purpose of determining gross gaming
 income.
 (7)  "Independent testing laboratory" means a
 nationally recognized laboratory facility that is demonstrably
 competent and qualified to scientifically test and evaluate video
 gaming equipment for compliance with this chapter.
 (8)  "Licensed authorized organization" has the
 meaning assigned by Section 2001.002.
 (9)  "Licensed commercial lessor" has the meaning
 assigned by Section 2001.002.
 (10)  "Major component or part" means a component or
 part that comprises the inner workings and peripherals of a video
 gaming terminal, site controller, or network operating center,
 including the device's hardware, software, human interface
 devices, interface ports, power supply, ticket payout system, bill
 validator, and printer, and any component that affects or could
 affect the result of a game played on the device.
 (11)  "Manufacture," with respect to video gaming
 terminals, means to design, assemble, fabricate, produce, program,
 or make modifications to a video gaming terminal, an electronic
 computer component of a video gaming terminal, a major component or
 part of video gaming equipment, the cabinet in which a video gaming
 terminal is housed, video gaming equipment, or video gaming game
 software intended for use or play in this state.
 (12)  "Network operating center" means a computer
 server that is connected directly or indirectly to a video gaming
 manufacturer's video gaming terminals operated in this state.
 (13)  "Player account card" means a plastic magnetic
 strip, paper, or smart card that may be used to:
 (A)  enable or track the play of video gaming
 games;
 (B)  track and record customer account data,
 including electronic credits purchased, played, won, or otherwise
 available for participating in a video gaming game; or
 (C)  redeem credits purchased, played, or won
 through a cashier or other point-of-sale station or redemption
 system.
 (14)  "Site controller" means computer hardware and
 software located on the premises of a video gaming retailer that:
 (A)  stores and distributes video gaming games for
 display on video gaming terminals;
 (B)  networks and communicates with a video gaming
 manufacturer's video gaming terminals at the premises; and
 (C)  communicates with the manufacturer's network
 operating center.
 (15)  "Video gaming" means the conduct of video gaming
 games on video gaming terminals.
 (16)  "Video gaming distributor" means a person
 licensed under this chapter to provide video gaming equipment,
 major components and parts of video gaming equipment, installation,
 and technical services to a licensed video gaming retailer.
 (17)  "Video gaming equipment" means:
 (A)  a video gaming terminal;
 (B)  equipment, a component, or a contrivance used
 remotely or directly in connection with a video gaming terminal to:
 (i)  affect the reporting of gross revenue
 and other accounting information, including a device for weighing
 and counting money;
 (ii)  provide accounting, player tracking,
 bonuses, and in-house or wide-area prizes;
 (iii)  monitor video gaming terminal
 operations; and
 (iv)  provide for the connection of video
 gaming terminals to the network operating center or site
 controller; or
 (C)  any other communications technology or
 equipment necessary for the operation of a video gaming terminal or
 the video gaming system.
 (18)  "Video gaming game" means any game of chance,
 including a game of chance in which the outcome may be partially
 determined by skill or ability, that for consideration may be
 played by an individual on a video gaming terminal.
 (19)  "Video gaming manufacturer" means a person who
 holds a license under this chapter to manufacture video gaming
 equipment and major components or parts of video gaming equipment.
 (20)  "Video gaming premises" means the area subject to
 direct control of and actual use by a licensed authorized
 organization, a group of licensed authorized organizations, or a
 licensed commercial lessor to conduct video gaming.
 (21)  "Video gaming retailer" means a licensed
 authorized organization or a licensed commercial lessor that holds
 a license to conduct video gaming under this chapter.
 (22)  "Video gaming system" means the system
 established as authorized by the commission to allow the commission
 or person contracting with the commission to monitor the operation
 of video gaming in this state.
 (23)  "Video gaming terminal" means a mechanical,
 electrical, or other type of device, contrivance, or machine that
 plays or operates on insertion of a coin, currency, a token, or a
 similar object or on payment of any other consideration, and the
 play or operation of which, through the skill of the operator, by
 chance, or both, may deliver to the person playing or operating the
 machine or entitle the person to receive premiums, merchandise,
 tokens, or any other thing of value, whether the payoff is made
 automatically from the machine or in any other manner.  The term
 does not include any equipment, machine, technological aid, or
 other device used or authorized in connection with the play of bingo
 under Chapter 2001 or authorized under other law.
 Sec. 2001A.002.  APPLICABILITY OF OTHER LAW. (a)  All
 shipments into, out of, or within this state of video gaming
 terminals or other gaming devices authorized under this chapter are
 legal shipments of the devices and are exempt from the provisions of
 15 U.S.C. Sections 1171-1178 prohibiting the transportation of
 gambling devices.
 (b)  To the extent of any conflict, this chapter controls
 over any local zoning law that impedes the implementation of video
 gaming at a location where bingo was conducted on January 1, 2011,
 and where a video gaming retailer is authorized to conduct video
 gaming under this chapter.
 Sec. 2001A.003.  EXEMPTION FROM TAXATION. A political
 subdivision of this state may not impose a tax or fee for attendance
 or admission to a video gaming premises unless specifically
 authorized by statute.
 [Sections 2001A.004-2001A.050 reserved for expansion]
 SUBCHAPTER B. ADMINISTRATION
 Sec. 2001A.051.  POWERS AND DUTIES OF COMMISSION AND
 DIRECTOR. (a) The commission and the director have broad authority
 and shall exercise strict control and close supervision over video
 gaming operated in this state to promote and ensure the integrity,
 security, honesty, and fairness of video gaming.
 (b)  The commission may contract with or employ a person to
 perform a function, activity, or service in connection with the
 regulation of video gaming as prescribed by the commission.
 (c)  The commission shall, as necessary to protect the public
 health and safety:
 (1)  monitor and regulate video gaming operations on a
 routine and random basis;
 (2)  establish standards for:
 (A)  the operation of video gaming;
 (B)  the provision of video gaming equipment and
 services; and
 (C)  video gaming premises; and
 (3)  inspect and examine all video gaming premises and
 all video gaming equipment, services, records, and operations to
 ensure compliance with the standards established by the commission.
 (d)  The commission may demand access to and inspect,
 examine, and audit all records regarding gross gaming income of a
 video gaming retailer.
 Sec. 2001A.052.  RULES; PROCEDURES. (a) The commission
 shall adopt all rules necessary to supervise and regulate video
 gaming in this state, administer this chapter, and ensure the
 security of video gaming operations in this state.
 (b)  The commission shall establish procedures for the
 approval, monitoring, and inspection of video gaming operations as
 necessary to protect the public health, welfare, and safety and the
 integrity of this state and to prevent financial loss to this state.
 (c)  In adopting rules and procedures under this chapter, the
 commission shall examine the laws of other jurisdictions and
 incorporate best practices from established responsible gaming
 systems.
 Sec. 2001A.053.  RULES FOR ADDITIONAL QUALIFICATIONS. The
 commission by rule may establish other license qualifications the
 commission determines are in the public interest and consistent
 with the declared policy of this state.
 Sec. 2001A.054.  LICENSE FEES; TERMINAL FEE. (a)  An
 applicant for a license under this chapter shall submit with the
 application the annual license fee required for the type of license
 sought.  The fee is nonrefundable.
 (b)  The annual license fee is:
 (1)  for a video gaming manufacturer license, $10,000;
 (2)  for a video gaming distributor license, $10,000;
 (3)  for a video gaming retailer holding:
 (A)  a class 1 license, $1,250;
 (B)  a class 2 license, $2,500; or
 (C)  a class 3 license, $5,000;
 (4)  for a video gaming manager, $2,500;
 (5)  for key video gaming personnel, $100;
 (6)  for a video gaming technician, $100; and
 (7)  for a video gaming employee, $50.
 (c)  The annual fee for each video gaming terminal operated
 by the video gaming retailer at a video gaming premises is $250.
 Sec. 2001A.055.  ESTABLISHMENT OF VIDEO GAMING SYSTEM. (a)
 In accordance with Section 47a, Article III, Texas Constitution,
 the commission shall establish a video gaming system that allows
 the commission to monitor and regulate video gaming and direct the
 disabling of video gaming terminals for the public safety, health,
 and welfare or the preservation of the integrity of video gaming and
 to prevent any financial loss to this state. The system must provide
 video gaming auditing, security, and other information required by
 the commission.
 (b)  This section does not affect or restrict the ability of
 a video gaming retailer to monitor activity of video gaming
 terminals and to disable video gaming terminals in accordance with
 commission rules.
 (c)  The commission may direct the disabling of a video
 gaming terminal if a video gaming retailer's license is revoked,
 surrendered, or summarily suspended under this chapter and as
 necessary to prevent any financial loss to this state.
 Sec. 2001A.056.  ANNUAL REPORT. The commission shall file
 an annual report with the governor, the comptroller, and the
 legislature regarding the collection and disposition of video
 gaming revenue for the state fiscal year preceding the report. The
 report must be in the form and reported in the time provided by the
 General Appropriations Act.
 [Sections 2001A.057-2001A.100 reserved for expansion]
 SUBCHAPTER C. LICENSE AND CONTRACT REQUIREMENTS
 Sec. 2001A.101.  RETAILER LICENSE REQUIRED; ELIGIBILITY
 REQUIREMENTS. (a) A person may not conduct video gaming in this
 state unless the person holds a video gaming retailer license
 issued under this chapter.
 (b)  A person is eligible for issuance of a video gaming
 retailer license under this chapter only if the person:
 (1)  is a licensed authorized organization that:
 (A)  on January 1, 2011, held a license to conduct
 bingo at a bingo premises;
 (B)  except as provided by Subsection (e),
 conducts video gaming only at the bingo premises where the
 organization is the only licensed authorized organization
 conducting bingo at that premises; and
 (C)  does not lease the premises from a licensed
 commercial lessor; or
 (2)  is a licensed commercial lessor who:
 (A)  on January 1, 2011, held a license to lease
 bingo premises; and
 (B)  except as provided by Subsection (e),
 conducts video gaming only at the premises the lessor leases to
 licensed authorized organizations for the conduct of bingo.
 (c)  On application and payment of required fees, the
 commission shall issue a video gaming retailer license to a person
 described by Subsection (b) unless the person is ineligible to hold
 the license under another provision of this chapter or commission
 rule.
 (d)  The commission shall establish the following
 classifications of video gaming retailer licenses:
 (1)  class 1 license for a premises where:
 (A)  a licensed authorized organization that does
 not lease bingo premises from a licensed commercial lessor conducts
 bingo on the premises under Chapter 2001; or
 (B)  a licensed commercial lessor who held a Class
 A, B, or C commercial lessor license under Chapter 2001 on January
 1, 2011, leases the premises to one or more licensed authorized
 organizations that conduct bingo on the premises;
 (2)  class 2 license for a licensed commercial lessor
 who held a Class D, E, F, or G commercial lessor license under
 Chapter 2001 on January 1, 2011; or
 (3)  class 3 license for a licensed commercial lessor
 who held a Class H, I, or J commercial lessor license under Chapter
 2001 on January 1, 2011.
 (e)  A video gaming retailer may conduct video gaming at a
 premises other than the premises described by Subsection (b) if:
 (1)  the county, justice precinct, or municipality in
 which those premises are located holds an election in which the
 majority of the voters of the jurisdiction favor prohibiting bingo
 games in the jurisdiction; and
 (2)  the other premises are located in a jurisdiction
 in which a majority of the voters voting in an election held before
 January 1, 2011, voted in favor of legalizing bingo games.
 Sec. 2001A.102.  DISTRIBUTOR OR MANUFACTURER LICENSE
 REQUIRED. (a)  A person may not sell, lease, distribute, or provide
 video gaming equipment or a major component or part of video gaming
 equipment or provide technical services to a video gaming retailer
 for use in this state unless the person holds a video gaming
 distributor license issued under this chapter.
 (b)  A person may not manufacture video gaming equipment or a
 major component or part of video gaming equipment for use in this
 state or buy, sell, lease, or distribute to a distributor video
 gaming equipment or a major component or part of video gaming
 equipment for use in this state unless the person holds a video
 gaming manufacturer license issued under this chapter.
 (c)  The commission shall issue a video gaming distributor
 license or a video gaming manufacturer license, as applicable, to
 an eligible person who has the resources and experience required to
 manufacture or provide video gaming equipment or a major component
 or part of video gaming equipment and technical services to video
 gaming retailers conducting video gaming under this chapter and who
 is not ineligible to hold the license under this chapter or
 commission rule.
 (d)  A video gaming manufacturer may not directly provide
 video gaming equipment or a major component or part of video gaming
 equipment to a video gaming retailer.
 Sec. 2001A.103.  LICENSE REQUIRED FOR VIDEO GAMING
 EMPLOYEES, MANAGERS, TECHNICIANS, AND KEY PERSONNEL. (a) To protect
 the public health and safety and prevent financial loss to this
 state, the commission by rule shall establish categories and
 eligibility requirements for employees required to hold a license
 issued under this chapter to operate in the licensed capacity at a
 video gaming premises under this chapter. The license holder must
 maintain eligibility to continue to hold the license. The
 commission shall require the following persons to be licensed:
 (1)  key video gaming personnel, including executive
 personnel critical to the operation of video gaming;
 (2)  video gaming employees, including gaming floor
 workers and accounting personnel;
 (3)  video gaming technicians who install, maintain,
 and repair video gaming equipment; and
 (4)  video gaming managers who contract with a video
 gaming retailer to oversee video gaming operations at premises
 authorized to operate video gaming under this chapter.
 (b)  A video gaming distributor that holds a video gaming
 manager's license under this section may serve as the manager for a
 premises.
 Sec. 2001A.104.  INELIGIBILITY FOR LICENSE. (a)  A person is
 not eligible to hold a license issued under this chapter if the
 person would be ineligible under Section 2001.154, 2001.202, or
 2001.207 to hold a license issued under Chapter 2001.
 (b)  The commission shall adopt any rules necessary to
 implement this section.
 Sec. 2001A.105.  LICENSE APPLICATION; TERM.  (a)  An
 applicant for a license under this chapter must file with the
 commission an application on the form prescribed by the commission.
 (b)  The license application must include:
 (1)  the name and address of the applicant and each
 other person who has a greater than 10 percent proprietary,
 equitable, or credit interest in or who is in any capacity a real
 party in interest in the applicant's business as it pertains to this
 chapter;
 (2)  a designation and address of the video gaming
 premises or location intended to be covered by the license;
 (3)  a statement that the applicant complies with the
 conditions for eligibility for the license; and
 (4)  any other information required by commission rule.
 (c)  A license issued under this chapter expires on the first
 anniversary of the date of issuance.
 Sec. 2001A.106.  BACKGROUND INVESTIGATIONS. (a)  Before
 issuing a license to a person under this chapter, the commission
 shall conduct a background investigation that includes obtaining
 criminal history record information as permitted by law of:
 (1)  an applicant for or holder of a license issued
 under this chapter;
 (2)  a person required to be named in a license
 application; and
 (3)  an employee or other person who works or will work
 for a license holder and is required to hold a license under this
 chapter or commission rule.
 (b)  The commission is not required to conduct a background
 investigation under Subsection (a) for a person who has undergone
 an investigation authorized by Section 2001.3025 that is sufficient
 for the person to continue to hold a license under Chapter 2001.
 Sec. 2001A.107.  LICENSE RENEWAL. The commission shall
 renew a license issued under this chapter to a license holder who is
 not ineligible to hold the license on payment of the license renewal
 fee and on the license holder's compliance with any additional
 requirements established by commission rule.
 [Sections 2001A.108-2001A.150 reserved for expansion]
 SUBCHAPTER D.  REGULATION OF VIDEO GAMING
 Sec. 2001A.151.  LIMITATION ON NUMBER OF VIDEO GAMING
 TERMINALS. A video gaming retailer may operate video gaming
 terminals at a premises as follows:
 (1)  a person who holds a class 1 video gaming retailer
 license may operate not more than 30 video gaming terminals at the
 premises;
 (2)  a person who holds a class 2 video gaming retailer
 license may operate not more than 60 video gaming terminals at the
 premises; and
 (3)  a person who holds a class 3 video gaming retailer
 license may operate not more than 120 video gaming terminals at the
 premises.
 Sec. 2001A.152.  EMPLOYEES. An employee who works in a video
 gaming premises must be at least 18 years of age.
 Sec. 2001A.153.  CREDIT PROHIBITED. (a)  A video gaming
 retailer may not knowingly accept as payment for play of a video
 gaming game any type of consideration borrowed from a person
 licensed under this chapter or obtained through a credit card
 transaction or similar credit transaction.
 (b)  This section does not prohibit a video gaming retailer
 from:
 (1)  offering for play a video gaming game on a video
 gaming terminal that tallies game credits; or
 (2)  accepting a player account card for play of a video
 gaming game.
 Sec. 2001A.154.  VIDEO GAMING SYSTEM; INDEPENDENT
 LABORATORY TESTING. (a)  The commission by rule shall establish
 standards and specifications for video gaming systems, network
 operating centers, and site controllers in this state as necessary
 to protect the public health and safety and to prevent financial
 loss to this state. The standards must require a video gaming
 manufacturer's video gaming system to:
 (1)  meet the industry security standards adopted by
 commission rule; and
 (2)  be certified as meeting the standard adopted under
 Subdivision (1) by an independent testing laboratory approved by
 the commission.
 (b)  The commission shall monitor and direct any disabling of
 video gaming systems or video gaming terminals in this state.
 (c)  The commission may contract with or otherwise authorize
 a video gaming manufacturer or other person to provide monitoring
 and reporting information required under this chapter.
 (d)  A video gaming retailer may operate video gaming
 terminals of more than one manufacturer on the retailer's video
 gaming premises.
 Sec. 2001A.155.  NETWORK OPERATING CENTER REQUIREMENTS. (a)
 Each video gaming manufacturer that has any of the manufacturer's
 video gaming terminals in operation at the video gaming premises of
 a video gaming retailer in this state shall provide at the
 manufacturer's expense at least one network operating center for
 the manufacturer's terminals at the commission's office or another
 location authorized by the commission. The manufacturer is not
 required to have a separate network operating center for each video
 gaming premises at which the manufacturer has video gaming
 terminals in operation.
 (b)  The manufacturer shall allow the commission complete
 access to the manufacturer's network operating center at all times.
 (c)  Each network operating center must provide monitoring,
 auditing, reporting, and command and control capabilities for each
 video gaming terminal connected to the center, regardless of the
 location of the terminal in this state.
 Sec. 2001A.156.  SITE CONTROLLER REQUIREMENTS. (a)  The
 video gaming distributor shall provide at each video gaming
 premises where the distributor's video gaming terminals are in
 operation a site controller to network the distributor's terminals
 at the premises and to communicate with the video gaming
 manufacturer's network operating center.
 (b)  The commission by rule may authorize a video gaming
 distributor that has in operation at any premises less than the
 number of video gaming terminals established by commission rule to
 connect the terminals at the premises directly to the
 manufacturer's network operating center without the use of a site
 controller.
 (c)  A site controller may be used to:
 (1)  create, shuffle, store, and configure video gaming
 games;
 (2)  distribute video gaming games to video gaming
 terminals;
 (3)  account for electronic credits purchased, played,
 or won playing a video gaming game, including through the use of a
 player account card;
 (4)  exchange credits described by Subdivision (3) for
 additional video gaming games; or
 (5)  allow the play of video gaming authorized by this
 chapter.
 (d)  A site controller must:
 (1)  at a minimum monitor, track, account for, and
 retain data on:
 (A)  all transactions that occur on the
 controller;
 (B)  amounts paid to play video gaming games;
 (C)  the amount of consideration paid for play on
 each video gaming terminal;
 (D)  the amount paid out in prizes;
 (E)  the number of video gaming games played;
 (F)  for video gaming games that use tickets, an
 inventory of current, out-of-stock, and excess game tickets and the
 name of the game, serial number of the terminal, time stamp, and
 terminal location when a player wins the video gaming game;
 (G)  out-of-service time periods for any video
 gaming equipment;
 (H)  the time of entry and exit when any
 compartment of the terminal is accessed, including main door
 access, cash box access, and logic compartment access;
 (I)  software signature failures and unauthorized
 communications with a manufacturer's network operating center,
 site controller, or terminal;
 (J)  payment vouchers dispensed and game payout
 percentage; and
 (K)  any outage of a communications system between
 a network operating center and site controller;
 (2)  cease operation when a main or cash door is opened;
 (3)  produce reports for the commission as required by
 the commission;
 (4)  prevent an unauthorized person from accessing data
 or downloading games to the location level; and
 (5)  provide a physical and electronic method, through
 the use of a password or other method specified by commission rule,
 to secure:
 (A)  video gaming games created, shuffled,
 stored, and configured by the site controller; and
 (B)  accounting system data.
 (e)  This section does not require the use of a site
 controller for the play of a video gaming game and does not prohibit
 the use of other methods to create, shuffle, store, configure, or
 distribute video gaming games.
 (f)  The commission may not require a preapproved site
 controller to be retested on the basis that the site controller is
 used by a video gaming retailer to create or distribute video gaming
 games.
 Sec. 2001A.157.  CENTRAL MONITORING AND CONTROL. (a)
 Notwithstanding any other provision of this chapter, the commission
 may develop and implement a secure, web-based central reporting
 system to gather data from a video gaming manufacturer's video
 gaming systems. The cost of the reporting system shall be divided
 proportionately between the manufacturers providing video gaming
 equipment in this state.
 (b)  The central system may not limit or preclude potential
 video gaming manufacturers or distributors from providing
 state-of-the-art industry standard video gaming terminals and
 video gaming equipment, such as player tracking systems, accounting
 systems, progressive systems, and bonus systems.
 Sec. 2001A.158.  VIDEO GAMING TERMINAL SPECIFICATIONS. (a)
 The commission shall adopt rules for approval of video gaming
 terminals, including requirements for video gaming games.
 (b)  A commission-approved video gaming terminal must meet
 the following minimum specifications:
 (1)  the terminal must:
 (A)  operate through a player's insertion of a
 chip, ticket, voucher, token, or player account card or another
 instrument of value that may only be used to purchase a play of a
 video gaming game into the video gaming terminal that causes the
 video gaming terminal to display credits that entitle the player to
 select one or more symbols or numbers or causes the video gaming
 terminal to select symbols or numbers;
 (B)  allow the player to win additional game play
 credits, chips, tickets, or tokens based on game rules that
 establish the selection of winning combinations of symbols or
 numbers and the number of free play credits or tokens to be awarded
 for each winning combination;
 (C)  account for credits purchased, played, or won
 playing a video gaming game; and
 (D)  allow the player at any time to clear all game
 play credits and receive a video gaming ticket or other
 representation of credits entitling the player to receive the cash
 value of those credits;
 (2)  a surge protector must be installed on the
 electrical power supply line to each video gaming terminal, a
 battery or equivalent power backup for the electronic meters must
 be capable of maintaining the accuracy of all accounting records
 and video gaming terminal status reports for a period of 180 days
 after power is disconnected from the video gaming terminal, and the
 power backup device must be in the compartment specified in
 Subdivision (4);
 (3)  the operation of each video gaming terminal may
 not be adversely affected by any static discharge or other
 electromagnetic interference;
 (4)  the main logic boards of all electronic storage
 mediums must be located in a separate compartment in or from the
 video gaming terminal that is locked and sealed in accordance with
 commission rule;
 (5)  the instructions for play of each game must be
 displayed on the video gaming terminal face or screen, including a
 display detailing the credits awarded for the occurrence of each
 possible winning combination of numbers or symbols;
 (6)  communication equipment and devices must be
 installed to enable each video gaming terminal to communicate with
 the site controller or network operating center through the use of a
 communications protocol provided by each video gaming manufacturer
 and each video gaming distributor, which must include information
 retrieval and programs to activate and disable the terminal;
 (7)  a video gaming terminal may be operated only if
 connected to a site controller or network operating center unless
 otherwise authorized by this chapter or commission rule, and play
 on the terminal may not be conducted unless the terminal is
 connected to the site controller or network operating center; and
 (8)  a video gaming game may not be purchased with and a
 video gaming terminal may not be operated through the insertion of
 money or negotiable currency.
 (c)  Nothing in this chapter prohibits a video gaming
 terminal from generating or creating graphics and animation to
 correspond to, display, or represent, in an entertaining manner,
 the outcome of a video gaming game.
 Sec. 2001A.159.  VIDEO GAMING TERMINAL: TESTING; REPORT.
 (a)  A video gaming manufacturer shall submit two copies of terminal
 illustrations, schematics, block diagrams, circuit analysis,
 technical and operation manuals, and any other information
 requested by the commission for the purpose of analyzing the video
 gaming terminal or other video gaming equipment.
 (b)  The commission may require a working model of a video
 gaming terminal to be provided to the commission for testing unless
 the video gaming manufacturer provides a certification from a
 commission-approved independent testing laboratory that the video
 gaming terminal meets the requirements of this chapter and
 commission rule.
 (c)  The commission may not require a preapproved video
 gaming terminal to be retested on the basis that the terminal
 creates graphics and animation.
 Sec. 2001A.160.  VIDEO GAMING TERMINAL REMOVAL. (a)  If any
 video gaming terminal that has not been approved by the commission
 is distributed by a video gaming distributor or operated by a video
 gaming retailer or if an approved video gaming terminal
 malfunctions, the commission shall require the terminal to be
 removed from use and play.
 (b)  The commission may order that an unapproved video gaming
 terminal be seized and destroyed.
 (c)  The commission may suspend or revoke the license of a
 video gaming retailer or of a video gaming distributor for the
 distribution, possession, or operation of an unauthorized video
 gaming terminal.
 (d)  A video gaming retailer may retain on the premises of a
 video gaming establishment a number of video gaming terminals that
 the retailer determines is necessary for spare parts or repair
 purposes or as replacements.  The retailer must provide to the
 commission each month a list of the terminals retained under this
 subsection.
 Sec. 2001A.161.  PRACTICE BY VIDEO GAMING RETAILER. (a)  A
 video gaming retailer must:
 (1)  comply with state alcoholic beverage control laws;
 (2)  at all times maintain sufficient tokens, chips,
 tickets, or other representations of value accepted by video gaming
 terminals;
 (3)  promptly report all video gaming terminal
 malfunctions and downtime;
 (4)  prohibit illegal gambling and any related
 paraphernalia;
 (5)  except as otherwise provided by this chapter, at
 all times prohibit money lending or other extensions of credit at
 the video gaming premises;
 (6)  supervise employees and activities to ensure
 compliance with all commission rules and this chapter; and
 (7)  maintain an entry log for each video gaming
 terminal on the premises and maintain and submit complete records
 on receipt of each video gaming terminal on the premises as
 determined by the commission.
 (b)  A video gaming retailer must use secure bill acceptors
 that detect and reject counterfeit money.
 (c)  A video gaming manufacturer must ensure the
 communication method used to transmit data from the video gaming
 terminals or site controller to the network operating center is
 secure by using cellular, DSL, cable, or Internet encryption that
 is secure or another method approved by the commission.
 Sec. 2001A.162.  RESPONSIBILITY FOR VIDEO GAMING
 OPERATIONS. (a)  A video gaming retailer is responsible for the
 management of video gaming game operations, including:
 (1)  the validation and payment of prizes,
 determination of game themes, prizes, bonuses, progressives,
 number and placement of video gaming terminals, and individual
 payout percentage settings; and
 (2)  the management of cashiers, food and beverage
 workers, floor workers, security personnel, the security system,
 building completion, janitorial services, landscape design, and
 maintenance.
 (b)  Nothing in Subsection (a) limits the authority of the
 commission, the Department of Public Safety, or another law
 enforcement agency to administer and enforce this chapter as
 related to video gaming.
 (c)  In addition to other requirements under this chapter
 relating to video gaming, a video gaming retailer at all times
 shall:
 (1)  operate only video gaming terminals that are
 distributed by a video gaming distributor and provide a secure
 location for the placement, operation, and play of the video gaming
 terminals;
 (2)  prevent any person from tampering with or
 interfering with the operation of a video gaming terminal;
 (3)  ensure that communication technology from the
 network operating center to the site controller and video gaming
 terminals is connected at all times and prevent any person from
 tampering or interfering with the operation of the connection;
 (4)  ensure that video gaming terminals are in the
 sight and control of designated employees of the video gaming
 retailer;
 (5)  monitor video gaming terminals to prevent access
 to or play by persons who are younger than 21 years of age or who are
 visibly intoxicated;
 (6)  pay all credits won by a player on presentment of a
 valid winning video gaming game ticket;
 (7)  install, post, and display prominently at the
 licensed location redemption information and other informational
 or promotional materials as required by the commission;
 (8)  maintain general liability insurance coverage for
 the video gaming terminal establishment and all video gaming
 terminals in the amounts required by the commission;
 (9)  assume liability for money lost or stolen from any
 video gaming terminal; and
 (10)  annually submit an audited financial statement to
 the commission in accordance with generally accepted accounting
 principles.
 Sec. 2001A.163.  TECHNICAL STANDARDS FOR VIDEO GAMING
 EQUIPMENT. The commission by rule shall establish minimum
 technical standards for video gaming equipment that may be operated
 in this state.
 Sec. 2001A.164.  INCIDENT REPORTS. (a)  A video gaming
 retailer shall record in accordance with commission rules all
 unusual occurrences related to gaming activity on the video gaming
 premises operated by the retailer.
 (b)  A video gaming retailer shall assign each incident,
 without regard to materiality, a sequential number and, at a
 minimum, provide the following information in a permanent record
 prepared in accordance with commission rules to ensure the
 integrity of the record:
 (1)  the number assigned to the incident;
 (2)  the date and time of the incident;
 (3)  the nature of the incident;
 (4)  each person involved in the incident; and
 (5)  the name of the employee or other agent of the
 video gaming retailer who investigated the incident.
 Sec. 2001A.165.  COMMISSION APPROVAL REQUIRED FOR
 PROCEDURES AND ACCOUNTING CONTROLS. (a)  The commission's approval
 is required for all internal procedures and accounting controls of
 a video gaming retailer.
 (b)  The commission by rule shall establish general
 accounting and auditing requirements and internal control
 standards for video gaming retailers.
 Sec. 2001A.166.  EMPLOYEE REGISTRY. (a)  The commission
 shall maintain a registry of individuals on whom the commission has
 conducted a criminal history background check and who are approved
 to be involved in the conduct of video gaming.  An individual listed
 in the registry may be involved in the conduct of video gaming at
 any location at which video gaming is authorized.  The commission
 shall maintain the registry in the same manner as the commission
 maintains the registry of approved bingo employees under Section
 2001.313.
 (b)  The commission may prohibit an employee from performing
 any act relating to video gaming terminals if the commission finds
 that the employee has:
 (1)  committed, attempted, or conspired to commit any
 act prohibited by this chapter;
 (2)  concealed or refused to disclose any material fact
 in any commission investigation;
 (3)  committed, attempted, or conspired to commit
 larceny or embezzlement;
 (4)  been convicted in any jurisdiction of an offense
 involving or relating to gambling;
 (5)  accepted employment in a position for which
 commission approval is required after commission approval was
 denied for a reason involving personal unsuitability or after
 failing to apply for a license or approval on commission request;
 (6)  been prohibited under color of governmental
 authority from being present on the premises of any gaming
 establishment or any establishment where pari-mutuel wagering is
 conducted for any reason relating to improper gambling activity or
 for any illegal act;
 (7)  wilfully defied any legislative investigative
 committee or other officially constituted body acting on behalf of
 the United States or any state, county, or municipality that sought
 to investigate alleged or potential crimes relating to gaming,
 corruption of public officials, or any organized criminal
 activities; or
 (8)  been convicted of any felony or any crime
 involving moral turpitude.
 (c)  The commission may prohibit an employee from performing
 any act relating to video gaming terminals based on a revocation or
 suspension of any gaming or wagering license or other affirmative
 regulatory approval or for any other reason the commission finds
 appropriate, including a refusal by a regulatory authority to issue
 a license or other affirmative regulatory approval for the employee
 to engage in or be involved with the lottery or with regulated
 gaming or pari-mutuel wagering in any jurisdiction.
 (d)  In this section, "employee" includes any person
 connected directly with or compensated by a license applicant or
 the holder of a license under this chapter as an agent, personal
 representative, consultant, or independent contractor for
 activities directly related to video gaming operations in this
 state.
 Sec. 2001A.167.  REPORT OF VIOLATIONS. A person who holds a
 license under this chapter shall immediately report to the
 commission a violation or suspected violation of this chapter or a
 rule adopted under this chapter by any license holder, an employee
 of the holder, or any person on the retailer's video gaming
 premises.
 Sec. 2001A.168.  SECURITY. (a)  A video gaming retailer
 shall comply with the following security procedures:
 (1)  except for a video gaming retailer whose gross
 gaming income is less than the minimum amount specified by
 commission rule, all video gaming terminals must be continuously
 monitored through the use of a closed-circuit television system
 that records activity for a continuous 24-hour period and all
 videotapes or other media used to store video images shall be
 retained for at least 30 days and made available to the commission
 on request;
 (2)  the video gaming retailer must provide to the
 commission a security plan for the retailer's video gaming
 operations that includes a floor plan of the area where video gaming
 terminals are to be operated showing video gaming terminal
 locations and security camera mount locations; and
 (3)  each license holder shall employ at least the
 minimum number of private security personnel the commission
 determines is necessary to provide for safe and approved operation
 of the video gaming premises and the safety and well-being of the
 players.
 (b)  Private security personnel must be present during all
 hours of video gaming operations at each retailer's video gaming
 premises.
 (c)  An agent or employee of the commission or the Department
 of Public Safety or other law enforcement personnel may be present
 at a retailer's video gaming premises at any time.
 (d)  The commission may adopt rules to impose additional
 surveillance and security requirements related to video gaming
 premises and the operation of video gaming terminals.
 Sec. 2001A.169.  COMMISSION RIGHT TO ENTER. The commission
 or the commission's representative, after displaying appropriate
 identification and credentials, has the free and unrestricted right
 to enter the premises involved in operation or support of video
 gaming of a person licensed under this chapter and to enter any
 other locations involved in operation or support of video gaming at
 all times to examine the systems and to inspect and copy the records
 of the person pertaining to the operation of video gaming.
 Sec. 2001A.170.  INDEPENDENT LABORATORY TESTING. (a)  The
 commission may not approve an independent testing laboratory to
 certify a video gaming system under Section 2001A.154 or a video
 gaming terminal under Section 2001A.159 if the laboratory is owned
 or controlled by a person licensed under this chapter.
 (b)  This section does not prohibit an applicant or license
 holder from paying an independent testing laboratory for testing
 that is requested.
 [Sections 2001A.171-2001A.200 reserved for expansion]
 SUBCHAPTER E. REVENUE
 Sec. 2001A.201.  DISTRIBUTION OF VIDEO GAMING REVENUE. (a)
 At the times and in the manner prescribed by commission rule, a
 video gaming retailer shall:
 (1)  remit to the commission 20 percent of the gross
 gaming income derived from video gaming games operated by the video
 gaming retailer; and
 (2)  distribute 10 percent of the gross gaming income
 derived from the video gaming games operated by the video gaming
 retailer to:
 (A)  the licensed authorized organization that
 conducts bingo on the premises; or
 (B)  if more than one licensed authorized
 organization is conducting bingo on the premises, the organizations
 in equal amounts.
 (b)  The remainder of the gross gaming income may be retained
 by the video gaming retailer.
 (c)  Except for a video gaming retailer whose gross gaming
 income is less than the minimum amount specified by commission
 rule, the commission shall require a video gaming retailer to
 establish a separate electronic funds transfer account for
 depositing money from video gaming operations and making payments
 to the commission.
 (d)  The commission by rule shall establish the procedures
 for:
 (1)  depositing money from video gaming terminal
 operations into electronic funds transfer accounts; and
 (2)  handling money from video gaming terminal
 operations.
 (e)  Unless otherwise directed by the commission, a video
 gaming retailer shall maintain in its account this state's share of
 the gross gaming income, to be electronically transferred on dates
 established by the commission.  On a retailer's failure to maintain
 this balance, the commission may direct the disabling of all of a
 retailer's video gaming terminals until full payment of all amounts
 due is made. Interest shall accrue on any unpaid balance at a rate
 consistent with the amount charged under Section 111.060, Tax Code.
 The interest shall begin to accrue on the date payment is due to the
 commission.
 (f)  In the commission's sole discretion, rather than
 directing the disabling of a video gaming retailer's video gaming
 terminals under Subsection (e), the commission may elect to impose
 an administrative penalty on a retailer in an amount determined by
 the commission not to exceed $5,000 for each violation of that
 subsection.  If the retailer fails to remedy the violation,
 including payment of any amounts assessed by or due to this state,
 on or before the 30th day after the date the retailer is notified of
 the violation, the commission may direct the disabling of the
 retailer's video gaming terminals or use any other means for
 collection as provided by the penalty chart established by the
 commission.
 (g)  A video gaming retailer is solely responsible for
 resolving any income discrepancies between actual money collected
 and the gross gaming income reported by the network operating
 center or central reporting system established by the commission.
 Unless an accounting discrepancy is resolved in favor of the video
 gaming retailer, the commission may not make any credit
 adjustments.  Any accounting discrepancies which cannot otherwise
 be resolved shall be resolved in favor of the commission.
 (h)  A video gaming retailer shall remit payment as directed
 by the commission if the electronic transfer of money is not
 operational or the commission notifies the retailer that other
 remittance is required.  The retailer shall report this state's
 share of gross gaming income and remit the amount generated from the
 terminals during the reporting period.
 (i)  A licensed authorized organization may only use the
 money distributed to the organization under Subsection (a)(2) for
 the charitable purposes of the organization that are authorized
 under Chapter 2001.
 Sec. 2001A.202.  COMMISSION EXAMINATION OF FINANCIAL
 RECORDS. The commission may examine all accounts, bank accounts,
 financial statements, and records in the possession or control of a
 person licensed under this chapter or in which the license holder
 has an interest.  The license holder must authorize and direct all
 third parties in possession or control of the accounts or records to
 allow examination of any of those accounts or records by the
 commission.
 Sec. 2001A.203.  FINANCIAL INFORMATION REQUIRED. (a)  A
 video gaming retailer shall furnish to the commission all
 information and bank authorizations required to facilitate the
 timely transfer of money to the commission.
 (b)  A video gaming retailer must provide the commission
 advance notice of any proposed account changes in information and
 bank authorizations to assure the uninterrupted electronic
 transfer of money.
 (c)  The commission is not responsible for any interruption
 or delays in the transfer of money.  The video gaming retailer is
 responsible for any interruption or delay in the transfer of money.
 Sec. 2001A.204.  STATE VIDEO GAMING ACCOUNT. (a) The state
 video gaming account is a special account in the general revenue
 fund. The account consists of all revenue received by the
 commission from video gaming, fees received under this chapter, and
 all money credited to the account from any other fund or source
 under law.
 (b)  Money in the state video gaming account may be used to
 pay the costs incurred by the commission in the operation and
 administration of video gaming. The remainder of the account shall
 be deposited to the credit of the general revenue fund.
 [Sections 2001A.205-2001A.250 reserved for expansion]
 SUBCHAPTER F. OFFENSES; PENALTIES
 Sec. 2001A.251.  MANIPULATION OR TAMPERING. (a) A person
 commits an offense if the person intentionally or knowingly:
 (1)  manipulates the outcome of a video gaming game or
 the amount of a video gaming prize; or
 (2)  tampers with, damages, defaces, renders
 inoperable, or manipulates the operation of a video gaming terminal
 or other device by physical, electronic, or other means, other than
 in accordance with commission rules.
 (b)  An offense under this section is a felony of the third
 degree.
 Sec. 2001A.252.  VIDEO GAMING BY INDIVIDUAL YOUNGER THAN 21
 YEARS OF AGE. (a)  A person commits an offense if the person
 intentionally or knowingly:
 (1)  sells or offers to sell a play of a video gaming
 game to an individual the person knows is younger than 21 years of
 age or permits the individual to purchase a play of a video gaming
 game; or
 (2)  pays money or issues a credit slip or other
 winnings for a play of a video gaming game to an individual the
 person knows is younger than 21 years of age.
 (b)  An individual who is younger than 21 years of age
 commits an offense if the individual:
 (1)  purchases a play of a video gaming game; or
 (2)  falsely represents the individual to be 21 years
 of age or older by displaying evidence of age that is false or
 fraudulent or misrepresents in any way the individual's age in
 order to purchase a play of a video gaming game.
 (c)  An offense under Subsection (a) is a Class B
 misdemeanor.
 (d)  An offense under Subsection (b) is a misdemeanor
 punishable by a fine not to exceed $250.
 (e)  It is a defense to the application of Subsection (b)
 that the individual younger than 21 years of age is participating in
 an inspection or investigation on behalf of the commission or other
 appropriate governmental entity regarding compliance with this
 section.
 Sec. 2001A.253.  UNAUTHORIZED OPERATION, USE, OR POSSESSION
 OF VIDEO GAMING TERMINAL.  (a)  A person may not operate, use, or
 possess a video gaming terminal unless the operation, use, or
 possession is expressly authorized by this chapter or other law.
 (b)  Except for transport to or from licensed video gaming
 premises and as provided by this chapter or other law, a person
 commits an offense if the person operates, uses, or possesses any
 video gaming terminal that is not connected to a site controller or
 network operating center as required by this chapter or commission
 rule. An offense under this subsection is a felony of the third
 degree.
 (c)  It is an exception to the application of Subsection (b)
 that the commission possesses video gaming terminals for study and
 evaluation or that a video gaming retailer, video gaming
 distributor, or video gaming manufacturer stores or possesses a
 video gaming terminal as authorized by the commission.
 Sec. 2001A.254.  OTHER OFFENSES; REVOCATION OF LICENSE. (a)
 A person commits an offense and the person's license is subject to
 revocation under this chapter if the person knowingly:
 (1)  makes a false statement or material omission in an
 application for a license under this chapter;
 (2)  fails to maintain records that fully and
 accurately record each transaction connected with the video gaming
 operations, the leasing of premises to be used for video gaming, or
 the manufacture, sale, or distribution of video gaming equipment;
 (3)  falsifies or makes a false entry in a book or
 record if the entry relates to video gaming, the disposition of
 video gaming proceeds, or the gross receipts from the manufacture,
 sale, or distribution of video gaming equipment;
 (4)  diverts or pays a portion of the gross gaming
 income to a person except in furtherance of one or more of the
 lawful purposes provided by this chapter; or
 (5)  violates this chapter or a term of a license issued
 under this chapter.
 (b)  An offense under Subsection (a)(2), (3), or (5) is a
 Class A misdemeanor, unless it is shown on the trial of the offense
 that the person has been convicted previously under this section,
 in which event the offense is a state jail felony. An offense under
 Subsection (a)(1) or (4) is a Class A misdemeanor.
 (c)  A person whose license is revoked under this section may
 not apply for another license under this chapter before the first
 anniversary of the date of revocation.
 Sec. 2001A.255.  DISCIPLINARY ACTION. (a) The commission
 may refuse to issue a license, may revoke, suspend, or refuse to
 renew a license, or may reprimand a license holder for a violation
 of this chapter, other state law, or a rule of the commission.
 (b)  If the commission proposes to take action against a
 license holder or applicant under Subsection (a), the license
 holder or applicant is entitled to notice and a hearing.
 (c)  The commission may place on license probation subject to
 reasonable conditions a person whose license is suspended under
 this section.
 (d)  The commission by rule shall develop a system for
 monitoring a license holder's compliance with this chapter.
 Sec. 2001A.256.  EFFECT OF DENIAL OF LICENSE. (a)  A person
 whose application for a license has been denied may not have any
 interest in or association with a video gaming retailer or any other
 business conducted in connection with video gaming without prior
 approval of the commission.
 (b)  Any contract between a person holding a license and a
 person denied a license must be terminated immediately on receipt
 of notice from the commission.  If the person denied a license has
 previously been granted a temporary license, the temporary license
 expires immediately on denial of the permanent license.
 (c)  Except as otherwise authorized by the commission, a
 person denied a license may not reapply for any license before the
 second anniversary of the date of the denial.
 Sec. 2001A.257.  SUMMARY SUSPENSION OF VIDEO GAMING
 RETAILER; TERMINAL DISABLED.  (a)  The commission may summarily
 suspend the license of a video gaming retailer without notice or a
 hearing if the commission finds the action is necessary to maintain
 the integrity, security, honesty, or fairness of the operation or
 administration of video gaming or to prevent financial loss to this
 state and:
 (1)  the retailer fails to deposit money received from
 video gaming terminal operations as required by this chapter or
 commission rule;
 (2)  an event occurs that would render the retailer
 ineligible for a license under this subchapter;
 (3)  the retailer refuses to allow the commission, the
 commission's agents, or the state auditor, or their designees, to
 examine the retailer's books, records, papers, or other objects as
 required under this chapter or commission rule; or
 (4)  the director learns the retailer failed to
 disclose information that would, if disclosed, render the retailer
 ineligible for a license under this chapter.
 (b)  A summary suspension under this section must comply with
 the notice and procedure requirements provided by Section 466.160,
 Government Code.
 (c)  The commission may direct the disabling of a video
 gaming terminal operated by a video lottery retailer under this
 chapter at the time:
 (1)  a proceeding to summarily suspend the retailer's
 license is initiated;
 (2)  the commission discovers the retailer failed to
 deposit money received from video gaming terminal operations as
 required if the license is being summarily suspended under this
 section; or
 (3)  an act or omission occurs that, under commission
 rule, justifies the termination of video gaming operations to:
 (A)  protect the integrity of the video gaming or
 the public health, welfare, or safety; or
 (B)  prevent financial loss to this state.
 (d)  The commission shall immediately direct the disabling
 of a video gaming terminal if necessary to protect the public
 health, welfare, or safety.
 Sec. 2001A.258.  INSPECTION OF PREMISES. The commission,
 its officers or agents, or a state, municipal, or county peace
 officer may enter and inspect the contents of premises where:
 (1)  video gaming is being conducted or is intended to
 be conducted; or
 (2)  video gaming equipment is found.
 Sec. 2001A.259.  INJUNCTION. (a) If the commission has
 reason to believe that this chapter has been or is about to be
 violated, the commission may petition a court for injunctive relief
 to restrain the violation.
 (b)  Venue for an action seeking injunctive relief is in a
 district court in Travis County.
 (c)  If the court finds that this chapter has been violated
 or is about to be violated, the court shall issue a temporary
 restraining order and, after due notice and hearing, a temporary
 injunction, and after a final trial, a permanent injunction to
 restrain the violation.
 (d)  If the court finds that this chapter has been knowingly
 violated, the court shall order all proceeds from the illegal video
 gaming to be forfeited to the commission as a civil penalty.
 Sec. 2001A.260.  ADMINISTRATIVE PENALTY. (a) The
 commission may impose an administrative penalty against a person
 who violates this chapter or a rule or order adopted by the
 commission under this chapter in the same manner as the commission
 imposes an administrative penalty under Subchapter M, Chapter 2001.
 (b)  Except as otherwise provided by this chapter, the amount
 of the administrative penalty may not exceed $1,000 for each
 violation. Each day a violation continues or occurs may be
 considered a separate violation for purposes of imposing a penalty.
 (c)  In determining the amount of the penalty, the director
 shall consider:
 (1)  the seriousness of the violation, including the
 nature, circumstances, extent, and gravity of the violation;
 (2)  the history of previous violations;
 (3)  the amount necessary to deter future violations;
 (4)  efforts to correct the violation; and
 (5)  any other matter that justice may require.
 (d)  The notice, hearing, and appeal for an administrative
 penalty assessed under this section shall be provided or conducted
 in the same manner as notice, hearing, and appeals are provided or
 conducted under Subchapter M, Chapter 2001, specifically Sections
 2001.603 through 2001.610.
 Sec. 2001A.261.  CIVIL PENALTY. (a) A person who violates
 this chapter or a rule adopted by the commission under this chapter
 is liable to the state for a civil penalty not to exceed $5,000 for
 each day of violation.
 (b)  At the request of the commission, the attorney general
 shall bring an action to recover a civil penalty authorized by this
 section. The attorney general may recover reasonable expenses,
 including attorney's fees, incurred in recovering the civil
 penalty.
 Sec. 2001A.262.  REMEDIES NOT EXCLUSIVE. The commission may
 suspend or revoke a license under this subchapter, impose an
 administrative or civil penalty under this subchapter, or both,
 depending on the severity of the violation.
 [Sections 2001A.263-2001A.300 reserved for expansion]
 SUBCHAPTER G.  RESPONSIBLE GAMING
 Sec. 2001A.301.  DEFINITIONS. In this subchapter:
 (1)  "Fully executed gaming transaction" means an
 activity involving a video gaming terminal or video gaming
 equipment that occurs on the gaming floor of a video gaming premises
 and that results in an individual obtaining any money or thing of
 value from, or being owed any money or thing of value by, a video
 gaming retailer.
 (2)  "Gaming activity" means an activity involving or
 related to the play of video gaming terminals, including player
 club memberships or promotional activities.
 (3)  "Self-excluded person" means a person whose name
 and identifying information is included, at the person's own
 request, on the self-exclusion list.
 (4)  "Self-exclusion list" means a list maintained by
 the commission of names and identifying information of persons who,
 under this subchapter, have voluntarily agreed to be excluded from
 a video gaming premises and all gaming activities at a video gaming
 premises and to be prohibited from collecting any winnings,
 recovering any losses, or accepting complimentary gifts or services
 or any other thing of value at a video gaming premises.
 (5)  "Winnings" means any money or thing of value
 received from or owed by a video gaming retailer as a result of a
 fully executed gaming transaction.
 Sec. 2001A.302.  UNDERAGE PERSONS EXCLUDED. (a)  An
 individual younger than 18 years of age may not enter or be on the
 gaming floor of a video gaming premises.
 (b)  An individual younger than 21 years of age may not:
 (1)  whether personally or through an agent, operate,
 use, play, or place a wager on a video gaming game at a video gaming
 premises;
 (2)  receive check cashing privileges, be rated as a
 player, or receive any complimentary service, item, or discount as
 a result of, or in anticipation of, video gaming activity; or
 (3)  in any manner or in any proceeding, whether
 personally or through an agent, collect winnings or recover losses
 arising as a result of any video gaming activity.
 (c)  Winnings incurred by an individual younger than 21 years
 of age shall be remitted to the commission.  For the purposes of
 this subsection, winnings issued to, found on or about, or redeemed
 by an individual younger than 21 years of age shall be presumed to
 constitute winnings subject to remittance to the commission.
 (d)  A person holding a license issued by the commission may
 not permit or enable an individual to engage in conduct that
 violates Subsection (a), (b), or (c).
 (e)  A video gaming retailer shall establish procedures that
 are designed to prevent violations of this section and shall submit
 a copy of the procedures to the commission not later than the 30th
 day before the date the retailer begins video gaming operations at
 the video gaming premises. The commission shall provide to a video
 gaming retailer written notification of any deficiencies in the
 plan, and the retailer may submit revisions of the plan to the
 commission.  The video gaming retailer may not begin video gaming
 operations until the commission approves the retailer's
 procedures. Amendments to these procedures must be submitted to and
 approved by the commission before implementation.
 (f)  A video gaming retailer may be subject to administrative
 sanctions if a person engages in conduct that violates Subsection
 (a), (b), or (c) at its video gaming premises.
 (g)  A video gaming retailer who violates this subchapter may
 be held jointly and severally liable for the violation.
 (h)  A video gaming retailer shall post signs that include a
 statement substantially similar to the following: "It is unlawful
 for any person under 21 years of age to engage in any gaming
 activities. Individuals violating this prohibition will be removed
 and may be subject to arrest for criminal trespass."  The complete
 text of the sign shall be submitted to and approved by the
 commission as part of the procedures required under this section.
 The signs shall be prominently posted within 50 feet of each
 entrance and exit of the gaming floor.
 (i)  It is an affirmative defense to administrative
 penalties imposed for violations of this section if it is shown by a
 preponderance of the evidence that:
 (1)  the video gaming retailer or the retailer's agent
 verified the underage person's age using identification supplied by
 the person;
 (2)  the identification supplied by the person included
 a driver's license or identification card issued by this state,
 another state, or an agency of the United States;
 (3)  the driver's license or identification card
 included a photograph of the person; and
 (4)  the driver's license or identification card
 reasonably appeared on its face to be valid.
 Sec. 2001A.303.  COMMISSION EXCLUSION OR EJECTION FROM VIDEO
 GAMING PREMISES; EXCLUSION LIST.  (a)  The legislature finds that
 the exclusion or ejection of certain persons from video gaming
 premises is necessary to maintain strict and effective regulation
 of video gaming. The commission by rule shall provide for a list of
 persons who are to be excluded or ejected from a video gaming
 premises. Persons included on the exclusion list shall be
 identified by name and physical description. The commission shall
 publish the exclusion list on its website, and shall transmit a copy
 of the exclusion list periodically to video gaming retailers, as
 the list is initially issued and as it is revised. A video gaming
 retailer shall take steps necessary to ensure that all its key video
 gaming personnel and video gaming employees are aware of and
 understand the exclusion list and its function, and that all its key
 video gaming personnel and video gaming employees are kept aware of
 the content of the exclusion list.
 (b)  The exclusion list may include any person whose presence
 at a video gaming premises the commission determines poses a threat
 to the interests of this state, to achieving the intents and
 purposes of this chapter, or to the strict and effective regulation
 of video gaming.  In determining whether to include a person on the
 exclusion list, the commission may consider:
 (1)  any prior conviction of the person of:
 (A)  a crime that is a felony under the laws of
 this state, another state, or the United States;
 (B)  a crime involving moral turpitude; or
 (C)  a violation of the gaming laws of this state,
 another state, or the United States;
 (2)  a violation or a conspiracy to violate by the
 person of any provision of this chapter, including:
 (A)  a failure to disclose an interest in a gaming
 facility for which the person must obtain a license;
 (B)  purposeful evasion of taxes or fees; or
 (C)  a violation of an order of the commission or
 of any other governmental agency that warrants exclusion or
 ejection of the person from a video gaming premises;
 (3)  whether the person has pending charges or
 indictments for a gaming or gambling crime or a crime related to the
 integrity of gaming operations in any state;
 (4)  whether the person's conduct or reputation is such
 that the person's presence at a video gaming premises may call into
 question the honesty and integrity of the video gaming operations,
 interfere with the orderly conduct of the video gaming operations,
 or adversely affect public confidence and trust that video gaming
 is free from criminal or corruptive elements;
 (5)  whether the person is a career or professional
 offender whose presence at a video gaming premises would be adverse
 to the interest of licensed gaming in this state;
 (6)  whether the person has a known relationship or
 connection with a career or professional offender whose presence at
 a video gaming premises would be adverse to the interest of licensed
 gaming in this state;
 (7)  whether the commission has suspended the person's
 gaming privileges;
 (8)  whether the commission has revoked the person's
 licenses related to video gaming;
 (9)  whether the commission determines that the person
 poses a threat to the safety of patrons or employees of a video
 gaming premises; and
 (10)  whether the person has a history of conduct
 involving the disruption of gaming operations at a video gaming
 premises.
 Sec. 2001A.304.  NOTIFICATION OF EXCLUSION. (a)  The
 commission shall notify a person of the commission's intent to
 include the person on the exclusion list created under Section
 2001A.303. The notice shall be provided by personal service, by
 certified mail to the person's last known address, or, if service
 cannot be accomplished by personal service or certified mail, by
 daily publication for two weeks in a newspaper of general
 circulation in the county in which the person's last known address
 is located and in a newspaper of general circulation in each county
 in which a video gaming premises is located.
 (b)  A person who receives notice of the commission's intent
 to include the person on the exclusion list is entitled to an
 adjudication hearing under Chapter 2001, Government Code, except as
 provided by this section, in which the person may demonstrate why
 the person should not be included on the exclusion list. The person
 shall request the adjudication hearing not later than the 30th day
 after:
 (1)  the date the person receives the notice by
 personal service or certified mail; or
 (2)  the date of the last newspaper publication of the
 notice.
 (c)  If the adjudication hearing or any appeal under Chapter
 2001, Government Code, results in an order that the person should
 not be included on the exclusion list, the commission shall:
 (1)  publish a revised exclusion list that does not
 include the person; and
 (2)  notify video gaming retailers that the person has
 been removed from the exclusion list.
 (d)  A video gaming retailer shall take all steps necessary
 to ensure its key video gaming personnel and video gaming employees
 are made aware that the person has been removed from the exclusion
 list.
 (e)  This section does not apply to the self-exclusion list.
 Sec. 2001A.305.  REQUEST FOR SELF-EXCLUSION. (a)  A person
 requesting placement on the self-exclusion list shall submit, in
 person or as provided by commission rule, a completed written
 request to the commission on a form prescribed by the commission.
 (b)  A request for self-exclusion must include the person's:
 (1)  name, including any aliases or nicknames;
 (2)  date of birth;
 (3)  address of current residence;
 (4)  telephone number;
 (5)  social security number, if voluntarily provided in
 accordance with any applicable federal law;
 (6)  physical description, including height, weight,
 gender, hair color, eye color, and any other physical
 characteristic that may assist in the identification of the person;
 and
 (7)  any other information required by commission rule.
 (c)  Not later than the 30th day after any change in the
 information provided in Subsection (b), the self-excluded person
 must update the changed information using a form prescribed by the
 commission.
 (d)  A person may request self-exclusion until:
 (1)  the first anniversary of the date the person is
 placed on the self-exclusion list;
 (2)  the fifth anniversary of the date the person is
 placed on the self-exclusion list; or
 (3)  the person's death.
 (e)  A request for self-exclusion must include a signed
 release statement that:
 (1)  acknowledges that the request for self-exclusion
 has been made voluntarily;
 (2)  certifies that the information provided in the
 request for self-exclusion is true and accurate;
 (3)  acknowledges that the person requesting
 self-exclusion is a problem gambler;
 (4)  acknowledges that:
 (A)  a person requesting a lifetime exclusion may
 not request removal from the self-exclusion list; and
 (B)  a person requesting a one-year or five-year
 exclusion:
 (i)  will remain on the self-exclusion list
 until a request for removal is approved; and
 (ii)  may not request removal from the
 self-exclusion list until the requested exclusion period ends;
 (5)  acknowledges that a person on the self-exclusion
 list who is discovered on the gaming floor or engaging in gaming
 activities at any video gaming premises is subject to removal and to
 arrest for criminal trespass; and
 (6)  releases, indemnifies, holds harmless, and
 forever discharges this state, the commission, and all video gaming
 retailers from any claims, damages, losses, expenses, or liability
 arising out of, by reason of, or relating to the self-excluded
 person or to any other party for any harm, monetary or otherwise,
 that may be proximately caused by:
 (A)  the failure of a video gaming retailer to
 withhold gaming privileges from or restore gaming privileges to a
 person who is on the self-exclusion list at the time of the failure;
 or
 (B)  a video gaming retailer otherwise permitting
 or not permitting a self-excluded person to engage in gaming
 activity at a video gaming premises while on the self-exclusion
 list.
 (f)  The exclusion of a person who requests self-exclusion
 for one year or five years remains in effect unless, after the end
 of the self-exclusion period, the self-excluded person requests
 removal from the commission's self-exclusion list as provided by
 Section 2001A.308. The exclusion terminates on the date the
 commission removes the person's name from the self-exclusion list.
 (g)  A person submitting a self-exclusion request must
 present a government-issued identification containing the person's
 signature and photograph when the person submits the request.
 (h)  The commission may require a person requesting
 self-exclusion under this subchapter to have the person's
 photograph taken by the commission or an agent of the commission on
 the commission's acceptance of the person's request to be on the
 list.
 Sec. 2001A.306.  SELF-EXCLUSION LIST; CONFIDENTIALITY. (a)
 The commission shall maintain the self-exclusion list and shall
 notify by first class mail or direct electronic transmission each
 video gaming retailer of any addition to or deletion from the list
 not later than the fifth business day after the date the commission
 verifies the information received under this subchapter.
 (b)  The notice provided to video gaming retailers by the
 commission must include:
 (1)  the person's identifying information specified by
 Section 2001A.305(b); and
 (2)  a copy of the person's photograph, if any, taken by
 the commission.
 (c)  The notice provided to video gaming retailers by the
 commission concerning a person whose name has been removed from the
 self-exclusion list must include the name and date of birth of the
 person.
 (d)  A video gaming retailer shall maintain a copy of the
 self-exclusion list and establish procedures to ensure that the
 copy of the self-exclusion list is updated and that all appropriate
 employees and agents of the video gaming retailer are notified of
 any addition to or deletion from the list not later than the fifth
 business day after the day notice is mailed or transmitted
 electronically to the video gaming retailer under Subsection (a).
 (e)  Information furnished to or obtained by the commission
 under this subchapter is confidential and may not be disclosed
 except in accordance with this subchapter.
 (f)  Except as provided by this subsection, a video gaming
 retailer or an employee or agent of the retailer may not disclose
 the name of, or any information about, a person who has requested
 self-exclusion to anyone other than employees and agents of the
 video gaming retailer whose duties and functions require access to
 the information. A video gaming retailer may disclose the identity
 of a self-excluded person to appropriate employees of other video
 gaming retailers in this state or affiliated video gaming entities
 in other jurisdictions for the limited purpose of assisting in the
 proper administration of responsible gaming programs.
 (g)  A self-excluded person may not in any manner or in any
 proceeding collect any winnings or recover any losses arising as a
 result of any video gaming activity that occurs during the period
 that the person is on the self-exclusion list.
 (h)  Winnings incurred by a self-excluded person shall be
 remitted to the commission.  For the purposes of this subsection,
 winnings issued to, found on or about, or redeemed by a
 self-excluded person shall be presumed to constitute winnings
 subject to remittance to the commission.
 Sec. 2001A.307.  DUTIES OF VIDEO GAMING RETAILERS REGARDING
 SELF-EXCLUDED PERSONS. (a)  A video gaming retailer shall train its
 employees and establish procedures designed to:
 (1)  identify a self-excluded person who is present at
 the retailer's video gaming premises and, on identification,
 immediately notify the following:
 (A)  employees of the retailer whose duties
 include the identification and removal of self-excluded persons; or
 (B)  commission agents or a peace officer at the
 premises;
 (2)  immediately notify the Department of Public Safety
 when a self-excluded person is discovered on the retailer's video
 gaming premises or engaging in video gaming activities;
 (3)  refuse wagers from and deny video gaming
 privileges to a self-excluded person;
 (4)  deny check cashing privileges, player club
 membership, complimentary goods and services, junket
 participation, and other similar privileges and benefits to a
 self-excluded person;
 (5)  ensure that a self-excluded person does not
 receive, either from the retailer or an agent of the retailer,
 junket solicitations, targeted mailings, telemarketing promotions,
 player club materials, or other promotional materials relating to
 video gaming activities at the retailer's video gaming premises;
 (6)  comply with Section 2001A.306(d); and
 (7)  disseminate written materials to patrons
 explaining the self-exclusion program.
 (b)  A video gaming retailer shall submit a copy of its
 procedures and training materials established under Subsection (a)
 to the commission for review and approval not later than the 30th
 day before the date the retailer begins gaming operations at the
 video gaming premises.  The commission shall notify the video
 gaming retailer in writing of any deficiencies in the procedures
 and training materials, and the retailer may submit amendments to
 the procedures and training materials to the commission.  A video
 gaming retailer may not begin video gaming operations until the
 commission approves the procedures and training.
 (c)  A video gaming retailer shall submit amendments to the
 procedures and training materials required under Subsection (b) to
 the commission for review and approval not later than the 30th day
 before the intended implementation date of the amendments.  The
 video gaming retailer may implement the amendments on the intended
 implementation date unless the video gaming retailer receives a
 notice under Subsection (d) objecting to the amendments.
 (d)  If during the review period prescribed by Subsection (c)
 the commission determines that the amendments to the procedures and
 training materials will not promote the prevention of gaming by
 self-excluded persons or assist in the proper administration of the
 self-exclusion program, the commission may, by written notice to
 the video gaming retailer, object to the amendments.  The objection
 must:
 (1)  specify the nature of the objection and, when
 possible, an acceptable alternative; and
 (2)  direct that the amendments not be implemented
 until approved by the commission.
 (e)  If the commission objects to amendments to the
 procedures and training materials under Subsection (d), the video
 gaming retailer may submit revised amendments not later than the
 30th day after the day the retailer receives the written notice of
 objection from the commission.  The video gaming retailer may
 implement the amendments on the 30th day following the submission
 of the revisions unless it receives written notice under Subsection
 (d) objecting to the amendments.
 (f)  A video gaming retailer shall post signs at all
 entrances to the retailer's video gaming premises indicating that a
 person who is on the self-exclusion list will be subject to arrest
 for trespassing if the person is on the video gaming premises or
 engaging in video gaming activities.  The text and font size of the
 signs shall be submitted for approval to the commission under the
 procedures specified by Subsection (b).
 (g)  The self-exclusion list is confidential, and any
 distribution of the list to an unauthorized source constitutes a
 violation of this subchapter.
 (h)  A video gaming retailer shall report the discovery of a
 self-excluded person on the retailer's video gaming premises or
 engaging in gaming activities to the commission within 24 hours of
 the discovery.
 Sec. 2001A.308.  REMOVAL FROM SELF-EXCLUSION LIST.  (a)  A
 person who requests self-exclusion for a one-year or five-year
 period may, after the end of the self-exclusion period, request
 removal of the person's name from the self-exclusion list by
 submitting a completed request for removal as required by
 Subsections (b) and (c). The request must be made in person unless
 the commission provides otherwise by rule.
 (b)  A self-excluded person's request for removal from the
 self-exclusion list must include:
 (1)  the person's identifying information specified by
 Section 2001A.305(b); and
 (2)  the person's signature, indicating acknowledgment
 of the following statement:
 "I certify that the information that I have provided is true
 and accurate.  I am aware that my signature constitutes a revocation
 of my previous request for self-exclusion, and I authorize the
 Texas Lottery Commission to permit all video gaming retailers in
 this state to reinstate my gaming privileges at video gaming
 premises."
 (c)  A person submitting a request for removal from the
 self-exclusion list must present a government-issued
 identification containing the person's signature and photograph
 when the person submits the request.  Not earlier than the fifth
 business day after the date the request is submitted, the person
 submitting the request shall:
 (1)  return to the commission office where the request
 was submitted;
 (2)  present a government-issued identification
 containing the person's signature and photograph; and
 (3)  sign the request a second time.
 (d)  Not later than the fifth business day after the date the
 person requesting removal from the self-exclusion list signs the
 request for the second time, the commission shall remove the
 person's name from the self-exclusion list and notify each video
 gaming retailer of the removal.
 Sec. 2001A.309.  EXCEPTION. A self-excluded person is not
 prohibited from being at a video gaming premises if:
 (1)  the individual is carrying out the duties of
 employment or incidental activities related to employment;
 (2)  the video gaming retailer's security personnel and
 any agent of the commission located at the video gaming premises
 have received prior notice;
 (3)  access to the video gaming premises is limited to
 the time necessary to complete the individual's assigned duties;
 and
 (4)  the self-excluded individual does not otherwise
 engage in any gaming activities.
 SECTION 3.  Section 2001.3025, Occupations Code, is amended
 to read as follows:
 Sec. 2001.3025.  ACCESS TO CRIMINAL HISTORY RECORD
 INFORMATION.  (a)  The commission is entitled to conduct an
 investigation of and is entitled to obtain criminal history record
 information maintained by the Department of Public Safety, the
 Federal Bureau of Investigation identification division, or
 another law enforcement agency to assist in the investigation of:
 (1)  an applicant for or holder of a license issued
 under this chapter;
 (2)  a person required to be named in a license
 application; or
 (3)  an employee or other person who works or will work
 for a license holder and who is required by another provision of
 this chapter to undergo a criminal background check.
 (b)  The commission is not required to conduct a criminal
 background check under Subsection (a) for a person who has
 undergone an investigation authorized by Section 2001A.106 that is
 sufficient for the person to continue to hold a license under
 Chapter 2001A.
 SECTION 4.  Section 411.108(a-1), Government Code, is
 amended to read as follows:
 (a-1)  The Texas Lottery Commission is entitled to obtain
 from the department criminal history record information maintained
 by the department that relates to:
 (1)  a person licensed under Chapter 2001, Occupations
 Code, or described by Section 2001.3025, Occupations Code; or
 (2)  a person holding or seeking a license under
 Chapter 2001A, Occupations Code.
 SECTION 5.  Section 466.024(b), Government Code, is amended
 to read as follows:
 (b)  The commission shall adopt rules prohibiting the
 operation of any game using a video lottery machine or machine,
 except in accordance with Chapter 2001A, Occupations Code.
 SECTION 6.  Section 47.02(c), Penal Code, is amended to read
 as follows:
 (c)  It is a defense to prosecution under this section that
 the actor reasonably believed that the conduct:
 (1)  was permitted under Chapter 2001, Occupations
 Code;
 (2)  was permitted under Chapter 2002, Occupations
 Code;
 (3)  was permitted under Chapter 2001A, Occupations
 Code;
 (4)  consisted entirely of participation in the state
 lottery authorized by [the State Lottery Act (]Chapter 466,
 Government Code[)];
 (5) [(4)]  was permitted under the Texas Racing Act
 (Article 179e, Vernon's Texas Civil Statutes); or
 (6) [(5)]  consisted entirely of participation in a
 drawing for the opportunity to participate in a hunting, fishing,
 or other recreational event conducted by the Parks and Wildlife
 Department.
 SECTION 7.  Section 47.09, Penal Code, is amended by
 amending Subsection (a) and adding Subsection (c) to read as
 follows:
 (a)  It is a defense to prosecution under this chapter that
 the conduct:
 (1)  was authorized under:
 (A)  Chapter 2001, Occupations Code;
 (B)  Chapter 2002, Occupations Code; [or]
 (C)  Chapter 2001A, Occupations Code; or
 (D)  the Texas Racing Act (Article 179e, Vernon's
 Texas Civil Statutes);
 (2)  consisted entirely of participation in the state
 lottery authorized by Chapter 466, Government Code; or
 (3)  was a necessary incident to the operation of the
 state lottery and was directly or indirectly authorized by:
 (A)  Chapter 466, Government Code;
 (B)  the lottery division of the Texas Lottery
 Commission;
 (C)  the Texas Lottery Commission; or
 (D)  the director of the lottery division of the
 Texas Lottery Commission.
 (c)  Subsection (a)(1)(C) applies to a person manufacturing,
 possessing, or operating a gambling device under a license or other
 authorization of the Texas Lottery Commission under Chapter 2001A,
 Occupations Code.
 SECTION 8.  Chapter 47, Penal Code, is amended by adding
 Section 47.095 to read as follows:
 Sec. 47.095.  INTERSTATE OR FOREIGN COMMERCE DEFENSE.  It is
 a defense to prosecution under this chapter that a person sells,
 leases, transports, possesses, stores, or manufactures a gambling
 device with the authorization of the Texas Lottery Commission under
 Chapter 2001A, Occupations Code, for transportation in interstate
 or foreign commerce.
 SECTION 9.  (a)  As soon as practicable after the effective
 date of this Act, but not later than October 1, 2011, the Texas
 Lottery Commission shall adopt the rules necessary to implement
 video gaming in accordance with Chapter 2001A, Occupations Code, as
 added by this Act.
 (b)  Before the constitutional amendment authorizing the
 establishment of video gaming operations in this state and
 providing that certain federally recognized Indian tribes are not
 prohibited from conducting video gaming on certain Indian lands
 proposed by the 82nd Legislature, Regular Session, 2011, is
 submitted to the voters, the Texas Lottery Commission may:
 (1)  expend money from the commission's appropriation
 for the 2012-2013 state fiscal biennium for purposes of conducting
 the pre-implementation activities necessary to promptly establish
 video gaming in this state in accordance with Chapter 2001A,
 Occupations Code, as added by this Act;
 (2)  request and receive information related to
 applications for licensing and testing for video gaming equipment
 as authorized under Chapter 2001A, Occupations Code, as added by
 this Act; or
 (3)  develop and approve forms necessary for licensing
 persons to conduct video gaming and for testing video gaming
 equipment.
 (c)  Notwithstanding Section 466.355, Government Code, the
 money authorized to be expended under this section may be withdrawn
 from the state lottery account to fund the establishment of video
 gaming.
 (d)  Notwithstanding any other law, the following provisions
 apply to procedures for adoption of the rules required by
 Subsection (a) of this section:
 (1)  the Texas Lottery Commission must give not less
 than 15 days' notice of its intent to adopt a rule under this
 section before adopting the rule;
 (2)  a rule adopted under this section takes effect on
 the date it is filed in the office of the secretary of state; and
 (3)  the commission shall notify all holders of a
 license issued under Section 10 of this Act of the adoption of a
 rule under this section.
 SECTION 10.  (a)  Notwithstanding Chapter 2001A, Occupations
 Code, as added by this Act, and except as otherwise provided by this
 section, on or after the effective date of this Act, the Texas
 Lottery Commission shall:
 (1)  issue a provisional video gaming manufacturer
 license to an applicant who:
 (A)  holds a manufacturer's license issued under
 Chapter 2001, Occupations Code;
 (B)  is eligible to hold a license under Section
 2001A.102, Occupations Code, as added by this Act;
 (C)  files with the commission on the form
 required by the commission an application for a video gaming
 manufacturer license; and
 (D)  pays the required application and license
 fees;
 (2)  issue a provisional video gaming distributor
 license to a person who:
 (A)  holds a distributor's license issued under
 Chapter 2001, Occupations Code;
 (B)  is eligible to hold a license under Section
 2001A.102, Occupations Code, as added by this Act;
 (C)  files with the commission on the form
 required by the commission an application for a video gaming
 distributor license; and
 (D)  pays the required application and license
 fees;
 (3)  issue a provisional video gaming retailer license
 to a person who:
 (A)  is a licensed commercial lessor or a licensed
 authorized organization under Chapter 2001, Occupations Code;
 (B)  is eligible to hold a license under Section
 2001A.101, Occupations Code, as added by this Act;
 (C)  files with the commission on the form
 required by the commission an application for a video gaming
 retailer license; and
 (D)  pays the required application and license
 fees; and
 (4)  issue a provisional video gaming employee license
 to a person who:
 (A)  is listed in the registry of approved bingo
 workers maintained as required under Section 2001.313, Occupations
 Code;
 (B)  is eligible to hold a license under Chapter
 2001A, Occupations Code, as added by this Act;
 (C)  files with the commission on the form
 required by the commission an application for a video gaming
 employee license; and
 (D)  pays the required application and license
 fees.
 (b)  Notwithstanding Chapter 2001A, Occupations Code, as
 added by this Act, and except as otherwise provided by this section,
 during the period that begins on the effective date of this Act and
 ends on a date determined by the Texas Lottery Commission that is
 not less than 18 months or more than 36 months after the effective
 date of this Act, the commission shall:
 (1)  approve for use in this state network operating
 centers, site controllers, video gaming terminals, and video gaming
 equipment that meets the standards established under the laws of
 another state, the United States, or the National Indian Gaming
 Commission unless the commission determines the licensing
 standards are insufficient to protect the public health and safety
 and prevent financial loss to this state; and
 (2)  issue a reciprocal license to a video gaming
 manufacturer who:
 (A)  is licensed as a video gaming manufacturer
 under the laws of another state unless the commission determines
 the licensing standards are insufficient to protect the public
 health and safety and prevent financial loss to this state;
 (B)  submits a letter from an independent testing
 laboratory approved by the commission that describes in detail the
 video gaming equipment the manufacturer is seeking to deploy in
 this state and certifies that the equipment has undergone
 independent tests performed by the laboratory; and
 (C)  submits documentation from the independent
 testing laboratory that verifies the manufacturer's equipment
 meets the standards established under the laws of another state,
 the United States, or the National Indian Gaming Commission.
 (c)  The Texas Lottery Commission shall establish the term of
 a provisional license issued under Subsection (a) of this section
 or a reciprocal license issued under Subsection (b) of this
 section, which may not be less than 18 months. The commission by
 rule shall establish timelines for license holders who hold a
 provisional or reciprocal license issued under this section to
 comply with the requirements of Chapter 2001A, Occupations Code, as
 added by this Act, and commission rules.  The rules must allow
 license holders at least six months to comply with the rules and
 requirements.
 (d)  Notwithstanding Chapter 2001A, Occupations Code, as
 added by this Act, during the provisional period specified by the
 commission, which may not be less than 18 months or more than 36
 months after the effective date of this Act, a video gaming retailer
 must obtain video gaming equipment and video gaming terminals from
 a video gaming distributor who holds a bingo distributor's license
 issued under Chapter 2001, Occupations Code.
 (e)  Notwithstanding Chapter 2001A, Occupations Code, as
 added by this Act, or any other law, a video gaming manufacturer,
 video gaming distributor, or applicant for a video gaming
 distributor or manufacturer license may display video gaming
 equipment in this state before the effective date of this Act if:
 (1)  the video gaming equipment is disabled for
 marketing purposes so that the equipment does not accept or
 dispense money or pay out video gaming tickets or the equipment
 contains only demonstration software that cannot be disabled;
 (2)  for a trade show or similar event, the Texas
 Lottery Commission:
 (A)  is notified in advance of the proposed event
 of:
 (i)  the date and location of the event;
 (ii)  the model and serial number of each
 item of video gaming equipment to be displayed;
 (iii)  the manner of transport of each item
 to be displayed; and
 (iv)  a description of how the item will at
 all times be possessed by and be under the control of the applicant
 or license holder; and
 (B)  approves the display of the equipment.
 SECTION 11.  The change in law made by this Act applies only
 to an offense committed on or after the effective date of this Act.
 An offense committed before the effective date of this Act is
 covered by the law in effect when the offense was committed, and the
 former law is continued in effect for that purpose. For purposes of
 this section, an offense was committed before the effective date of
 this Act if any element of the offense was committed before that
 date.
 SECTION 12.  (a)  Sections 1 through 8 of this Act take
 effect on the date the constitutional amendment authorizing the
 establishment of video gaming operations in this state and
 providing that federally recognized Indian tribes are not
 prohibited from conducting video gaming on certain Indian lands
 proposed by the 82nd Legislature, Regular Session, 2011, is
 approved by the voters. If that amendment is not approved by the
 voters, Sections 1 through 8 of this Act have no effect.
 (b)  Sections 9 through 11 of this Act and this section take
 effect immediately if this Act receives a vote of two-thirds of all
 the members elected to each house, as provided by Section 39,
 Article III, Texas Constitution. If this Act does not receive the
 vote necessary for immediate effect, Sections 9 through 11 of this
 Act and this section take effect September 1, 2011.