Office of House Bill AnalysisH.B. 844
By: Wilson
Licensing & Administrative Procedures


In 1997, the 75th Legislature passed legislation to place a limit on the
total amount of lottery prizes that may be awarded in a fiscal year.  Prior
to the reduction in prize payout percentage, the Texas Lottery experienced
five years of sales growth from its inception in 1992 through fiscal year
1997. According to analyses provided to the legislature, the reduction in
prize payout should have increased the revenue to the state by
approximately $300,000,000 for the 1998-1999 biennium. Instead, after
enactment of the legislation to reduce the payout, total sales for the
fiscal year 1998 decreased by 17 and one-half percent. 

Gtech, the Rhode Island company that operates the lottery and whose fee is
based on ticket sales, has reported in a Securities and Exchange Commission
filing last November that it received lower service revenue from the
company's Texas lottery contract primarily because of the lower sales
generated by the Texas Lottery.  Gtech believes that the ticket sales slump
correlates with the reduction in prize payout.  However, Gtech also
reported in its federal filings that lotteries nationwide are experiencing
a slowing in sales or, at best, modest growth rates.   

H.B. 844 removes the current limit on the amount of lottery awards and adds
a restriction on the amount the Texas Lottery Commission may spend on
advertising based on increases in gross ticket sale receipts. 


It is the opinion of the Office of House Bill Analysis that rulemaking
authority previously delegated to the Texas Lottery Commission is modified
in SECTION 1 (Section 466.015, Government Code) of this bill. 


SECTION 1.  Amends Section 466.015(c), Government Code, to delete the
exception that the total amount of prizes awarded for the state lottery may
not exceed the amount described in Subsection (d) from the list of
provisions for which the Texas Lottery Commission (commission) is
authorized to adopt rules. 

SECTION 2.  Amends Section 466.015, Government Code, by amending Subsection
(d) and adding Subsection (e), to prohibit the commission's advertising
budget from exceeding $40 million for each fiscal year, less $1 million for
each one percent increase over the total amount of lottery prizes awarded
in the preceding fiscal year over 52 percent of gross ticket sale revenue,
if such award exceeds 52 percent in fiscal year 2000, and by $1 million for
each one percent increase over 57 percent, if such revenue exceeds 57
percent in fiscal year 2000.  Deletes language concerning the limitation on
the total amount of lottery awards exceeding a certain amount. 

SECTION 3.Emergency clause.
  Effective date: upon passage.