Texas 2019 - 86th Regular

Texas House Bill HB1275 Compare Versions

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

Old	New	Differences
1	1	86R854 ADM-D
2	2	By: Lucio III H.B. No. 1275
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of sports betting; requiring an
8	8	occupational permit; authorizing a fee; imposing a tax; creating
9	9	criminal offenses.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subtitle A, Title 13, Occupations Code, is
12	12	amended by adding Chapter 2005 to read as follows:
13	13	CHAPTER 2005. SPORTS BETTING
14	14	SUBCHAPTER A. GENERAL PROVISIONS
15	15	Sec. 2005.001. DEFINITIONS. In this chapter:
16	16	(1) "College sport" means an athletic event:
17	17	(A) in which at least one participant is a team
18	18	from a public or private institution of higher education,
19	19	regardless of where the institution is located; and
20	20	(B) that is not a Texas college sport.
21	21	(2) "Commission" means the Texas Commission of
22	22	Licensing and Regulation.
23	23	(3) "Department" means the Texas Department of
24	24	Licensing and Regulation.
25	25	(4) "Executive director" means the executive director
26	26	of the department.
27	27	(5) "Permit holder" means a person who holds a permit
28	28	issued under this chapter.
29	29	(6) "Professional sport" means an athletic event
30	30	involving at least two human competitors who receive compensation,
31	31	in excess of their expenses, for participating in the event. The
32	32	term does not include greyhound racing or horse racing regulated
33	33	under Subtitle A-1 (Texas Racing Act).
34	34	(7) "Sports betting" means placing a wager on a
35	35	professional sport or college sport competition. The term does not
36	36	include wagering on greyhound racing or horse racing regulated
37	37	under Subtitle A-1 (Texas Racing Act).
38	38	(8) "Sports betting platform" means a website, an
39	39	application for a wireless telecommunication device, or any other
40	40	similar technology that allows sports bettors to engage in sports
41	41	betting.
42	42	(9) "Sports bettor" means an individual physically
43	43	located in this state who participates in sports betting.
44	44	(10) "Texas college sport" means an athletic event in
45	45	which at least one participant is a team from a Texas public or
46	46	private institution of higher education.
47	47	(11) "Youth sport" means an athletic event:
48	48	(A) involving a participant who is 17 years of
49	49	age or younger; or
50	50	(B) in which at least one participant is a team
51	51	from a public or private elementary, middle, or secondary school,
52	52	regardless of where the school is located.
53	53	SUBCHAPTER B. POWERS AND DUTIES
54	54	Sec. 2005.051. SPORTS BETTING PROGRAM. (a) The commission
55	55	shall operate a sports betting program under the direction of the
56	56	executive director that allows applicants to apply for permits to
57	57	engage in sports betting operations in this state.
58	58	(b) The commission may establish a sports betting program
59	59	directed by the executive director that authorizes the department
60	60	to operate a sports betting platform. Any revenue received from a
61	61	sports betting platform operated by the department that exceeds the
62	62	expenses necessary to operate the platform shall be deposited to
63	63	the credit of the foundation school fund.
64	64	(c) The executive director may:
65	65	(1) require bond or other surety satisfactory to the
66	66	executive director from permit holders in the amount provided by
67	67	rules adopted under this chapter;
68	68	(2) suspend, revoke, or refuse to renew a permit
69	69	issued under this chapter; and
70	70	(3) enter into contracts for the operation of the
71	71	sports betting program established under this section and enter
72	72	into contracts related to sports betting with other states,
73	73	provided that any contract entered into by the executive director
74	74	prohibits assignment of the contract except with specific approval
75	75	of the executive director.
76	76	Sec. 2005.052. RULES. The commission shall adopt the rules
77	77	necessary to protect the public health and safety, administer this
78	78	chapter, and regulate a sports betting program established under
79	79	this chapter.
80	80	Sec. 2005.053. REPORTS. (a) The executive director shall
81	81	provide to the commission, the comptroller, the governor, the chair
82	82	of the senate finance committee, and the chair of the house
83	83	appropriations committee a monthly statement of the sports betting
84	84	revenues received by the department and the expenses incurred by
85	85	the department in regulating sports betting for the preceding
86	86	month.
87	87	(b) The executive director shall submit to the governor and
88	88	the legislature an annual report that includes:
89	89	(1) a statement of the sports betting revenues
90	90	received by the department and the expenses incurred by the
91	91	department in regulating sports betting for the preceding state
92	92	fiscal year; and
93	93	(2) any recommendations, including statutory
94	94	amendments, of the executive director or commission related to
95	95	regulating sports betting.
96	96	(c) The executive director shall immediately report to the
97	97	governor and the legislature any matter that requires an immediate
98	98	change in state law to prevent abuse and circumvention of this
99	99	chapter or rules adopted under this chapter or to rectify
100	100	undesirable conditions in connection with the administration or
101	101	operation of a sports betting program.
102	102	SUBCHAPTER C. SPORTS BETTING REGULATION
103	103	Sec. 2005.101. PERMIT REQUIRED. A person may not operate a
104	104	sports betting program in this state unless the person holds a
105	105	permit issued under this chapter.
106	106	Sec. 2005.102. APPLICATION AND FEE FOR SPORTS BETTING
107	107	PERMIT; OFFENSE. (a) An applicant for a sports betting permit shall
108	108	submit to the department:
109	109	(1) an application on a form prescribed by the
110	110	executive director, containing the information prescribed in
111	111	Subsection (b); and
112	112	(2) a fee of $250,000.
113	113	(b) An application for a sports betting permit must include
114	114	the following information:
115	115	(1) the applicant's background in sports betting;
116	116	(2) the applicant's experience in wagering activities
117	117	in this state and other jurisdictions, including the applicant's
118	118	history and reputation of operational integrity and regulatory
119	119	compliance;
120	120	(3) the applicant's proposed internal controls,
121	121	including controls to ensure that an individual who is excluded
122	122	from participating in sports betting does not participate in sports
123	123	betting;
124	124	(4) the applicant's history of preventing compulsive
125	125	gambling, including employee training programs; and
126	126	(5) any other information the executive director
127	127	considers necessary.
128	128	(c) The department shall conduct a background investigation
129	129	on each applicant for a sports betting permit. The background
130	130	investigation must include a credit history check, a tax record
131	131	check, and a criminal history record check.
132	132	(d) The executive director may issue no more than five
133	133	permits under this section. If more than five applicants submit
134	134	applications, the executive director shall issue permits to the
135	135	five applicants the executive director determines will best:
136	136	(1) perform the duties of a permit holder; and
137	137	(2) maximize revenue to this state.
138	138	(e) A permit that is revoked or expired is not counted for
139	139	purposes of the limit provided by Subsection (d).
140	140	(f) The executive director shall approve an application and
141	141	grant a permit not later than the 60th day after the date the
142	142	application is received unless the executive director:
143	143	(1) is prohibited from issuing additional permits
144	144	under Subsection (d); or
145	145	(2) finds an applicable ground for denial under
146	146	Section 2005.103.
147	147	(g) The executive director's decision under Subsection (f)
148	148	is final unless appealed in accordance with this chapter.
149	149	Sec. 2005.103. DENIAL OF PERMIT ISSUANCE OR RENEWAL. The
150	150	executive director may deny issuance or renewal of a permit if:
151	151	(1) the executive director reasonably believes:
152	152	(A) the applicant is unable to satisfy the duties
153	153	of a permit holder as described in Section 2005.107;
154	154	(B) the applicant or its directors lack good
155	155	character, honesty, or integrity; or
156	156	(C) the applicant's prior activities, criminal
157	157	history, reputation, or associations are likely to:
158	158	(i) pose a threat to the public interest;
159	159	(ii) impede the regulation of sports
160	160	betting; or
161	161	(iii) promote unfair or illegal activities
162	162	in the conduct of sports betting;
163	163	(2) the applicant or its directors knowingly make a
164	164	false statement of material fact or deliberately fail to disclose
165	165	information requested by the executive director;
166	166	(3) the applicant or its directors knowingly fail to
167	167	comply with this chapter, rules adopted under this chapter, or any
168	168	requirements of the executive director;
169	169	(4) the applicant or its directors were convicted of a
170	170	felony, a crime of moral turpitude, or any criminal offense
171	171	involving dishonesty or breach of trust within the 10 years
172	172	preceding the date the permit application is submitted;
173	173	(5) the applicant's license, registration, or permit
174	174	to conduct a sports betting operation issued by any other
175	175	jurisdiction has been suspended or revoked;
176	176	(6) the applicant defaults in payment of any
177	177	obligation or debt due to this state; or
178	178	(7) the applicant's application is incomplete.
179	179	Sec. 2005.104. BOND REQUIRED. Before issuance of a permit,
180	180	each permit holder must be bonded by a surety company entitled to
181	181	conduct business in this state in the amount provided by commission
182	182	rule.
183	183	Sec. 2005.105. RENEWAL OF PERMIT. (a) A permit issued under
184	184	this subchapter expires on the third anniversary of the date the
185	185	permit is issued.
186	186	(b) Not later than the 60th day before the date a permit
187	187	expires, a permit holder wishing to renew the permit shall submit to
188	188	the department:
189	189	(1) a renewal application on a form prescribed by the
190	190	executive director; and
191	191	(2) a renewal fee of $200,000.
192	192	(c) The executive director may deny a permit renewal if the
193	193	executive director finds a ground for denial under Section
194	194	2005.103.
195	195	(d) The executive director's action is final unless
196	196	appealed in accordance with this chapter.
197	197	Sec. 2005.106. CRIMINAL PENALTY. (a) Any person who
198	198	knowingly falsifies, conceals, or misrepresents a material fact or
199	199	knowingly makes a false, fictitious, or fraudulent statement or
200	200	representation in any application under this subchapter commits an
201	201	offense.
202	202	(b) An offense under Subsection (a) is a Class A
203	203	misdemeanor.
204	204	Sec. 2005.107. DUTIES OF PERMIT HOLDERS. (a) A permit
205	205	holder shall ensure that its sports betting operation takes
206	206	reasonable measures to:
207	207	(1) allow only individuals physically located in this
208	208	state to place bets through the permit holder's sports betting
209	209	platform;
210	210	(2) protect the confidential information of sports
211	211	bettors using the permit holder's sports betting platform;
212	212	(3) prevent betting that is prohibited under this
213	213	chapter or other state law;
214	214	(4) allow an individual to restrict the individual's
215	215	access to placing bets with the permit holder, including sharing
216	216	with the department on the individual's request the restriction for
217	217	the sole purpose of the department disseminating the request to
218	218	other permit holders;
219	219	(5) establish procedures to detect suspicious or
220	220	illegal betting activity, including measures to immediately report
221	221	the activity to the department; and
222	222	(6) provide for the appropriate withholding of the
223	223	applicable amount of state tax as required by Section 2005.108 and
224	224	any federal income tax required under other laws or by rule for
225	225	persons who receive income from sports betting.
226	226	(b) A permit holder shall maintain records on:
227	227	(1) all sports betting placed with the permit holder,
228	228	including records of:
229	229	(A) a sports bettor's personal information;
230	230	(B) the amount and type of bet;
231	231	(C) the time and location of the bet; and
232	232	(D) the outcome of the bet; and
233	233	(2) suspicious or illegal sports betting activity.
234	234	(c) A permit holder shall disclose the records described in
235	235	Subsection (b) to the department on request and shall maintain the
236	236	records until at least the third anniversary of the date the related
237	237	sports event occurs.
238	238	(d) A permit holder shall ensure that advertisements for its
239	239	sports betting operations:
240	240	(1) disclose the identity of the permit holder;
241	241	(2) provide information about or links to resources
242	242	related to gambling addiction;
243	243	(3) are not misleading to a reasonable person; and
244	244	(4) do not target persons under the age of 21.
245	245	(e) A permit holder may not sublicense, convey, concede, or
246	246	otherwise transfer a permit to a third party.
247	247	(f) A permit holder is prohibited from holding itself out to
248	248	the public as a sports betting operation under more than two brands.
249	249	(g) A permit holder shall conspicuously display the permit
250	250	holder's identity to sports bettors on any sports betting platform
251	251	operated by the permit holder.
252	252	Sec. 2005.108. TAX; USE OF TAX REVENUE. (a) A tax of 6.25
253	253	percent is imposed on each bet placed by a sports bettor under this
254	254	chapter. The tax is to be collected by the permit holder at the time
255	255	the bet is placed.
256	256	(b) The tax imposed under this section is payable monthly to
257	257	the department, and the permit holder shall remit the taxes on or
258	258	before the 20th day of the next calendar month.
259	259	(c) If the permit holder's accounting necessitates
260	260	corrections to a previously remitted tax, the permit holder shall
261	261	document the corrections when the following month's taxes are paid.
262	262	(d) The department shall deposit tax revenue collected
263	263	under this section to the credit of the foundation school fund.
264	264	Sec. 2005.109. LIQUIDITY POOLS. (a) The commission may
265	265	adopt rules authorizing permit holders to offset loss and manage
266	266	risk, directly or with a third party approved by the department,
267	267	through the use of a liquidity pool in this state or another
268	268	jurisdiction provided that the permit holder, or an affiliate of
269	269	the permit holder, is licensed or otherwise authorized by that
270	270	jurisdiction to operate a sports betting business.
271	271	(b) A permit holder's use of a liquidity pool does not
272	272	eliminate the permit holder's duty to ensure that sufficient funds
273	273	are available to pay bettors.
274	274	Sec. 2005.110. INTERMEDIATE ROUTING OF ELECTRONIC DATA.
275	275	(a) Sports betting offered to a sports bettor in this state must be
276	276	initiated and received within this state unless otherwise
277	277	authorized by federal law.
278	278	(b) The intermediate routing of electronic data relating to
279	279	sports betting authorized under this chapter does not determine the
280	280	location in which a bet is initiated and received for purposes of
281	281	determining compliance with this chapter.
282	282	SUBCHAPTER D. DISCIPLINARY ACTIONS AND PENALTIES
283	283	Sec. 2005.151. CIVIL PENALTIES; SUSPENSION AND REVOCATION
284	284	OF PERMIT. (a) If the executive director determines a permit
285	285	holder has violated this chapter or rules adopted under this
286	286	chapter, the executive director in accordance with Chapter 51 may:
287	287	(1) suspend or revoke the permit holder's permit; and
288	288	(2) impose a monetary penalty not to exceed $1,000 for
289	289	each violation of this chapter.
290	290	(b) An action taken by the executive director under this
291	291	section is final unless appealed in accordance with Sec. 2005.152.
292	292	Sec. 2005.152. APPEAL. (a) The commission shall hear and
293	293	decide an appeal of any denial of a permit by the executive director
294	294	or suspension or revocation of a permit under this chapter.
295	295	(b) The action of the commission in granting or denying a
296	296	permit, or suspending or revoking a permit under this chapter may be
297	297	referred to the State Office of Administrative Hearings for a
298	298	contested case hearing.
299	299	Sec. 2005.153. PROHIBITED BETTING; OFFENSES. (a) A person
300	300	commits an offense if the person places or accepts a bet on Texas
301	301	college sports or youth sports.
302	302	(b) A person commits an offense if the person knowingly
303	303	accepts or redeems or offers to accept or redeem a sports bet made
304	304	by or on behalf of a person under 21 years of age.
305	305	(c) An offense under this section is a Class A misdemeanor.
306	306	(d) If conduct that constitutes an offense under this
307	307	section also constitutes an offense under another law, the actor
308	308	may be prosecuted under this section, the other law, or both.
309	309	Sec. 2005.154. PERSONS PROHIBITED FROM BETTING; OFFENSE.
310	310	(a) A person commits an offense if the person places a sports bet
311	311	and the person is:
312	312	(1) a member, officer, or employee of the commission
313	313	or the department;
314	314	(2) a permit holder or an officer or employee of a
315	315	permit holder;
316	316	(3) an officer or an employee of any entity working
317	317	directly on a contract relating to sports betting with the
318	318	department; or
319	319	(4) a competitor, coach, trainer, employee, or owner
320	320	of a team in a sports event, or any referee for a sports event, and
321	321	the actor places the sports bet on that event.
322	322	(b) An offense under this section is a Class A misdemeanor.
323	323	(c) If conduct that constitutes an offense under this
324	324	section also constitutes an offense under another law, the actor
325	325	may be prosecuted under this section, the other law, or both.
326	326	Sec. 2005.155. OPERATION AND ADVERTISING OF UNPERMITTED
327	327	FACILITY PROHIBITED; CIVIL PENALTY. (a) A person may not make the
328	328	person's premises available for placing wagers on sports betting
329	329	using the Internet or advertise that the person's premises may be
330	330	used for that purpose unless the person holds a permit issued under
331	331	this chapter.
332	332	(b) The executive director may impose a monetary penalty for
333	333	each violation of this section. For a person determined to have
334	334	made the person's premises available for placing wagers on sports
335	335	betting using the Internet, the penalty may not exceed $1,000 per
336	336	day per individual who places a bet. For a person determined to have
337	337	advertised that the person's premises may be used for that purpose,
338	338	the penalty may not exceed $10,000 per violation.
339	339	SECTION 2. Section 47.02(c), Penal Code, as effective April
340	340	1, 2019, is amended to read as follows:
341	341	(c) It is a defense to prosecution under this section that
342	342	the actor reasonably believed that the conduct:
343	343	(1) was permitted under Chapter 2001, Occupations
344	344	Code;
345	345	(2) was permitted under Chapter 2002, Occupations
346	346	Code;
347	347	(3) was permitted under Chapter 2004, Occupations
348	348	Code;
349	349	(4) was permitted under Chapter 2005, Occupations
350	350	Code;
351	351	(5) consisted entirely of participation in the state
352	352	lottery authorized by the State Lottery Act (Chapter 466,
353	353	Government Code);
354	354	(6) [(5)] was permitted under Subtitle A-1, Title 13,
355	355	Occupations Code (Texas Racing Act); or
356	356	(7) [(6)] consisted entirely of participation in a
357	357	drawing for the opportunity to participate in a hunting, fishing,
358	358	or other recreational event conducted by the Parks and Wildlife
359	359	Department.
360	360	SECTION 3. Section 47.09(a), Penal Code, as effective April
361	361	1, 2019, is amended to read as follows:
362	362	(a) It is a defense to prosecution under this chapter that
363	363	the conduct:
364	364	(1) was authorized under:
365	365	(A) Chapter 2001, Occupations Code;
366	366	(B) Chapter 2002, Occupations Code;
367	367	(C) Chapter 2004, Occupations Code;
368	368	(D) Chapter 2005, Occupations Code;
369	369	(E) Subtitle A-1, Title 13, Occupations Code
370	370	(Texas Racing Act); or
371	371	(F) [(E)] Chapter 280, Finance Code;
372	372	(2) consisted entirely of participation in the state
373	373	lottery authorized by Chapter 466, Government Code; or
374	374	(3) was a necessary incident to the operation of the
375	375	state lottery and was directly or indirectly authorized by:
376	376	(A) Chapter 466, Government Code;
377	377	(B) the lottery division of the Texas Lottery
378	378	Commission;
379	379	(C) the Texas Lottery Commission; or
380	380	(D) the director of the lottery division of the
381	381	Texas Lottery Commission.
382	382	SECTION 4. This Act takes effect January 1, 2020, but only
383	383	if the constitutional amendment authorizing the legislature to
384	384	legalize sports betting in this state is approved by the voters. If
385	385	that amendment is not approved by the voters, this Act has no
386	386	effect.