HBA-ALS C.S.H.B. 3688 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 3688
By: Flores
Licensing & Administrative Procedures
4/19/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Since the creation of the Texas Lottery, charitable bingo in Texas has
suffered declining profits.  In 1996, a Senate interim committee conducted
an extensive study on the operation and regulation of charitable bingo.
While many of the committee's recommendations were implemented through the
passage of H.B. 2086 by the 75th Legislature, several items were not
addressed.    

C.S.H.B. 3688 sets forth regulations governing satellite bingo. This bill
requires a person to obtain a satellite bingo service provider's license in
order to provide satellite bingo services. This bill sets forth the
licensing requirements relating to application information, application
fees, and bonding.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Texas Lottery Commission in SECTION
2 (Section 11b, Article 179d, V.T.C.S. (Bingo Enabling Act)) and SECTION 3
(Section 13g, Article 179d, V.T.C.S. (Bingo Enabling Act) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 2, Article 179d, V.T.C.S. (Bingo Enabling Act),
by adding Subdivision (30) to define "satellite bingo game."   

SECTION 2.  Amends Article 179d, V.T.C.S. (Bingo Enabling Act), by adding
Section 11b, as follows: 

Sec. 11b.  REGULATION OF SATELLITE BINGO.  Provides that Sections 11(e),
(i), and (j) of this Act do not apply to a satellite bingo game. Authorizes
the Texas Lottery Commission (commission), by rule, to exempt a satellite
bingo game or a person conducting or participating in a satellite bingo
game or who holds a license under this Act from any other provision of this
Act, if the commission determines the exemption is necessary to facilitate
the operation and administration of satellite bingo games.  

SECTION 3.  Amends Article 179d, V.T.C.S. (Bingo Enabling Act), by adding
Section 13g, as follows: 

Sec. 13g.  SATELLITE BINGO SERVICE PROVIDER'S LICENSE.  (a)  Provides that
a person must obtain a satellite bingo service provider's license from the
commission in order to provide satellite bingo services for the use of
licensed authorized organizations. 

(b) Provides that an applicant for a license under this section must file
with the commission a written application which includes specified
information. 

(c)  Provides that a person is not eligible for a license under this
section if the person has been convicted of specified crimes within the
last 10 years or the person is an owner, officer, or director of a holder
of a commercial lessor licensed under this Act.  

(d)  Establishes that the fee for a satellite bingo service provider's
license is $5,000 plus  any cost incurred to conduct the criminal
background checks.  

(e)  Requires the revocation of a license for a satellite bingo service
provider if any disqualifications under this section occur within the
license period.  

(f)  Authorizes a satellite bingo service provider to purchase goods or
services from a licensed manufacturer.  

(g)  Authorizes the commission, upon receiving a complaint, to inspect the
satellite bingo service provider's services. Requires the satellite bingo
service provider to provide to the commission any information requested
that relates to the complaint. Requires the executive director of the bingo
division of the commission to establish procedures for investigating and
resolving complaints against a satellite bingo service provider. 

(h)  Requires a satellite bingo service provider to be bonded in the amount
established by rule of the commission that is not less than $50,000 or more
than $250,000.  

(i)  Requires a satellite bingo service provider to establish a bank
account and requires the provider to deposit all proceeds from each
satellite bingo game, less any prizes paid. Authorizes  disbursement from
the satellite bingo bank account for payment of prizes; payment of taxes
and fees on prizes;  allocation payments to participating licensed
authorized organizations; payments for facility access fees; and payments
to a satellite bingo service provider for operating costs.  

(j)  Requires allocation payments to a licensed authorized organization
participating in satellite bingo to be made monthly.  Requires that an
organization receive a portion of the satellite bingo proceeds and
specifies the formula for computing the portion that an organization
receives.     

SECTION 4. Amends Article 179d, V.T.C.S., by adding Section 19d, as follows:

Sec. 19d. FEES ON SATELLITE BINGO GAME. (a) Provides that Sections 19b and
19c of this Act do not apply to a satellite bingo game. 

(b) Requires a satellite bingo service provider to collect a fee from a
person who wins a prize in a game for which the provider provides services. 

(c) Provides that the fee imposed by this section is 10 percent of the
prize value. 

(d) Requires the commission to use the revenue collected to offset the cost
of administering the provisions of this Act in the regulation of satellite
bingo games and to transfer any remaining revenue to the comptroller. 

(e) Requires the comptroller, on receipt of the revenue collected by the
commission under this section, to transfer the revenue to a trust fund for
the perpetual support and maintenance of a veterans cemetery system, until
the amount of the trust equals $50 million, and to then transfer revenue
collected to the general revenue fund. 

SECTION 5.Effective date: October 1, 1999. 

SECTION 6.Emergency clause. 

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute modifies the original in SECTION 2 (proposed Section 11b,
Article 179d, V.T.C.S. (Bingo Enabling Act)) by creating proposed
Subsections (a) and (b) from text proposed in the original.  

The substitute modifies the original in SECTION 3 (proposed Section 13g,
Article 179d, V.T.C.S.  (Bingo Enabling Act)) in proposed Subsection (g) to
require the executive director of the bingo division of the commission to
establish procedures for investigating and resolving complaints against a
satellite bingo service provider. The substitute modifies the original in
proposed Subsection (h) requiring a satellite bingo service provider to be
bonded in the amount established by rule of the commission that is not less
than $50,000 or more than $250,000, rather than in amount of $50,000. 

The substitute modifies the original by adding a new SECTION 4 to provide
that Sections 19b and 19c of this Act do not apply to a satellite bingo
game.  Requires a satellite bingo service provider to collect a fee in an
amount that is 10 percent of the prize value from a person who wins a prize
in a game for which the provider provides services. Requires the commission
to use the collected revenue to offset the cost of administering this Act
and to transfer any remaining revenue to the comptroller. Requires the
comptroller to transfer the collected revenue to a trust fund for the
perpetual support and maintenance of a veterans cemetery system, until the
amount of the trust equals $50 million, and to then transfer revenue
collected to the general revenue fund. 

The substitute redesignates SECTIONS 4 and 5 (effective date and emergency
clause) of the original to SECTIONS  5 and 6.