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.