Bill Text: TX SB736 | 2021-2022 | 87th Legislature | Introduced

---

Bill Title: 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.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2021-03-11 - Referred to Business & Commerce [SB736 Detail]

Download: Texas-2021-SB736-Introduced.html

---

By: Hinojosa S.B. No. 736

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, 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) "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 ACCOMMODATION. (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 reducing property tax burden in this state.
The comptroller shall direct the commissioner of education to
reduce the compression percentage described by Texas Education
Code, Section 48.2551(b)(1) from 2.5 percent to a lower percentage
to the extent feasible based on the amount of excess funds available
under this subsection.
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 2. 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 3. 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 4. 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 5. 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 6. 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 7. 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.