Bill Text: TX HB1942 | 2023-2024 | 88th Legislature | Engrossed

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Bill Title: Relating to the regulation of sports wagering; requiring occupational permits; authorizing fees; imposing a tax; decriminalizing wagering on certain sports events; creating criminal offenses; providing administrative penalties.

Spectrum: Bipartisan Bill

Status: (Engrossed - Dead) 2023-05-12 - Received from the House [HB1942 Detail]

Download: Texas-2023-HB1942-Engrossed.html

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By: Leach, Meyer, Patterson, Moody, Rose, H.B. No. 1942
et al.

A BILL TO BE ENTITLED
AN ACT
relating to the regulation of sports wagering; requiring
occupational permits; authorizing fees; imposing a tax;
decriminalizing wagering on certain sports events; creating
criminal offenses; providing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The Legislature finds the following:
(1) consistent with a 2018 United States Supreme Court
decision authorizing states to exercise their lawful prerogative to
license and regulate sports wagering activity, it is in the
interest of this state to authorize a strict regulatory model for
sports wagering;
(2) a legal, regulated sports wagering market will
help to deter unlawful sports wagering and provide for more
regulatory and law enforcement oversight over sports wagering,
while generating state revenue;
(3) any sports wagering enforcement and regulatory
structure must begin from the bedrock premise that participation in
a lawful and licensed sports wagering industry is a privilege and
not a right and that strict regulatory oversight is intended to
safeguard the integrity of wagering on sporting events and to
ensure accountability and the public trust;
(4) the most expeditious way to legalize sports
wagering in this state and to strictly regulate this activity is to
utilize the resources of the Texas Lottery Commission; and
(5) sports wagering within this state will be vested
in operators acting under authority of state law and will promote
trust and integrity in all sports wagering operations.
SECTION 2. Subtitle A, Title 13, Occupations Code, is
amended by adding Chapter 2005 to read as follows:
CHAPTER 2005. SPORTS WAGERING
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2005.001. SHORT TITLE. This chapter may be cited as the
Texas Sports and Entertainment Recovery Act.
Sec. 2005.002. DEFINITIONS. In this chapter:
(1) "Authorized sports entity" means:
(A) a sports entity; or
(B) a sports entity designee.
(2) "Cash equivalent" means an asset that is
convertible to cash and approved for use in connection with
authorized sports wagering, including the following approved cash
equivalents:
(A) traveler's checks;
(B) foreign currency;
(C) certified checks, cashier's checks, and
money orders;
(D) personal checks and drafts;
(E) digital and virtual currencies and
cryptocurrencies;
(F) online and mobile payment systems that
support online money transfers;
(G) credit cards and debit cards;
(H) electronic devices with prepaid access, as
defined by 31 C.F.R. Section 1010.100(ww); and
(I) any other form approved by the commission.
(3) "Class 1 racetrack" means a class 1 racetrack
described by Section 2026.102 that was in existence on January 1,
2023. The term includes an entity that operates a class 1
racetrack.
(4) "College sport" means an athletic or sporting
event in which at least one participant is a team or contestant
competing on behalf or under the sponsorship of a public or private
institution of higher education, regardless of where the
institution is located.
(5) "Commission" means the Texas Lottery Commission.
(6) "Covered service" means any service that involves
the operation, management, or control of wagers authorized by this
chapter, including the development or operation of sports wagering
platforms and the provision of sports wagering odds and line
information and sports wagering risk management information. The
term does not include:
(A) payment processing and similar financial
services;
(B) customer identity, age verification, and
geolocation services;
(C) streaming or other video and data that do not
include sports wagering odds or line information;
(D) telecommunications, Internet service
providers, and other similar services not specifically designed for
use in connection with sports wagering;
(E) other goods or services designed to support
the operation, management, or control of a sports wagering
platform; and
(F) other goods or services not specifically
designed for use in connection with sports wagering.
(7) "Executive director" means the executive director
of the commission.
(8) "Fantasy sports contest" has the meaning assigned
by Section 47.01, Penal Code.
(9) "Interactive sports wagering" means the conduct of
sports wagering through or by means of the Internet, a mobile
device, or any other telecommunications service.
(10) "Interactive sports wagering operator" means the
holder of an interactive sports wagering permit.
(11) "Interactive sports wagering permit" means a
permit issued by the commission that authorizes the operation of
interactive sports wagering under this chapter.
(12) "Key person" means an officer or director of an
interactive sports wagering operator who:
(A) is directly involved in the operation,
management, or control of the conduct of sports wagering under this
chapter; or
(B) exercises substantial influence or control
over the interactive sports wagering operator's wagering
activities.
(13) "Official league data" means statistics,
results, outcomes, and other sporting event data obtained for
determining the outcome of tier two sports wagers under an
agreement between an interactive sports wagering operator and:
(A) the relevant sports governing body that
authorizes the use of the data for determining the outcome of tier
two sports wagers; or
(B) an entity expressly authorized by the sports
governing body to provide the information described by this
subdivision to interactive sports wagering operators.
(14) "Permit holder" means a person who holds an
interactive sports wagering permit or service provider permit
issued under this chapter.
(15) "Professional sports" means an athletic or
sporting event involving at least two competitors, at least one of
whom receives compensation for participating in the event.
(16) "Service provider" means the holder of a service
provider permit.
(17) "Service provider permit" means a permit issued
by the commission that authorizes the provision of covered
services.
(18) "Sporting event" or "sports event" means a
professional sports or athletic event, college sports or athletic
event, amateur sports or athletic event, motor race event,
electronic sports event, competitive video game event, or any other
event approved by the commission.
(19) "Sports entity" means:
(A) a sports team;
(B) a sports organization that:
(i) holds in this state sanctioned annual
professional golf tournaments as part of a national tour of
professional golfers; and
(ii) held events described by Subparagraph
(i) before January 1, 2023;
(C) a class 1 racetrack that was in operation on
January 1, 2023; or
(D) a racetrack that:
(i) existed and operated before January 1,
2000, and annually hosted National Association for Stock Car Auto
Racing Cup Series events for at least 20 years preceding May 1,
2023; or
(ii) existed and operated before January 1,
2015, and annually hosted the Formula One United States Grand Prix
in each year that the race occurred for at least five years
preceding May 1, 2023.
(20) "Sports entity designee" means any person, other
than an individual, that is designated and authorized by a sports
entity to receive an interactive sports wagering permit on behalf
of the sports entity.
(21) "Sports facility" means:
(A) a facility in this state that is the primary
host of:
(i) a Major League Baseball, National
Basketball Association, Women's National Basketball Association,
National Football League, Major League Soccer, National Lacrosse
League, or National Hockey League professional sports franchise; or
(ii) a sanctioned annual professional golf
tournament that is part of a national tour of professional golfers;
(B) a class 1 racetrack that was in operation on
January 1, 2023; or
(C) a racetrack that:
(i) existed and operated before January 1,
2000, and annually hosted National Association for Stock Car Auto
Racing Cup Series events for at least 20 years preceding May 1,
2023; or
(ii) existed and operated before January 1,
2015, and annually hosted the Formula One United States Grand Prix
in each year that the race occurred for at least five years
preceding May 1, 2023.
(22) "Sports governing body" means the organization
that:
(A) prescribes final rules and enforces codes of
conduct with respect to a professional sporting event and
participants in the professional sporting event; and
(B) has corporate headquarters located in the
United States.
(23) "Sports team" means a Major League Baseball,
National Basketball Association, Women's National Basketball
Association, National Football League, Major League Soccer,
National Lacrosse League, or National Hockey League professional
sports franchise located in this state that:
(A) leases, subleases, or exclusively or jointly
operates a sports facility; and
(B) existed on January 1, 2023.
(24) "Sports wagering" means a bet placed on sporting
events or portions of sporting events, or on the individual
performance statistics of athletes in a sporting event or
combination of sporting events. The term includes single-game
wagers, teaser wagers, parlays, over-unders, moneylines, pools,
exchange wagering, in-game wagering, in-play wagers, proposition
wagers, and straight wagers. The term does not include:
(A) fantasy sports contests; or
(B) horse racing or greyhound racing regulated
under Subtitle A-1 (Texas Racing Act).
(25) "Sports wagering brand" means the names, logos,
and brands by which an interactive sports wagering operator
advertises, promotes, or otherwise holds out to the public its
sports wagering platform.
(26) "Sports wagering platform" means an Internet
website, mobile application, or other interactive platform
accessible through or by means of the Internet, a mobile device, or
any other telecommunications service that sports wagering players
may use to place sports wagers and participate in sports wagering
authorized under this chapter.
(27) "Tier one sports wager" means any sports wager
other than a tier two sports wager.
(28) "Tier two sports wager" means a sports wager
placed after a sporting event begins.
(29) "Youth sports" means an athletic or sporting
event in which the majority of participants are under the age of 18
or are competing on behalf of or under the sponsorship of one or
more public or private preschools or public or private elementary,
middle or junior high, or high schools. The term does not include
professional sports or events that occur under the sponsorship or
oversight of national or international athletic bodies that are not
educational institutions and that include participants both over
and under the age of 18.
Sec. 2005.003. COMPLIANCE WITH FEDERAL AND STATE LAW. (a)
All sports wagering authorized under this chapter must be
initiated, received, and otherwise placed within the boundaries of
this state unless otherwise authorized by commission rule adopted
in accordance with applicable federal and state laws.
(b) The intermediate routing of electronic data relating to
Internet sports wagering authorized under this chapter, including
routing across state lines, does not determine the location in
which wagers are initiated, received, or otherwise placed,
consistent with the Unlawful Internet Gambling Enforcement Act of
2006 (31 U.S.C. Section 5361, et seq.).
Sec. 2005.004. INAPPLICABILITY OF CHAPTER TO CERTAIN
EVENTS. This chapter does not to apply to:
(1) fantasy sports contests; or
(2) pari-mutuel wagering on horse-racing or greyhound
racing under Subtitle A-1 (Texas Racing Act).
Sec. 2005.005. REVIEW OF COMMISSION ACTION. Except as
otherwise provided by this chapter, an action of the commission
under this chapter is subject to review under Chapter 2001,
Government Code.
Sec. 2005.006. ALLOCATION OF EXCESS FEE REVENUE. Any fees
collected by the commission under this chapter in amounts that
exceed the amount the commission requires to implement this chapter
shall be remitted to the comptroller to be deposited as prescribed
by Section 2005.258.
SUBCHAPTER B. COMMISSION POWERS AND DUTIES
Sec. 2005.051. SPORTS WAGERING PROGRAM. (a) The commission
shall by rule establish an interactive sports wagering program
under this chapter and issue permits to operate interactive sports
wagering on sporting events as authorized by this chapter and
commission rule.
(b) The commission may not authorize sports wagering
involving youth sports.
Sec. 2005.052. RULES. The commission shall adopt all
necessary rules to administer this chapter and regulate sports
wagering in this state.
Sec. 2005.053. ADMINISTRATION AND ENFORCEMENT. The
executive director under direction of the commission shall
administer and enforce this chapter.
Sec. 2005.054. CERTIFICATION OF REVENUES AND EXPENSES. The
commission shall:
(1) each month certify to the comptroller in the form
and manner required by the comptroller a full and complete
statement of sports wagering revenue and expenses for the preceding
month; and
(2) not later than September 30 of each year, provide
to the comptroller a full and complete statement of sports wagering
revenue and expenses for the preceding state fiscal year and any
recommendations for amendments to this chapter that may be
warranted and prudent to protect the public interest.
Sec. 2005.055. AUDITS. (a) To ensure a proper accounting
of all revenue due to this state, the commission and the comptroller
each independently shall have the right to audit the books and
records of interactive sports wagering operators and service
providers that are related to sports wagering activities authorized
under this chapter. The commission and comptroller shall
coordinate to ensure audits are not duplicative or overly
burdensome on the operators or providers.
(b) The comptroller may conduct an audit of any taxes or
fees imposed under this chapter in the same manner the comptroller
conducts an audit of taxes imposed under Title 2, Tax Code.
Sec. 2005.056. VOLUNTARY EXCLUSION PROGRAM. (a) The
commission by rule shall establish, implement, and administer a
voluntary exclusion program.
(b) The rules adopted under this section must require:
(1) the commission to establish and administer a
statewide self-exclusion list that allows an individual to register
on the commission's public Internet website for self-exclusion for
the period specified in the exclusion registration agreement and
requires the commission to regularly distribute the list to each
interactive sports wagering operator;
(2) each interactive sports wagering operator to
provide information on the procedures for individuals to request to
be added to the commission's self-exclusion list and for operators
to bar individuals on the self-exclusion list from any further
participation in sports wagering for the period the individuals are
included on the list;
(3) except as otherwise provided by commission rule,
an individual who participates in the voluntary exclusion program
to agree to refrain from participating in sports wagering for the
period specified in the exclusion registration agreement;
(4) except as otherwise provided by commission rule,
an individual who participates in the voluntary exclusion program
to agree not to petition the commission for removal from the program
for the period specified in the exclusion registration agreement;
and
(5) a permit holder to make all commercially
reasonable attempts and cause its sales agents and others operating
on its behalf to make reasonable efforts to cease all direct
marketing efforts to individuals participating in the voluntary
exclusion program.
(c) An individual's registration under the voluntary
exclusion program does not prevent a permit holder and its agents
and others operating on their behalf from seeking payment of a debt
accrued by the individual before the individual entered the
program.
Sec. 2005.057. RISK MANAGEMENT. (a) The commission shall
adopt rules allowing interactive sports wagering operators and
their service providers to use systems that offset loss or manage
risk in the operation of sports wagering under this chapter,
including through liquidity pools, exchanges, or similar
mechanisms in other approved jurisdictions in which the interactive
sports wagering operator, service provider, affiliate of either, or
other third party also holds an equivalent permit or license.
(b) Notwithstanding Subsection (a), the rules adopted under
this section must require that adequate protections be maintained
at all times to ensure sufficient funds are available to pay all
sports wagering players.
Sec. 2005.058. PLACES OF PUBLIC ACCOMMODATION. The
commission may not authorize or allow a person to:
(1) operate or to allow the operation of a place of
public accommodation, a club, or a similar establishment in which
computer terminals or similar access devices are intended or are
made available for the primary use of accessing a sports wagering
platform; or
(2) otherwise advertise to the general public that the
place of public accommodation, club, or similar establishment is
available to engage in sports wagering.
Sec. 2005.059. AUTHORITY TO SUSPEND WAGERING. The
commission, as necessary to protect the integrity of a competition
or its participants or as described in Section 2005.060, may
suspend wagering on any competition, category or type of
competition, or other aspect of a competition.
Sec. 2005.060. LIMITATIONS ON CERTAIN SPORTS WAGERING FOR
GOOD CAUSE. (a) If a sports governing body believes that the type,
form, or category of sports wagering on that sports governing
body's sporting events has the potential to undermine the integrity
or perceived integrity of the sports governing body or its sporting
events, the sports governing body may submit to the commission a
written request to restrict, limit, or exclude a certain type,
form, or category of sports wagering for that sports governing
body's sporting events. The sports governing body shall provide the
request in the form and manner prescribed by commission rule.
(b) The commission shall request comment from interactive
sports wagering operators on each request described by Subsection
(a) before granting the request.
(c) After giving due consideration to all comments received
under Subsection (b), the commission shall, on a demonstration of
good cause from the requestor that the type, form, or category of
sports wagering is likely to undermine the perceived integrity or
the integrity of the sports governing body or its sporting events,
grant the request.
(d) The commission shall:
(1) if feasible, respond to a request under Subsection
(a) concerning a particular event before the event begins; or
(2) if not feasible, respond not later than the
seventh day after the date the request is submitted.
(e) If the commission determines the requestor who
submitted a request under Subsection (a) is likely to prevail in
successfully demonstrating good cause for its request, the
commission may provisionally grant the request until the commission
issues a final determination on whether the requestor has
demonstrated good cause. Absent a provisional grant by the
commission, an interactive sports wagering operator may continue to
offer sports wagering on sporting events that are the subject of a
request under this section during the commission's consideration of
the request.
Sec. 2005.061. MONITORING PROGRAM. The commission by rule
shall adopt and administer a monitoring program sufficient to
protect the integrity of all sports wagering regulated under this
chapter. The program must provide for the sharing of suspicious
activities on wagering with operators and regulators in other
states.
SUBCHAPTER C. SPORTS WAGERING PERMITS
Sec. 2005.101. INTERACTIVE SPORTS WAGERING PERMIT
APPLICATION; FEE. (a) The commission shall issue not more than one
interactive sports wagering permit for each authorized sports
entity under this chapter. Each sports entity may designate only
one sports entity designee as an authorized sports entity.
(b) The commission shall issue an interactive sports
wagering permit to an authorized sports entity that:
(1) submits a completed application to the commission,
on a form prescribed by the commission, containing the information
required by this section; and
(2) pays to the commission a permitting fee in an
amount equal to $2 million, which the commission must refund if the
applicant's application is denied after deducting the commission's
expenses incurred in considering the application.
(c) The commission may issue an interactive sports wagering
permit to an authorized sports entity that is a sports entity
designee only if the designee is based in the United States.
(d) The commission shall prescribe an application form for
an interactive sports wagering permit that requires an applicant to
submit:
(1) the applicant's proposed initial business plan,
including the range of contemplated types and modes of sports
wagering;
(2) the applicant's proposed measures to address age
and identity verification and geolocation requirements;
(3) the applicant's proposed internal controls,
including controls to ensure that an ineligible person does not
participate in sports wagering;
(4) the applicant's history of preventing problem
gambling, including training programs for its employees;
(5) the applicant's written information security
program, including information security governance and the
designation of a chief security officer or equivalent;
(6) the single sports wagering brand under which an
interactive sports wagering operator plans to hold out its sports
wagering platform to the public;
(7) any personal information the commission by rule
may determine is required for the applicant's key persons; and
(8) any other information the commission considers
necessary.
Sec. 2005.102. SERVICE PROVIDER PERMIT APPLICATION; FEE.
(a) An applicant for a service provider permit shall:
(1) submit an application to the commission, on a form
prescribed by the commission, containing the information required
by this section; and
(2) pay to the commission an application fee in an
amount equal to $25,000.
(b) An application submitted under this section must
include:
(1) the applicant's background in sports wagering or a
covered service;
(2) the applicant's experience in connection with
sports wagering or other wagering activities in other
jurisdictions, including the applicant's history and reputation of
integrity and compliance, a list of all active or lapsed permits or
licenses for sports wagering or other wagering activities, and the
reason for any lapse;
(3) the applicant's written information security
program, including information security governance and the
designation of a chief security officer or equivalent;
(4) any personal information the commission by rule
determines should be required concerning the applicant's key
persons; and
(5) any other information the commission considers
necessary.
Sec. 2005.103. BACKGROUND CHECK. The commission shall
conduct a background check on each service provider applicant,
including any key persons of the applicant, as required by
commission rule. A background check conducted under this section
must include a credit history check, a tax record check, and a
criminal history record information check.
Sec. 2005.104. GRANT OR DENIAL. (a) The commission shall
grant or deny a completed application under this subchapter not
later than the 90th day after the date the commission receives the
application. The commission's decision is final and not
appealable, except as otherwise required under state law.
(b) The commission may accept a license, permit, or any
other authorization to operate sports wagering issued by another
jurisdiction that the commission specifically determines has
similar permitting requirements as evidence that the applicant
meets the interactive sports wagering operator requirements. The
commission may accept another jurisdiction's or an approved third
party's testing of the interactive sports wagering platform as
evidence that the platform meets any requirements mandated by
commission rule.
(c) The commission shall grant a permit to an applicant for
a service provider permit unless:
(1) the commission reasonably believes:
(A) the applicant will be unable to satisfy the
duties of a service provider under this chapter;
(B) the applicant or a key person of the
applicant is not of good character, honesty, or integrity; or
(C) the applicant's or a key person of the
applicant's prior activities, criminal record, reputation, or
associations are likely to:
(i) pose a threat to the public interest;
(ii) impede the regulation of sports
wagering; or
(iii) promote unfair or illegal activities
in the conduct of sports wagering;
(2) the applicant or a key person of the applicant
knowingly fails to comply with the provisions of this chapter or a
commission rule under this chapter;
(3) the applicant or a key person of the applicant has
been previously convicted of a felony, a crime of moral turpitude,
or any criminal offense involving dishonesty or breach of trust in
the 10 years preceding the date the application is submitted;
(4) the applicant's or a key person of the applicant's
license, registration, or permit to conduct sports wagering, other
forms of gambling activity, or a covered service issued by another
state has been revoked; or
(5) the applicant defaults in payment of any
obligation or debt due to this state.
Sec. 2005.105. CONFIDENTIAL INFORMATION. Notwithstanding
any other law, the information an applicant submits under this
subchapter is confidential and exempt from public disclosure.
Sec. 2005.106. PERMIT RENEWAL. (a) Except as provided by
Subsection (b), a permit issued under this chapter expires on the
third anniversary of the date of issuance.
(b) If the permit application is submitted by a designee of
a sports entity or the sports entity's affiliate, a permit under
this chapter expires on the earlier of:
(1) the third anniversary of the date of issuance; or
(2) the expiration date of any contract between the
sports entity or an affiliate of the sports entity and the designee
of the sports entity or affiliate authorizing the designee to
manage and operate the sports entity's or affiliate's sports
wagering activities.
(c) At least 60 days before the expiration date of a permit,
a permit holder may renew a permit by submitting a renewal
application on a form prescribed by the commission. The permit
holder must include a renewal fee in an amount equal to:
(1) $400,000 for renewal of an interactive sports
wagering permit; or
(2) $10,000 for renewal of a service provider permit.
(d) The commission may deny an application for permit
renewal if the commission finds grounds for denial as provided in
Section 2005.101 for an interactive sports wagering permit or
Section 2005.102 for a service provider permit.
SUBCHAPTER D. SPORTS WAGERING OPERATORS
Sec. 2005.151. INTERACTIVE SPORTS WAGERING OPERATOR. An
interactive sports wagering operator or a service provider on
behalf of an interactive sports wagering operator may conduct
statewide interactive sports wagering.
Sec. 2005.152. DUTIES OF INTERACTIVE SPORTS WAGERING
OPERATORS. (a) An interactive sports wagering operator and its
service provider shall implement reasonable measures to:
(1) ensure that only individuals physically located in
this state or as otherwise authorized by commission rule may place a
wager through its sports wagering platform;
(2) protect the confidential information of players
using its sports wagering platform;
(3) prevent wagering on events that are prohibited
events, as provided by this chapter or commission rule;
(4) prevent individuals from placing wagers as agents
or proxies for other individuals;
(5) allow individuals to restrict themselves from
placing wagers through the sports wagering platform under the
voluntary exclusion program established under Section 2005.056;
(6) establish procedures to detect suspicious or
illegal wagering activity, including measures to report suspicious
or illegal wagering activity to the commission; and
(7) provide for the withholding or reporting of income
tax of players as required by applicable state or federal law.
(b) An interactive sports wagering operator shall maintain
until the third anniversary of the date of a sporting event records
of:
(1) all sports wagers placed on the event, including:
(A) the identity of the player;
(B) the amount and type of wager;
(C) the time and location of the wager, including
an Internet Protocol address, if available; and
(D) the outcome of the wager; and
(2) suspicious or illegal wagering activity.
(c) An interactive sports wagering operator must disclose
the records described in Subsection (b) to the commission on
request.
(d) If a sports governing body notifies the commission that
real-time information sharing for wagers placed on its sporting
events is necessary and desirable, interactive sports wagering
operators must share with that sports governing body or its
designee in real time, at the account level:
(1) anonymized information regarding an individual
who places a wager;
(2) the amount and type of wager;
(3) the time the wager was placed;
(4) the location of the wager, including the Internet
Protocol address if applicable;
(5) the outcome of the wager; and
(6) records of abnormal wagering activity.
(e) A sports governing body may use the information
described by Subsection (d) solely for sports wagering integrity
purposes.
(f) In advertising its sports wagering platform, an
interactive sports wagering operator must ensure that its
advertisements:
(1) are not targeted to individuals under the age of
21;
(2) disclose the identity of the interactive sports
wagering operator's brand;
(3) provide information about or links to resources
related to problem gambling and prevention, including a toll-free
crisis help telephone number approved by the commission; and
(4) are not misleading to a reasonable individual.
(g) For purposes of Subsection (d), "real-time information
sharing" means the sharing of information at a commercially
reasonable periodic interval of not less than once every 72 hours.
Sec. 2005.153. ESTABLISHMENT OF INTERACTIVE ACCOUNTS. (a)
An interactive sports wagering operator:
(1) is responsible for verifying the identity of a
sports wagering player and ensuring that the player is at least 21
years of age; and
(2) may remotely verify the identity of a sports
wagering player in order to establish the player's interactive
sports wagering account.
(b) A sports wagering player may not establish more than one
account with any interactive sports wagering operator.
(c) The following individuals are prohibited from placing
sports wagers:
(1) any individual under 21 years of age;
(2) any individual who has requested and has not
revoked exclusion from sports wagering under the voluntary
exclusion program established under Section 2005.056, or who
otherwise has been adjudicated by law as prohibited from engaging
in sports wagering;
(3) any member, officer, or employee of the
commission;
(4) any employee or key person of a permit holder for
that permit holder's sports wagering platform;
(5) any participant, including an athlete, coach,
trainer, referee, or other official, and any employee or other
staff of a participant, in a competition that is the subject of
sports wagering under this chapter for the league with which the
participant is affiliated; and
(6) any employee or other staff of a sports governing
body or authorizing league or similar sponsoring organization for a
competition subject to sports wagering under this chapter for the
sports governing body, authorizing league, or similar sponsoring
organization with which the individual is employed or otherwise
affiliated.
(d) An interactive sports wagering operator and, as
applicable, the operator's service providers may not accept a
sports wager from an individual described by Subsection (c)(5) or
(6) if the interactive sports wagering operator or, as applicable,
the operator's service provider, has notice or actual knowledge
that the individual is prohibited from placing a sports wager under
those subsections.
(e) An interactive sports wagering account must:
(1) be established in the name or on behalf of a player
who is a natural person and may not be in the name of any
beneficiary, custodian, joint trust, corporation, partnership, or
any other entity;
(2) be established:
(A) through the interactive sports wagering
operator's sports wagering platform or a specialized Internet
website or other interface established for that purpose; or
(B) by any other means approved by the
commission; and
(3) include terms that:
(A) prohibit the transfer or sale of an account
or account balance to another registered player;
(B) prohibit the use of any virtual private
network or other technology that may obscure or falsify the
player's physical location;
(C) prohibit any form of collusion, cheating, or
other unlawful activity;
(D) affirm that the player meets all eligibility
requirements for registration; and
(E) authorize the provision of notices and other
required communications either through a designated mobile or other
interface or to an electronic mail address designated by the
player.
(f) The interactive sports wagering operator may allow for
the establishment, verification, and funding of an account
remotely, provided the operator has in place measures sufficient to
remotely verify the age and identity of the player.
(g) An interactive sports wagering operator may suspend or
terminate an account:
(1) if the operator determines the player has provided
any false or misleading information in connection with the opening
of the account or has engaged in cheating or other unlawful conduct;
(2) if the player is or has been barred from placing
sports wagers in this state;
(3) if the player is or otherwise becomes ineligible
under this chapter;
(4) if the interactive sports wagering operator
determines it lacks sufficient information to verify the age and
eligibility of the player; or
(5) for any other reason at the sole discretion of the
operator, provided that reason is not based on a player's actual or
believed sex, gender identity, race, religion, national origin,
sexual orientation, or other lawfully protected characteristic.
(h) On termination for any reason other than the reason
described in Subsection (g)(1), an interactive sports wagering
operator must provide the player sufficient time and access to
withdraw any funds remaining in the account.
Sec. 2005.154. BRAND LIMITATION. An interactive sports
wagering operator may hold out the operator's sports wagering
platform to the public under only one sports wagering brand.
Sec. 2005.155. ASSIGNMENT OF SPORTS WAGERING OPERATIONS TO
THIRD PARTY. (a) Subject to commission approval, an interactive
sports wagering operator may assign the operator's interactive
sports wagering operations to a third-party designee to manage and
operate the operator's sports wagering activities.
(b) A third-party designee described by Subsection (a) must
submit to the commission the information required for an applicant
under Subchapter C in accordance with procedures prescribed by
commission rule.
Sec. 2005.156. FANTASY SPORTS CONTESTS. An interactive
sports wagering operator may offer fantasy sports contests to the
extent those contests are authorized by law.
Sec. 2005.157. RISK MANAGEMENT MEASURES. An interactive
sports wagering operator may engage in risk management measures,
commonly known as layoff wagering, in the ordinary course of
business.
Sec. 2005.158. DATA SOURCES. (a) An interactive sports
wagering operator is not required to use official league data in
determining the result of a tier one sports wager.
(b) A sports governing body may notify the commission in
accordance with forms and procedures prescribed by the commission
of the governing body's determination that an interactive sports
wagering operator must use official league data to settle tier two
sports wagers. The commission shall notify each interactive sports
wagering operator of the sports governing body's notification not
later than the fifth day after the date the commission receives the
notification. If a sports governing body does not notify the
commission of its determination to provide official league data, an
operator is not required to use official league data in determining
the result of a tier two sports wager on a professional sports event
of the league governed by the sports governing body.
(c) Not later than the 60th day after the date the
commission notifies each interactive sports wagering operator as
required by Subsection (b), a permit holder may only use official
league data to determine the results of tier two sports wagers on
professional sports events of the league governed by the sports
governing body, unless:
(1) the sports governing body or its applicable
designee is unable to provide a feed, on commercially reasonable
terms, of official league data to determine the results of a tier
two sports wager, in which case an operator is not required to use
official league data in determining the results of tier two sports
wagers until the data feed becomes available on commercially
reasonable terms; or
(2) an operator demonstrates to the commission that
the sports governing body has not provided or offered to provide a
feed of official league data to the operator on commercially
reasonable terms.
(d) The commission may consider the following nonexclusive
factors in evaluating whether a sports governing body has provided
or offered to provide a feed of official league data on commercially
reasonable terms:
(1) the availability of a sports governing body's
official league data for tier two sports wagers from more than one
authorized source;
(2) market information, including price, terms, and
conditions, regarding the purchase, in this state and other states,
by interactive sports wagering operators of comparable data for the
purpose of settling sports wagers;
(3) the nature and quantity of the data, including the
quality and complexity of the process used for collecting the data;
and
(4) the extent to which sports governing bodies or
their designees have made data used to settle tier two sports wagers
available to sports wagering operators and any terms and conditions
relating to the use of that data.
(e) During any period in which the commission is determining
whether official league data is available on commercially
reasonable terms under Subsections (c) and (d), an interactive
sports wagering operator is not required to use official league
data in determining the results of any tier two sports wagers. The
commission shall make a determination under Subsections (c) and (d)
not later than the 60th day after the date an operator notifies the
commission that it desires to demonstrate that a sports governing
body has not provided or offered to provide a feed of official
league data to the operator on commercially reasonable terms. If
the commission determines that the requesting operator is likely to
fail in successfully making the demonstration under this
subsection, the commission may provisionally deny the request until
the commission makes a final determination as to whether the
requesting operator has made the demonstration.
Sec. 2005.159. COMMERCIAL AGREEMENTS. (a) Any sports
governing body may enter into a commercial agreement with an
interactive sports wagering operator under which the sports
governing body may share in the amounts wagered or revenues derived
from sports wagering on the sports governing body's sporting
events.
(b) A sports governing body is not required to obtain a
permit or other approval from the commission to lawfully accept
amounts or revenues described by Subsection (a).
SUBCHAPTER E. COMPETITION INTEGRITY: PROHIBITED EVENTS;
INVESTIGATIONS; PROMPT REPORTING
Sec. 2005.201. PROHIBITION ON YOUTH SPORTS WAGERING. A
person may not place or accept a sports wager on youth sports.
Sec. 2005.202. COOPERATION WITH INVESTIGATIONS. The
commission and interactive sports wagering operators shall
cooperate with investigations conducted by sports governing bodies
or law enforcement agencies, including by providing or facilitating
the provision of account-level wagering information and audio or
video files relating to individuals placing wagers.
Sec. 2005.203. REQUIRED REPORT TO COMMISSION. (a) An
interactive sports wagering operator must promptly report to the
commission any information relating to:
(1) criminal or disciplinary proceedings commenced
against the interactive sports wagering operator in connection with
its operations;
(2) abnormal wagering activity or patterns that may
indicate a concern with the integrity of a sporting event;
(3) any potential breach of the relevant sports
governing body's internal rules and codes of conduct pertaining to
sports wagering, to the extent the operator has actual knowledge of
the potential breach;
(4) any other conduct that corrupts a wagering outcome
of a sporting event for purposes of financial gain, including match
fixing; and
(5) suspicious or illegal wagering activities,
including the use of funds derived from illegal activity, the
placement of wagers to conceal or launder funds derived from
illegal activity, the use of agents to place wagers, and the use of
false identification in placing wagers.
(b) Interactive sports wagering operators must promptly
report information relating to conduct described in Subsections
(a)(2), (3), and (4) to the relevant sports governing body.
Sec. 2005.204. CONFIDENTIALITY OF CERTAIN REPORTED
INFORMATION. (a) An interactive sports wagering operator must
maintain the confidentiality of information provided by a sports
governing body to the operator unless disclosure is required by
this chapter, the commission, other law, or court order.
(b) The commission, sports governing bodies, and
interactive sports wagering operators must maintain the
confidentiality of all information relating to conduct described in
Sections 2005.203(a)(2), (3), and (4) unless disclosure is required
by this chapter, other law, or court order, or as authorized by the
relevant sports governing body.
(c) The commission must maintain the confidentiality of all
information provided by sports wagering operators for compliance
purposes unless disclosure is required by this chapter, other law,
or court order.
(d) The commission and an interactive sports wagering
operator may disclose confidential information to another
interactive sports wagering operator, a sports governing body, a
sports wagering regulating entity, a law enforcement entity, or
other party for the purpose of preventing or investigating conduct
that corrupts or could corrupt the outcome of a sporting event,
including match fixing.
SUBCHAPTER F. WAGERING REVENUE TAX
Sec. 2005.251. IMPOSITION OF TAX. A tax is imposed on the
adjusted gross wagering revenue of an interactive sports wagering
operator.
Sec. 2005.252. COMPUTATION OF ADJUSTED GROSS WAGERING
REVENUE; LOSS CARRYFORWARD. (a) For purposes of the tax imposed
under this subchapter, an interactive sports wagering operator
shall compute the operator's adjusted gross wagering revenue for a
reporting period by determining the total amount of wagering
revenue the operator received from all sports wagers authorized
under this chapter during the period and subtracting the following
for the period:
(1) all cash or cash equivalents the operator paid as
winnings to players;
(2) the actual cost paid by the operator for any
personal property the operator distributed to a player as a result
of a sports wager authorized under this chapter;
(3) uncollectible receivables, not to exceed four
percent of the amount of gross wagering revenue except as provided
by Subsection (b);
(4) any federal excise tax payments on sports wagers
the operator remitted to the federal government; and
(5) amounts returned to an authorized participant due
to technical malfunction or due to concerns regarding the integrity
of the wager or the sporting event.
(b) The commission may increase the percentage of gross
wagering revenue that an interactive sports wagering operator may
deduct as uncollectible receivables under Subsection (a)(3) on a
showing that a greater percentage is reasonable and warranted.
(c) An interactive sports wagering operator that has an
adjusted gross wagering revenue for a reporting period computed
under Subsection (a) that is less than zero may carry that amount
forward and deduct the amount from the operator's adjusted gross
wagering revenue for one or more of the succeeding 12 reporting
periods before determining the amount of tax due under this
subchapter for the applicable reporting period.
(d) Notwithstanding Subsection (a), an interactive sports
wagering operator may, before the first anniversary of the date the
operator is initially issued an interactive sports wagering permit
under this chapter, exclude wagers placed using free bets or
promotional credits from the computation of the operator's adjusted
gross wagering revenue for a reporting period.
Sec. 2005.253. RATE OF TAX. The rate of the tax imposed
under this subchapter is 15 percent of the adjusted gross wagering
revenue for a reporting period, subject to Section 2005.252(c).
Sec. 2005.254. PAYMENT OF TAX. The tax imposed under this
subchapter is due and payable to the comptroller on or before the
20th day of the month following the month in which the adjusted
gross wagering revenue on which the tax is based is received.
Sec. 2005.255. TAX REPORT. (a) A person required to pay a
tax under this subchapter shall file a tax report with the
comptroller on a form prescribed by the comptroller. The tax report
is due on the date the tax is due under Section 2005.254.
(b) The tax report must include separate statements of:
(1) the amount of the gross wagering revenue the
person received from all sports wagers authorized under this
chapter during the reporting period;
(2) the total amount of cash or cash equivalents the
person paid as winnings to players during the reporting period;
(3) the amount of the actual cost the person paid
during the reporting period for any personal property the person
distributed to a player as a result of a sports wager authorized
under this chapter;
(4) the cash value of any bonuses or promotional
credits provided to players that are returned to the person in the
form of a deposit or wager during the reporting period;
(5) the person's total amount of uncollectible
receivables during the reporting period as determined under Section
2005.252;
(6) the amount of any federal excise tax payments on
sports wagers the person remitted to the federal government during
the reporting period; and
(7) the total negative amount of adjusted gross
wagering revenue that is eligible to be deducted under Section
2005.252(c), the amount of that revenue the person actually
deducted for the report in determining the tax due, and the
remaining amount of that revenue that is eligible to be deducted on
a subsequent report.
Sec. 2005.256. RECORDS. A person required to pay a tax
under this subchapter shall keep a record of:
(1) the amounts the person is required to report under
Section 2005.255; and
(2) any other information the comptroller requires.
Sec. 2005.257. ADMINISTRATION AND ENFORCEMENT; RULES. (a)
The comptroller shall administer, collect, and enforce the tax
imposed under this subchapter in the manner the comptroller
administers, collects, and enforces taxes imposed under Title 2,
Tax Code, except as otherwise provided by this subchapter.
(b) The comptroller shall adopt rules providing for the
manner in which a person required to pay a tax under this subchapter
may file an amended tax report for a reporting period or otherwise
account for errors or omissions in a tax report filed under this
subchapter. The comptroller may adopt other rules as necessary to
implement this subchapter.
Sec. 2005.258. ALLOCATION OF TAX REVENUE AND EXCESS FEE
REVENUE. The comptroller shall deposit the net revenue from the tax
collected under this subchapter and the excess fee revenue
collected under Section 2005.006 as follows:
(1) two percent to the problem gambling and addiction
grant fund established under Section 2005.259; and
(2) the remainder to the general revenue fund to be
appropriated to the Texas Education Agency for use in providing
property tax relief through the reduction of the state compression
percentage, as defined by Section 48.255, Education Code.
Sec. 2005.259. PROBLEM GAMBLING AND ADDICTION GRANT FUND.
(a) The problem gambling and addiction grant fund is established as
an account in the general revenue fund.
(b) Money credited to the fund may be used only for awarding
grants under this section. The fund shall be administered in
accordance with this section.
(c) An expenditure from the problem gambling and addiction
grant fund shall be made in accordance with the General
Appropriations Act.
(d) From funds appropriated as described by Subsection (c),
the commission shall administer a grant program to provide:
(1) assistance for the direct treatment of persons
diagnosed as suffering from pathological gambling and other
addictive behaviors; and
(2) funding for research regarding the impact of
gambling on residents of this state.
(e) Research grants awarded under Subsection (d)(2) may
include grants for determining the effectiveness of education and
prevention efforts on the prevalence of pathological gambling in
this state.
Sec. 2005.260. INAPPLICABILITY OF OTHER TAXES.
Notwithstanding any other law, except this chapter, an interactive
sports wagering operator is exempt from all excise taxes, license
taxes, permit taxes, privilege taxes, amusement taxes, and
occupation taxes imposed by this state or any political subdivision
of this state.
SUBCHAPTER G. PENALTIES
Sec. 2005.301. CRIMINAL PENALTIES. (a) A person commits an
offense if the person knowingly offers or engages in sports
wagering in violation of this chapter. An offense under this
subsection is a Class B misdemeanor.
(b) A person commits an offense if the person knowingly
attempts to suborn, collude, or otherwise conspire to impermissibly
influence the outcome of any competition or aspect of any
competition that is the subject of sports wagering under this
chapter. An offense under this subsection is a state jail felony.
(c) A person commits an offense if the person knowingly or
wilfully falsifies, conceals, or misrepresents a material fact or
knowingly or wilfully makes a false, fictitious, or fraudulent
statement or representation in an application submitted under this
chapter. An offense under this subsection is a state jail felony.
(d) If conduct constituting an offense under this chapter
also constitutes an offense under Chapter 47, Penal Code, the actor
may be prosecuted under either chapter or under both chapters.
Sec. 2005.302. CIVIL PENALTIES. If the commission
determines that a permit holder has intentionally violated any
material provision of this chapter or a rule adopted by the
commission under this chapter, the commission, after providing at
least 15 days' notice and a hearing, may:
(1) suspend or revoke the permit holder's permit; and
(2) impose a monetary penalty not to exceed $10,000
for each violation.
SECTION 3. Section 47.01, Penal Code, is amended by
amending Subdivision (1) and adding Subdivision (2-a) to read as
follows:
(1) "Bet" means an agreement to win or lose something
of value solely or partially by chance. A bet does not include:
(A) contracts of indemnity or guaranty, or life,
health, property, or accident insurance;
(B) an offer of a prize, award, or compensation
to the actual contestants or participants in a bona fide contest for
the determination of skill, speed, strength, or endurance or to the
owners of animals, vehicles, watercraft, or aircraft entered in a
contest; [or]
(C) an offer of merchandise, with a value not
greater than $25, made by the proprietor of a bona fide carnival
contest conducted at a carnival sponsored by a nonprofit religious,
fraternal, school, law enforcement, youth, agricultural, or civic
group, including any nonprofit agricultural or civic group
incorporated by the state before 1955, if the person to receive the
merchandise from the proprietor is the person who performs the
carnival contest; or
(D) an offer of a prize, award, or compensation
to the participants in a fantasy sports contest.
(2-a) "Fantasy sports contest" means a bona fide
contest, reflecting the relative knowledge and skill of the
participants, in which:
(A) participants assemble a fictional sports
team composed of actual professional or amateur athletes to compete
against other fictional sports teams assembled by other
participants for a prize, award, or compensation;
(B) the value of any prize, award, or
compensation is established in advance of the beginning of the game
or contest;
(C) the outcome of the game or contest is
determined by the accumulated statistical performances of the
individual athletes on a participant's fictional sports team; and
(D) the outcome of the game or contest is not
based solely on the score, point spread, or performance of a single
professional or amateur team or athlete.
SECTION 4. 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 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 5. Section 47.09(a), Penal Code, 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 6. (a) Not later than the 90th day after the
effective date of this Act, the Texas Lottery Commission shall post
on the commission's Internet website the application forms and
adopt rules allowing for the submission of applications for
interactive sports wagering permits and service provider permits,
as required by Chapter 2005, Occupations Code, as added by this Act.
(b) Not later than the 45th day after the date the
application forms are posted and rules are adopted as required by
Subsection (a) of this section, the Texas Lottery Commission shall
open an initial application period for issuance of permits under
Chapter 2005, Occupations Code, as added by this Act.
(c) Not later than the 30th day after the date the initial
application period described by Subsection (b) of this section
commences, the Texas Lottery Commission shall complete the review
of all applications received during the initial application period
and award interactive sports wagering permits in accordance with
Chapter 2005, Occupations Code, as added by this Act.
(d) Following the close of the initial application period
described by Subsection (c) of this section, the Texas Lottery
Commission shall issue additional available permits on a rolling
basis.
SECTION 7. The changes in law made by this Act to Chapter
47, Penal Code, apply 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 governed by the law in effect on the
date 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 occurred before that date.
SECTION 8. This Act takes effect January 1, 2024, but only
if the constitutional amendment authorizing the legislature to
legalize wagering in this state on certain sporting events is
approved by the voters. If that amendment is not approved by the
voters, this Act has no effect.