By: Huberty	H.B. No. 2070

	A BILL TO BE ENTITLED
	AN ACT
	relating to the regulation of sports wagering; requiring an
	occupational permit; authorizing a fee; imposing a tax; creating
	criminal offenses; decriminalizing wagering on sports events.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  LEGISLATIVE FINDINGS. 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 this
	state's interest 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 revenue to this state;
	(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 Department of Licensing and
	Regulation, which has experience regulating business activities in
	this state; and
	(5)  Sports wagering within this state will be vested
	in sports wagering operators acting under authority of state law
	and will promote trust and integrity in all sports wagering
	operations.
	SECTION 2.  Subtitle A, Tile 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)  "Adjusted gross revenue" means gross wagering
	revenue received by a sports wagering operator from all sports
	wagers authorized under this chapter, minus:
	(A)  all cash or cash equivalents paid out as
	winnings to players;
	(B)  the actual cost paid by a sports wagering
	operator for any personal property distributed to a player as a
	result of a sports wager authorized under this chapter;
	(C)  the cash value of any bonuses or promotional
	credits provided to players that are then returned to a sports
	wagering operator;
	(D)  Uncollectible receivables, not to exceed
	four percent of gross revenue, except that the commission may
	increase that percentage upon a showing of that a higher amount is
	reasonable and warranted; and
	(E)  excise tax payments on sports wagers remitted
	to the federal government.
	(F)  Amounts returned to an authorized
	participant:
	(i)  because of game, platform, or system
	malfunction; or
	(ii)  because the sports bet must be voided
	due to concerns regarding the integrity of the wager or game.
	(2)  "Authorized sports entity" means:
	(A)  a sports team or a sports team designee;
	(B)  a Class 1 racetrack, as defined by Section
	2026.102; or
	(C)  a greyhound racetrack, as described by
	Subchapter D, Chapter 2025
	(3)  "Cash equivalent" means an asset that is
	convertible to cash and approved for use in connection with
	authorized sports wagering. Approved cash equivalents include:
	(A)  travelers checks;
	(B)  foreign currency and coin;
	(C)  certified checks, cashier's checks, and
	money orders;
	(D)  personal checks and drafts;
	(E)  digital, crypto, and virtual currencies;
	(F)  online and mobile payment systems that
	support online money transfers;
	(G)  credit cards and debit cards;
	(H)  prepaid access instruments; and
	(I)  any other form approved by the commission.
	(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 Commission of
	Licensing and Regulation.
	(6)  "Comptroller" means the Comptroller of Public
	Accounts of the State of Texas.
	(7)  "Covered service" means the operation,
	management, or control of wagers authorized by this chapter,
	including the development or operation of sports wagering platforms
	and the provision of odds lines and risk management information.
	The term excludes:
	(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 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.
	(8)  "Department" means the Texas Department of
	Licensing and Regulation.
	(9)  "Executive director" means the executive director
	of the department.
	(10)  "Interactive sports wagering" means engaging in
	sports wagering via the internet, on a mobile device, or any other
	telecommunications service.
	(11)  "Interactive sports wagering permit" means a
	permit issued by the commission that authorizes the operation of
	interactive sports wagering under this chapter;
	(12)  "Interactive sports wagering operator" means the
	holder of an interactive sports wagering permit.
	(13)  "Key person" means an officer or director of a
	sports wagering operator who:
	(A)  is directly involved in the operation,
	management, or control of the conduct of sports wagering under this
	chapter; and
	(B)  exercises substantial influence or control
	over the sports wagering operator's sports wagering activities.
	(14)  "Official league data" means statistics,
	results, outcomes, and other data relating to a sporting event
	obtained for determining the outcome of tier two sports wagers
	under an agreement wager between a 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 sports wagering operators.
	(15)  "Permit holder" means a person who holds a permit
	issued under this chapter.
	(16)  "Professional sports" means an athletic or
	sporting event at which two or more competitors participate and one
	or more competitors receive compensation.
	(17)  "Retail permit" means a permit issued by the
	commission to an entity included in Section 2005.103 that
	authorizes the operation of sports wagering at a location
	authorized by the commission, but with the operation limited to
	accepting in-person sports wagering only from individuals who are
	physically present in the location.
	(18)  "Retail permit holder" means the holder of a
	retail permit.
	(19)  "Retail sports wagering" means engaging in sports
	wagering at authorized locations in person.
	(20)  "Service provider" means the holder of a service
	provider permit.
	(21)  "Service provider permit" means a permit issued
	by the commission that authorizes the provision of covered
	services.
	(22)  "Sporting event" or "sports event" means
	professional sports and athletic events, college sports and
	athletic events, amateur sports and athletic events, motor race
	events, electronic sports events, competitive video game events, or
	any other event approved by the commission.
	(23)  "Sports wagering brand" means the names, logos,
	and brands by which a sports wagering operator advertises,
	promotes, or otherwise holds out to the public its sports wagering
	platform or retail sports wagering operations.
	(24)  "Sports wagering operator" means:
	(A)  an interactive sports wagering permit
	holder;
	(B)  a service provider permit holder operating
	sports wagering on behalf of an interactive sports wagering permit
	holder;
	(C)  a retail permit holder; or
	(D)  a service provider permit holder operating
	sports wagering on behalf of a retail permit holder.
	(25)  "Sports wagering platform" means a website,
	mobile application, or other interactive platform accessible via
	the internet or mobile, wireless, or similar communications
	technology that players may use to place sports wagers authorized
	under this chapter.
	(26)  "Sports entertainment district" means a public
	entertainment facility, as that term is defined in Section
	108.73(2), Alcoholic Beverages Code that is related infrastructure
	to an approved venue project, as those terms are defined in Section
	334.001, Local Government Code.
	(27)  "Sports facility" means:
	(A)  a facility that is the primary host of a Major
	League Baseball, National Basketball Association, National
	Football League, Major League Soccer, or National Hockey League,
	professional sports franchise in this state and that has a seating
	capacity of at least 5,000 people; or
	(B)  a Class 1 racetrack as defined by Section
	2026.102.
	(28)  "Sports governing body" means the organization
	that prescribes final rules and enforces codes of conduct with
	respect to a professional sporting event and participants in the
	professional sporting event and whose corporate headquarters is
	located in the United States.
	(29)  "Sports wagering" means accepting wagers on
	sporting events or portions of sporting events, or on the
	individual performance statistics of participants in a sporting
	event or combination of sporting events, by any system or method of
	wagering, including in-person or over the internet through a
	website or on mobile devices. The term includes but is not limited
	to 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 or simulated games or contests as
	that term is defined in Section 47.01(2-a), Penal Code ; or
	(B)  greyhound racing or horse racing regulated
	under Subtitle A-1 (Texas Racing Act).
	(30)  "Sports team" means a Major League Baseball,
	National Basketball Association, National Football League, Major
	League Soccer, or National Hockey League professional sports
	franchise located in this state that leases, subleases, or
	exclusively or by a joint venture with another sports team operates
	a sports facility.
	(31)  "Sports team designee" means any person
	designated by a sports team as being authorized to receive an
	interactive sports wagering license in lieu of the sports team.
	(32)  "Tier one sports wager" means a sports wager that
	is not a tier two sports wager.
	(33)  "Tier two sports wager" means a sports wager that
	is placed after the event it concerns has started.
	(34)  "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 or under the sponsorship of one or more
	public or private preschools or elementary, middle, or secondary
	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. 2005.002.  COMPLIANCE WITH FEDERAL AND STATE LAW. (a)
	All sports wagering authorized under this chapter must be
	initiated, received, and otherwise made within this state unless
	otherwise determined by the commission in accordance with
	applicable federal and state laws.
	(b)  Consistent with the intent of the United States Congress
	in the Unlawful Internet Gambling Enforcement Act of 2006 (31
	U.S.C. § 5361, et seq.), 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 such wagers are initiated, received, or
	otherwise made.
	Sec. 2005.003.  REVIEW OF AGENCY ACTIONS. Except as
	otherwise provided by this chapter, all actions of the commission
	or department are subject to review under the Administrative
	Procedure Act.
	SUBCHAPTER B.  POWERS AND DUTIES
	Sec. 2005.051.  SPORTS WAGERING PROGRAM. (a) Subject to the
	requirements set forth in this chapter, the commission shall
	authorize an authorized sports entity to become an interactive
	sports wagering operator for the purpose of offering and accepting
	sports wagers to and from players on sporting events.
	(b)  The department under the direction of the commission and
	executive director shall administer this chapter.
	(c)  The commission may not authorize sports wagers
	involving youth sports.
	(d)  Nothing in this chapter may be construed to apply to
	pari-mutuel wagering on horse-racing or greyhound racing as
	authorized by Subtitle A-1 or fantasy or simulated games or
	contests.
	Sec. 2005.052.  RULES. The commission shall adopt rules for
	the administration of this chapter and to regulate sports wagering
	in this state.
	Sec. 2005.053.  CERTIFICATION OF REVENUES AND EXPENSES. The
	commission shall:
	(1)  certify monthly to the comptroller a full and
	complete statement of sports wagering revenues and expenses for the
	previous month; and
	(2)  within thirty days of the end of the fiscal year,
	provide to the comptroller a full and complete statement of sports
	wagering revenues and expenses for that fiscal year, along with any
	recommendations for changes to this chapter that may be warranted
	and prudent to protect the public interest.
	Sec. 2005.054.  AUDITS. (a)  To ensure a proper accounting
	of all revenues due to the state, the commission and the comptroller
	each independently shall have the right to audit the books and
	records of a sports wagering operator that are related to sports
	wagering activities conducted in this state and authorized under
	the chapter.  The commission and the comptroller shall coordinate
	to ensure that such requests are not duplicative or overly
	burdensome on the sports wagering operator.
	(b)  The comptroller may perform audits of any taxes or fees
	paid under this chapter.
	Sec. 2005.055.  VOLUNTARY EXCLUSION PROGRAM. (a) The
	commission shall adopt rules to establish and implement a statewide
	voluntary exclusion program administered by the commission.
	(b)  The rules must include:
	(1)  a requirement that the commission will establish
	and administer a statewide self-exclusion list, hosting a website
	that sport wagering operators may link to in order to allow
	individuals to register for self-exclusion, and that the commission
	shall regularly distribute such list to sport wagering operators;
	(2)  a requirement that each sports wagering operator
	implement a procedure by which individuals may access the
	commission's website form to ask to be excluded from participation
	in sports wagering and under which the sports wagering operator
	will bar individuals on the self-exclusion list from any further
	participation in sports wagering for the period that they are
	self-excluded;
	(3)  except as otherwise provided by commission rule, a
	requirement that an individual who participates in the voluntary
	exclusion program agrees to refrain from participating in sports
	wagering for the period of time specified at self-exclusion;
	(3)  except as otherwise provided by commission rule, a
	requirement that a person who participates in the voluntary
	exclusion program may not petition the commission for removal from
	the program; and
	(4)  a requirement that the sports wagering operator
	must make all commercially reasonable attempts and cause its sales
	agents and others operating on its behalf to make commercially
	reasonable efforts to cease all direct marketing efforts to persons
	participating in the program.
	(c)  The voluntary exclusion program may not preclude a
	sports wagering operator and its agents and others operating on
	their behalf from seeking the payment of a debt accrued by a person
	before entering the program.
	Sec. 2005.056.  RISK MANAGEMENT. The commission shall adopt
	rules permitting sports wagering operators to use systems that
	offset loss or manage or lay off risk in the operation of sports
	wagering under this chapter, including through liquidity pools,
	exchanges, or similar mechanisms in other approved jurisdiction in
	which the sports wagering operator or an affiliate of either or
	other third party also holds a license or the equivalent.
	(b)  Notwithstanding Subsection (a), the rules adopted under
	this section must require that at all times adequate protections
	are maintained to ensure sufficient funds are available to pay all
	players.
	Sec. 2005.057.  PLACES OF PUBLIC ACCOMODATION. (a) Except
	as provided by Subsection (b), and other than an authorized retail
	sports wagering location, 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 (including a club or association
	limited to dues-paying members or similar restricted groups), or a
	similar establishment in which computer terminals or similar access
	devices are intended or are made available to be used principally
	for the purpose 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.
	(b)  The commission may authorize:
	(1)  an interactive sports wagering operator or a
	service provider operating sports wagering on behalf of an
	interactive sports wagering permit holder to establish a place of
	public accommodation for the purpose of accessing a sports wagering
	platform if it is located within an interactive sports wagering
	operator's sports facility or sports entertainment district; and
	(2)  the advertisement of an activity described by
	Subsection (b)(1) at the location.
	(c)  The commission shall adopt rules governing the
	establishment of a sports wagering public accommodation at a sports
	facility or sports entertainment district.
	(d)  Places of public accommodation, clubs, or similar
	establishments that are allowed under this section are subject to
	all applicable state, local, criminal, zoning, or other regulatory
	powers that are not intended to be limited in any way by this
	chapter.
	(e)  This section does not apply to operations and
	advertisement conducted by a retail permit holder or a service
	provider operating sports wagering on behalf of a retail permit
	holder.
	SUBCHAPTER C. SPORTS WAGERING PERMITS
	Sec. 2005.101.  INTERACTIVE SPORTS WAGERING PERMIT. (a)
	The commission shall issue an interactive sports wagering permit to
	a qualified authorized sports entity under this chapter if the
	applicant:
	(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 of
	$500,000, which must be refunded in the event the applicant's
	application is denied, after deduction of the commission's expenses
	in considering the application.
	(b)  The commission may only award an interactive sports
	wagering permit to an authorized sports entity as defined by this
	chapter. The interactive sports wagering operator or a service
	provider on behalf of an interactive sports wagering operator may:
	(1)  offer retail sports wagering in a place of public
	accommodation located at its sports facility or the sports
	entertainment district created in connection with the sports
	facility;
	(2)  conduct state-wide interactive sports wagering;
	and
	(3)  operate kiosks for interactive sports wagering.
	(c)  The commission may only award an interactive sports
	wagering permit to an authorized sports entity that is based in the
	United States.
	(d)  The commission shall only award one interactive sports
	wagering permit per authorized sports entity, except that if a
	person owns more than one authorized sports entity, that person may
	only obtain one interactive sports wagering permit.
	(e)  The interactive sports wagering operator shall only be
	permitted to hold out its sports wagering platform to the public
	under one brand.
	(f)  The commission shall evaluate and then grant or deny
	each application submitted under this section in its discretion in
	the same manner and based on the same considerations that it uses to
	consider applications for service provider permits. The
	commission's decision is final and not appealable, except as
	otherwise may be required under state law.
	(g)  The commission shall prescribe an application form for
	an interactive sports wagering permit that includes:
	(1)  the applicant's proposed initial business plan,
	which must include 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 no ineligible person will be able
	to participate in sports wagering;
	(4)  the applicant's history of working to prevent
	compulsive 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 of equivalent (which
	designation shall be a requirement for issuance of a license);
	(6)  the sports wagering brand (which shall be limited
	to a maximum of one brand and may be different from the brand
	offered by a retail permit holder) under which an interactive
	sports wagering operator plans to hold out its sports wagering
	platform to the public;
	(7)  any personal information the commission may
	determine by rule should be required concerning the applicant's key
	persons; and
	(8)  any other information the commission considers
	necessary.
	(h)  The commission may accept permitting or authorization
	to operate by another jurisdiction that is specifically determined
	by the commission to have 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.
	(i)  Notwithstanding any other law, the information an
	applicant submits under this section shall be considered
	confidential and exempt from public disclosure.
	(j)  An authorized applicant may elect to assign its
	interactive sports wagering permit to a third-party designee to
	handle all of the applicant's sports wagering management and
	operations. If the applicant makes this election, the application
	and disclosure requirements described by this section should be
	made by the designee rather than the applicant, in accordance with
	procedures determined by the commission.
	Sec. 2005.102.  SERVICE PROVIDER PERMIT. (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
	under this section; and
	(2)  pay to the commission an application fee of
	$25,000.
	(b)  An application submitted under this section must
	include:
	(1)  the applicant's background in sports wagering or
	the 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, as well as a list of all active or lapsed
	permits or licenses for sports wagering or other wagering
	activities (including the reason for any lapse);
	(3)  the applicant's written information security
	program, including information concerning information security
	governance and the designation of a chief security officer or
	equivalent (which designation shall be a requirement for issuance
	of a permit);
	(4)  any personal information the commission
	determines by rule should be required concerning the applicant's
	key persons; and
	(5)  any other information the commission considers
	necessary.
	(c)  The commission shall conduct a background investigation
	on the applicant and key persons as considered necessary by the
	commission. The background investigation must include a credit
	history check, a tax record check, and a criminal history records
	check.
	(d)  The commission shall grant or deny a service provider
	permit within 90 days of receipt of a completed application. The
	commission's decision is final and not appealable, except as
	otherwise may be required under state law.
	(e)  Notwithstanding any other provision of law, the
	information an applicant submits under this section is considered
	confidential and exempt from public disclosure.
	(f)  The following shall constitute the sole grounds for
	denial of a service provider permit:
	(1)  the commission reasonably believes the applicant
	will be unable to satisfy the duties of a permittee described by
	this chapter;
	(2)  the commission reasonably believes that the
	applicant or any of its key persons are not of good character,
	honesty, or integrity;
	(3)  the commission reasonably believes that the
	applicant's or any of its key person's prior activities, criminal
	record, reputation, or associations are likely to:
	(A)  pose a threat to the public interest;
	(B)  impede the regulation of sports wagering; or
	(C)  promote unfair or illegal activities in the
	conduct of sports wagering;
	(4)  the applicant or a key person knowingly fails to
	comply with the provisions of this chapter or any of the
	commission's requirements;
	(5)  the applicant or a key person knowingly fails to
	comply with the provisions of this chapter or any of the
	commission's requirements;
	(6)  the applicant or a key person was convicted of a
	felony, a crime of moral turpitude, or any criminal offense
	involving dishonesty or breach of trust within the 10 years before
	the submission date of the application;
	(7)  the applicant's or a key person's license,
	registration, or permit to conduct sports wagering, other forms of
	gambling activity, or a covered service issued by any other state
	has been revoked; or
	(8)  the applicant defaults in payment of any
	obligation or debt due to the state.
	Sec. 2005.103.  RETAIL PERMIT. (a) The commission may award
	a retail permit to:
	(1)  an authorized sports entity;
	(2)  a sports facility that is the primary host of a
	Minor League Baseball, Basketball, Hockey, or Soccer professional
	sports franchise in this state that is affiliated with a sports team
	or a related sports entertainment district;
	(3)  a racetrack that is not a Class 1 racetrack as
	defined by Section 2026.102;
	(4)  a motorsports racetrack that has a seating
	capacity of at least 5,000 people; or
	(5)  a facility operated by the PGA TOUR that is the
	primary host of a PGA TOUR professional golf tournament.
	(b)  A person eligible to receive a retail permit under
	Subsection (a) may only hold a retail permit for offering retail
	sports wagering at any approved location by the Commission,
	including:
	(1)  the sports facility that the sports team or its
	affiliate leases, subleases, or exclusively or by a joint venture
	with another sports team operates;
	(2)  the sports entertainment district related to the
	sports facility;
	(3)  a facility owned or exclusively leased by an
	authorized sports entity and approved by the commission; or
	(4)  in the case of a facility described by Subsection
	(a)(5), the golf facility or entertainment or resort complex
	related to the golf facility.
	(c)  A retail permit holder that is not also an interactive
	sports wagering operator may only conduct sports wagering with
	individuals who are physically present at the location authorized
	by the commission for retail sports wagering. A retail permit
	holder may operate kiosks for sports wagering at locations approved
	by the commission.
	(d)  The retail permit holder shall only be permitted to hold
	out its sports wagering platform to the public under one brand. If
	an interactive sports wagering operator permit holder also holds a
	retail permit, the brand offered under the retail permit may be
	different from the brand offered under the interactive sports
	wagering operator permit.
	(e)  An applicant for a retail permit shall:
	(1)  submit an application to the commission on a form
	prescribed by the commission, containing the information required
	under this section; and
	(2)  pay to the commission an application fee of
	$50,000.
	(f)  An application submitted under this section must
	include:
	(1)  the applicant's background in sports wagering or
	the 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, as well as a list of all active or lapsed
	permits or licenses for sports wagering or other wagering
	activities (including the reason for any lapse);
	(3)  the applicant's written information security
	program, including information concerning information security
	governance and the designation of a chief security officer or
	equivalent (which designation shall be a requirement for issuance
	of a permit);
	(4)  the sports wagering brand (maximum of one) under
	which the retail permit holders plans to offer retail sports
	wagering to the public;
	(5)  any personal information the commission
	determines by rule should be required concerning the applicant's
	key persons; and
	(6)  any other information the commission considers
	necessary.
	(f)  The commission shall conduct a background investigation
	on the applicant and key persons as considered necessary by the
	commission. The background investigation must include a credit
	history check, a tax record check, and a criminal history records
	check.
	(g)  The commission shall grant or deny a service provider
	permit within 90 days of receipt of a completed application. The
	commission's decision is final and not appealable, except as
	otherwise may be required under state law.
	(h)  Notwithstanding any other provision of law, the
	information an applicant submits under this section is considered
	confidential and exempt from public disclosure.
	(i)  The following shall constitute the sole grounds for
	denial of a retail permit:
	(1)  the commission reasonably believes the applicant
	will be unable to satisfy the duties of a permittee described by
	this chapter;
	(2)  the commission reasonably believes that the
	applicant or any of its key persons are not of good character,
	honesty, or integrity;
	(3)  the commission reasonably believes that the
	applicant's or any of its key person's prior activities, criminal
	record, reputation, or associations are likely to:
	(A)  pose a threat to the public interest;
	(B)  impede the regulation of sports wagering; or
	(C)  promote unfair or illegal activities in the
	conduct of sports wagering;
	(4)  the applicant or a key person knowingly fails to
	comply with the provisions of this chapter or any of the
	commission's requirements;
	(5)  the applicant or a key person was convicted of a
	felony, a crime of moral turpitude, or any criminal offense
	involving dishonesty or breach of trust within the 10 years before
	the submission date of the application;
	(6)  the applicant's or a key person's license,
	registration, or permit to conduct sports wagering, other forms of
	gambling activity, or a covered service issued by any other state
	has been revoked; or
	(7)  the applicant defaults in payment of any
	obligation or debt due to the state.
	(j)  An authorized applicant may elect to assign its retail
	permit to a third-party designee to handle all of the applicant's
	sports wagering management and operations. If the applicant makes
	this election, the application and disclosure requirements
	described by this section should be made by the designee rather than
	the applicant, in accordance with procedures determined by the
	commission.
	Sec. 2005.104.  PERMIT RENEWAL. (a) A permit issued under
	this chapter shall be valid for:
	(1)  if the permit application is submitted by a Class 1
	Racetrack, as defined by Section 2026.102, a sports team or
	affiliate of the sports team, three years after the date of
	issuance; or
	(2)  if the permit application is submitted by a
	designee of the sports team or the sports team's affiliate, the
	earlier of:
	(A)  three years after the date of issuance; or
	(B)  the date of the expiration of any contract
	wager between the sports teams or an affiliate of the sports team
	and the designee of the sports team or affiliate authorizing the
	designee to handle the sports team's or affiliate's sports wagering
	management and operations.
	(b)  At least 60 days before the expiration of a permit, the
	permit holder shall submit a renewal application on a form
	prescribed by the commission. The permit holder must include a
	renewal fee of:
	(1)  $100,000 for renewal of an interactive sports
	wagering permit;
	(2)  $25,000 for renewal of a retail permit; and
	(3)  $10,000 for renewal of a service provider permit.
	(c)  The commission may deny an application for permit
	renewal if the commission finds grounds for denial set forth in
	Section 2005.101 for an interactive sports wagering permit, Section
	2005.102 for a service provider permit, or Section 2005.103 for a
	retail permit holder.
	SUBCHAPTER D. REQUIREMENTS FOR PERMIT HOLDERS AND OPERATORS
	Sec. 2005.151.  DUTIES OF SPORTS WAGERING OPERATORS. (a) A
	sports wagering operator shall ensure that it implement reasonable
	measures:
	(1)  to ensure that only persons physically located in
	the state or as otherwise may be authorized by the commission are
	able to place a wager through its sports wagering platform;
	(2)  to protect the confidential information of players
	using its sports wagering platform;
	(3)  to prevent wagering on prohibited events as set
	forth in this chapter or as otherwise determined by the commission;
	(4)  to prevent persons from placing wagers as agents
	or proxies for others;
	(5)  to allow persons to restrict themselves from
	placing wagers through its sports wagering platform as set forth in
	this chapter, including sharing, at the person's request, that
	person's request for self-exclusion with the commission for the
	sole purpose of disseminating the request to other sports wagering
	operators;
	(6)  to establish procedures to detect suspicious or
	illegal wagering activity, including measures to report suspicious
	or illegal activity to the commission; and
	(7)  to provide for the withholding or reporting of
	income tax of players where required by applicable state or federal
	law.
	(b)  For three years after a sporting event occurs,
	interactive sports wagering operators must maintain records on:
	(1)  all wagers, including the identity of the player,
	the amount and type of wager, the time and location of the wager
	(including IP address if available), and 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 upon
	request.
	(d)  If a sports governing body has notified the commission
	that real-time information sharing for wagers placed on its
	sporting events is necessary and desirable, sports wagering
	operators must share with that sports governing body or its
	designee in real time, at the account level:
	(1)  anonymized information regarding a wager;
	(2)  the amount and type of wager;
	(3)  the time the wager was place;
	(4)  the location of the wager, including the IP
	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 integrity purposes. For
	purposes of Subsection (d), "real time" means on a commercially
	reasonable periodic interval, but in any event not less than once
	every 72 hours.
	(f)  In advertising its sports wagering operation, a sports
	wagering operator must ensure that its advertisements:
	(1)  do not target persons under the age of 21;
	(2)  disclose the identity of the sports wagering
	operator;
	(3)  provide information about or links to resources
	related to gambling addiction and prevention; and
	(4)  are not misleading to a reasonable person.
	Sec. 2005.152.  ESTABLISHMENT OF INTERACTIVE ACCOUNTS. (a)
	The sports wagering operator is responsible for verifying the
	identity of a player and ensuring that the player is at least 21
	years of age. This section does not mean that a patron is required
	to have an account to wager with a retail permit holder at the
	retail permit holder's facility.
	(b)  A player may not have more than one account with each
	sports wagering operator.
	(c)  The following persons are prohibited from the placement
	of sports wagers:
	(1)  any person under the age of 21;
	(2)  any person who has requested and not revoked
	exclusion from sports wagering under this chapter or who otherwise
	has been adjudicated by law as prohibited from engaging in sports
	wagering;
	(3)  any member, officer, or employee of the department
	or the commission;
	(4)  any employee or key person of a permit holder, only
	as to the affiliated permittee's sports wagering platform; and
	(5)  any participant, including 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 (but only as to the league with
	which the individual is affiliated);
	(6)  any employee or other staff of a governing or
	authorizing league or similar sponsoring organization for a
	competition that is the subject of sports wagering under this
	chapter (but only as to the league with which the individual is
	affiliated).
	(d)  A sports wagering operator may not be charged with
	violation of Subsection (c)(5) or (6) absent notice or actual
	knowledge that a player is within the scope of those provisions.
	(d)  In determining which persons are excluded from placing
	wagers under Subsection (c)(5) or (6), a sports wagering operator
	shall use any list of persons that is provided by the commission.
	(e)  A sports wagering account:
	(1)  must be established in the name or on behalf of the
	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)  must be established through the sports wagering
	operator's sports wagering platform or a specialized website or
	interface established for that purpose;
	(3)  must 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
	players' 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 sports wagering operator may allow for the
	establishment of sports wagering accounts remotely, provided that
	it has in place measures sufficient to verify the age and identity
	of the player.
	(g)  A sports wagering operator may suspend or terminate a
	sports wagering account if:
	(1)  it is determined that 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)  the player is or has been barred from placing
	wagers in this state;
	(3)  the player is or otherwise becomes ineligible
	under this chapter;
	(4)  the sports wagering operator determines that 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
	sports wagering operator, provided that it is not on the basis of a
	player's actual or believed sex, gender identity, race, religion,
	national origin, sexual orientation, or other lawfully protected
	characteristic.
	(h)  In the event of termination for any reason other than
	set forth in Subsection (g)(1), the player shall be provided a
	timely ability to access and withdraw any funds remaining in the
	sports wagering account.
	Sec. 2005.152.  "LAYOFF" WAGERING.  Nothing in this
	subchapter is intended to prohibit sports wagering operators from
	engaging in risk management measures commonly known as "layoff"
	wagering in the ordinary course of business.
	SUBCHAPTER E. COMPETITION INTEGRITY; PROHIBITED EVENTS
	Sec. 2005.201.  PROHIBITION ON YOUTH SPORTS WAGERING. No
	person shall place or accept a wager on youth sports.
	Sec. 2005.202.  MONITORING PROGRAM. Before the commencement
	of sports wagering under this chapter, the commission shall adopt
	rules and a monitoring program sufficient to protect the integrity
	of all sports wagering under this chapter and that provides for a
	sharing of suspicious activities on wagering with sports wagering
	operators and regulators in other states.
	Sec. 2005.203.  AUTHORITY TO SUSPEND WAGERING. The
	commission, as necessary to protect the integrity of a competition
	or its participants or as set forth in Section 2005.204, shall have
	the authority to suspend wagering on any competition, category or
	type of competition, any other aspect of a competition.
	Sec. 2005.204.  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 in
	writing a 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 a form and manner as the commission may reasonably
	require.
	(b)  The commission may request comment from sports wagering
	operators on all requests described by Subsection (a) before
	granting the request.
	(c)  After giving due consideration to all comments received
	under Subsection (b), the commission shall, upon 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 sports governing body or its sporting events,
	grant the request.
	(d)  If feasible, the commission must respond to a request
	under Subsection (a) concerning a particular event before the start
	of the event. If it is not feasible to respond before the start of
	the event, the commission must respond no later than seven days
	after the request is made.
	(e)  If the commission determines that the requestor under
	Subsection (a) is more likely than not to prevail in successfully
	demonstrating good cause for its request, the commission may
	provisionally grant the request until the commission makes a final
	determination as to whether the requestor has demonstrated good
	cause. Absent a provisional grant by the commission, a sports
	wagering operator may continue to offer sports wagering on sporting
	events that are the subject of a request under this section during
	the pendency of the commission's consideration of the request.
	Sec. 2005.205.  COOPERATION WITH INVESTIGATIONS. The
	commission and 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 persons placing wagers.
	Sec. 2005.206.  PROMPT REPORTING TO COMMISSION. (a)  A
	sports wagering operator must promptly report to the commission any
	information relating to:
	(1)  criminal or disciplinary proceedings commenced
	against the 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;
	(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 use of funds derived from illegal activity, wagers to
	conceal or launder funds derived from illegal activity, using
	agents to place wagers, and using false identification.
	(b)  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. 2005.207.  CONFIDENTIALITY OF INFORMATION. (a)  A
	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, and sports wagering operators must
	maintain the confidentiality of all information relating to conduct
	described in Section 2005.206(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)  Nothing in this chapter prohibits the commission or a
	sports wagering operator from making a confidential disclosure to
	another 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.
	Sec. 2005.208.  DATA SOURCES. (a)  Except as provided by
	Subsection (c), a sports wagering operator may use any data source
	to determine the results of sports wagers, provided that the data is
	not obtained directly or indirectly from live event attendees who
	collect the data in violation of the terms of admittance to an event
	or through automated computer programs that compile data from the
	internet in violation of the terms of service of the relevant
	website or other internet platform.
	(b)  A sports wagering operator may use any data source for
	determining the result of a tier one sports wager.
	(c)  A sports governing body may notify the commission that
	it desires sports wagering operators to use official league data to
	settle tier two sports wagers. A notification under this subsection
	must be made in accordance with forms and procedures prescribed by
	the commission. The commission shall notify each sports wagering
	operator of the sports governing body's notification not later than
	the fifth day after the department's receipt of the notification.
	If a sports governing body does not notify the commission of its
	desire to supply official league data, a sports wagering operator
	may use any data source for determining the result of a tier two
	sports wager on a professional sporting event of the league
	governed by the sports governing body subject to the limitations of
	Subsection (a).
	(d)  Not later than the sixtieth day after the commission
	notifies each sports wagering operator as required by Subsection
	(c), a sports wagering operator must use only 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 any of the following apply:
	(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 sports wagering operators may use
	any data source for determining the results of tier two sports
	wagers until the data feed becomes available on commercial
	reasonable terms; or
	(2)  a sports wagering 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 sports
	wagering operator on commercially reasonable terms, according to
	criteria described in Subsection (e).
	(e)  The commission may consider the following information
	in determining whether a sports governing body has provided or
	offered to provide a feed of official league data on commercially
	reasonable terms, provided that no single factor on its own will be
	deemed conclusive evidence that official league data is being
	offered on terms that are not commercially reasonable:
	(1)  the availability of a sports governing body's
	official league data for tier two sports wagers from one or more
	authorized source;
	(2)  market information regarding the purchase, in
	Texas and in other states, by sports wagering operators of data for
	all sports from all authorized sources;
	(3)  the nature and quantity of the data, including the
	quality and complexity of the process used for collecting the data;
	and
	(4)  any other information the commission considers
	relevant.
	(f)  During any time period in which the commission is
	determining whether official league data is available on
	commercially reasonable terms under Subsections (d) and (e), a
	sports wagering operator may use any data source for determining
	the results of any tier two sports wagers subject to the limitations
	of Subsection (a). The commissioner shall make a determination
	under Subsections (d) and (e) not later than the 60th day after a
	sports wagering 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 sports
	wagering operator on commercially reasonable terms. If the
	commission determines that the requestor is more likely than not 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
	requestor has made the demonstration.
	Sec. 2005.209.  COMMERCIAL AGREEMENTS.  Any sports governing
	body may enter into a commercial agreement with a sports wagering
	operator under which the sports governing body may share in the
	amount wager or revenues derived from sports wagering on the sports
	governing body's sporting events. A sports governing body is not
	required to obtain a permit or other approval from the commission to
	lawfully accept these amounts or revenues.
	SUBCHAPTER F. TAXES
	Sec. 2005.251.  IMPOSITION OF TAX. (a) A sports wagering
	operator shall pay a tax of ten percent on the sports wagering
	operator's adjusted gross revenue.
	(b)  The tax imposed under this section is due monthly to the
	comptroller and shall be remitted on or before the 20th day of the
	next succeeding calendar month. If the sports wagering operator's
	account necessitates corrections to a previously remitted tax, it
	shall document the corrections when it pays the following month's
	taxes.
	(c)  If the sports wagering operator's adjusted gross
	revenue for a month is a negative amount, the sports wagering
	operator may carry over the negative amount to a return filed for a
	subsequent month and deduct this amount from its tax liability for
	the subsequent month, provided that the amount may not be carried
	over and deducted against tax liability in any month that is more
	than 12 months after the month in which the amount was accrued.
	(d)  Any taxes collected under this section and any fees
	collected by the commission under this chapter that are in excess of
	what the department and commission need to implement this chapter
	shall be dedicated to providing special education and related
	services to eligible students in addition to and as a supplement to
	the funding provided under the Texas Education Code, Section
	48.102. The special education allotment advisory committee
	established under the Texas Education Code, Section 48.1021, shall
	make recommendations for the use of these supplemental fees, and
	the commissioner by rule shall determine the use of these
	supplemental funds based on the advisory committee's
	recommendation.
	Sec. 2005.252.  NO OTHER TAXATION PERMITTED. A sports
	wagering operator may not be subjected to an excise tax, license
	tax, permit tax, privilege tax, amusement tax, sales tax, or
	occupation tax that is imposed upon licensees by the state or any
	political subdivision of the state, except as provided by this
	chapter.
	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
	willfully falsifies, conceals, or misrepresents a material fact or
	knowingly or willfully makes a false, fictitious, or fraudulent
	statement or representation in any application under Section
	2005.101 or Section 2005.102. An offense under this section is a
	state jail felony.
	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 or simulated sports game or
	contest.
	(2-a)  "Fantasy or simulated sports game or contest"
	means a bona fide contest, reflecting the 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.  Not later than the 90th day after the effective
	date of this Act, the Texas Commission on Licensing and Regulation
	shall publish applications and adopt rules allowing for the
	submission of applications for interactive sports wagering
	permits, service provider permits, and retail permits. The initial
	application period shall close 45 days after the publication of the
	application and adoption of rules. The commission shall complete
	the review of all applications received and award interactive
	sports wagering permits, service provider permits, and retail
	permits not later than the 30th day after the close of the initial
	application period. Additional available permits may be issued on a
	rolling basis thereafter.
	SECTION 7.  The change in law made by this Act applies only
	to an offense committed on or after the effective date of this Act.
	An offense committed before the effective date of this Act is
	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, 2022, but only
	if the constitutional amendment authorizing the legislature to
	legalize sports wagering in this state is approved by the voters. If
	that amendment is not approved by the voters, this Act has no
	effect.