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.