TX
Texas House Bill HB1121

Texas 2021 - 87th Regular

Texas House Bill HB1121 Compare Versions

Only one version of the bill is available at this time.
OldNewDifferences
11 87R3463 ADM-D
22 By: Dutton H.B. No. 1121
33
44
55 A BILL TO BE ENTITLED
66 AN ACT
77 relating to the regulation of sports betting; requiring an
88 occupational permit; authorizing a fee; imposing a tax; creating
99 criminal offenses; providing a civil penalty.
1010 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1111 SECTION 1. Subtitle A, Title 13, Occupations Code, is
1212 amended by adding Chapter 2005 to read as follows:
1313 CHAPTER 2005. SPORTS BETTING
1414 SUBCHAPTER A. GENERAL PROVISIONS
1515 Sec. 2005.001. DEFINITIONS. In this chapter:
1616 (1) "College sport" means an athletic event:
1717 (A) in which at least one participant is a team
1818 from a public or private institution of higher education,
1919 regardless of the location of the institution; and
2020 (B) that is not a Texas college sport.
2121 (2) "Commission" means the Texas Commission of
2222 Licensing and Regulation.
2323 (3) "Department" means the Texas Department of
2424 Licensing and Regulation.
2525 (4) "Executive director" means the executive director
2626 of the department.
2727 (5) "Professional sport" means an athletic event
2828 involving at least two human competitors who receive compensation,
2929 in excess of their expenses, for participating in the event. The
3030 term does not include greyhound racing or horse racing regulated
3131 under Subtitle A-1 (Texas Racing Act).
3232 (6) "Sports betting" means placing a wager on a
3333 professional sport or college sport competition. The term does not
3434 include wagering on greyhound racing or horse racing regulated
3535 under Subtitle A-1 (Texas Racing Act).
3636 (7) "Sports betting platform" means an Internet
3737 website, an application for a wireless telecommunication device, or
3838 any other similar technology that allows sports bettors to engage
3939 in sports betting.
4040 (8) "Sports bettor" means an individual physically
4141 located in this state who participates in sports betting.
4242 (9) "Texas college sport" means an athletic event in
4343 which at least one participant is a team from a Texas public or
4444 private institution of higher education.
4545 (10) "Youth sport" means an athletic event:
4646 (A) involving a participant who is 17 years of
4747 age or younger; or
4848 (B) in which at least one participant is a team
4949 from a public or private elementary, middle, or secondary school,
5050 regardless of the location of the school.
5151 SUBCHAPTER B. POWERS AND DUTIES
5252 Sec. 2005.051. SPORTS BETTING PROGRAM. (a) The commission
5353 shall operate a sports betting program under the direction of the
5454 executive director that allows applicants to apply for sports
5555 betting operation permits to engage in sports betting operations in
5656 this state.
5757 (b) The commission may establish a sports betting program
5858 directed by the executive director that authorizes the department
5959 to operate a sports betting platform. Any revenue received from a
6060 sports betting platform operated by the department that exceeds the
6161 expenses necessary to operate the platform shall be deposited to
6262 the credit of the foundation school fund.
6363 (c) The executive director may:
6464 (1) require bond or other surety satisfactory to the
6565 executive director from sports betting operation permit holders in
6666 the amount provided by rules adopted under this chapter;
6767 (2) suspend, revoke, or refuse to renew a sports
6868 betting operation permit issued under this chapter; and
6969 (3) enter into contracts for the operation of the
7070 sports betting program established under this section and enter
7171 into contracts related to sports betting with other states,
7272 provided that any contract entered into by the executive director
7373 contains a provision prohibiting assignment of the contract except
7474 with specific approval of the executive director.
7575 Sec. 2005.052. RULES. The commission shall adopt rules
7676 necessary to protect the public health and safety, administer this
7777 chapter, and regulate a sports betting program established under
7878 this chapter.
7979 Sec. 2005.053. REPORTS. (a) The executive director shall
8080 provide to the commission, the comptroller, the governor, and the
8181 chairs of the standing committees of the senate and house of
8282 representatives with jurisdiction over state finances and
8383 appropriations a monthly statement of the sports betting revenues
8484 received by the department and the expenses incurred by the
8585 department in regulating sports betting for the preceding month.
8686 (b) The executive director shall submit to the governor and
8787 the legislature an annual report that includes:
8888 (1) a statement of the sports betting revenues
8989 received by the department and the expenses incurred by the
9090 department in regulating sports betting for the preceding state
9191 fiscal year; and
9292 (2) any recommendations, including statutory
9393 amendments, of the executive director or commission related to
9494 regulating sports betting.
9595 (c) The executive director shall immediately report to the
9696 governor and the legislature any matter that requires an immediate
9797 change in state law to prevent abuse and circumvention of this
9898 chapter or rules adopted under this chapter or to rectify
9999 undesirable conditions in connection with the administration or
100100 operation of a sports betting program.
101101 SUBCHAPTER C. SPORTS BETTING REGULATION
102102 Sec. 2005.101. SPORTS BETTING OPERATION PERMIT REQUIRED. A
103103 person may not conduct a sports betting operation in this state
104104 unless the person holds a sports betting operation permit issued
105105 under this chapter.
106106 Sec. 2005.102. APPLICATION AND FEE FOR SPORTS BETTING
107107 OPERATION PERMIT; OFFENSE. (a) An applicant for a sports betting
108108 operation permit shall submit to the department:
109109 (1) an application on a form prescribed by the
110110 executive director, containing the information prescribed in
111111 Subsection (b); and
112112 (2) a fee of $250,000.
113113 (b) An application for a sports betting operation permit
114114 must include the following information:
115115 (1) the applicant's experience in sports betting;
116116 (2) the applicant's experience in wagering activities
117117 in this state and other jurisdictions, including the applicant's
118118 history and reputation of operational integrity and regulatory
119119 compliance;
120120 (3) the applicant's proposed internal controls,
121121 including controls to ensure that an individual who is excluded
122122 from participating in sports betting does not participate in sports
123123 betting;
124124 (4) the applicant's history of preventing compulsive
125125 gambling, including employee training programs; and
126126 (5) any other information the executive director
127127 considers necessary.
128128 (c) The department shall conduct a background investigation
129129 on each applicant for a sports betting operation permit. The
130130 background investigation must include a credit history check, a tax
131131 record check, and a criminal history record check.
132132 (d) The executive director may not issue permits for more
133133 than five sports betting operations to operate at any time. If more
134134 applicants submit applications for permits than the permits
135135 available, the executive director shall issue the number of
136136 available permits to the applicants the executive director
137137 determines will best:
138138 (1) perform the duties of a sports betting operation
139139 permit holder; and
140140 (2) maximize revenue to this state.
141141 (e) A sports betting operation permit that is revoked or
142142 expired is not counted for purposes of the maximum number of permits
143143 authorized by Subsection (d).
144144 (f) The executive director shall approve an application and
145145 grant a sports betting operation permit not later than the 60th day
146146 after the date the application is received unless the executive
147147 director:
148148 (1) is prohibited from issuing additional permits
149149 under Subsection (d); or
150150 (2) finds an applicable ground for denial under
151151 Section 2005.103.
152152 (g) The executive director's decision under Subsection (f)
153153 is final unless appealed in accordance with this chapter.
154154 Sec. 2005.103. DENIAL OF SPORTS BETTING OPERATION PERMIT
155155 ISSUANCE OR RENEWAL. The executive director may deny issuance or
156156 renewal of a sports betting operation permit if:
157157 (1) the executive director reasonably believes:
158158 (A) the applicant is unable to satisfy the duties
159159 of a permit holder imposed under Section 2005.107;
160160 (B) the applicant or any officer or director of
161161 the applicant lacks good character, honesty, or integrity; or
162162 (C) the applicant's, officer's, or director's
163163 prior activities, criminal history, reputation, or associations
164164 are likely to:
165165 (i) pose a threat to the public interest;
166166 (ii) impede the regulation of sports
167167 betting; or
168168 (iii) promote unfair or illegal activities
169169 in the conduct of sports betting;
170170 (2) the applicant, officer, or director knowingly
171171 makes a false statement of material fact or deliberately fails to
172172 disclose information requested by the executive director;
173173 (3) the applicant, officer, or director knowingly
174174 fails to comply with this chapter, rules adopted under this
175175 chapter, or any requirements of the executive director;
176176 (4) the applicant, officer, or director was convicted
177177 of a felony, a crime of moral turpitude, or any criminal offense
178178 involving dishonesty or breach of trust in the 10 years preceding
179179 the date the permit application is submitted;
180180 (5) the applicant's license, registration, or permit
181181 to conduct a sports betting operation issued by any other
182182 jurisdiction has been suspended or revoked;
183183 (6) the applicant defaults in payment of any
184184 obligation or debt due to this state; or
185185 (7) the applicant's application is incomplete.
186186 Sec. 2005.104. BOND REQUIRED. Before issuance of a sports
187187 betting operation permit, each permit holder must execute a bond
188188 cosigned by a surety company authorized to conduct business in this
189189 state in the amount required by commission rule.
190190 Sec. 2005.105. RENEWAL OF SPORTS BETTING OPERATION PERMIT.
191191 (a) A sports betting operation permit issued under this subchapter
192192 expires on the third anniversary of the date the permit is issued.
193193 (b) Not later than the 60th day before the date a sports
194194 betting operation permit expires, a permit holder wishing to renew
195195 the permit shall submit to the department:
196196 (1) a renewal application on a form prescribed by the
197197 executive director; and
198198 (2) a renewal fee of $200,000.
199199 (c) The executive director may deny a sports betting
200200 operation permit renewal if the executive director finds a ground
201201 for denial under Section 2005.103.
202202 (d) The executive director's action is final unless
203203 appealed in accordance with this chapter.
204204 Sec. 2005.106. CRIMINAL PENALTY. (a) Any person who
205205 knowingly falsifies, conceals, or misrepresents a material fact or
206206 knowingly makes a false, fictitious, or fraudulent statement or
207207 representation in any application for a sports betting operation
208208 permit under this subchapter commits an offense.
209209 (b) An offense under Subsection (a) is a Class A
210210 misdemeanor.
211211 Sec. 2005.107. DUTIES OF SPORTS BETTING OPERATION PERMIT
212212 HOLDERS. (a) A sports betting operation permit holder shall ensure
213213 that the permit holder's sports betting operation takes reasonable
214214 measures to:
215215 (1) allow only individuals physically located in this
216216 state to place bets through the permit holder's sports betting
217217 platform;
218218 (2) protect the confidential information of sports
219219 bettors using the permit holder's sports betting platform;
220220 (3) prevent betting that is prohibited under this
221221 chapter or other state law;
222222 (4) allow an individual to restrict the individual's
223223 access to placing a bet with the permit holder's sports betting
224224 operation, including sharing with the department on the
225225 individual's request the restriction for the sole purpose of the
226226 department disseminating the request to other permit holders;
227227 (5) establish procedures to detect suspicious or
228228 illegal betting activity, including measures to immediately report
229229 the activity to the department; and
230230 (6) provide for the appropriate withholding of the
231231 applicable amount of state tax as required by Section 2005.108 and
232232 any federal income tax required under other laws or by rule for
233233 persons who receive income from sports betting.
234234 (b) A sports betting operation permit holder shall maintain
235235 records on:
236236 (1) all sports betting placed with the permit holder,
237237 including records of:
238238 (A) a sports bettor's personal information;
239239 (B) the amount and type of bet;
240240 (C) the time and location of the bet; and
241241 (D) the outcome of the bet; and
242242 (2) suspicious or illegal sports betting activity.
243243 (c) A sports betting operation permit holder shall disclose
244244 the records described in Subsection (b) to the department on
245245 request and shall maintain the records until at least the third
246246 anniversary of the date the related sports event occurs.
247247 (d) A sports betting operation permit holder shall ensure
248248 that advertisements for its sports betting operations:
249249 (1) disclose the identity of the permit holder;
250250 (2) provide information about or links to resources
251251 related to gambling addiction;
252252 (3) are not misleading to a reasonable person; and
253253 (4) do not target persons under the age of 21.
254254 (e) A sports betting operation permit holder may not
255255 sublicense, convey, concede, or otherwise transfer a permit to a
256256 third party.
257257 (f) A sports betting operation permit holder is prohibited
258258 from holding itself out to the public as a sports betting operation
259259 under more than two brands.
260260 (g) A sports betting operation permit holder shall
261261 conspicuously display the permit holder's identity to sports
262262 bettors on any sports betting platform operated by the permit
263263 holder.
264264 Sec. 2005.108. TAX; USE OF TAX REVENUE. (a) A tax of 6.25
265265 percent is imposed on each bet placed by a sports bettor under this
266266 chapter. The tax is to be collected by the sports betting operation
267267 permit holder at the time the bet is placed.
268268 (b) The tax collected under this section is payable monthly
269269 to the department, and the sports betting operation permit holder
270270 shall remit the collected taxes on or before the 20th day of the
271271 next calendar month.
272272 (c) If the sports betting operation permit holder's
273273 accounting necessitates corrections to a previously remitted tax,
274274 the permit holder shall document the corrections when the following
275275 month's taxes are paid.
276276 (d) The department shall deposit tax revenue collected
277277 under this section to the credit of the foundation school fund.
278278 Sec. 2005.109. LIQUIDITY POOLS. (a) The commission may
279279 adopt rules authorizing sports betting operation permit holders to
280280 offset loss and manage risk, directly or with a third party approved
281281 by the department, through the use of a liquidity pool in this state
282282 or another jurisdiction provided that the permit holder, or an
283283 affiliate of the permit holder, is licensed or otherwise authorized
284284 by that jurisdiction to operate a sports betting business.
285285 (b) A sports betting operation permit holder's use of a
286286 liquidity pool does not eliminate the permit holder's duty to
287287 ensure that sufficient funds are available to pay bettors.
288288 Sec. 2005.110. INTERMEDIATE ROUTING OF ELECTRONIC DATA.
289289 (a) Sports betting offered to a sports bettor in this state must be
290290 initiated and received within this state unless otherwise
291291 authorized by federal law.
292292 (b) The intermediate routing of electronic data relating to
293293 sports betting authorized under this chapter does not determine the
294294 location where a bet is initiated and received for purposes of
295295 determining compliance with this chapter.
296296 SUBCHAPTER D. DISCIPLINARY ACTIONS AND PENALTIES
297297 Sec. 2005.151. CIVIL PENALTIES; SUSPENSION AND REVOCATION
298298 OF SPORTS BETTING OPERATION PERMIT. (a) If the executive director
299299 determines a sports betting operation permit holder has violated
300300 this chapter or rules adopted under this chapter, the executive
301301 director in accordance with Chapter 51 may:
302302 (1) suspend or revoke the permit holder's permit; and
303303 (2) impose a monetary penalty not to exceed $1,000 for
304304 each violation of this chapter.
305305 (b) An action taken by the executive director under this
306306 section is final unless appealed in accordance with Sec. 2005.152.
307307 Sec. 2005.152. APPEAL. (a) The commission shall hear and
308308 decide an appeal of any denial of a sports betting operation permit
309309 by the executive director or suspension or revocation of a permit
310310 under this chapter.
311311 (b) The action of the commission in granting or denying a
312312 sports betting operation permit or suspending or revoking a permit
313313 under this chapter may be referred to the State Office of
314314 Administrative Hearings for a contested case hearing.
315315 Sec. 2005.153. PROHIBITED BETTING; OFFENSES. (a) A person
316316 commits an offense if the person places or accepts a bet on Texas
317317 college sports or youth sports.
318318 (b) A person commits an offense if the person knowingly
319319 accepts or redeems or offers to accept or redeem a sports bet made
320320 by or on behalf of a person under 21 years of age.
321321 (c) An offense under this section is a Class A misdemeanor.
322322 (d) If conduct that constitutes an offense under this
323323 section also constitutes an offense under another law, the actor
324324 may be prosecuted under this section, the other law, or both.
325325 Sec. 2005.154. PERSONS PROHIBITED FROM BETTING; OFFENSE.
326326 (a) A person commits an offense if the person places a sports bet
327327 and the person is:
328328 (1) a member, officer, or employee of the commission
329329 or the department;
330330 (2) a sports betting operation permit holder or an
331331 officer, director, or employee of a permit holder;
332332 (3) an officer, director, or employee of any entity
333333 working directly on a contract relating to sports betting with the
334334 department; or
335335 (4) a competitor, coach, trainer, employee, or owner
336336 of a team in a sports event, or any referee for a sports event, and
337337 the actor places the sports bet on that event.
338338 (b) An offense under this section is a Class A misdemeanor.
339339 (c) If conduct that constitutes an offense under this
340340 section also constitutes an offense under another law, the actor
341341 may be prosecuted under this section, the other law, or both.
342342 Sec. 2005.155. OPERATION AND ADVERTISING OF UNPERMITTED
343343 FACILITY PROHIBITED; CIVIL PENALTY. (a) A person may not make the
344344 person's premises available for placing wagers on sports betting
345345 using the Internet or advertise that the person's premises may be
346346 used for that purpose unless the person holds a sports betting
347347 operation permit issued under this chapter.
348348 (b) The executive director may impose a monetary penalty for
349349 each violation of this section. For a person determined to have
350350 made the person's premises available for placing wagers on sports
351351 betting using the Internet, the penalty may not exceed $1,000 per
352352 day per individual who places a bet. For a person determined to have
353353 advertised that the person's premises may be used for that purpose,
354354 the penalty may not exceed $10,000 per violation.
355355 SECTION 2. Section 47.02(c), Penal Code, is amended to read
356356 as follows:
357357 (c) It is a defense to prosecution under this section that
358358 the actor reasonably believed that the conduct:
359359 (1) was permitted under Chapter 2001, Occupations
360360 Code;
361361 (2) was permitted under Chapter 2002, Occupations
362362 Code;
363363 (3) was permitted under Chapter 2004, Occupations
364364 Code;
365365 (4) was permitted under Chapter 2005, Occupations
366366 Code;
367367 (5) consisted entirely of participation in the state
368368 lottery authorized by the State Lottery Act (Chapter 466,
369369 Government Code);
370370 (6) [(5)] was permitted under Subtitle A-1, Title 13,
371371 Occupations Code (Texas Racing Act); or
372372 (7) [(6)] consisted entirely of participation in a
373373 drawing for the opportunity to participate in a hunting, fishing,
374374 or other recreational event conducted by the Parks and Wildlife
375375 Department.
376376 SECTION 3. Section 47.09(a), Penal Code, is amended to read
377377 as follows:
378378 (a) It is a defense to prosecution under this chapter that
379379 the conduct:
380380 (1) was authorized under:
381381 (A) Chapter 2001, Occupations Code;
382382 (B) Chapter 2002, Occupations Code;
383383 (C) Chapter 2004, Occupations Code;
384384 (D) Chapter 2005, Occupations Code;
385385 (E) Subtitle A-1, Title 13, Occupations Code
386386 (Texas Racing Act); or
387387 (F) [(E)] Chapter 280, Finance Code;
388388 (2) consisted entirely of participation in the state
389389 lottery authorized by Chapter 466, Government Code; or
390390 (3) was a necessary incident to the operation of the
391391 state lottery and was directly or indirectly authorized by:
392392 (A) Chapter 466, Government Code;
393393 (B) the lottery division of the Texas Lottery
394394 Commission;
395395 (C) the Texas Lottery Commission; or
396396 (D) the director of the lottery division of the
397397 Texas Lottery Commission.
398398 SECTION 4. This Act takes effect January 1, 2022, but only
399399 if the constitutional amendment authorizing the legislature to
400400 legalize wagering on professional and collegiate sporting events in
401401 this state is approved by the voters. If that amendment is not
402402 approved by the voters, this Act has no effect.