86R527 GCB-F
By: Menéndez S.B. No. 889
A BILL TO BE ENTITLED
AN ACT
relating to the authorization and regulation of social gaming
establishments and the duties of the Texas Department of Licensing
and Regulation; providing civil and administrative penalties;
authorizing a fee; requiring an occupational license.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 13, Occupations Code, is
amended by adding Chapter 2005 to read as follows:
CHAPTER 2005. SOCIAL GAMING
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2005.001. SHORT TITLE. This chapter may be cited as
the Social Gaming Act of 2019.
Sec. 2005.002. DEFINITIONS. In this chapter:
(1) "Bet" means an agreement to win or lose money,
chips, tokens, or other consideration in a social game.
(2) "Buy-in" means the amount of consideration paid by
a player to enter a social game.
(3) "Commercial game" means a game conducted in a
manner that provides a mathematical or financial economic benefit
to any person other than a player or participant in the game.
(4) "Commission" means the Texas Commission of
Licensing and Regulation.
(5) "Communal pot" means the total amount of
considerations collected through all bets placed during one
instance of a social game or tournament event.
(6) "Controlling person" means an individual who:
(A) controls 25 percent or more of the voting
securities of a corporation that offers or proposes to offer social
gaming as an operator;
(B) has authority to set policy and direct
management of an entity that offers or proposes to offer social
gaming as an operator;
(C) is employed, appointed, or authorized by an
entity that offers or proposes to offer social gaming as an operator
to contract with another entity to conduct social gaming on behalf
of the contracting entity; or
(D) is an officer or director of a corporation or
a general partnership that offers social gaming as an operator.
(7) "Dealer" means a person who exchanges bets between
players, monitors activities, or conducts hands in a social game at
a licensed social gaming establishment.
(8) "Department" means the Texas Department of
Licensing and Regulation.
(9) "Executive director" means the executive director
of the department.
(10) "Operator" means a person that organizes,
operates, or promotes social games at a licensed social gaming
establishment.
(11) "Pay-out" means the amount of consideration paid
to a player on the player's exit from a social game.
(12) "Player" means an individual who is a registered
member of a social gaming establishment, is at least 21 years of
age, and participates in a social game while physically present on
the premises of the establishment.
(13) "Social game" means a card game:
(A) that is conducted with players placing bets
on predetermined outcomes in which no person receives an economic
benefit except for personal winnings;
(B) in which, except for the advantages of skill
or luck, the risk of losing and the chance of winning are the same
for all players; and
(C) that does not include any commercial game or
any video, mechanical, electronic, or online version of a game
described by Paragraphs (A) and (B).
(14) "Social gaming establishment" means an
establishment in which social gaming authorized by this chapter is
conducted.
(15) "Tournament event" means an event at a social
gaming establishment in which two or more players pay a buy-in to
compete in a social game in which:
(A) the players place bets using chips that have
no monetary value and cannot be exchanged for money; and
(B) a player is awarded a pay-out based on the
total time the player remains in the game and the total amount of
chips the player acquires.
Sec. 2005.003. APPLICABILITY. This chapter does not apply
to the conduct of bingo, charitable raffles, the state lottery, or
greyhound or horse racing.
Sec. 2005.004. OTHER GAMING NOT AUTHORIZED. This chapter
does not authorize the conduct of commercial games or gambling
otherwise prohibited by law.
Sec. 2005.005. PRIVATE PLACE. For purposes of this chapter
and other law, a social game conducted in a licensed social gaming
establishment is conducted in a private place.
Sec. 2005.006. ECONOMIC BENEFIT; SERVICE GRATUITY;
ENTRANCE FEE. (a) For purposes of this chapter and other law, a
social game is considered to be conducted in a manner that does not
provide to any person an economic benefit other than player
pay-outs if the social game is conducted in a licensed social gaming
establishment in which:
(1) total buy-ins equal total pay-outs;
(2) bets are placed only between players; and
(3) a fee or percentage of winnings is not collected
from any communal pot.
(b) A service gratuity may be accepted only if the gratuity:
(1) does not create a discrepancy in the equal balance
of buy-ins and pay-outs; and
(2) is offered in a manner that does not conflict with
Subsection (a).
(c) An operator may not receive any economic benefit from a
bet placed during a social game organized, operated, or promoted by
that operator.
(d) An operator may charge a player a fee to enter a social
game held at a licensed social gaming establishment.
Sec. 2005.007. PUBLIC POLICY: PREFERENCE FOR STATE
RESOURCES. It is the intent of this chapter, where possible, to use
the resources, goods, labor, and services of this state in the
operation of social gaming-related amenities to the extent
allowable by law.
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSION AND DEPARTMENT
Sec. 2005.051. COMMISSION RULES ON REGULATION AND
LICENSING. (a) To protect the public health, safety, and welfare
and to ensure that social gaming authorized under this chapter is
conducted fairly at social gaming establishments, the commission
shall adopt rules providing for:
(1) fees in amounts reasonable and necessary to
administer this chapter;
(2) requirements for licensing, renewal, and
reinstatement of a license issued under this chapter;
(3) standards of conduct for license holders under
this chapter; and
(4) the administration and enforcement of this
chapter.
(b) The executive director shall ensure that rules adopted
under this section are consistent with state and federal law.
Sec. 2005.052. DEPARTMENT DUTIES; APPLICABILITY OF OTHER
LAW. (a) The department shall license and regulate each social
gaming establishment, operator, and dealer in accordance with this
chapter and rules adopted under this chapter.
(b) Chapter 51 applies to licensing, regulation, and
enforcement under this chapter. The department shall assess
against a social gaming establishment a civil or administrative
penalty authorized under that chapter for a violation of that
chapter, this chapter, or a commission rule.
SUBCHAPTER C. SOCIAL GAMING LICENSING AND REGULATION
Sec. 2005.101. LICENSE REQUIRED. (a) A person may not own
or operate a social gaming establishment unless the person holds a
license issued under this chapter for the conduct of social games at
the social gaming establishment.
(b) A person may not act as an operator or dealer at a social
gaming establishment unless the person holds a license issued under
this chapter.
(c) A player may not participate in a social game at a social
gaming establishment that is not licensed under this chapter.
Sec. 2005.102. GENERAL APPLICATION REQUIREMENTS; LICENSE
TERM. (a) An applicant for a license under this chapter shall:
(1) submit to the department a completed application
on a form prescribed by the department;
(2) pay the required fees; and
(3) provide any other information required by
commission rule.
(b) A license issued under this chapter expires on the first
anniversary of the date of issuance.
Sec. 2005.103. SOCIAL GAMING ESTABLISHMENT LICENSE
REQUIREMENTS. An applicant for a social gaming establishment
license must hold a game room permit issued under Subchapter E,
Chapter 234, Local Government Code, and be in good standing with the
issuing authority.
Sec. 2005.104. OPERATOR LICENSE OR DEALER LICENSE
QUALIFICATIONS. (a) An applicant for issuance or renewal of an
operator license or a dealer license, or the applicant's
controlling person, if applicable, must:
(1) be 18 years of age or older;
(2) demonstrate honesty, trustworthiness, and
integrity; and
(3) complete an education course approved by the
commission under Section 2005.151.
(b) On receipt of an original application for a license
under this chapter, the department shall conduct a thorough
background and criminal history check on each applicant and each
controlling person of an applicant to determine whether the
applicant or controlling person is qualified for issuance of a
license under this chapter. The department in accordance with
commission rules may conduct a background and criminal history
check for renewal of a license issued under this chapter.
(c) In conducting a background and criminal history check
under Subsection (b), the department may obtain from the Department
of Public Safety criminal history record information for the
applicant, controlling person, or license holder, as provided by
Section 411.122, Government Code.
(d) In conducting a background and criminal history check
under Subsection (b), the department must obtain fingerprints from
the applicant, controlling person, or license holder and submit the
fingerprints for processing through appropriate local, state, and
federal law enforcement agencies.
Sec. 2005.105. SURETY BOND FOR OPERATOR LICENSE. (a) An
applicant for issuance of, or a license holder applying for renewal
of, an operator license must provide a surety bond in the amount of
$25,000.
(b) The surety bond provided by an applicant or license
holder:
(1) must be issued by a company authorized to conduct
business in this state;
(2) must comply with all applicable provisions of the
Insurance Code;
(3) must be payable to the department for the purpose
of:
(A) satisfying a judgment awarded to this state
or a political subdivision of this state against the applicant or
license holder for actions engaged in as an operator conducting
social gaming activities;
(B) paying penalties assessed on the applicant or
license holder by this state or a political subdivision of this
state for actions engaged in as an operator conducting social
gaming activities; or
(C) settling a tax debt or other debt owed to this
state or a political subdivision of this state arising out of
actions engaged in by an operator conducting social gaming
activities; and
(4) may not be limited to one claim, provided that the
sum of all claims does not exceed the face value of the surety bond.
(c) An applicant or license holder required to file a surety
bond under this section must file a new bond with each application
for renewal of the license holder's operator license.
(d) A company that issues a surety bond for purposes of
satisfying this section shall notify the department in writing not
later than the 30th day before the date on which the company will
cancel the bond.
(e) An operator whose surety bond is canceled shall
immediately cease operating a social gaming establishment. The
operator may continue to operate the social gaming establishment
after providing to the department a surety bond that is an
acceptable replacement for the canceled bond.
Sec. 2005.106. DENIAL OF APPLICATION. The commission or
the executive director may deny an application for issuance or
renewal of a license if:
(1) the applicant or license holder does not meet the
qualifications for the license;
(2) after conducting an investigation and providing
notice and an opportunity for a hearing, the executive director
determines that the applicant or license holder has violated this
chapter or a rule adopted under this chapter; or
(3) the applicant or license holder engaged in fraud
or misrepresentation in applying for or obtaining a license under
this chapter.
Sec. 2005.107. LICENSE RENEWAL. The commission shall adopt
rules regarding the annual renewal of licenses issued under this
chapter, including rules on required background and criminal
history checks.
Sec. 2005.108. STATEWIDE VALIDITY; NONTRANSFERABLE. A
license issued under this chapter is valid throughout this state
and is not transferable.
Sec. 2005.109. RESTRICTION ON TOURNAMENT EVENT. The
operator of a social gaming establishment may not conduct a
tournament event in which an amount less than the total amount of
buy-ins is collected and distributed as pay-outs to the players
participating in the event for which the buy-ins are collected.
SUBCHAPTER D. EDUCATION
Sec. 2005.151. RECOGNITION OF EDUCATION PROGRAMS AND
COURSES. The commission by rule shall develop criteria by which the
commission approves education programs and courses for operators
and dealers.
SUBCHAPTER E. INSPECTIONS AND INVESTIGATIONS
Sec. 2005.201. INSPECTIONS; INVESTIGATIONS. (a) The
department may conduct inspections of social gaming establishments
and investigate license holders under this chapter as necessary to
enforce this chapter or Chapter 51.
(b) The department may:
(1) enter the business premises of a license holder
regulated by the department or a person suspected of being in
violation of or threatening to violate this chapter or a rule or
order of the commission or an order of the executive director under
this chapter; and
(2) examine and copy records pertinent to the
inspection or investigation.
SUBCHAPTER F. ADMINISTRATIVE SANCTIONS; ENFORCEMENT
Sec. 2005.251. ADMINISTRATIVE SANCTIONS. (a) The
commission or the executive director may deny an application for a
license, revoke, suspend, or refuse to renew a license, or
reprimand a license holder for a violation of this chapter or a rule
or order of the commission or an order of the executive director.
(b) The commission or the executive director may impose an
administrative penalty on a person under Subchapter F, Chapter 51,
regardless of whether the person holds a license under this
chapter, if the person violates this chapter or a rule or order of
the commission or an order of the executive director.
Sec. 2005.252. CEASE AND DESIST ORDER; INJUNCTION; CIVIL
PENALTY. (a) The executive director may issue a cease and desist
order as necessary to enforce this chapter if the executive
director determines that the action is necessary to prevent a
violation of this chapter or to protect the health and safety of the
public.
(b) The attorney general or the executive director may bring
an action for an injunction or a civil penalty under this chapter,
as provided by Section 51.352.
SECTION 2. Section 47.02(c), Penal Code, as effective April
1, 2019, 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 2004, Occupations
Code;
(4) was permitted under Chapter 2005, Occupations
Code;
(5) consisted entirely of participation in the state
lottery authorized by the State Lottery Act (Chapter 466,
Government Code);
(6) [(5)] was permitted under Subtitle A-1, Title 13,
Occupations Code (Texas Racing Act); or
(7) [(6)] 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 3. Section 47.06, Penal Code, is amended by adding
Subsection (f-1) to read as follows:
(f-1) It is a defense to prosecution under Subsection (a) or
(c) that the person owned, manufactured, transferred, or possessed
the equipment or paraphernalia related to social gaming for the
sole purpose of shipping it to a social gaming establishment
licensed under Chapter 2005, Occupations Code.
SECTION 4. Section 47.09(a), Penal Code, as effective April
1, 2019, is amended to read as follows:
(a) It is a defense to prosecution under this chapter that
the conduct:
(1) was authorized under:
(A) Chapter 2001, Occupations Code;
(B) Chapter 2002, Occupations Code;
(C) Chapter 2004, Occupations Code;
(D) Chapter 2005, Occupations Code;
(E) Subtitle A-1, Title 13, Occupations Code
(Texas Racing Act); or
(F) [(E)] Chapter 280, Finance Code;
(2) consisted entirely of participation in the state
lottery authorized by Chapter 466, Government Code; or
(3) was a necessary incident to the operation of the
state lottery and was directly or indirectly authorized by:
(A) Chapter 466, Government Code;
(B) the lottery division of the Texas Lottery
Commission;
(C) the Texas Lottery Commission; or
(D) the director of the lottery division of the
Texas Lottery Commission.
SECTION 5. Not later than March 1, 2020, the Texas
Commission of Licensing and Regulation shall adopt the rules
necessary and the Texas Department of Licensing and Regulation
shall develop the applications and establish the procedures
necessary to implement Chapter 2005, Occupations Code, as added by
this Act.
SECTION 6. This Act takes effect September 1, 2019.