TITLE 16. ECONOMIC REGULATION

PART 9. TEXAS LOTTERY COMMISSION

CHAPTER 401. ADMINISTRATION OF STATE LOTTERY ACT

The Texas Lottery Commission (Commission) proposes amendments to 16 TAC §401.158 (Suspension or Revocation of License), §401.160 (Standard Penalty Chart), §401.301 (General Definitions), §401.302 (Instant Game Rules), §401.304 (On-Line Game Rules (General)), §401.307 ("Pick 3" On-Line Game Rule), §401.308 ("Cash Five" On-Line Game), §401.312 ("Texas Two Step" On-Line Game), §401.316 ("Daily 4" On-Line Game Rule), §401.320 ("All or Nothing" On-Line Game Rule), §401.322 ("Texas Triple Chance" Lottery Game), §401.353 (Retailer Settlements, Financial Obligations, and Commissions), §401.361 (Required Purchases of Lottery Tickets), §401.364 (Training), and §401.370 (Retailer's Financial Responsibility for Lottery Tickets Received and Subsequently Stolen or Lost).

There are two purposes for the proposed amendments. The first purpose is to facilitate the potential future sale of lottery tickets using Commission-approved third-party point-of-sale systems. Specifically, these amendments change the way tickets are issued, including revising the definition of terminals, clarifying language on Quick Pick selection, and updating how tickets are printed on third-party point-of-sale systems. Certain retailer requirements are amended to facilitate these types of sales as well.

Second, these proposed amendments make conforming changes that match rule language to current Commission (and industry) practice and terminology. These amendments include changing the references to lottery games from "on-line" and "instant" to "draw" and "scratch." There are multiple other clarifications of meanings and terms, both to conform usage of those terms throughout the rules and to match current Commission practice. Some of these changes were identified in the most recent Commission rule review and are being implemented with these amendments.

Kathy Pyka, Controller, has determined that for each year of the first five years the amendments will be in effect, there will be no significant fiscal impact for state or local governments as a result of the proposed amendments. There will be no adverse effect on small businesses or rural communities, micro businesses, or local or state employment. There will be no additional economic cost to persons required to comply with the amendments, as proposed. Furthermore, an Economic Impact Statement and Regulatory Flexibility Analysis is not required because the proposed amendments will not have an adverse economic effect on small businesses or rural communities as defined in Texas Government Code §2006.001(1-a) and (2).

Michael Anger, Director of Lottery Operations, has determined that for each year of the first five years the proposed amendments will be in effect, the public benefit anticipated is to allow for increased convenience for lottery ticket purchasers through the use of Commission-approved third-party point-of-sale systems. In addition, the public will benefit from more understandable rules aligned with Commission practice and applicable statutes. These amendments will increase the clarity and comprehensibility of the Commission's rules.

The Commission requests comments on the proposed amendments from any interested person. Comments on the proposed amendments may be submitted to Ryan Mindell, Assistant General Counsel, by mail at Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630; by facsimile at (512) 344-5189; or by email at legal.input@lottery.state.tx.us. Comments must be received within 30 days after publication of this proposal in the Texas Register in order to be considered.

SUBCHAPTER B. LICENSING OF SALES AGENTS

16 TAC §401.158, §401.160

These amendments are proposed under Texas Government Code §466.015, which authorizes the Commission to adopt rules governing the operation of the lottery; and §467.102, which authorizes the Commission to adopt rules for the enforcement and administration of the laws under the Commission's jurisdiction.

This proposal is intended to implement Texas Government Code, Chapter 466.

§401.158.Suspension or Revocation of License.

(a) (No change.)

(b) Without limiting the commission's ability to consider factors listed in §401.153(b) of this title as grounds for suspension or revocation of a license issued under this subchapter, the commission may also suspend or revoke a license for reasons including, but not limited to, any of the following:

(1) - (6) (No change.)

(7) licensee endangers the security and/or [and] integrity of the lottery games operated by the commission;

(8) licensee violates any directive or instruction issued by the director of the Lottery Operations Division; [director;]

(9) (No change.)

(10) licensee incurs four (4) notices of nonsufficient fund transfers or non-transfer of funds within a 12-month period;

(11) licensee sells a scratch [an instant] ticket from a game that has closed after the date designated for the end of the game;

(12) - (16) (No change.)

(17) licensee fails to keep accurate and complete records of all tickets from confirmed, active, and settled packs that have not been sold;

[(18) licensee fails to offer a minimum of two instant ticket games for sale if two or more instant games are available from the Lottery;]

(18) [(19)] licensee [fails to order or accept delivery of the required minimum number of lottery tickets or] fails or refuses to meet minimum sales criteria;

(19) [(20)] licensee fails to meet any requirement under §401.368 of this title (relating to Lottery Ticket Vending Machines), [Machine),] if the licensee has been supplied with a self-service lottery ticket vending machine by the commission;

(20) [(21)] licensee fails to take readily achievable measures within the allowed time period to comply with the barrier removal requirements regarding the ADA;

(21) [(22)] licensee fails to prominently post license;

(22) [(23)] licensee knowingly sells a ticket or pays a lottery prize to another person who is:

(A) an officer or an employee of the commission;

(B) an officer, member, or employee of a lottery operator;

(C) an officer, member, or employee of a contractor or subcontractor that is excluded by the terms of its contract from playing lottery games;

(D) the spouse, child, brother, sister, or parent of a person described by subparagraph (A), (B), or (C) of this paragraph who resides within the same household as that person;

(23) [(24)] licensee intentionally or knowingly sells a ticket at a price the licensee knows is greater than the price set by the executive director;

(24) [(25)] licensee sells tickets issued to a licensed location at another location that is not licensed;

(25) [(26)] licensee intentionally or knowingly sells a ticket by extending credit or lends money to enable a person to buy a ticket;

(26) [(27)] licensee intentionally or knowingly sells a ticket to a person that the licensee knows is younger than 18 years;

(27) [(28)] licensee intentionally or knowingly sells a ticket and accepts anything for payment not specifically allowed under the State Lottery Act;

(28) [(29)] licensee sells tickets over the telephone or via mail order sales, establishes or promotes a group purchase or pooling arrangement under which tickets are purchased on behalf of the group or pool and any prize is divided among the members of the group or pool, and the licensee [person] intentionally or knowingly:

(A) uses any part of the funds solicited or accepted for a purpose other than purchasing tickets on behalf of the group or pool; or

(B) retains a share of any prize awarded as compensation for establishing or promoting the group purchase or pooling arrangement;

(29) [(30)] licensee intentionally or knowingly alters or forges a ticket;

(30) [(31)] licensee intentionally or knowingly influences or attempts to influence the selection of the winner of a lottery game;

(31) [(32)] licensee intentionally or knowingly claims a lottery prize or a share of a lottery prize by means of fraud, deceit, or misrepresentation; or aids or agrees to aid another person or persons to claim a lottery prize or a share of a lottery prize by means of fraud, deceit, or misrepresentation;

(32) [(33)] licensee intentionally or knowingly tampers with, damages, defaces, or renders inoperable any vending machine, electronic computer terminal, or other mechanical device used in a lottery game, or fails to exercise due care in the treatment of commission property;

(33) [(34)] licensee:

(A) induces another person to assign or transfer a right to claim a prize;

(B) initiates or accepts an offer to sell the right to claim a prize;

(C) initiates or accepts an offer of compensation from another person to claim a lottery prize; or

(D) purchases a lottery ticket from a person who is not a licensed lottery retailer;

(34) [(35)] licensee intentionally or knowingly makes a statement or entry that the person knows to be false or misleading on a required report;

(35) [(36)] licensee fails to maintain or make an entry the licensee knows is required to be maintained or made for a required report;

(36) [(37)] licensee knowingly refuses to permit the director of the Lottery Operations Division, the executive director, commission, or the state auditor to examine the agent's books, records, papers or other objects, or refuses to answer any question authorized under the State Lottery Act;

(37) [(38)] licensee intentionally or knowingly makes a material and false or incorrect, or deceptive statement, written or oral, to a person conducting an investigation under the State Lottery Act or a commission rule [adopted by the commission];

(38) [(39)] licensee commits an offense of conspiracy as defined in the State Lottery Act;

(39) [(40)] licensee sells or offers for sale any interest in a lottery of another state or state government or an Indian tribe or tribal government, including an interest in an actual lottery ticket, receipt, contingent promise to pay, order to purchase, or other record of the interest; or

(40) [(41)] licensee has violated a provision of the State Lottery Act, Government Code, Chapter 466, or a commission rule adopted under the State Lottery Act.

§401.160.Standard Penalty Chart.

(a) - (f) (No change.)

(g) Based upon consideration of the following factors, the commission may impose penalties other than the penalties recommended in §401.158 of this title (relating to Suspension or Revocation of License) and/or this section:

(1) - (9) (No change.)

(10) Any other mitigating or aggravating circumstances.

Figure: 16 TAC §401.160(g)(10) (.pdf)

[Figure: 16 TAC §401.160(g)(10)]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 9, 2017.

TRD-201704061

Bob Biard

General Counsel

Texas Lottery Commission

Earliest possible date of adoption: November 19, 2017

For further information, please call: (512) 344-5012


SUBCHAPTER D. LOTTERY GAME RULES

16 TAC §§401.301, 401.302, 401.304, 401.307, 401.308, 401.312, 401.316, 401.320, 401.322

The following amendments are proposed under Texas Government Code §466.015, which authorizes the Commission to adopt rules governing the operation of the lottery; and §467.102, which authorizes the Commission to adopt rules for the enforcement and administration of the laws under the Commission's jurisdiction.

This proposal is intended to implement Texas Government Code, Chapter 466.

§401.301.General Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Caption--The letters appearing below the play symbols in the play area of a ticket that verify the correctness of the play symbols.

(2) Certified drawing--A drawing in which a lottery drawing representative [the lottery drawing supervisor, security representative,] and an independent certified public accountant attest that the drawing equipment functioned properly and that a random selection of a winning combination occurred.

(3) - (5) (No change.)

(6) Commission--The Texas Lottery Commission. Unless the context clearly requires otherwise, "commission" includes authorized Texas Lottery commission staff members/employees.

(7) [(6)] Current draw period--The period of time in which the player selections and Quick Pick selections are accumulated into a pool of plays eligible for winning in a drawing held at the end of the designated period.

(8) [(7)] Director--The Director [A director] of the Texas Lottery Commission, Lottery Operations. [Commission.]

(9) [(8)] Direct prize category contribution--A specified percentage of net sales allocated to the prize categories as described in the rules of the specific game being played.

(10) [(9)] Division--Lottery Operations [A division] of the Texas Lottery Commission.

(11) [(10)] Draw break--A period of time before a drawing for a draw [an on-line] game during which player selections for that drawing may not be entered into the lottery gaming [on-line] system and during which no requests for Quick Pick selections for that drawing may be entered into the lottery gaming [on-line] system.

(12) Draw game--A lottery game which utilizes a computer system to administer plays, the type of game, and amount of play for a specified drawing date, and in which a player either selects a combination of numbers or allows number selection by a random number generator approved by the commission, referred to as Quick Pick. The commission, or other authorized entity, will conduct a drawing to determine the winning combination(s) in accordance with the rules of the specific game being played and the draw procedures for the specific game. Sometimes, draw games are called "on-line games."

(13) Draw game ticket--A ticket issued to a player, by a retailer, and generated by a terminal provided by the commission or commission's vendor on official Texas Lottery paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game. That ticket shall be the only acceptable evidence of the combination of digits, numbers, or symbols selected. Draw game tickets may be purchased only from retailers.

(14) [(11)] Drawing--The procedure by which the commission randomly selects winning combinations of digits, numbers, or symbols in accordance with the rules of the game as set forth in the rules of the specific game being played and the draw [drawing] procedures for the specific game.

(15) [(12)] Drawing pool--The amount of money available for all prize categories for a specific drawing.

(16) [(13)] Draw procedures--The written document approved by the executive director that specifies the draw procedures for a particular game, if a drawing is designed as part of the game.

(17) [(14)] Duplicate ticket--A ticket produced by photograph, xerography, or any other method other than a ticket generated by a terminal. [an on-line terminal.]

(18) [(15)] Executive director--The executive director of the Texas Lottery Commission.

(19) [(16)] Game number--The number on the back of the scratch [instant] ticket which refers to the number associated with the particular scratch ticket [instant] game.

(20) [(17)] Game procedures--The written document approved by the director [of the marketing division of the commission] that includes, among other things, the game name, how a prize is won, game prize structure, play style, [playstyle,] and eligibility for a drawing, if any.

(21) [(18)] High-tier prize--A prize of $600 or more.

(22) [(19)] Indirect prize category contribution--Amounts allocated from the prize reserve fund, roll-over and prize breakage for a specific draw [online] game drawing.

[(20) Instant game--An instant ticket lottery game, developed and offered for sale to the public in accordance with commission rules, that is played by removing the latex covered play area on an instant ticket to reveal the ticket play symbols.]

[(21) Instant retailer--A commission retailer authorized by the commission to sell instant tickets only.]

(23) [(22)] Invalid ticket--Any ticket that fails to meet all validation requirements of the commission.

(24) Lottery gaming system--The commission or commission's vendor's computer system consisting of terminals, central processing equipment, and a communication network.

(25) [(23)] Lottery retailer or retailer--A licensed sales agent, as contemplated by Chapter 466, Government Code.

(26) [(24)] Low-tier prize--A prize of less than $25.

(27) [(25)] Mid-tier prize--A prize of $25 or more but less than $600.

(28) [(26)] Minor--An individual younger than 18 years of age.

[(27) On-line game--A lottery game which utilizes a computer system to administer plays, the type of game, and amount of play for a specified drawing date, and in which a player either selects a combination of numbers or allows number selection by a random number generator operated by the computer, referred to as Quick Pick. The commission will conduct a drawing to determine the winning combination(s) in accordance with the rules of the specific game being played and the drawing procedures for the specific game.]

[(28) On-line retailer--A lottery retailer authorized by the commission to sell on-line tickets. On-line retailers shall sell all on-line lottery games and at least two instant ticket games offered by the commission.]

[(29) On-line system--The commission or commission's vendor's on-line computer system consisting of on-line terminals, central processing equipment, and a communication network.]

[(30) On-line terminal--The commission or commission's vendor's computer hardware through which an on-line retailer enters player selections or Quick Pick selections and by which on-line tickets are generated and claims are validated.]

[(31) On-line ticket--A computer-generated ticket issued to a player, by an on-line retailer, as a receipt for the combination of numbers a player has selected, and generated on an on-line terminal provided by the commission or commission's vendor on official Texas Lottery paper stock, by either selecting his or her own numbers or selecting Quick Pick, which is a random number generator operated by the computer. That ticket shall be the only acceptable evidence of the combination of digits, numbers, or symbols selected. On-line tickets may be purchased only from on-line retailers.]

(29) [(32)] Pack number--The unique number on the back of the scratch [instant] ticket that designates the number of the pack within a specific scratch ticket [instant] game.

(30) [(33)] Play area--The latex-covered area of a scratch [an instant] ticket that when removed, reveals the ticket play symbols.

(31) [(34)] Play style [Playstyle]--The method of play to determine a winner for an individual game.

(32) [(35)] Play symbol--The printed data under the latex on a scratch [the front of an instant] ticket that is used to determine eligibility for a prize. The symbols for individual games will be specified in individual scratch ticket [instant] game procedures.

[(36) Preliminary drawing--An event in which entries received by a specific deadline are utilized for the selection of contestants for a promotional drawing.]

(33) [(37)] Present at the terminal--A player remains physically present at the [on-line] terminal from the time the player's order for the purchase of draw game [on-line lottery] tickets is paid for and accepted by the [lottery on-line] retailer until the processing of the order is completed and the tickets are delivered to the player at the [licensed on-line] retailer terminal location.

(34) [(38)] Prize amounts--The amount of money payable to each share in a prize category, the annuitized future value of each share in a prize category, or the net present cash value of each share in a prize category for each draw [on-line] game drawing. Prize amounts are calculated by dividing the prize category contribution, the annuitized future value of the prize category contribution, or the net present cash value of the prize category contribution by the number of shares determined for the prize category.

(35) [(39)] Prize breakage--The money which is left over from the rounding down of the pari-mutuel prize levels to the next lowest whole dollar amount or money which is in excess of the amount needed to pay a prize.

(36) [(40)] Prize category--The matching combinations of numbers and their corresponding prize levels as described in rules for the specific game being played.

(37) [(41)] Prize category contributions--Refers to contributions for each drawing to each prize category, [category] including direct and indirect prize category contributions.

(38) [(42)] Prize fund--The monies allocated to be returned to players in winning tickets within a specific scratch ticket [instant] game.

(39) [(43)] Prize pool--In a draw game, the [The] total amount of money available for prizes as a percentage of the total sales for the current draw period.

(40) [(44)] Prize structure--The number, value, prize pay out percentage, and odds of winning prizes for an individual game as approved by the executive director.

(41) [(45)] Promotion--One or more events [An event] coordinated or conducted by the commission [Texas Lottery Commission] at retail sites, fairs, festivals and other appropriate venues, or in conjunction with one or more particular Texas Lottery games, to educate players about Texas Lottery products and/or sell Texas Lottery games through a [licensed Lottery] retailer in specific markets to maximize Texas Lottery sales and statewide awareness.

(42) [(46)] Promotional drawing--A drawing in which qualified contestants are awarded prizes in a random manner in accordance with the procedures set forth for a specific promotional event.

(43) [(47)] Quick Pick--A play option that generates random numbers in a manner approved by the commission. [by the computer.]

(44) [(48)] Roll-over--The amount in a specific draw game prize pool category resulting from no matching combinations and/or prize breakage from the previous drawing.

(45) [(49)] Sales agent--A person licensed under the State Lottery Act to sell Texas Lottery tickets.

(46) Scratch ticket--A scratch ticket lottery game, developed and offered for sale to the public in accordance with commission rules, that is played by removing the latex covered play area on a scratch ticket to reveal the ticket play symbols. Sometimes, scratch ticket games are called "instant games."

(47) [(50)] Shares--In a draw game, the [The] total number of matching combinations within each prize category as determined for each drawing.

(48) [(51)] Sign-on slip--The receipt produced by a dedicated lottery ticket [the on-line] terminal when the retailer signs on to the lottery gaming system.

(49) Terminal--A device authorized by the commission for the purpose of issuing draw game tickets and/or validating claims, including the commission or commission's vendor's computer hardware as well as commission-authorized third-party point-of-sale systems.

[(52) Texas Lottery Commission--The agency created by House Bill 54, 72nd Legislature, First Called Session, as amended by House Bill 1587 and House Bill 1013, 73rd Legislature, Regular Session.]

(50) [(53)] Ticket--Any tangible evidence issued [by the commission] to provide [allow] participation in a lottery game or activity authorized by the State Lottery Act.

(51) Ticket bearer--The person who has signed the ticket or who has possession of an unsigned ticket.

(52) Ticket number--The number on the back of the scratch ticket that refers to the ticket sequence within a specific pack of a scratch ticket game.

[(54) Ticket number--The number on the back of the instant ticket that refers to the ticket sequence within a specific pack of an instant game.]

[(55) Ticket bearer--The person who has signed the Lottery game ticket or who has possession of an unsigned Lottery game ticket.]

(53) [(56)] Validation number--The unique number sequence printed on a ticket that provides for the verification of the ticket as a valid winner.

(54) [(57)] Valid ticket--A ticket which meets all specifications and validation requirements and entitles the holder to a specific prize amount.

(55) [(58)] Void ticket--Any ticket that is stolen, unissued, illegible, mutilated, altered, counterfeit in whole or part, misregistered, defective, incomplete, printed or produced in error, multiply printed, fails any of the commission's confidential validation tests, or is a ticket produced by or for the commission for education and training purposes.

(56) [(59)] Winning combination--One or more digits, numbers, or symbols randomly selected by the commission in a drawing which has been certified.

§401.302.Scratch Ticket [Instant] Game Rules.

(a) Sale of scratch [instant game] tickets.

(1) Only retailers who have been licensed by the commission are authorized to sell scratch [instant game] tickets, and tickets may be sold only at a licensed location.

(2) Each scratch [instant game] ticket shall sell for the retail sales price authorized by the executive director and stated in the individual game procedures.

(3) Each scratch [instant game] ticket shall state the overall estimated odds of winning a prize of any kind, including a break-even [break even] prize.

(b) Game procedures.

(1) The director [of the marketing division] may approve and publish individual game procedures prior to each scratch ticket [instant] game being introduced for sale to the public. Game procedures shall be published in the Texas Register and shall be made available upon request to the public.

(2) At a minimum, the game procedures for each game shall contain the following information:

(A) confirming captions;

(B) game name;

(C) game number;

(D) prize structure;

(E) play style; [playstyle;]

(F) play symbols;

(G) ticket order quantity;

(H) retail sales price;

(I) dollar amount of prizes that may be paid by retailers; and

(J) eligibility requirements for a prize drawing, if any.

(3) (No change.)

(c) Determination of prize winner.

(1) The play symbols shall be used by a player to determine eligibility for [instant] prizes. Qualifying play symbols are stated in the game procedures.

(2) A player's eligibility to win a prize is subject to the ticket validation requirements provided in subsection (d) of this section.

(3) For each individual game, the player shall rub off the latex covering on [the front of] the ticket to reveal the play symbols. Eligibility to win a prize is based on the approved play style as follows.

(A) - (I) (No change.)

(J) Bonus game features. These features are added to the game for extra play value and entertainment. The specific variants, as described below, are used for a particular game and are described in the individual game procedures:

(i) - (ii) (No change.)

(iii) Double and Double Doubler. If the player reveals one of these designated play symbols as part of the winning combination of the game, the player either doubles or quadruples their prize respectively, [respectfully,] as stated in the game card itself. The player may also reveal the "double" or "double doubler" play symbols in a prize box, in which case the prize amount that the player won is either doubled or quadrupled respectively, [respectfully, ] as stated in the game card itself.

(iv) - (vi) (No change.)

(K) Any other approved play style or bonus game feature developed by the commission. [Texas Lottery.] If the player reveals the designated play symbols or bonus play features, the player shall win the prize(s) as indicated.

(d) Ticket validation requirements.

(1) Each scratch [instant game] ticket shall be validated according to validation procedures prior to payment of a prize.

(2) A scratch [An instant game] ticket shall comply with all of the following.

(A) - (E) (No change.)

(F) The ticket shall pass all the confidential validation and security tests appropriate to the applicable play style. [playstyle.]

(G) (No change.)

(3) - (4) (No change.)

(5) If a defective ticket is purchased and is void, the sole remedy available against the commission and the commission's sole liability shall be, at the executive director's sole discretion, reimbursement for the cost of the void ticket, or replacement of the defective ticket with another unplayed ticket in that scratch ticket game [Instant Game] (or a ticket of equivalent sales price from any other current scratch ticket game). [Instant Game).]

(e) Payment of low-tier and mid-tier prizes.

(1) - (5) (No change.)

(6) If a low- [low] or mid-tier claim is presented to the commission, the claimant shall follow all procedures of the commission related to claiming a prize, including but not limited to filling out a claim form, presenting appropriate identification if required, completing the back of the ticket, and submitting these items including the apparent winning ticket to the commission by mail or in person. Upon validation of a winning ticket, the commission shall present or mail a check to the claimant in payment of the amount due. If the ticket is determined to be a non-winning ticket, the claim shall be denied and the claimant shall be promptly notified. Tickets will not be returned to the claimant.

(f) Payment of high-tier prizes.

(1) High-tier prizes must be presented for payment to the commission. For purposes of this provision, the term "commission" includes claim centers located throughout Texas. In connection with certain scratch ticket [instant] games, the top-level [top level] prizes must be claimed at commission headquarters.

(2) If a high-tier [high tier] claim is presented to the commission, the claimant shall follow all procedures of the commission related to claiming a prize, including but not limited to filling out a claim form, presenting appropriate identification as [if] required, completing the back of the ticket, and submitting these items including the apparent winning ticket to the commission by mail or in person. Upon validation of the ticket as a winning ticket, the commission shall pay the claimant the amount due in accordance with commission procedures. If the ticket is determined to be a non-winning ticket, the claim shall be denied and the claimant shall be promptly notified. Tickets will not be returned to the claimant.

(3) - (7) (No change.)

(8) The director shall recognize only one person as claimant of a particular prize. A claim may be made in the name of a person other than an individual only if the person possesses a federal employer identification number (FEIN) issued by the Internal Revenue Service and such number is shown on the claim form. Groups, family units, clubs, organizations, or other persons without an FEIN shall designate one individual in whose name the claim is to be filed. If a claim is erroneously entered with multiple claimants, the claimants shall designate one of them as the individual recipient of the prize, or, if they fail to designate an individual recipient, the director may designate any one of the claimants as the sole recipient. In either case, the claim shall then be considered as if it were originally entered in the name of the designated individual and payment of any prizes won shall be made to that single individual. Once a ticket is submitted as a claim, [validated,] it will not be returned to the winner.[, but will be forwarded to the lottery, along with the completed claim form.]

(9) (No change.)

(g) - (i) (No change.)

(j) Game closing.

(1) The executive director or his/her designee shall determine the closing date for an individual scratch ticket [instant] game in accordance with a scratch ticket [an instant] game closing procedure that defines the criteria used to monitor scratch ticket [Instant Ticket] sales performance and that identifies when scratch ticket [instant] games should be closed.

(A) The procedure shall provide for the timely closing of a scratch ticket [an instant] game after all top-level [top level] prizes in the game have been claimed or on an earlier date as determined by the executive director.

(B) The procedure shall provide for ending ticket sales in a scratch ticket [an instant] game within 45 days after game closing procedures have been initiated.

(2) No tickets in a scratch ticket [an instant] game may be sold after the scratch ticket [instant] game closing date.

(k) Governing law. In purchasing a scratch [an instant game] ticket, the lottery player agrees to comply with and abide by Texas law, all rules, procedures, and final decisions of the commission, and all procedures and instructions established by the executive director for the conduct of the scratch ticket [instant] game.

§401.304.Draw [On-Line] Game Rules (General).

(a) Price of tickets and prizes.

(1) The purchase price of each draw game [on-line] ticket shall be as set forth in the rules of the specific game being played.

(2) The total amount of prize money allocated to the prize pool for draw [on-line] games from the total of draw game [on-line] sales shall be a minimum of 50%.

(3) The prize pool for draw [on-line] games shall have contributions to prize categories as set forth in the rules of the specific game being played.

(b) Sale of tickets.

(1) Except to the extent that sales in draw [on-line] games are impeded by draw breaks, draw game [on-line] tickets may be sold during all normal business hours of the lottery [on-line] retailer during draw [on-line] game operating hours. Retailers [On-line retailers] must give prompt service to lottery customers present and waiting at the [on-line] terminal to purchase tickets for draw [on-line] games. Prompt service includes interrupting processing of draw game [on-line] ticket orders for which the customer is not present at the terminal.

(2) Draw game [On-line] tickets shall be sold only at the location listed on each retailer's license from the commission. For purposes of this section, the sale of a draw game [an on-line] lottery ticket at the licensed location means a lottery transaction in which all elements of the sale between the retailer [licensee] and the purchaser must take place at the retailer location using their terminal, [on-line terminal] including the exchange of consideration, the exchange of the playslip if one is used, and the exchange of the draw game [on-line] ticket. No part of the sale may take place away from the [on-line] terminal.

(c) Drawings and end of sales prior to drawings.

(1) The manner and frequency of drawings shall be as set forth in the rules of the specific game being played and the draw [drawing] procedures for the specific game.

(2) The drawings shall be conducted at times and locations to be announced by the executive director.

(3) The executive director shall establish the times for draw breaks for each draw [on-line] game.

(4) The executive director or his/her designee shall designate the type of drawing equipment to be used and shall establish draw [drawing] procedures to randomly select the winning combination for each type of draw [on-line] game. Draw [Drawing] procedures shall include provisions for the substitution of backup drawing equipment in the event the primary drawing equipment malfunctions or fails for any reason.

(5) A lottery drawing representative [The executive director shall designate a drawing supervisor who shall oversee each drawing and may also serve as the commission security representative. The drawing supervisor, along with a commission security representative] and an independent certified public accountant, [accountant] shall be responsible for conducting the drawing in compliance with the lottery's draw [drawing ] procedures. A lottery drawing representative [The drawing supervisor, along with a commission security representative] and an independent certified public accountant, shall attest whether the drawing was conducted in accordance with proper draw [drawing] procedures at the end of each drawing.

(d) Procedures for claiming draw game [on-line] prizes.

(1) All apparent winning tickets presented for payment to the lottery or a retailer [an on-line retailer] must meet the commission's validation requirements as set forth in subsection (e) of this section.

(2) To claim a draw [on-line] game prize of less than $600, the claimant shall present the winning draw game [on-line] ticket to a retailer [an on-line retailer] or to the commission. All tickets validated by a retailer must be paid by that retailer.

(3) If a claim of less than $600 is presented to a retailer, [an on-line retailer,] the [on-line] retailer must validate the claim, and, if determined to be a winning ticket, make payment of the amount due the claimant.

(4) To claim a draw [an on-line] game prize of $600 or more, [more] the claimant shall present the winning draw game [on-line] ticket to the commission. For purposes of this provision, the term "commission" includes claim centers located throughout Texas. In connection with certain draw [on-line] games, the top-level [top level] prizes must be claimed at commission headquarters. For any claim presented to the commission, the claimant shall follow all procedures of the commission related to claiming a prize, including but not limited to filling out a claim form, presenting appropriate identification as [if] required, completing the back of the ticket, and submitting these items including the apparent winning ticket to the commission by mail or in person. Upon validation of the ticket as a winning ticket, the commission shall pay the claimant the amount due in accordance with commission procedures. If the ticket is determined to be a non-winning ticket, the claim shall be denied and the claimant shall be promptly notified. Tickets will not be returned to the claimant.

(5) - (8) (No change.)

(9) Payment of a prize will be made to the bearer of the validated winning ticket for that prize upon presentation of proper identification following the completion of all procedures of the commission related to claiming a prize.

(10) The commission [director] shall recognize only one person as claimant of a particular prize. A claim may be made in the name of a person other than an individual only if the person possesses a federal employer identification number (FEIN) issued by the Internal Revenue Service and such number is shown on the claim form. Groups, family units, clubs, organizations, or other persons without an FEIN shall designate one individual in whose name the claim is to be filed. If a claim is erroneously entered with multiple claimants, the claimants shall designate one of them as the individual recipient of the prize, or, if they fail to designate an individual recipient, the director may designate any one of the claimants as the sole recipient. In either case, the claim shall then be considered as if it were originally entered in the name of the designated individual and payment of any prizes won shall be made to that single individual. Once a ticket is submitted as a claim, [validated,] it will not be returned to the winner.[, but will be forwarded to the commission, along with the completed claim form.]

(11) (No change.)

(e) Validation requirements.

(1) To be a valid winning draw game [on-line ] ticket, all of the following conditions must be met.

(A) - (C) (No change.)

(D) The ticket must have been issued by an authorized [on-line] retailer in an authorized manner on official Texas Lottery [lottery] paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game.

(E) The ticket shall not be stolen. Neither the commission nor its retailers shall be responsible for the payment of prizes for lost or stolen tickets.

(F) - (H) (No change.)

(2) The commission may pay the prize for a draw game ticket that is partially mutilated or not intact if the [on-line] ticket can still be validated by the other validation requirements.

(3) Liability for void tickets, if any, is limited to the replacement of ticket or refund of the sales price.

(4) A ticket shall be the only valid receipt for claiming a prize. A copy of a ticket or a playslip has no pecuniary or prize value and shall not constitute evidence of ticket purchase or of numbers selected.

(5) In submitting an official draw game [on-line ] ticket for validation, the player agrees to abide by applicable laws, all commission rules, regulations, policies, directives, instructions, conditions, procedures, and final decisions of the executive director.

(6) All prizes shall be subject to tax withholdings, offsets, and other withholdings as provided by law.

(f) Payment of prizes by [on-line] retailers.

(1) A retailer [An on-line retailer] may pay to the ticket bearer [on-line] game prizes of $599 or less for any valid claims presented to that [on-line] retailer. All tickets validated by a retailer must be paid by that retailer. These prizes may be paid during normal business hours of a retailer, provided the lottery gaming [on-line] system is operational and claims can be validated. The on-line retailer shall not charge the claimant any fee for payment of the prize or for cashing a business check drawn on the licensed retailer's account.

[(2) An on-line retailer may pay prizes in cash or by certified check, money order, or by business check if acceptable by the claimant. An on-line retailer that pays a prize with a check which is dishonored may be subject to suspension or revocation of its license.]

(2) [(3)] Retailers may pay prizes in cash or by certified check, cashier's check, or money order. Retailers may also pay prizes by business check if acceptable to the claimant. If a retailer decides to pay a prize with a business check, the retailer shall inform the claimant prior to ticket validation. A retailer that pays a prize with a check that is dishonored may be subject to suspension or revocation of its license.

(g) (No change.)

(h) Game termination and prize claim period.

(1) The executive director or his/her designee, at any time, may announce the termination date for a draw [an on-line] game. If this occurs, no [on-line] tickets for that draw game shall be sold past the termination date.

(2) Draw [On-line] game prizes shall be claimed no later than 180 days after the applicable draw date of the draw [on-line] game. In the event any player who has a valid winning ticket does not claim the prize within 180 days after the drawing in which the prize was won, the prize amount shall be deposited in accordance with Government Code, §466.408.

§401.307."Pick 3" Draw [On-Line] Game Rule.

(a) Pick 3. The executive director is authorized to conduct a game known as "Pick 3." The executive director may issue further directives and procedures for the conduct of Pick 3 that are consistent with this rule. In the case of conflict, this rule takes precedence over §401.304 of this title (relating to Draw [On-Line] Game Rules (General)).

(b) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this rule otherwise requires, the following definitions apply. [When used in this rule, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.]

(1) - (4) (No change.)

(c) Play types.

(1) Pick 3 may include the following play types: exact order, any order, exact/any order, combo, and Sum It Up.

(A) - (B) (No change.)

(C) An "exact order/any order" play is a winning play if either [if] the player's three single-digit numbers match in exact order the numbers drawn in the applicable drawing or [if] the player's three single-digit numbers match in any order the numbers drawn in the applicable drawing.

(i) - (iii) (No change.)

(D) A "combo" play combines all of the possible straight (exact) plays that can be played with the three single-digit numbers selected for the play.

(i) A combo play may be a 3-way combo play or a 6-way combo play.

(ii) 3-way combo play is a combo play in connection with a set of three single-digit numbers that includes two occurrences of one single-digit number and one occurrence of one other single-digit number. A 3-way combo play involves three possible winning combinations.

(iii) 6-way combo play is a combo play in connection with a set of three single-digit numbers that includes a single occurrence of three different single-digit numbers. A 6-way combo play involves six possible winning combinations.

(iv) Combo play is not permitted in connection with a set of numbers that includes three occurrences of one single-digit number.

(E) (No change.)

(2) The executive director may allow or disallow any type of play described in this subsection. [Currently available play types must be posted on the commission's web site.]

(d) Plays and tickets.

(1) A ticket may be sold only by a retailer [an on-line retailer] and only at the location listed on the retailer's license. A ticket sold by a person other than a retailer [an on-line retailer] is not valid.

(2) - (9) (No change.)

(10) Acceptable methods to select numbers for a play may include: [A person may only select numbers for a play by:]

(A) - (C) (No change.)

(D) requesting a retailer to manually enter numbers; [numbers into an on-line terminal;]

(E) using a previously-generated "Pick 3" ticket provided by the player; or

(F) using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(11) Acceptable methods to [A player may] select the play type, base play amount, and draw date and time for a play may include: [by:]

(A) - (D) (No change.)

(E) using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(12) Playslips must be completed manually. A ticket generated from a playslip that was not completed manually, or using a selection method that is not approved by the commission, [Texas Lottery,] is not valid.

(13) A retailer [An on-line retailer] may only accept a request for a play using a commission-approved [Texas Lottery-approved] method of play, and if the request is made in person.

(14) Consecutive plays.

[(A) Subject to subparagraph (B) of this paragraph, a player may purchase one or more plays for any one or more of the next 12 drawings after the purchase and may purchase up to 12 consecutive night plays or 12 consecutive day plays.]

[(B)] A [Beginning on the date when Pick 3 drawings will be held four times a day pursuant to subsection (f)(1)(A) of this section, a] player may purchase one or more plays for any one or more of the next 24 drawings after the purchase and may purchase up to 24 consecutive plays for a particular drawing time.

(15) A retailer [An on-line retailer] shall issue a ticket as evidence of one or more plays. A ticket must show the numbers, play type and base play amount selected for each play; the number of plays, the draw date(s) for which the plays were purchased; and the security and transaction serial numbers. Tickets must be printed on official Texas Lottery paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game.

(16) - (18) (No change.)

(e) Cancellation of plays.

(1) A retailer [An on-line retailer] may cancel a Pick 3 play only in accordance with the following provisions:

(A) (No change.)

(B) The [on-line] retailer must have possession of the ticket evidencing the play;

(C) - (F) (No change.)

(2) A [An on-line] retailer must retain the ticket and the cancellation receipt for the play(s) evidenced by that ticket for at least 30 days after the cancellation.

(f) Drawings.

[(1)] [Subject to subparagraph (A) of this paragraph, Pick 3 drawings shall be held twice a day, Monday through Saturday, at 12:27 p.m. and 10:12 p.m., central time.]

[(A)] [Beginning on a date determined by the executive director, but no later than October 13, 2013,]

(1) Pick 3 drawings shall be held four times a day, Monday through Saturday, at 10:00 a.m., 12:27 p.m., 6:00 p.m., and 10:12 p.m. Central Time.[, central time.]

[(B)] The executive director may change the drawing schedule, if necessary.

(2) (No change.)

(3) Numbers drawn and the order in which the numbers are drawn must be certified by the commission in accordance with the commission's draw [drawing] procedures.

(4) (No change.)

(5) Each drawing shall be witnessed by an independent certified public accountant. All drawing equipment used shall be examined by a lottery drawing [commission drawings] representative and the independent certified public accountant immediately before each drawing and immediately after each drawing.

(g) Prizes.

(1) - (11) (No change.)

(h) The executive director may authorize promotions in connection with Pick 3. [Current promotions must be posted on the commission's web site.]

(i) Announcement of incentive or bonus program. The executive director shall announce each incentive or bonus program prior to its commencement. The announcement shall specify the beginning and ending time, if applicable, of the incentive or bonus program and the value for the award.

§401.308."Cash Five" Draw [On-Line] Game Rule.

(a) Cash Five. A Texas Lottery draw [on-line ] game to be known as "Cash Five" is authorized to be conducted by the executive director under the following rules and under such further instructions and directives as the executive director may issue in furtherance thereof. If a conflict arises between this rule and §401.304 of this title (relating to Draw [On-Line ] Game Rules (General)), this section shall have precedence.

(b) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this rule otherwise requires, the following definitions apply.

(1) Advance Play--A player may purchase a Cash Five ticket for any of the five Cash Five drawings immediately following the current drawing. Example: On Monday, before the drawing, a Cash Five ticket can be purchased for Tuesday, Wednesday, Thursday, Friday, or Saturday drawings.

(2) Multi-draw [Multi draw]--A player may purchase a Cash Five ticket for up to 12 consecutive drawings beginning with the current draw.

(3) - (5) (No change.)

(6) Playslip--An optically readable card issued by the commission [Texas Lottery] used by players of Cash Five to select plays. There shall be five play boards on each playslip identified as A, B, C, D, and E. A playslip has no pecuniary value and shall not constitute evidence of ticket purchase or of numbers selected.

(c) (No change.)

(d) Play for Cash Five.

(1) Type of play. A Cash Five player must select five numbers in each play or allow number selection by a random number generator approved by the commission, [operated by the computer,] referred to as Quick Pick. A winning play is achieved only when two, three, four, or five of the numbers selected by the player match, in any order, two, three, four, or five, respectively, of the five winning numbers drawn by the lottery.

(2) Method of play. The player may use playslips, or other commission-approved [Texas Lottery-approved] method of play, to make number selections. A ticket generated using a selection method that is not approved by the commission [Texas Lottery] is not valid. A selection of a play may be made only if the request is made in person. Acceptable methods to select numbers for a play may include: [A player may only select a play:]

(A) [by] using a self-service terminal;

(B) [by] using a playslip;

(C) [by] using a previously-generated "Cash Five" ticket provided by the player;

(D) [by] requesting a retailer to use Quick Pick; [to select numbers;]

(E) [by] requesting a retailer to manually enter numbers; or

(F) [by] using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(3) One prize per play. The holder of a winning ticket may win only one prize per play in connection with the winning numbers [number] drawn and shall be entitled only to the highest prize category won by those numbers.

(e) Prizes for Cash Five.

(1) - (2) (No change.)

(3) Prize categories.

(A) First prize--The prize amount shall be calculated by dividing the prize category contributions by the number of shares for the prize category. A share is the matching combination, in one play, of all five numbers of the five numbers drawn (in any order). Each first prize will be paid in one lump-sum [lump sum] payment. The five-of-five [five of five] first prize of $600 to $2,500,000 [$999,999] must be claimed at a Lottery claim center. Five-of-five [Five of five] prizes of over $2,500,000 [$1,000,000 or larger] must be claimed at the commission [Lottery Commission] headquarters in Austin. The total prize category contribution for a drawing will include the following: [following.]

(i) - (ii) (No change.)

(B) Second prize--The prize amount shall be calculated by dividing the prize category contributions by the number of shares for the prize category. A share is the matching combination, in one play, of any four of the five numbers drawn (in any order). The total prize category contribution will include the following: [following.]

(i) - (ii) (No change.)

(C) Third prize--The prize amount shall be calculated by dividing the prize category contributions by the number of shares for the prize category. A share is the matching combination, in one play, of any three of the five numbers drawn (in any order). The total prize category contribution will include the following: [following.]

(i) - (ii) (No change.)

(D) (No change.)

[(4) Unclaimed Prizes. In the event any player who has a valid winning ticket does not claim the prize within 180 days after the drawing in which the prize was won, the prize amount shall be deposited in accordance with Government Code, §466.408.]

(f) Ticket purchases.

(1) Cash Five tickets may be purchased only at a licensed location from a lottery retailer authorized [by the lottery director ] to sell draw game [on-line] tickets.

(2) - (3) (No change.)

(4) Except as provided in subsection (d)(2) of this section, Cash Five tickets must be purchased using official Cash Five playslips. Playslips which have been mechanically completed are not valid. Cash Five tickets must be printed on official Texas Lottery [lottery] paper stock or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game. Cash Five tickets must be [and] purchased at a licensed location through an authorized [Texas lottery] retailer's [on-line] terminal.

(g) Drawings.

(1) The Cash Five drawings shall be held each week on Monday, Tuesday, Wednesday, Thursday, Friday, and Saturday evenings at 10:12 [9:59] p.m. Central Time except that the drawing schedule may be changed by the executive director, if necessary.

(2) (No change.)

(3) Each drawing shall determine, at random, five winning numbers in accordance with Cash Five draw [drawing] procedures. Any numbers drawn are not declared winning numbers until the drawing is certified by the lottery in accordance with the draw [drawing] procedures. The winning numbers shall be used in determining all Cash Five winners for that drawing.

(4) Each drawing shall be witnessed by an independent certified public accountant. All drawing equipment used shall be examined by a lottery drawing representative [at least one lottery security representative, the drawing supervisor,] and the independent certified public accountant immediately prior to a drawing and immediately after the drawing.

(5) A drawing will not be invalidated based on the financial liability of the lottery.

(h) The executive director may authorize promotions in connection with Cash Five.

(i) [(h)] Announcement of incentive or bonus program. The executive director shall announce each incentive or bonus program prior to its commencement. The announcement shall specify the beginning and ending time, if applicable, of the incentive or bonus program and the value for the award.

§401.312."Texas Two Step" Draw [On-Line] Game Rule.

(a) Texas Two Step. The executive director is authorized to conduct a game known as "Texas Two Step." The executive director may issue further directives for the conduct of Texas Two Step that are consistent with this rule. In the case of conflict, this rule takes precedence over §401.304 of this title (relating to Draw [On-Line] Game Rules (General)).

(b) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this rule otherwise requires, the following definitions apply. [When used in this rule, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.]

(1) - (4) (No change.)

(c) Plays and tickets.

(1) A ticket may be sold only by a [an on-line] retailer and only at the location listed on the retailer's license. A ticket sold by a person other than a [an on-line] retailer is not valid.

(2) - (3) (No change.)

(4) A player may use a single playslip, or other commission-approved [Texas Lottery-approved] method of play, to purchase the same play(s) for up to 10 consecutive drawings, to begin with the next drawing after the purchase.

(5) Acceptable methods to select a play may include: [A person may only select a play:]

(A) [by] using a self-service terminal;

(B) [by] using a playslip;

(C) [by] requesting a retailer to use [the ] Quick Pick; [option;]

(D) [by] requesting a retailer to manually enter numbers;

(E) [by] using a previously-generated "Texas Two Step" ticket provided by the player; or

(F) [by] using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(6) Playslips must be completed manually. A ticket generated from a playslip that was not completed manually, or using a selection method that is not approved by the commission, [Texas Lottery,] is not valid.

(7) A retailer [An on-line retailer] may only accept a request for a play using a commission-approved [Texas Lottery-approved] method of play, and if the request is made in person.

(8) A retailer [An on-line retailer] shall issue a ticket as evidence of one or more plays. A ticket must show the numbers selected for each play, the number of plays, the draw date(s) for which the plays were purchased, and the security and transaction serial numbers. Tickets must be printed on official Texas Lottery paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game.

(9) - (11) (No change.)

(d) Drawings.

(1) Texas Two Step drawings shall be held each week on Monday and Thursday at 10:12 p.m. Central Time.[, central time.] The executive director may change the drawing schedule, if necessary.

(2) (No change.)

(3) Numbers drawn must be certified by the commission in accordance with the commission's draw [drawing] procedures.

(4) (No change.)

(5) Each drawing shall be witnessed by an independent certified public accountant. All drawing equipment used shall be examined by a lottery drawing [commission drawings] representative and the independent certified public accountant immediately before each drawing and immediately after each drawing.

(e) Prizes.

(1) Jackpot prize (first prize).

(A) - (C) (No change.)

(2) Second prize.

(A) - (B) (No change.)

(C) A payment made to a person for a share of the second prize for a drawing shall be rounded to the closest whole dollar amount. An amount of exactly fifty cents shall be rounded up to the nearest whole dollar amount.

(D) (No change.)

(3) - (11) (No change.)

(f) (No change.)

(g) Jackpot information on commission [Commission ] website. After the commission has approved an advertised estimated jackpot under subsection (e) of this section, the commission shall post the following information on the agency website:

(1) - (2) (No change.)

(h) The executive director may authorize promotions in connection with Texas Two Step.

(i) Announcement of incentive or bonus program. The executive director shall announce each incentive or bonus program prior to its commencement. The announcement shall specify the beginning and ending time, if applicable, of the incentive or bonus program and the value for the award.

[(h) This rule takes effect May 26, 2008.]

§401.316."Daily 4" Draw [On-Line ] Game Rule.

(a) Daily 4. The executive director is authorized to conduct a game known as "Daily 4." The executive director may issue further directives and procedures for the conduct of Daily 4 that are consistent with this rule. In the case of conflict, this rule takes precedence over §401.304 of this title (relating to Draw [On-Line] Game Rules (General)).

(b) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this rule otherwise requires, the following definitions apply. [When used in this rule, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.]

(1) Play--A Daily 4 play other than a Sum It Up play consists of:

(A) - (E) (No change.)

(2) - (4) (No change.)

(c) Play types.

(1) Daily 4 may include the following play types: straight, box, straight/box, combo, front-pair, mid-pair, back-pair, and Sum It Up.

(A) - (C) (No change.)

(D) A "combo" play combines into a single play all of the possible straight plays that can be played with the four single-digit numbers selected for the play.

(i) A combo play may be a 4-way combo play, a 6-way combo play, a 12-way combo play, or a 24-way combo play.

(I) 4-way combo play is a combo play in connection with a set of four single-digit numbers that includes three occurrences of one single-digit number and one occurrence of one other single-digit number. A four-way combo play involves four possible winning combinations.

(II) 6-way combo play is a combo play in connection with a set of four single-digit numbers that includes two occurrences of one single-digit number and two occurrences of another single-digit number. A six-way combo play involves six possible winning combinations.

(III) 12-way combo play is a combo play in connection with a set of four single-digit numbers that includes two occurrences of one single-digit number and one occurrence of two other single-digit numbers. A 12-way combo play involves 12 possible winning combinations.

(IV) 24-way combo play is a combo play in connection with a set of four single-digit numbers that includes a single occurrence of four different single-digit numbers. A 24-way combo play involves 24 possible winning combinations.

(ii) (No change

(E) Pair play.

(i) - (iii) (No change.)

(F) (No change.)

(2) The executive director may allow or disallow any type of play described in this subsection. [Currently available play types must be posted on the commission's web site.]

(d) Plays and tickets.

(1) A ticket may be sold only by a retailer [an on-line retailer] and only at the location listed on the retailer's license. A ticket sold by a person other than a retailer [an on-line retailer] is not valid.

(2) - (4) (No change.)

(A) - (E) (No change.)

(F) The cost of a Sum It Up play is the same as the Sum It Up base play amount selected for the Sum It [it] Up play. The cost of a Sum It Up play is in addition to the cost of the Daily 4 play with which the Sum It Up play is connected.

(5) - (6) (No change.)

(7) Acceptable methods to select numbers for a play may include: [A person may only select numbers for a play by:]

(A) using a self-service terminal;

(B) using a playslip;

(C) requesting a retailer to use Quick Pick;

(D) requesting a retailer to manually enter numbers; [numbers into an on-line terminal;]

(E) using a previously-generated "Daily 4" ticket provided by the player; or

(F) using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(8) Acceptable methods to [A player may only] select the play type, base play amount, and draw date and time for a play may include: [by:]

(A) using a self-service terminal;

(B) using a playslip;

(C) requesting a retailer to manually enter the selections;

(D) using a previously-generated "Daily 4" ticket provided by the player; or

(E) using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(9) Playslips must be completed manually. A ticket generated from a playslip that was not completed manually, or using a selection method that is not approved by the commission, [Texas Lottery,] is not valid.

(10) A retailer [An on-line retailer] may only accept a request for a play using a commission-approved [Texas Lottery-approved] method of play, and if the request is made in person.

(11) [Consecutive plays]

[(A) Subject to subparagraph (B) of this paragraph, a player may purchase one or more plays for any one or more of the next 12 drawings after the purchase and may purchase up to 12 consecutive night plays or 12 consecutive day plays.]

[(B)] A [Beginning on the date when Daily 4 drawings will be held four times a day pursuant to subsection (f)(1)(A) of this section, a] player may purchase one or more plays for any one or more of the next 24 drawings after the purchase and may purchase up to 24 consecutive plays for a particular drawing time.

(12) A retailer [An on-line retailer] shall issue a ticket as evidence of one or more plays. A ticket must show the numbers, play type and base play amount selected for each play; the number of plays, the draw date(s) for which the plays were purchased; and the security and transaction serial numbers. Tickets must be printed on official Texas Lottery paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game.

(13) - (15) (No change.)

(e) Cancellation of plays.

[(1)] A retailer [An on-line retailer] may cancel a Daily 4 play only in accordance with the following provisions:

(1) [(A)] The ticket evidencing the play must have been sold at the retail location at which it is cancelled;

(2) [(B)] The [on-line] retailer must have possession of the ticket evidencing the play;

(3) [(C)] All Daily 4 plays evidenced by a single ticket must be cancelled;

(4) [(D)] Cancellation must [may] occur no later than 60 minutes after sale of the ticket evidencing the play;

(5) [(E)] Cancellation must occur before the beginning of the next draw break after the sale of the ticket evidencing the play; and

(6) [(F)] Cancellation must occur before midnight on the day the ticket evidencing the play was sold.

[(2) An on-line retailer must retain the ticket and the cancellation receipt for the play(s) evidenced by that ticket for at least 30 days after the cancellation.]

(f) Drawings.

(1) [Subject to subparagraph (A) of this paragraph, Daily 4 drawings shall be held twice a day, Monday through Saturday, at 12:27 p.m. and 10:12 p.m., central time.]

[(A)] [Beginning on a date determined by the executive director, but no later than October 13, 2013,] Daily 4 drawings shall be held four times a day, Monday through Saturday, at 10:00 a.m., 12:27 p.m., 6:00 p.m., and 10:12 p.m. Central Time.[, central time. ]

[(B)] The executive director may change the drawing schedule, if necessary.

(2) (No change.)

(3) Numbers drawn and the order in which the numbers are drawn must be certified by the commission in accordance with the commission's draw [drawing] procedures.

(4) (No change.)

(5) Each drawing shall be witnessed by an independent certified public accountant. All drawing equipment used shall be examined by a lottery drawing [commission drawings] representative and the independent certified public accountant immediately before each drawing and immediately after each drawing.

(g) Prizes.

(1) - (2) (No change.)

(3) A Sum It [it] Up play is a separate play from the play with which it is connected.

(4) - (16) (No change.)

[(h) Start of Play. The executive director shall determine the start date for Daily 4. The start date shall be no later than August 31, 2008.]

(h) [(i)] The executive director may authorize promotions in connection with Daily 4. [Any current promotions must be posted on the commission's web site.]

(i) Announcement of incentive or bonus program. The executive director shall announce each incentive or bonus program prior to its commencement. The announcement shall specify the beginning and ending time, if applicable, of the incentive or bonus program and the value for the award.

§401.320."All or Nothing" Draw [On-Line] Game Rule.

(a) "All or Nothing." The executive director is authorized to conduct a game known as "All or Nothing." The executive director may issue further directives for the conduct of "All or Nothing" that are consistent with this rule. In the case of conflict, this rule takes precedence over §401.304 of this title (relating to Draw [On-Line] Game Rules (General)).

(b) (No change.)

(c) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this rule otherwise requires, the following definitions apply. [When used in this rule, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.]

(1) - (3) (No change.)

(d) Plays and tickets.

(1) A ticket may be sold only by a retailer [an on-line retailer] and only at the location listed on the retailer's license. A ticket sold by a person other than a retailer [an on-line retailer] is not valid.

(2) - (3) (No change.)

(4) A player may use a single playslip or other commission-approved [Texas Lottery-approved] method of play to purchase the same play(s) for up to 24 consecutive drawings, to begin with the next drawing after the purchase.

(5) Acceptable methods to select a play may include: [A person may only select a play:]

(A) [by] using a playslip to select numbers;

(B) requesting a retailer to use Quick Pick; [by selecting a Quick Pick and allowing a random number generator operated by the terminal to select numbers;]

(C) by requesting a retailer to manually enter numbers;

(D) by using a self-service terminal;

(E) by using a previously-generated "All or Nothing" ticket provided by the player; or

(F) by using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(6) Playslips must be completed manually. A ticket generated from a playslip that was not completed manually, or using a selection method that is not approved by the commission, [Texas Lottery,] is not valid.

(7) A retailer [An on-line retailer] may only accept a request for a play using a commission-approved [Texas Lottery-approved] method of play, and if the request is made in person.

(8) A retailer [An on-line retailer] shall issue a ticket as evidence of one or more plays. A ticket must show the numbers selected for each play, the number of plays, the draw date(s) and time(s) for which the plays were purchased, the cost of the ticket and the security and transaction serial numbers. Tickets must be printed on official Texas Lottery paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game.

(9) A playslip, or any document other than a ticket issued as described in paragraph (8) of this subsection, has no monetary value and is not evidence of a play.

(10) (No change.)

(11) An unsigned winning ticket is payable to the holder or bearer of the ticket if the ticket meets all applicable validation requirements. [Neither the commission nor its sales agents shall be responsible for lost or stolen tickets.]

(12) The executive director may authorize promotions in connection with All or Nothing. [the "All or Nothing" On-Line game. Current promotions will be posted on the commission's web site, and published in the "In Addition" section of the Texas Register.]

(e) Drawings.

(1) "All or Nothing" drawings will be held four times a day, (at 10:00 a.m., 12:27 p.m., 6:00 p.m., and 10:12 p.m. Central Time) six days a week (Monday through Saturday). The executive director may change the drawing schedule, if[, in the executive director's sole discretion,] it is deemed necessary. [or expedient.]

(2) (No change.)

(3) Numbers drawn must be certified by the commission in accordance with the commission's draw [drawing] procedures.

(4) - (5) (No change.)

(f) (No change.)

(g) Prizes.

(1) The Top Prize.

(A) (No change.)

(B) All payments shall be made upon completion of commission [Commission] validation procedures.

(C) A claim for any prize of $600 or more must be presented at a [Texas Lottery] claim center.

(2) (No change.)

§401.322."Texas Triple Chance" Draw Game Rule. [Lottery Game.]

(a) "Texas Triple Chance." The executive director is authorized to conduct a game known as "Texas Triple Chance." The executive director may issue further directives for the conduct of "Texas Triple Chance" that are consistent with this rule. In the case of conflict, this rule takes precedence over §401.304 of this title (relating to Draw [On-Line] Game Rules (General)).

(b) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this rule otherwise requires, the following definitions apply. [When used in this rule, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.]

(1) (No change.)

(2) Play--The three separate Chances, each representing an opportunity to win a prize in "Texas Triple Chance," and the purchase of a ticket evidencing same. The first Chance consists of 7 numbers either chosen by the player or by Quick Pick allowing a random number generator approved by the commission [operated by the terminal] to select the numbers. The remaining two Chances consist of two sets of 7 numbers always automatically selected by Quick Pick.

(3) - (4) (No change.)

(c) - (d) (No change.)

(e) Plays and tickets.

(1) A ticket may be sold only by a retailer [an on-line retailer] and only at the location listed on the retailer's license. A ticket sold by a person other than a retailer [an on-line retailer] is not valid.

(2) - (3) (No change.)

(4) A player may use a single playslip or other commission-approved [Texas Lottery-approved] method of play to purchase the same play(s) for up to 12 consecutive drawings, to begin with the next drawing after the purchase.

(5) Acceptable methods to [A person may only] select a play may include: [as follows:]

(A) For the first Chance, the set of 7 numbers may be selected by:

(i) using a playslip; [playslip,]

(ii) requesting a retailer to use Quick Pick; [selecting a Quick Pick and allowing a random number generator operated by the terminal to select numbers;]

(iii) requesting a retailer to manually enter numbers;

(iv) using a self-service terminal;

(v) using a previously-generated "Texas Triple Chance" ticket provided by the player; or

(vi) using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(B) (No change.)

(6) Playslips must be completed manually. A ticket generated from a playslip that was not completed manually, or using a selection method that is not approved by the commission, [Texas Lottery,] is not valid.

(7) A retailer [An on-line retailer] may only accept a request for a play using a commission-approved [Texas Lottery-approved] method of play, and if the request is made in person.

(8) A retailer [An on-line retailer] shall issue a ticket as evidence of one or more plays. A ticket must show the numbers selected for each play, the number of plays and the draw date(s) for which the plays were purchased, the cost of the ticket and the security and transaction serial numbers. Tickets must be printed on official Texas Lottery paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game.

(9) - (10) (No change.)

(11) An unsigned winning ticket is payable to the holder or bearer of the ticket if the ticket meets all applicable validation requirements. [Neither the commission nor its sales agents shall be responsible for lost or stolen tickets.]

(12) The executive director may authorize promotions in connection with "Texas Triple Chance." [the "Texas Triple Chance" game. Current promotions will be posted on the commission's web site.]

(f) Drawings.

(1) "Texas Triple Chance" drawings will be held daily at 10:12 p.m. Central Time, Monday through Saturday. The executive director may change the drawing schedule if it is deemed necessary.[, in the executive director's sole discretion, it is deemed necessary or expedient.]

(2) (No change.)

(3) Numbers drawn must be certified by the commission in accordance with the commission's draw [drawing] procedures.

(4) - (5) (No change.)

(g) - (h) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 9, 2017.

TRD-201704062

Bob Biard

General Counsel

Texas Lottery Commission

Earliest possible date of adoption: November 19, 2017

For further information, please call: (512) 344-5012


SUBCHAPTER E. RETAILER RULES

16 TAC §§401.353, 401.361, 401.364, 401.370

The amendments are proposed under Texas Government Code §466.015, which authorizes the Commission to adopt rules governing the operation of the lottery; and §467.102, which authorizes the Commission to adopt rules for the enforcement and administration of the laws under the Commission's jurisdiction.

This proposal is intended to implement Texas Government Code, Chapter 466.

§401.353.Retailer Settlements, Financial Obligations, and Commissions.

(a) (No change.)

(b) Each retailer shall maintain an account balance sufficient to cover monies due the commission [Commission ] for the established billing period. The commission [Commission] shall withdraw by EFT the amount due the commission [Commission] on the day specified by the executive director. In the event a bank holiday falls on or before the day specified for withdrawal during the same business week, the withdrawal shall occur one day later in the week than normally scheduled. "Business week" means Sunday through Saturday. In the event the commission changes the beginning and ending days of the business week, the commission shall notify the retailers prior to the change.

(c) - (d) (No change.)

(e) If a retailer fails to maintain a sufficient account balance to cover monies due the commission [Commission] for the established billing period, the retailer's license shall be summarily suspended. If a retailer's license is summarily suspended for insufficient funds or non-transfer of funds four times in a 12-month period, the retailer's license shall be revoked.

(f) A retailer [An on-line retailer] must retain all sign-on slips for a minimum of seven weeks from the date the sign-on slip is produced. Sign-on slips must be surrendered to commission [Commission] security personnel upon request.

§401.361.Required Purchases of Lottery Tickets.

(a) (No change.)

(b) [Each retailer shall offer for sale to the public at all times at least two instant games, provided that the commission makes available at least two games.] The executive director may prohibit a retailer from using a method of marketing lottery games other than those methods provided by the commission.

(c) - (d) (No change.)

§401.364.Training.

Retailers shall be required to send at least one person to lottery training to be conducted by the commission and/or the lottery operator. All expenses or costs of attendance by employees of a retailer shall be paid by such retailer, including, but not limited to, costs of salaries, travel, lodging, meals, and materials. If employees of a retailer have previously attended lottery training, the commission may not require attendance of such employees. In this event, the retailer shall certify to the commission that at least one employee at the retailer's location has previously attended lottery training. Additionally, the commission may require a retailer to participate in [attend] lottery training as determined by the commission. [at any time if the executive]

§401.370.Retailer's Financial Responsibility for Lottery Tickets Received and Subsequently Stolen or Lost.

(a) (No change.)

(1) Available--The status in the lottery management system for a pack of scratch [instant] tickets that is stored in the scratch [instant] ticket distribution warehouse and is available to be assigned to a retailer's account. Scratch [Instant] tickets in a pack in this status shall not be sold to the public and prizes contained in scratch [instant] tickets in the pack cannot be validated.

(2) Issued--The status in the lottery management system for a pack of scratch [instant] tickets that has been assigned to a retailer's account and is pending confirmation of delivery to the retailer's location. Scratch [Instant] tickets in a pack in this status shall not be sold to the public and prizes contained in scratch [instant] tickets in the pack cannot be validated.

(3) Confirmed--The status in the lottery management system for a pack of scratch [instant] tickets that has been physically received at the retailer's location. A retailer is required to "confirm" receipt of a pack of scratch [instant ] tickets upon delivery to the retailer's location. Scratch [Instant] tickets are confirmed using the lottery terminal located in the retailer's business location and the status is recorded in [on] the lottery management system. Scratch [Instant ] tickets in a pack in this status shall not be sold to the public and prizes contained in scratch [instant] tickets in the pack cannot be validated.

(4) Active--The status in the lottery management system for a pack of scratch [instant] tickets that has been physically received at the retailer's location and that is being offered for sale to the public. A retailer is required to "activate" a pack of scratch [instant] tickets prior to selling the tickets to the public. A pack of scratch [instant ] tickets is activated using the lottery terminal located in the retailer's location and the status is recorded on the lottery management system. A pack of scratch [instant] tickets shall be placed in this status prior to being sold to the public and prizes contained in scratch [instant] tickets in the pack may be validated.

(5) Settled--The status in the lottery management system for a pack of scratch [instant] tickets that has been physically received at the retailer's location, has been activated and the cost of the tickets in the pack has been or is being charged to the retailer's account. Scratch [Instant] tickets "settle" against a retailer's account and the value of the settled packs are swept from the retailer's [retailers'] bank account through an electronic funds transfer. Settled scratch [instant] tickets are recorded in the lottery management system. Scratch [Instant] tickets in a pack in settled status may be sold to the public and prizes contained in scratch tickets [instant ticket] in the pack may be validated.

(6) Unactivated Scratch [Instant] Tickets--Unactivated scratch [instant] tickets are tickets in Available, Issued or Confirmed status. Unactivated tickets have never been activated or settled and no prizes have been validated. [for unactivated tickets.]

(b) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 9, 2017.

TRD-201704063

Bob Biard

General Counsel

Texas Lottery Commission

Earliest possible date of adoption: November 19, 2017

For further information, please call: (512) 344-5012


SUBCHAPTER D. LOTTERY GAME RULES

16 TAC §401.305

The Texas Lottery Commission (Commission) proposes amendments to 16 TAC §401.305 "Lotto Texas" On-Line Game Rule. The purpose of the proposed amendments is to add Lotto Texas® Winner Take All®, a promotional play option the player may purchase for an additional one dollar ($1.00), which will give player a chance to win the Lotto Texas Winner Take All Prize during bonus drawings. The bonus drawings for this promotion will be held on Mondays and Thursdays. The single prize, based upon the sales of the promotional play feature, will be divided equally among all holders of winning plays. The Commission anticipates the new Lotto Texas Winner Take All promotion to be implemented April 15, 2018.

The proposed amendments also include language to facilitate the potential future sale of lottery tickets using Commission-approved third-party point-of-sale systems, including updating how tickets are printed on such systems. Finally, the proposed amendments make conforming changes that match rule language to current Commission (and industry) practice and terminology, including changing the reference to the Lotto Texas game from "on-line" to "draw" and other clarifications of meanings and terms.

Kathy Pyka, Controller, has determined that for each year of the first five years the amendments will be in effect, there will be no significant fiscal impact for state or local governments as a result of the proposed amendments. There will be no adverse effect on small businesses or rural communities, micro businesses, or local or state employment. There will be no additional economic cost to persons required to comply with the amendments, as proposed. Furthermore, an Economic Impact Statement and Regulatory Flexibility Analysis is not required because the proposed amendments will not have an adverse economic effect on small businesses or rural communities as defined in Texas Government Code §2006.001(1-a) and (2).

Michael Anger, Director of Lottery Operations, has determined that for each year of the first five years the proposed amendments will be in effect, the public benefit anticipated is providing Texas Lottery players with notification of the changes to the Lotto Texas game, specifically the addition of new Lotto Texas bonus drawings called Lotto Texas Winner Take All. The addition of Lotto Texas Winner Take All offers players who chose to participate in these bonus drawings the potential to win prizes in the additional drawings. Also, included in the anticipated public benefit is allowing for increased convenience for lottery ticket purchasers through the use of Commission-approved third-party point-of-sale systems, as well as a more understandable rule aligned with Commission practice.

The Commission requests comments on the proposed amendments from any interested person. Comments on the proposed amendments may be submitted to Deanne Rienstra, Assistant General Counsel, by mail at Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630; by facsimile at (512) 344-5189; or by email at legal.input@lottery.state.tx.us. The Commission will hold a public hearing on this proposal on November 8, 2017, at 9:30 a.m., at 611 E. 6th Street, Austin, Texas 78701. Comments must be received within 30 days after publication of this proposal in the Texas Register in order to be considered.

These amendments are proposed under Texas Government Code §466.015(c), which authorizes the Commission to adopt rules governing the operation of the lottery; §466.451, which authorizes the Commission to adopt rules relating to a multi-jurisdiction lottery game; and §467.102, which authorizes the Commission to adopt rules for the enforcement and administration of the laws under the Commission's jurisdiction.

This proposal is intended to implement Texas Government Code Chapter 466.

§401.305."Lotto Texas®" Draw [On-Line] Game Rule.

(a) Lotto Texas®. The executive director is authorized to conduct a game known as "Lotto Texas." The executive director may issue further directives for the conduct of Lotto Texas that are consistent with this rule. In the case of conflict, this rule takes precedence over §401.304 of this title (relating to Draw [On-Line] Game Rules (General)). Lotto Texas consists of a base game for which plays may be purchased for the opportunity to win prizes during drawings in accordance with this section. Lotto Texas With Extra!® is an add-on feature that allows players who purchase this feature to increase non-jackpot prize amounts. Lotto Texas® Winner Take All® (LTWTA) is a promotional play option which offers the players who purchase this option the opportunity to win the Lotto Texas Winner Take All Prize (LTWTA Prize) in a promotional drawing conducted in accordance with this section.

(b) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this rule otherwise requires, the following definitions apply: [When used in this rule, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.]

(1) Lotto Texas Play--A Lotto Texas Play refers to the [The] selection of six different numbers from 1 through 54 for one opportunity to win a prize in the Lotto Texas base game and the purchase of a ticket evidencing that selection. A Lotto Texas With Extra! Play refers to a play purchased as part of the Extra! feature fully described in subsection (g) of this section. A Lotto Texas Winner Take All Play (LTWTA Play) refers to a play purchased as part of the LTWTA promotion fully described in subsection (i) of this section.

(2) Playboard--A panel on a Playslip containing a [A] field of 54 numbers [on a playslip] for use in selecting numbers for a Lotto Texas Play. [play.]

(3) Playslip--An optically readable card issued by the commission for use in selecting numbers for one or more Lotto Texas Plays. [plays.]

(4) Roll cycle--A series of drawings that ends when there is a drawing for which one or more tickets are sold that match the six numbers drawn in the Lotto Texas base game drawing. A new roll cycle begins with the next Lotto Texas base game drawing after [a drawing for which] one or more [jackpot] tickets are sold that match the six numbers drawn in the drawing. The LTWTA promotion does not contribute to increases in the Lotto Texas base game jackpot roll cycle.

(5) Lotto Texas Winner Take All Drawing (LTWTA Drawing)--The LTWTA Drawing refers to the drawing event separate from the Lotto Texas base game drawing and shall determine the winning combination of numbers for the LTWTA promotion. The numbers selected during the Lotto Texas base game drawing will not be used to determine the winning combination of numbers for the LTWTA Prize.

(6) Lotto Texas Winner Take All Prize (LTWTA Prize)--The LTWTA Prize refers to the prize for the LTWTA promotion set forth in subsection (i) of this section. The LTWTA Prize is determined by the sales of LTWTA Plays.

(c) Lotto Texas Plays and tickets.

(1) A Lotto Texas base game ticket may be sold only by a [an on-line] retailer and only at the location listed on the retailer's license. A ticket sold by a person other than a [an on-line] retailer is not valid.

(2) The price of a single play for the Lotto Texas base game is $1.

(3) A player may complete up to five playboards on a single playslip.

(4) A player may use a single playslip or other commission-approved [Texas Lottery-approved] method of play to purchase the same play(s) for up to 10 consecutive drawings, to begin with the next drawing after the purchase.

(5) Acceptable methods to [A player may only] select numbers for a play may include:

(A) [by] using a self-service terminal;

(B) [by] using a playslip; [to select numbers;]

(C) [by] requesting a retailer to use Quick Pick; [to select numbers;]

(D) [by] requesting a retailer to manually enter numbers;

(E) [by] using a previously-generated "Lotto Texas" ticket provided by the player; or

(F) [by] using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission. [Texas Lottery.]

(6) Playslips must be completed manually. A ticket generated from a playslip that was not completed manually, or using a selection method that is not approved by the commission [Texas Lottery], is not valid.

(7) A [An on-line] retailer may only accept a request for play using a commission-approved [Texas Lottery-approved] method of play, and if the request is made in person.

(8) At the time of making a play, a player may select the option for payment of the cash value or annuitized payments of a share of the jackpot if the play is a winning play. If no selection is made, payment option will be as described in the chart below:

Figure: 16 TAC §401.305(c)(8) (.pdf)

[Figure: 16 TAC §401.305(c)(8)]

(9) A [An on-line] retailer shall issue a ticket as evidence of one or more plays. A ticket must show the numbers selected for each play, the number of plays, the draw date(s) for which the plays were purchased, the cost of the ticket, the jackpot payment option, and the security and transaction serial numbers. Tickets must be printed on official Texas Lottery paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game.

(10) A playslip, or any document other than a ticket issued as described in paragraph (9) of this subsection, has no monetary value and is not evidence of a play.

(11) It shall be the exclusive responsibility of the player to verify the accuracy of the player's selection(s) and other data printed on the ticket. [The purchaser is responsible for verifying the accuracy of the numbers and other selections shown on a ticket.]

(12) An unsigned winning ticket is payable to the holder or bearer of the ticket if the ticket meets all applicable validation requirements.

(13) The executive director may authorize promotions in connection with Lotto Texas.

(d) Drawings.

(1) Lotto Texas base game drawings shall be held each week on Wednesday and Saturday at 10:12 p.m. Central Time[, central time]. The executive director may change the drawing schedule, if it is deemed necessary.

(2) Six different numbers from 1 through 54 shall be drawn at each [Lotto Texas] drawing.

(3) Numbers drawn must be certified by the commission in accordance with the commission's draw [drawing] procedures.

(4) The numbers selected in each [a] drawing shall be used to determine all winning plays [winners ] for that drawing.

(5) Each drawing shall be witnessed by an independent certified public accountant. All drawing equipment used shall be examined by a commission drawings representative and the independent certified public accountant immediately before each drawing and immediately after each drawing.

(e) Lotto Texas Advertised Jackpots. [jackpots.] For the Lotto Texas base game [each] drawing, the commission shall approve a jackpot amount to be advertised in a manner prescribed by written procedure. The advertised amount shall be an amount payable in 30 annual installments. To the extent that advertised amount is based on projected sales, the projections shall be fair and reasonable. The commission may approve an increase in the amount of the jackpot originally advertised for a drawing if the increase is supported by reasonable sales projections and is prescribed by written procedure.

(f) Lotto Texas Prizes. The following prizes are intended for the Lotto Texas base game drawing only. These prizes do not apply to LTWTA promotional drawings.

(1) Jackpot prize (first prize).

(A) A person who holds a valid ticket for a play matching (in any order) the six numbers drawn in a drawing is entitled to a share of the jackpot prize (first prize) for the drawing.

(B) The jackpot prize for a drawing is the greater of:

(i) 40.47 percent of the proceeds from Lotto Texas ticket sales for all drawings in the roll cycle and any earnings on an investment of all or part of the proceeds from ticket sales, paid in 30 annual installments; or

(ii) The amount advertised in accordance with subsection (e) of this section as the estimated jackpot for the drawing, paid in 30 annual installments.

(C) Except as provided by subparagraph (F) of this paragraph, a person who is entitled to a share of a jackpot prize and who opted for annualized installment payments, shall receive payment in 30 annual installments.

(D) The first installment payment shall be made upon completion of commission validation procedures. The subsequent 29 installment payments shall be made annually on the 15th day of the month in which the applicable drawing occurred.

(E) The second through 29th installment payments shall be in equal amounts. The first installment payment may be equal to or higher than the subsequent installment payments.

(F) If a person would otherwise receive total installment payments of $2 million or less, the commission shall pay the person, upon completion of all validation procedures, a single payment in the amount of the cash value of those total installment payments. The cash value is the cost on the first business day after the applicable drawing of funding those installment payments.

(G) A person who is entitled to a share of the jackpot and who selected the cash value option, or for whom the cash value option was automatically selected shall receive the greater of the following two amounts:

(i) a share of 40.47 percent of the proceeds from Lotto Texas ticket sales; or

(ii) the cost on the day after the drawing of funding a share of installment payments under subparagraph (B)(ii) of this paragraph.

(H) A payment under subparagraph (G) of this paragraph shall be made upon completion of commission validation procedures.

(I) Any investment necessary to fund a jackpot prize shall be made on the first business day after a drawing for which one or more tickets were sold that match the six numbers drawn in the drawing.

(J) A claim for a jackpot prize must be presented at the Austin claim center.

(K) If 40.47 percent of the proceeds from Lotto Texas ticket sales is not sufficient to pay a jackpot prize, the commission shall use funds from other authorized sources, including the State Lottery Account as identified in Government Code, §466.355.

(2) Second prize.

(A) A person who holds a valid ticket for a play matching (in any order) five of the six numbers drawn in a drawing is entitled to a share of the second prize for that drawing.

(B) The second prize consists of 2.23 percent of the proceeds from Lotto Texas ticket sales for the drawing and any amounts carried forward under subparagraph (D) of this paragraph.

(C) A payment made to a person for a share of the second prize for a drawing shall be rounded to the closest whole dollar amount. An amount of exactly fifty cents shall be rounded up to the nearest whole dollar amount.

(D) Any part of the second prize for a drawing that is not paid in prizes shall be carried forward and shall become part of the second prize for the next drawing.

(3) Third prize.

(A) A person who holds a valid ticket for a play matching (in any order) four of the six numbers drawn in a drawing is entitled to a share of the third prize for that drawing.

(B) The third prize consists of 3.28 percent of the proceeds from Lotto Texas ticket sales for the drawing and any amounts carried forward under subparagraphs (C) and (D) of this paragraph.

(C) A payment made to a person for a share of the third prize for a drawing shall be rounded to the closest whole dollar amount. An amount of exactly fifty cents shall be rounded up to the nearest whole dollar amount.

(D) Any part of the third prize for a drawing that is not paid in prizes shall be carried forward and shall become part of the third prize for the next drawing.

(4) Fourth prize.

(A) A person who holds a valid ticket for a play matching (in any order) three of the six numbers drawn in a drawing is entitled to a guaranteed prize of $3.

(B) If 4.02 percent of the proceeds from Lotto Texas ticket sales is not sufficient to pay all fourth prizes for a draw, the commission shall use funds from other authorized sources, including the State Lottery Account as identified in Government Code, §466.355.

(C) To the extent that the total amount of fourth prizes for a drawing is less than 4.02 percent of the proceeds from ticket sales for the drawing, the difference shall be carried forward to fund future fourth prize payments.

(5) A person may win only one prize per play per drawing. A player who holds a valid ticket for a winning play is entitled to the highest prize for that play.

(6) A share of a prize is determined by dividing the prize by the number of winning plays for that prize.

(7) Jackpot payment amounts are calculated on the first business day after the applicable drawing. A claimant is not entitled to interest or other earnings on those amounts, regardless of when the claim is actually presented and regardless of the dates on which payments are made.

(g) Lotto Texas With Extra!®.

(1) A Lotto Texas player may purchase the Extra! feature by paying an additional $1 per play at the time of his/her Lotto Texas base game ticket purchase.

(2) Extra! offers players a chance to increase the amount of any of the non-jackpot prizes won in a Lotto Texas base game drawing, and to win a prize for matching two of the six numbers drawn. The Extra! feature does not apply to a Lotto Texas base game jackpot prize (match six-of-six) or the LTWTA Prize.

(3) A Lotto Texas Play that wins one of the non-jackpot prizes or matches two of the six numbers drawn, and for which the player paid an additional $1 for Extra!, shall be paid as follows:

Figure: 16 TAC §401.305(g)(3) (.pdf)

[Figure: 16 TAC §401.305(g)(3)]

(h) Lotto Texas Jackpot information on commission [Commission] website.

(1) After the commission has approved an advertised estimated annuitized jackpot under subsection (e) of this section, the commission shall post the following information on the agency website:

(A) the amount of ticket sales, if any, for previous drawings in the roll cycle;

(B) the amount of projected ticket sales for the upcoming drawing;

(C) investment information used to determine the advertised estimated jackpot; and

(D) other information used to determine the advertised estimated jackpot.

(2) After the commission determines that one or more tickets have been sold that match the six numbers drawn in a drawing, the commission shall post on the agency website information used to calculate the Lotto Texas base game jackpot prize.

(i) Lotto Texas® Winner Take All®. LTWTA is a promotional play option for the Lotto Texas base game and is conducted in accordance with this Lotto Texas draw game rule.

(1) The promotion will begin at a time announced by the commission and will continue until discontinued by the commission.

(2) This promotion will offer to the holders of a qualifying LTWTA Play a chance to win the LTWTA Prize as a result of the selection winning combination of numbers in the LTWTA Drawing.

(3) To participate in the LTWTA promotion, a player must first purchase a Lotto Texas Play, as well as a Lotto Texas With Extra! Play, and then must pay an additional one dollar ($1.00) per LTWTA Play for each Lotto Texas Play purchased.

(4) LTWTA is a six (6) out of fifty-four (54) play option promotion, drawn every Monday and Thursday, which pays a single LTWTA Prize paid as a pari-mutuel single lump sum payment. The Lotto Texas base game numbers selected by the player (or randomly generated as a Quick Pick selection) in the qualifying purchase, shall be used as the LTWTA Play numbers if the LTWTA promotion has been purchased. The ticket evidencing the LTWTA Play shall conspicuously indicate the LTWTA Play numbers and shall indicate the date of drawing(s) for which the LTWTA Play is applicable. This information may be on the same ticket as the Lotto Texas base game play(s) or on a separate ticket, as determined by the commission.

(5) A LTWTA Drawing shall determine the winning combination of numbers for this promotion. During the drawing, six (6) numbers shall be drawn from a set of fifty-four (54) numbers, which shall constitute the winning combination of numbers.

(6) A purchased LTWTA Play shall qualify for the next scheduled LTWTA Drawing; advance purchases shall qualify for the drawings as indicated to the player on the ticket as recorded on the commission's lottery gaming system. For example, if a player purchases a qualifying LTWTA Play on a Thursday prior to the close of the LTWTA sales for that Thursday LTWTA Drawing, then the LTWTA play will qualify for that night's LTWTA Drawing (10:12 p.m., Central Time) and the Lotto Texas Play and Lotto Texas With Extra! Play will qualify for the next Lotto Texas base game drawing on Saturday; if the LTWTA Play is purchased on Thursday after the close of sales for the Thursday LTWTA Drawing, the Lotto Texas Play and Lotto Texas With Extra! Play will qualify for the next Lotto Texas base game drawing on Saturday and the LTWTA Play shall qualify for the next Monday LTWTA Drawing; if a Player purchases a qualifying LTWTA Play on a Sunday, then the LTWTA play will qualify for the next LTWTA Drawing on Monday and the Lotto Texas Play and Lotto Texas With Extra! Play will qualify for the next Lotto Texas base game drawing on Wednesday.

(7) The winning LTWTA Play(s) are determined as the play(s) matching the highest LTWTA winning combination of numbers (see paragraph (10) of this subsection). There is only one LTWTA Prize for each LTWTA Drawing and the LTWTA Prize will be divided on a pari-mutuel basis among all winning LTWTA Plays.

(8) The Lotto Texas With Extra! add-on feature is not applicable to the LTWTA promotional drawings and prize.

(9) LTWTA Prize Pool. The prize pool for the LTWTA Prize shall consist of fifty percent (50%) of each LTWTA Drawing period's sales of LTWTA Plays.

(10) LTWTA Expected Prize Payout Percentage and Winning Numbers Match Determination.

(A) Pari-Mutuel Determination. The LTWTA Prize payout shall be determined on a pari-mutuel basis. The LTWTA Prize awarded will consist of 100% of the allocated prize pool and shall be paid as a single lump sum payment to the LTWTA Play(s) matching the most winning numbers in a LTWTA Drawing as indicated below:

(i) The LTWTA Prize will be paid to the holder(s) of the LTWTA Play(s) that matches all six (6) of the numbers selected in the LTWTA Drawing.

(ii) If the LTWTA Prize has not been awarded under clause (i) of this subparagraph, then the LTWTA Prize will be awarded to the holder(s) of any LTWTA Play(s) that matches five (5) of the six (6) numbers selected in the LTWTA Drawing.

(iii) If the LTWTA Prize has not been awarded under clause (i) or (ii) of this subparagraph, then the LTWTA Prize will be awarded to the holder(s) of any LTWTA Play(s) that matches four (4) of the six (6) numbers selected in the LTWTA Drawing.

(iv) If the LTWTA Prize has not been awarded under clauses (i) - (iii) of this subparagraph, then the LTWTA Prize will be awarded to the holder(s) of any LTWTA Play(s) that matches three (3) of the six (6) numbers selected in the LTWTA Drawing.

(v) If the LTWTA Prize has not been awarded under clauses (i) - (iv) of this subparagraph, then the LTWTA Prize will be awarded to the holder(s) of any LTWTA Play(s) that matches two (2) of the six (6) numbers selected in the LTWTA Drawing.

(vi) If the LTWTA Prize has not been awarded under clauses (i) - (v) of this subparagraph, then the LTWTA Prize will be awarded to the holder(s) of any LTWTA Play(s) that matches one (1) of the six (6) numbers selected in the LTWTA Drawing.

(vii) If all or a portion of the LTWTA Prize pool has not been awarded under clauses (i) - (vi) of this subparagraph, then the prize pool shall be carried forward to the subsequent LTWTA Drawing.

(B) LTWTA Prize Pool Allocation. The LTWTA Prize Pool money allocated to the LTWTA Prize shall be divided on a pari-mutuel basis by the number of winning LTWTA Plays.

(C) LTWTA Prize Rounded; Breakage Carried Forward. The LTWTA Prize is a single prize that will be divided on a pari-mutuel basis among all holders of winning LTWTA Plays and shall be rounded to the closest whole dollar amount. An amount of exactly fifty cents shall be rounded up to the nearest whole dollar amount. A LTWTA Prize will never be less than one dollar ($1.00). Breakage resulting from rounding these prizes shall be carried forward to the prize pool for the next LTWTA Drawing.

(11) LTWTA Probabilities. The following table sets forth the probability of a LTWTA Play matching the winning numbers from the LTWTA Drawing.

Figure: 16 TAC §401.305(i)(11) (.pdf)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 6, 2017.

TRD-201704023

Bob Biard

General Counsel

Texas Lottery Commission

Earliest possible date of adoption: November 19, 2017

For further information, please call: (512) 344-5012


16 TAC §401.317

The Texas Lottery Commission (Commission) proposes amendments to 16 TAC §401.317 "Powerball®" On-Line Game Rule. The purpose of the proposed amendments is to conform the Commission's rule to recent changes adopted by the Multi-State Lottery Association (MUSL). These changes include offering Winner Take All®, a promotional play option the player may purchase for an additional one dollar ($1.00), which will give the player a chance to win the Winner Take All® Prize during bonus drawings. The bonus drawings for this promotion will be held on Mondays and Thursdays. The single prize, based upon the sales of the promotional play feature, will be divided equally among all holders of winning plays. The proposed amendments also include language to facilitate the potential future sale of lottery tickets using Commission-approved third-party point-of-sale systems, including updating how tickets are printed on such systems. Finally, the proposed amendments make conforming changes that match rule language to current Commission (and industry) practice and terminology, including changing the reference to the Powerball game from "on-line" to "draw" and other clarifications of meanings and terms. The Commission anticipates the new Powerball game changes to be implemented April 15, 2018.

Kathy Pyka, Controller, has determined that for each year of the first five years the amendments will be in effect, there will be no significant fiscal impact for state or local governments as a result of the proposed amendments. There will be no adverse effect on small businesses or rural communities, micro businesses, or local or state employment. There will be no additional economic cost to persons required to comply with the amendments, as proposed. Furthermore, an Economic Impact Statement and Regulatory Flexibility Analysis is not required because the proposed amendments will not have an adverse economic effect on small businesses or rural communities as defined in Texas Government Code §2006.001(1-a) and (2).

Michael Anger, Director of Lottery Operations, has determined that for each year of the first five years the proposed amendments will be in effect, the public benefit anticipated is providing Texas Lottery players with notification of the changes to the Powerball game, specifically the addition of new Powerball bonus drawings called Winner Take All®. The addition of Winner Take All® offers players who chose to participate in these bonus drawings the potential to win prizes in the additional drawings. Also, included in the anticipated public benefit is allowing for increased convenience for lottery ticket purchasers through the use of Commission-approved third-party point-of-sale systems, as well as a more understandable rule aligned with Commission practice.

The Commission requests comments on the proposed amendments from any interested person. Comments on the proposed amendments may be submitted to Deanne Rienstra, Assistant General Counsel, by mail at Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630; by facsimile at (512) 344-5189; or by email at legal.input@lottery.state.tx.us. Comments must be received within 30 days after publication of this proposal in the Texas Register in order to be considered.

These amendments are proposed under Texas Government Code §466.015(c), which authorizes the Commission to adopt rules governing the operation of the lottery; §466.451, which authorizes the Commission to adopt rules relating to a multi-jurisdiction lottery game; and §467.102, which authorizes the Commission to adopt rules for the enforcement and administration of the laws under the Commission's jurisdiction.

This proposal is intended to implement Texas Government Code Chapter 466.

§401.317."Powerball®" Draw [On-Line] Game Rule.

(a) Powerball. Powerball is a Multi-State Lottery Association (MUSL) lottery draw game offered by all Lotteries that have agreed to MUSL's Powerball Group Rules. The purpose of the Powerball game is the generation of revenue for MUSL Party Lottery members and Mega Millions Party Lotteries participating under the Cross-Sell Agreement, through the operation of a specially designed multi-jurisdiction lottery game that will award prizes to ticket holders of validated winning tickets matching specified combinations of numbers randomly selected in regularly scheduled Drawings. The Powerball game is authorized to be conducted by the executive director under the conditions of the MUSL rules, the laws of the State of Texas, this section, and under such further instructions, directives, and procedures as the executive director may issue in furtherance thereof. In this regard, the executive director is authorized to issue such further instructions and directives as may be necessary to conform the conduct and play of the Powerball game to the requirements of the MUSL rules if, in the opinion of the executive director, such instructions, directives, and procedures are in conformance with state law. To be clear, the authority to participate in the Powerball game is provided to the Texas Lottery by MUSL. The conduct and play of the Powerball game must conform to the MUSL Powerball Group Rules. Further, if a conflict arises between this section and §401.304 of this chapter (relating to Draw Game Rules (General)), this section shall have precedence. In addition to other applicable rules contained in Chapter 401, this section and definitions herein apply unless the context requires a different meaning or is otherwise inconsistent with the intent of the rules adopted by the MUSL or the MUSL Powerball Group.

[(a) Powerball. Powerball is a Multi-State Lottery Association (MUSL) on-line game offered by all Lotteries that have agreed to MUSL's Powerball Group Rules. "Powerball" is authorized to be conducted by the executive director under the conditions of the MUSL rules, the laws of the State of Texas, this section, and under such further instructions, directives, and procedures as the executive director may issue in furtherance thereof. In this regard, the executive director is authorized to issue such further instructions and directives as may be necessary to conform the conduct and play of Powerball to the requirements of the MUSL rules if, in the opinion of the executive director, such instructions, directives, and procedures are in conformance with state law. If a conflict arises between this section and §401.304 of this chapter (relating to On-Line Game Rules (General)), this section shall have precedence. The purpose of the Powerball game is the generation of revenue for MUSL Party Lottery members and Mega Millions Party Lotteries participating under the Reciprocal Game Agreement, through the operation of a specially designed multi-jurisdiction lottery game that will award prizes to ticket holders matching specified combinations of numbers randomly selected in regularly scheduled drawings. In addition to other applicable rules contained in Chapter 401, this section and definitions apply unless the context requires a different meaning or is otherwise inconsistent with the intention of the rules adopted by the MUSL or the MUSL Powerball Group. To be clear, the authority to participate in the MUSL Powerball game is provided to the Texas Lottery by MUSL. The conduct and play of Powerball must conform to the MUSL Powerball game.]

(b) Definitions.

(1) "Agent" or "retailer" means a person or entity authorized by the commission [Texas Lottery Commission (TLC)] to sell lottery Plays.

(2) A "Drawing" refers collectively to the formal draw event for randomly selecting the Winning Numbers that [winning numbers which] determine the number of winning Plays [winners] for each prize level of the Powerball game or a Powerball game promotion as described in this section [and the Power Play multiplier.].

(A) The Powerball Drawing (PB Drawing) shall determine the Winning Numbers for the Powerball game and the Power Play multiplier.

(B) A Winner Take All® Drawing (WTA Drawing) is a separate Drawing event from the PB Drawing and shall determine the Winning Numbers for the Winner Take All® promotion.

(C) The PB Drawing Winning Numbers shall not be used for the WTA promotion, and shall not be used to determine winning Winner Take All Play(s) (WTA Plays) or prizes. Similarly, the WTA Winning Numbers shall not be used as the Winning Numbers for the Powerball game or to determine the Powerball winning Play(s) or prizes.

[(3) "Game board", "board", "panel", or "playboard" means that area of the playslip which contains two sets of numbered squares to be marked by the player.]

(3) [(4)] "Game ticket" or "ticket" means an acceptable evidence of Play, which is a ticket produced in a manner that meets the specifications defined in the [MUSL rules or the rules of each member or participating] Selling Lottery and subsection (g) of this section, [(Ticket Validation),] and is a physical representation of the Play or Plays sold to the player.

(4) [(5)] "MUSL" means the Multi-State Lottery Association, a government-benefit association wholly owned and operated by the MUSL Party Lotteries.

(5) [(6)] "MUSL Board" means the governing body of the MUSL, which is comprised of the chief executive officer of each Party Lottery. "MUSL Finance and Audit Committee" shall mean the committee of that name established by the MUSL Board.

(6) [(7)] "MUSL Annuity Factor" shall mean the annuity factor as determined by the MUSL central office through a method approved by the MUSL Finance and Audit Committee and which is used as described in this rule.

(7) "Pari-Mutuel" or "pari-mutuel" as used in this section shall mean wagered funds that are pooled and then paid in equal shares to the holders of winning Plays as described in this section and the MUSL Rules.

(8) "Party Lottery" means a state lottery or lottery of a political subdivision or entity that has joined MUSL and is authorized to sell the Powerball game. "Licensee Lottery" shall mean a state lottery or lottery of a governmental unit, political subdivision, or entity thereof that is not a Party Lottery but has agreed to comply with all applicable MUSL and Product Group requirements and has been authorized by the MUSL and by the Powerball Product Group to sell the Powerball game. "Selling Lottery" or "Participating Lottery" shall mean a lottery authorized by the Product Group to sell [Powerball] Plays, including Party Lotteries and Licensee Lotteries.

(9) "Play" means the six (6) numbers, the first five (5) from a field of sixty-nine (69) numbers and the last one (1) from a field of twenty-six (26) numbers, that appear on a ticket as a single lettered selection and are to be played by a player in the Powerball game as well as in the WTA promotion if the WTA promotion is selected by the player. As used in this section, unless otherwise indicated, "Play" includes both Powerball Plays and Winner Take All Plays.

(A) "Powerball Plays" (PB Plays) shall refer to Plays purchased as part of the Powerball game, but shall not include WTA Plays or Power Play Plays.

(B) "Power Play Plays" shall refer to Plays purchased as part of the Power Play promotion described in subsection (k) of this section.

(C) "Winner Take All Plays" (WTA Plays) shall refer to Plays purchased as part of the WTA promotion as described in subsection (l) of this section.

(10) "Playslip" means a physical or electronic means by which a player communicates their intended Play selection to the retailer as defined and approved by the Selling Lottery. A playslip has no pecuniary value and shall not constitute evidence of ticket purchase or of numbers selected.

[(10) "Playslip" means an optically readable card issued by the Texas Lottery used by players of Powerball to select Plays and to elect all features. There shall be five playboards on each playslip. A playslip has no pecuniary value and shall not constitute evidence of ticket purchase or of numbers selected.]

(11) "Power Play" shall refer to the Power Play promotion as described in subsection (k) of this section.

(12) [(11)] "Powerball Group" or "Product Group" means the MUSL member group of lotteries which have joined together to offer the Powerball product pursuant to the terms of the Multi-State Lottery Agreement and the Powerball Group's rules, including the MUSL Powerball Drawing Procedures. In this rule, wherever either term is used it is referring to the MUSL Powerball Group.

(13) [(12)] "Prize" means an amount paid to a person or entity holding a winning ticket.

(A) "The Grand Prize" ["Grand Prize"] shall refer to the top prize in the Powerball game.

(B) The "Winner Take All Prize" (WTA Prize) means the Prize established by the Product Group for the WTA promotion set forth in subsection (l) of this section.

(C) The Advertised Grand Prize ["Advertised Grand Prize"] shall mean the estimated annuitized Grand Prize amount as determined by the MUSL Central Office by use of the MUSL Annuity Factor and communicated through the Selling Lotteries prior to the Grand Prize Drawing. The Advertised Grand Prize ["Advertised Grand Prize"] is not a guaranteed prize amount and the actual Grand Prize amount may vary from the advertised amount, except in circumstances where there is a guaranteed Grand Prize amount as described in paragraph (6) of subsection (f) of this section.

(D) The "Set Prize" or "low-tier prize" means all other prizes, except the Grand Prize and WTA Prize, and, except in instances outlined in this section, will be equal to the prize amount established by the Product Group for the prize level.

[(13) "Set Prize" or "low-tier prize" means all other prizes, except the Grand Prize, and, except in instances outlined in this section, will be equal to the prize amount established by the Product Group for the prize level.]

(14) "Terminal" means a device authorized by the commission for the purpose of issuing Powerball game tickets and as defined in §401.301 (General Definitions) of this chapter. [a Selling Lottery to function in an on-line, interactive mode with the gaming computer system for the purpose of issuing lottery tickets and entering, receiving, and processing lottery transactions, including purchases, validating tickets, and transmitting reports.]

(15) "Winner Take All" (WTA) shall refer to the Winner Take All® promotion as described in subsection (l) of this section.

(16) [(15)] "Winning Numbers" means the numbers randomly selected during a Drawing event which shall be used to determine the winning Plays for the Powerball game or the Powerball game promotion being drawn [contained on a game ticket].

(c) Game Description.

(1) Powerball. Powerball is a five (5) out of sixty-nine (69) plus one (1) out of twenty-six (26) numbers lottery game drawn every Wednesday and Saturday, as part of the Powerball Drawing event, which pays the Grand Prize, at the election of the player made in accordance with this section, [rule,] or by a default election made in accordance with this section, [rule,] either on an annuitized pari-mutuel basis or as a single lump sum payment of the total funding held in the Grand Prize Pool for the winning Drawing [drawing] on a pari-mutuel basis. Except as provided in this section, all other prizes are paid on a single payment basis.

(A) Powerball Winning Numbers applicable to determine Powerball prizes will be determined in the Powerball Drawing event. During the Powerball Drawing, five (5) numbers shall be drawn from the first set of sixty-nine (69) and one (1) number shall be drawn from the second set of twenty-six (26) numbers, which shall constitute the Powerball Winning Numbers.

(B) To play Powerball, a player shall select five (5) different numbers, from one (1) through sixty-nine (69) and one (1) additional number from one (1) through twenty-six (26), or request the retailer to generate a Quick Pick selection of numbers from the lottery terminal. The additional number may be the same as one of the first five numbers selected by the player.

(C) Powerball Plays can be purchased for two dollars (U.S. $2.00), including any specific statutorily-mandated tax of a Selling Lottery to be included in the price of a PB Play. PB Plays may be purchased from a Selling Lottery approved sales outlet in a manner as approved by the Selling Lottery and in accordance with MUSL Rules. [The Drawing Procedures adopted by MUSL shall include procedures for randomly selecting the Powerball game Winning Numbers and the Power Play multiplier.]

(2) Claims. A ticket shall be the only proof of a game Play or Plays and is subject to the validation requirements set forth in subsection (g) of this section. The submission of a winning ticket to the issuing Selling Lottery or its authorized agent shall be the sole method of claiming a prize or prizes. A playslip has no pecuniary or prize value and shall not constitute evidence of Play purchase or of numbers selected. A terminal-produced paper receipt has no pecuniary or prize value and shall not constitute evidence of Play purchase or of numbers selected.

(3) Cancellations Prohibited. A Play may not be voided or canceled by returning the ticket to the selling agent or to the lottery, including tickets that are printed in error. A Selling Lottery may develop an approved method of compensating retailers for Plays that are not transferred to a player for a reason acceptable to the Selling Lottery. No Play that is eligible for a prize can be returned to the lottery for credit. Plays accepted by retailers as returned Plays and which cannot be re-sold shall be deemed owned by the bearer thereof.

(4) Player Responsibility. It shall be the sole responsibility of the player to verify the accuracy of the game Play or Plays and other data printed on the ticket. The placing of Plays is done at the player's own risk through the licensed sales agent who is acting on behalf of the player in entering the Play or Plays.

(5) Entry of Plays. Plays may only be entered manually using the lottery retailer terminal touch screen, by means of an approved playslip, or by such other means as approved by the commission. Retailers shall not permit the use of playslips that are not approved by the commission. Retailers shall not permit any device to be physically or wirelessly connected to a lottery terminal to enter Plays, except as approved by the commission.

[(5)] [Entry of Plays. Plays may only be entered manually using the lottery retailer terminal touch screen or by means of a playslip provided by the Texas Lottery and hand-marked by the player or by such other means approved by the Texas Lottery. Retailers shall not permit the use of facsimiles of playslips, copies of playslips, or other materials that are inserted into the terminal's playslip reader that are not printed or approved by the Texas Lottery. Retailers shall not permit any device to be connected to a lottery terminal to enter Plays, except as approved by the Texas Lottery.]

(A) A ticket generated using a selection method that is not approved by the commission [Texas Lottery] is not valid.

(B) A selection of numbers for a Play may be made only if the request is made in person. Acceptable methods of Play selection may include:

(i) [(A)] using a self-service terminal;

(ii) [(B)] using a playslip;

(iii) [(C)] using a previously-generated "Powerball" ticket provided by the player;

(iv) [(D)] requesting a retailer to use a Quick Pick [to select numbers];

(v) [(E)] requesting a retailer to manually enter numbers; or

(vi) [(F)] using a QR code generated through a Texas Lottery Mobile Application offered and approved by the commission [Texas Lottery].

(6) Subscription Sales [sales]. A subscription sales program may be offered, at the discretion of the executive director.

(7) Maximum Purchase. The maximum number of consecutive Drawings on a single Play purchase is ten (10).

(d) Powerball Prize Pool.

(1) Powerball Prize Pool.

(A) The prize pool for all Powerball prize categories shall consist of fifty percent (50%) of each Drawing period's Powerball sales, inclusive of any specific statutorily-mandated tax of a Selling Lottery to be included in the price of a PB Play, and including contributions to the prize pool accounts and prize reserve accounts.

(B) Powerball Prize Pool Accounts and Prize Reserve Accounts. The Product Group shall set the contribution rates to the prize pool and to one or more prize reserve or pool accounts established by the MUSL Powerball Group Rules.

(i) Prize Reserve Accounts. The Product Group has established the following prize reserve accounts for the Powerball game: the Powerball Prize Reserve Account (PRA), which is used to guarantee the payment of valid, but unanticipated, Grand Prize claims that may result from a system error or other reason; and the Powerball Set Prize Reserve Account (SPRA), which is used to fund deficiencies in low-tier Powerball prize payments, subject to the limitations of the MUSL rules.

(ii) Prize Pool Accounts. The Product Group has established the following prize pool accounts for the Powerball game: the Grand Prize Pool, which is used to fund the current Grand Prize; the Powerball Set Prize Pool, which is used to fund the Powerball Set Prizes; the Powerball Set-Aside Pool, which is used to fund the payment of the awarded minimum starting annuity Grand Prizes and minimum annuity Grand Prize increase, if necessary (subject to the limitations in the MUSL Powerball Group Rules), as may be set by the Product Group; and the Grand Prize Carry Forward Pool (GPCFP), which is used to fund the starting minimum annuity Grand Prize, as may be set by the Product Group, if such funds are available, and if sales do not fund the Grand Prize. The Power Play Prize Pool is described in subsection (k)(4) of this section. The Powerball Set Prize Pool shall hold the temporary balances that may result from having fewer than expected winners in the Powerball Set Prize (aka low-tier prize) categories and the source of the Powerball Set Prize Pool is the Party Lottery's weekly prize contributions less actual Powerball Set Prize liability.

(iii) The above prize reserve accounts, the GPCFP and the Set-Aside Pool shall have maximum balance amounts or balance limiter triggers that are set by the Product Group and are detailed in the Comments to the MUSL Rule. The maximum balance amounts and balance limiter triggers are subject to review by the MUSL Board Finance and Audit Committee. The Finance and Audit Committee shall have two weeks to state objections, if any, to the approved maximum balance amounts or balance limiter triggers. Approved maximum balance amounts or balance limiter triggers shall become effective no sooner than two weeks after notice is given to the Finance and Audit Committee and no objection is stated or sooner if the Committee affirmatively approves the maximum balance amounts or balance limiter triggers. The Group may appeal the Committee's objections to the full Board. Group approved changes in the maximum balance amounts or balance limiter triggers set by the Product Group shall be effective only after the next Grand Prize win.

(iv) The maximum contribution rate to the Grand Prize Pool shall be 68.0131% of the prize pool (34.0066% of sales). An amount up to five percent (5%) of a Party Lottery's sales shall be deducted from a Party Lottery's Grand Prize Pool contribution and placed in trust in one or more prize pool accounts and prize reserve accounts held by the Product Group (hereinafter the "prize pool and reserve deduction") at any time that the prize pool accounts and Party Lottery's share of the prize reserve accounts is below the amounts designated by the Product Group. An additional amount up to twenty percent (20%) of a Party Lottery's sales shall be deducted from a Party Lottery's Grand Prize Pool contribution and placed in trust in the GPCFP to be held by the Product Group at a time as determined by the Product Group.

(v) The Product Group may determine to expend all or a portion of the funds in the Powerball prize pool accounts (except the Powerball Grand Prize Pool account and the GPCFP) and the prize reserve accounts: (1) for the purpose of indemnifying the Selling Lotteries for the payment of prizes to be made by the Selling Lottery; and, (2) for the payment of prizes or special prizes in the game, limited to prize pool and prize reserve contributions from lotteries participating in the special prize promotion, subject to the approval of the Board's Finance and Audit Committee or that Committee's failure to object after given two weeks' notice of the planned action, which actions may be appealed to the full MUSL Board by the Product Group. The GPCFP may only be expended to fund the starting minimum annuity Grand Prize.

(vi) The prize reserve shares of a Party Lottery may be adjusted with refunds to the Party Lottery from the prize reserve account(s) as may be needed to maintain the approved maximum balance and sales percentage shares of the Party Lotteries.

(vii) A Party Lottery may contribute to its sales percentage share of prize reserve accounts over time, but in the event of a draw down from a prize reserve account, a Party Lottery is responsible for its full sales percentage share of the prize reserve account, whether or not it has been paid in full.

(viii) Any amount remaining in the Powerball prize pool accounts or prize reserve accounts when the Product Group declares the end of this game shall be returned to the lotteries participating in the accounts after the end of all claim periods of all Selling Lotteries, carried forward to a replacement game or otherwise expended in a manner at the election of the individual Members of the Product Group in accordance with jurisdiction statute.

(2) Expected Powerball Prize Payout Percentages. The Grand Prize payout shall be determined on a pari-mutuel basis. Except as otherwise provided in this section, all other prizes awarded shall be paid as single payment set cash prizes. All prize payouts are made with the following expected prize payout percentages, although the prize payout percentage per draw may vary:

Figure: 16 TAC §401.317(d)(2) (.pdf)

[Figure: 16 TAC §401.317(d)(2)]

(A) The prize money allocated to the Powerball Grand Prize category shall be divided on a pari-mutuel basis [equally ] by the number of PB Plays winning the Powerball Grand Prize.

(B) Powerball Set Prize Pool Carried Forward. For Party Lotteries, the Powerball Set Prize Pool (for single payment cash prizes of $1,000,000 or less) shall be carried forward to subsequent draws if all or a portion of it is not needed to pay the Powerball Set Prizes awarded in the current draw.

(C) Pari-Mutuel Powerball Prize Determinations. Except as otherwise provided, if the total of the Powerball Set Prizes (as multiplied by the respective Power Play multiplier, if applicable) awarded in a Drawing exceeds the percentage of the prize pool allocated to the Powerball Set Prizes, then the amount needed to fund the Powerball Set Prizes, including Power Play prizes, awarded shall be drawn first from the amount available in the Powerball Set Prize Pool and the Power Play Prize Pool, if any; second from the SPRA, if available, not to exceed forty million dollars ($40,000,000.00) per Drawing; and, third from other amounts as agreed to by the Product Group in their sole discretion.

(D) If, after these sources are depleted, there are not sufficient funds to pay the Set Prizes awarded, including Power Play Prizes, then the highest Set Prize shall become a pari-mutuel prize. If the amount of the highest Set Prize, when paid on a pari-mutuel basis, drops to or below the next highest Set Prize and there are still not sufficient funds to pay the remaining Set Prizes awarded, then the next highest Set Prize, including Power Play prizes, shall become a pari-mutuel prize. This procedure shall continue down through all Set Prize levels, if necessary, until all Set Prize levels become pari-mutuel prize levels. In that instance, the money available from the funding sources listed in this rule shall be divided among the winning PB Plays in proportion to their respective prize percentages. Powerball Set Prizes and Power Play Prizes will be reduced by the same percentage.

(E) By agreement, the Licensee Lotteries shall independently calculate their Set Prize pari-mutuel prize amounts. The Party Lotteries and the Licensee Lotteries shall then agree to set the pari-mutuel prize amounts for all lotteries selling the game at the lesser of the independently-calculated prize amounts.

(e) Probability of Winning Powerball Plays. [Powerball Winning Plays.] The following table sets forth the probability of winning PB Plays and the probable distribution of winning PB Plays in and among each prize category, based upon the total number of possible combinations in the Powerball game. The Set Prize Amount shall be the prizes set for all Selling Lotteries unless prohibited or limited by a jurisdiction's statute or judicial requirements.

Figure: 16 TAC §401.317(e) (.pdf)

[Figure: 16 TAC §401.317(e)]

(f) Powerball Prize Payment.

(1) Powerball Grand Prizes. The advertised Grand Prize in a Powerball game is not a guaranteed amount; it is an estimated amount, and all advertised prizes, even advertised Set Prizes, are estimated amounts. At the time of ticket purchase, a player must select a payment option of either a single lump sum payment (cash value option or CVO) or annuitized payments (Annuity) of a share of the Grand Prize if the PB Play is a winning Play. [At the time of ticket purchase, a player must select a payment option of either a single cash value payment or annuitized payments of a share of the Grand Prize if the Play is a winning Play.] If no selection is made, payment option will be as described in the chart below:

Figure: 16 TAC §401.317(f)(1) (.pdf)

[Figure: 16 TAC §401.317(f)(1)]

(A) A player's selection of the payment option at the time of purchase [from the Texas Lottery] is final and cannot be revoked, withdrawn, or otherwise changed.

(B) The Grand Prize available in the Grand Prize Pool shall be determined on a pari-mutuel basis among all winning PB Plays of the Grand Prize. A player(s) who elects a cash value option payment shall be paid their share(s) in a single lump sum payment. [Shares of the Grand Prize shall be determined by dividing the cash available in the Grand Prize Pool equally among all winning Plays of the Grand Prize. A player(s) who elects a cash value option payment shall be paid his/her share(s) in a single cash payment.] The annuitized option prize shall be determined by multiplying the winning Play's share of the Grand Prize Pool by the annuity factor established in accordance with Texas law and the rules of the Texas Comptroller of Public Accounts. The MUSL Annuity Factor will not be used for Texas Lottery players. Neither MUSL nor any Selling Lottery shall be responsible or liable for changes in the advertised or estimated annuity prize amount and the actual amount purchased after the prize payment method is actually known to MUSL.

(C) In certain instances announced by the Powerball Group, the Grand Prize shall be a guaranteed amount and shall be determined pursuant to paragraph (6) of this subsection.

(D) If individual shares of the Grand Prize Pool funds held to fund an annuity is less than $250,000.00, the Powerball Group, in its sole discretion, may elect to pay the winners their share of the funds held in the Grand Prize Pool. All annuitized prizes shall be paid annually in thirty (30) payments with the initial payment being made in a single payment, to be followed by twenty-nine (29) payments funded by the annuity.

(E) All annuitized prizes shall be paid annually in thirty (30) graduated payments, as provided by the MUSL rules, (increasing each year) at a rate as determined by the MUSL Product Group. Prize payments may be rounded down to the nearest one thousand dollars ($1,000).

(F) Funds for the initial payment of an annuitized prize or the lump sum cash value option payment shall be made available by MUSL for payment by the Selling Lottery no earlier than the fifteenth calendar day (or the next banking day if the fifteenth day is a holiday) following the Drawing. If necessary, when the due date for the payment of a prize occurs before the receipt of funds in the prize pool trust sufficient to pay the prize, the transfer of funds for the payment of the full lump sum cash value option payment amount may be delayed pending receipt of funds from the Selling Lotteries. The identification of the securities to fund the annuitized prize shall be at the sole discretion of the State of Texas. If the State of Texas purchases the securities, or holds the prize payment annuity for a Powerball prize won in this state, the prize winner will have no recourse on the MUSL or any other Party Lottery for payment of that prize.

(2) Payment of Prize Payments upon the Death of a Prize Winner. In the event of the death of a prize winner, payments may be made in accordance with §401.310 of this chapter (relating to Payment of Prize Payments Upon Death of Prize Winner), otherwise, payment of prize payments will be made to the estate of a deceased prize winner in accordance with Texas Government Code §466.406.

(3) Powerball Prize Payments. All prizes shall be paid through the Selling Lottery that sold the winning Play(s). All low-tier cash prizes (all prizes except the Grand Prize) shall be paid in cash or warrants in accordance with Texas statutes and these rules. A Selling Lottery may begin paying low-tier cash prizes after receiving authorization to pay from the MUSL central office.

(4) Powerball Prizes Rounded. Annuitized payments of the Grand Prize or a share of the Grand Prize may be rounded to facilitate the purchase of an appropriate funding mechanism. Breakage on an annuitized Grand Prize win shall be added to the first cash payment to the winner or winners. Prizes other than the Grand Prize, which, under this section, may become single-payment, pari-mutuel prizes, may be rounded down so that prizes can be paid in multiples of whole dollars. Breakage resulting from rounding these prizes shall be carried forward to the prize pool for the next Drawing.

(5) Powerball Prize Rollover. If the Grand Prize is not won in a Drawing, the prize money allocated for the Grand Prize shall roll over and be added to the Grand Prize Pool for the following Drawing.

(6) Funding of Guaranteed Powerball Prizes. The Powerball Group may offer guaranteed minimum Grand Prize amounts or minimum increases in the Grand Prize amount between Drawings or make other changes in the allocation of prize money where the Powerball Group finds that it would be in the best interest of the game. If a minimum Grand Prize amount or a minimum increase in the Grand Prize amount between Drawings is offered by the Powerball Group, then the Grand Prize shares shall be determined as follows:

(A) If there are multiple Grand Prize winning PB Plays during a single Drawing, each selecting the annuitized option prize, then a winning PB Play's share of the guaranteed annuitized Grand Prize shall be determined by dividing the guaranteed annuitized Grand Prize by the number of Grand Prize winning PB Plays.

(B) If there are multiple Grand Prize winning PB Plays during a single Drawing and at least one of the Grand Prize ticket holders has elected the annuitized option prize, then the MUSL Annuity Factor may be utilized to determine the cash pool. The cost of the annuitized prize(s) will be determined at the time the annuity is purchased through a process as approved by the MUSL Board. If the annuitized option prize is selected by a Texas Lottery player, the amount shall be determined by multiplying the winning PB Play's share of the Grand Prize Pool by the annuity factor established in accordance with Texas law and the rules of the Texas Comptroller of Public Accounts. The MUSL Annuity Factor will not be used for Texas Lottery players.

(C) If there are multiple Grand Prize winning PB Plays during a single Drawing, and no claimant of the Grand Prize has elected the annuitized option prize, then the amount of cash in the Grand Prize Pool shall be an amount equal to the guaranteed annuitized amount divided by the MUSL Annuity Factor.

(D) Minimum guaranteed prizes or increases may be waived upon approval of the Powerball Group if the alternate funding mechanism set out in subsection (d)(2)(D) of this section becomes necessary.

(7) Limited to Highest Powerball Prize Won. The holder of a winning PB Play may win only one (1) prize per PB Play in connection with the Winning Numbers drawn, and shall be entitled only to the prize won by those numbers in the highest matching prize category. All liabilities for a Powerball game or Powerball game promotional prize are discharged upon payment of a prize claim.

(8) Powerball Prize Claim Period. Prizes must be claimed no later than 180 days after the draw date.

(g) Ticket Validation. To be a valid Play and eligible to receive a prize, a Play's ticket shall satisfy all the requirements established by the commission [Texas Lottery] for validation of winning tickets sold through its lottery [computer] gaming system and any other validation requirements adopted by the Powerball Group, the MUSL Board, and published as the Confidential MUSL Minimum Game Security Standards. The MUSL and the Selling Lotteries shall not be responsible for tickets which are altered in any manner.

(1) Under no circumstances will a claim be paid for any prize without an official ticket matching all game Play, serial number and other validation data residing in the selling Party Lottery's lottery gaming system and such ticket shall be the only valid proof of the wager placed and the only valid evidence for purposes of claiming or redeeming such prize.

(2) In order to be deemed a valid, winning Play, all of the following conditions must be met:

(A) The validation data must be present in its entirety and must correspond, using the computer validation file, to the number selections printed on the ticket for the Drawing date(s) printed on the ticket.

(B) The ticket must be intact.

(C) The ticket must not be mutilated, altered, reconstituted, or tampered with in any manner.

(D) The ticket must not be counterfeit or an exact duplicate of another winning ticket.

(E) The ticket must have been issued by an authorized sales agent, selling agent or retailer on official Texas Lottery paper stock, or, for third-party point-of-sale systems approved by the commission, printed on paper stock or otherwise issued in a manner approved by the commission to provide tangible evidence of participation in a lottery game.

(F) The ticket must not have been stolen, to the knowledge of the commission.

(G) The Play data must have been recorded on the commission's lottery gaming system prior to the Drawing and the Play data must match this lottery record in every respect. In the event of a conflict between information as printed on the ticket and as accepted by the commission's lottery gaming system, the wager accepted by the commission's lottery gaming system shall be the valid wager.

(H) The player or computer pick number selections, validation data and the Drawing date(s) of an apparent winning Play must appear on the official file of winning Plays, and a Play with that exact data must not have been previously paid.

(I) The play must not be misregistered, and the Play's ticket must not be defectively printed or printed or produced in error to an extent that it cannot be processed by the commission.

(J) In submitting a Play for validation, the claimant agrees to abide by applicable laws, all rules and regulations, instructions, conditions and final decisions of the executive director.

(K) There must not be any other breach of the Powerball Game Rules in relation to the Play that, in the opinion of the executive director, justifies invalidation.

(L) The Play must be submitted to the Selling Lottery that issued it.

(3) A Play submitted for validation that fails any of the validation conditions shall be considered void, subject to the following determinations:

(A) In all cases of doubt, the determination of the commission shall be final and binding; however, the commission may, at its option, replace an invalid Play with a Play of equivalent sales price;

(B) In the event a defective ticket is purchased or in the event the commission determines to adjust an error, the claimant's sole and exclusive remedy shall be the replacement of such defective or erroneous ticket(s) with a Play of equivalent sales price;

(C) In the event a Play is not paid by the commission and a dispute occurs as to whether the Play is a winning Play, the commission may, at its option, replace the Play as provided in subparagraph (A) of this paragraph. This shall be the sole and exclusive remedy of the claimant.

(h) Ticket Responsibility.

(1) Signature. Until such time as a signature is placed upon a ticket in the area designated for signature, a ticket shall be owned by the bearer of the ticket. When a signature is placed on the ticket in the place designated, the person whose signature appears in such area shall be the owner of the ticket and shall be entitled (subject to the validation requirements in subsection (g) of this section (Ticket Validation) and state or district law) to any prize attributable thereto.

(2) Multiple Claimants. The issue of multiple claimants shall be handled in accordance with Texas Government Code Chapter 466 and §401.304 of this chapter.

(3) Stolen Tickets. The Powerball Group, the MUSL and the Party Lotteries shall not be responsible for lost or stolen tickets.

(4) Prize Claims. Prize claim procedures shall be governed by the rules of the commission [Commission] as set out in §401.304 of this subchapter and any internal procedures used by the commission [Texas Lottery]. The MUSL and the Party Lotteries shall not be responsible for prizes that are not claimed following the proper procedures as determined by the Selling Lottery.

(5) The MUSL and the Participating Lotteries shall not be responsible to a prize claimant for Plays redeemed in error by a selling agent, sales agent or retailer.

(6) Winning Plays are determined by the numbers drawn and certified by the independent auditor responsible for auditing the Drawing. MUSL and the Participating Lotteries are not responsible for Winning Numbers reported in error.

(i) Ineligible Players.

(1) A Play or share for a MUSL game issued by the MUSL or any of its Selling Lotteries shall not be purchased by, and a prize won by any such Play or share shall not be paid to:

(A) a MUSL employee, officer, or director;

(B) a contractor or consultant under agreement with the MUSL to review the MUSL audit and security procedures;

(C) an employee of an independent accounting firm under contract with MUSL to observe Drawings [drawings] or site operations and actually assigned to the MUSL account and all partners, shareholders, or owners in the local office of the firm; or

(D) an immediate family member (parent, stepparent, child, stepchild, spouse, or sibling) of an individual described in subparagraphs (A), (B), and (C) of this paragraph and residing in the same household.

(2) Those persons designated by a Selling Lottery's law as ineligible to play its games shall also be ineligible to Play the Powerball game in that Selling Lottery's jurisdiction.

(j) Applicable Law.

(1) In purchasing a Play, as evidenced by a ticket, or attempting to claim a prize, the purchasers and prize claimants agree to comply with and abide by all applicable laws, rules, regulations, procedures, and decisions of the Selling Lottery where the ticket was purchased, and by directives and determinations of the director of that Party Lottery.

(2) A prize claimant agrees, as its sole and exclusive remedy, that claims arising out of a Powerball game or a Powerball game promotion (as described in this section) [Play] can only be pursued against the Selling Lottery which issued the Play. Litigation, if any, shall only be maintained within the jurisdiction in which the [Powerball] Play was purchased and only against the Selling Lottery that issued the Play. No claim shall be made against any other Participating Lottery or against the MUSL.

(3) Nothing in these Rules shall be construed as a waiver of any defense or claim the Selling Lottery which issued the Play, any other Participating Lottery or MUSL may have in any litigation, including in the event a player or prize claimant pursues litigation against the Selling Lottery, any other Participating Lottery or MUSL, or their respective officers, directors or employees.

(4) All decisions made by a Selling Lottery, including the declaration of prizes and the payment thereof and the interpretation of Powerball Rules, shall be final and binding on all Play purchasers and on every person making a prize claim in respect thereof, but only in the jurisdiction where the [Powerball] Play was issued.

(5) Unless the laws, rules, regulations, procedures, and decisions of the Lottery which issued the Play provide otherwise, no prize shall be paid upon a Play purchased, claimed or sold in violation of the MUSL Powerball Rules or the laws, rules, regulations, procedures, and decisions of that Selling Lottery; any such prize claimed but unpaid shall constitute an unclaimed prize under these Rules and the laws, rules, regulations, procedures, and decisions of that Selling Lottery.

(k) Powerball Special Game Rules: Powerball Power Play®.

(1) Power Play® Description. The Powerball Power Play® is a promotional limited extension of the Powerball game and is conducted in accordance with the Powerball game rules and other lottery rules applicable to the Powerball game except as may be amended herein. Power Play will begin at a time announced by the commission [Selling Lottery] and will continue until discontinued by the commission [lottery]. Power Play will offer to the owners of a qualifying Play a chance to increase the amount of any of the eight Low-Tier Set Prizes (the Low-Tier prizes normally paying $4 to $1,000,000) won in a Power Play Drawing. The Grand Prize is not a Set Prize and will not be increased. MUSL will conduct a separate random "Power Play" Drawing and announce results during each of the regular Powerball Drawings held during the promotion. During each Power Play Drawing a single number (2, 3, 4, 5 and sometimes 10) shall be drawn. The ten (10X) multiplier shall be available for all Drawings in which the initially Advertised Grand Prize amount is one hundred fifty million dollars ($150,000,000.00) or less. The probability of the possible Power Play numbers being drawn is indicated in Figure 16 TAC §401.317(k)(4)(D). The Powerball Group may modify the multiplier features for special promotions from time to time.

(2) Qualifying Play. A qualifying Play is any single PB [Powerball] Play for which the player pays an extra dollar ($1.00) for the Power Play option [Play] and which is recorded at the commission's lottery [Selling Lottery's computer] gaming system as a qualifying Power Play Play. A Power Play Play purchase will not multiply a WTA Play.

(3) Prizes to be Increased. Except as provided in the MUSL Powerball game rules and this section, a qualifying Play which wins one of the seven lowest Set Prizes (excluding the Match 5 + 0) will be multiplied by the number drawn, either two (2), three (3), four (4), five (5), or sometimes ten (10), in a separate random Power Play Drawing announced during the official Powerball Drawing show. The ten (10X) multiplier will be available for Drawings in which the initially advertised annuitized Grand Prize amount is one hundred fifty million dollars ($150,000,000.00) or less. The announced Match 5+0 prize, for players selecting the Power Play option, shall be paid two million dollars ($2,000,000.00) unless a higher limited promotional dollar amount is announced by the Powerball Group.

Figure: 16 TAC §401.317(k)(3)(No change.)

(4) Prize Pool.

(A) Power Play Prize Pool. The Power Play Prize Pool is created to be used to fund Power Play Prizes and shall hold the temporary balances that may result from having fewer than expected winners in the Power Play. The source of the Power Play Prize Pool is the Party Lottery's weekly prize contributions less actual Power Play Prize liability. In total, fifty percent (50%) of each draw's sales shall be collected [and placed in the Power Play Prize Pool] for the payment of prizes.

(i) In Drawings where the ten (10X) multiplier is available, the expected payout for all prize categories shall consist of up to forty-nine and nine hundred sixty-nine thousandths percent (49.969%) of each Drawing period's sales, including any specific statutorily mandated tax of a Selling Lottery to be included in the price of a lottery Play. In Drawings [drawings] where the ten (10X) multiplier is not available, the expected payout for all prize categories shall consist of up to forty-five and nine hundred thirty-four thousandths percent (45.934%) of each Drawing period's sales, including any specific statutorily mandated tax of a Selling Lottery to be included in the price of a lottery Play.

(ii) In Drawings [drawings] where the ten (10X) multiplier is available, an additional thirty-one thousandths percent (0.031%) of each Drawing [drawing] period's sales, including any specific statutorily mandated tax of a Selling Lottery to be included in the price of a lottery ticket, may be collected and placed in trust in the Power Play Prize Pool, for the purpose of paying Power Play prizes. In drawings where the ten (10X) multiplier is not available, an additional four and sixty-six thousandths percent (4.066%) of each Drawing [drawing] period's sales, including any specific statutorily mandated tax of a Selling Lottery to be included in the price of a lottery ticket, may be collected and placed in trust in the Power Play Prize Pool, for the purpose of paying Power Play Prizes.

(iii) The prize payout percentage per draw may vary. The Power Play Prize Pool shall be carried forward to subsequent draws if all or a portion of it is not needed to pay the Power Play Prizes awarded in the current draw and held in the Power Play Prize Pool.

(B) End of Promotion [Game]. Any amount remaining in the Power Play Prize Pool when the Powerball Group declares the end of this promotion [game] shall be returned to the lotteries participating in the account after the end of all claim periods of all Selling Lotteries, carried forward to a replacement game or Promotion, or otherwise expended in a manner at the election of the individual Participating Lotteries [Members] of the Product Group in accordance with jurisdiction statute.

(C) Expected Prize Payout. Except as provided in this section, all prizes awarded shall be paid as single payment cash prizes. Instead of the Powerball Set Prize amounts, qualifying winning Plays of Power Play will pay the amounts shown in paragraph (3) of this subsection, above. In certain rare instances, the Powerball Set Prize amount may be less than the amount shown in Figure: 16 TAC §401.317(k)(3). In such case, the eight lowest Power Play Prizes will be changed to an amount announced after the draw. For example, if the Match 4+1 Powerball Set Prize amount of $50,000 becomes $25,000 under the rules of the Powerball game, and a 5X Power Play Multiplier is drawn, then a Power Play winning Play prize amount would win $125,000.

(D) Probability of Power Play Numbers Being Drawn. The following table sets forth the probability of the various Power Play numbers being drawn during a single Powerball Power Play Drawing. The Powerball Group may elect to run limited promotions that may modify the multiplier features. Power Play does not apply to the Powerball Grand Prize. Except as provided in subparagraph (C) of this paragraph, a Power Play Match 5 + 0 prize is set at two million dollars ($2,000,000.00), regardless of the multiplier selected.

Figure: 16 TAC §401.317(k)(4)(D) (.pdf)

[Figure: 16 TAC §401.317(k)(4)(D)]

(5) Limitations on Payment of Power Play Prizes.

(A) Prize Pool Carried Forward. The prize pool percentage allocated to the Power Play Set Prizes shall be carried forward to subsequent draws if all or a portion of it is not needed to pay the Set Prizes awarded in the current draw.

(B) Pari-Mutuel Prizes--All Prize Amounts. If the total of the original Powerball Set Prizes and the Power Play Prizes awarded in a Drawing [drawing] exceeds the percentage of the prize pools allocated to the Set Prizes, then the amount needed to fund the Set Prizes (including the Power Play prize amounts) awarded shall first come from the amount available in the Set Prize Pool and the Power Play Prize Pool, if any, second from the Powerball Group's Set Prizes Reserve Account, if available, not to exceed forty million dollars ($40,000,000.00) per Drawing, [drawing,] and third from other amounts as agreed to by the Powerball Group in their sole discretion.

(C) If, after these sources are depleted, there are not sufficient funds to pay the Set Prizes awarded (including Power Play prize amounts), then the highest Set Prize (including the Power Play prize amounts) shall become a pari-mutuel prize. If the amount of the highest Set Prize, when paid on a pari-mutuel basis, drops to or below the next highest Set Prize and there are still not sufficient funds to pay the remaining Set Prizes awarded, then the next highest Set Prize, including the Power Play prize amount, shall become a pari-mutuel prize. This procedure shall continue down through all Set Prizes levels, if necessary, until all Set Prize levels become pari-mutuel prize levels. In that instance, the money available from the funding sources listed in this section shall be divided among the winning Plays in proportion to their respective prize percentages. Powerball and Power Play prizes will be reduced by the same percentage. By agreement, the Licensee Lotteries shall independently calculate their set pari-mutuel prize amounts, including the Power Play prize amounts. The Party Lotteries and the Licensee Lotteries shall then agree to set the pari-mutuel prize amounts for all lotteries selling the game at the lesser of the independently-calculated prize amounts.

(6) Prize Payment.

(A) Prize Payments. All Power Play prizes shall be paid in a single payment through the Selling Lottery that sold the winning Power Play Play(s). A Selling Lottery may begin paying Power Play prizes after receiving authorization to pay from the MUSL central office.

(B) Prizes Rounded. Prizes, which, under these rules, may become pari-mutuel prizes, may be rounded down so that prizes can be paid in multiples of whole dollars. Breakage resulting from rounding these prizes shall be carried forward to the prize pool for the next Drawing.

(l) Powerball Special Game Rules: Powerball Winner Take All®.

(1) Winner Take All® (WTA) is a promotional add-on game element for the Powerball game and is conducted in accordance with the Powerball game rules and commission rules applicable to the Powerball game, except as may be amended herein.

(A) The promotion will begin at a time announced by the commission and will continue until discontinued by the MUSL Product Group and the commission.

(B) This promotion will offer to the owners of a qualifying WTA Play a chance to win the WTA Prize as a result of the selection of Winner Take All Winning Numbers.

(C) All rules applicable to the Powerball game in this section are applicable to the WTA promotion unless otherwise indicated.

(D) WTA is a five (5) out of sixty-nine (69) plus one (1) out of twenty-six (26) add-on promotion, drawn every Monday and Thursday, which pays a single WTA Prize paid as a pari-mutuel single lump sum payment.

(E) A WTA Drawing shall determine the Winning Numbers for the WTA promotion. During the WTA Drawing, five (5) numbers shall be drawn from the first set of sixty-nine (69) numbers, and one (1) number shall be drawn from the second set of twenty-six (26) numbers, which shall constitute the Winning Numbers.

(F) A single purchased WTA Play shall qualify for the next scheduled WTA Drawing; advance WTA Play purchases shall qualify for the Drawings as indicated to the Player on the ticket as recorded on the commission's lottery gaming system. For example, if a player purchases a Powerball Play and a WTA Play on Thursday prior to the close of WTA sales for that Thursday WTA Drawing, the Powerball Play shall qualify for the next Saturday Powerball Drawing and the WTA Play shall qualify for the Thursday WTA Drawing; if the Powerball Play and WTA Play are purchased on Thursday after the close of sales for the Thursday WTA Drawing, the Powerball Play shall qualify for the next Saturday Powerball Drawing and the WTA Play shall qualify for the next Monday WTA Drawing; if a Player purchases a Powerball Play and a WTA Play on a Sunday, the Powerball Play shall qualify for the next Wednesday Powerball Drawing, and the WTA Play shall qualify for the next Monday WTA Drawing.

(G) The winning WTA Play(s) are determined as the Play(s) matching the highest WTA Winning Numbers (see subparagraph (A) of paragraph (4) of this subsection). There is only one WTA Prize for each WTA Drawing and the WTA Prize will be divided on a pari-mutuel basis among all winning WTA Plays.

(H) The Powerball Play numbers selected by the player (or randomly generated as a Quick Pick selection) in the qualifying purchase, shall be used as the WTA Play numbers if the WTA promotion has been purchased. The ticket evidencing the WTA Play shall conspicuously indicate the WTA Play numbers and shall indicate the date of Drawing(s) for which the WTA Play is applicable. This information may be on the same ticket as the PB Play(s) or on a separate ticket, as determined by the commission.

(I) The Power Play multiplier is not applicable to the WTA promotion.

(2) Winner Take All Qualifying Play. To participate in the WTA add-on promotion, a player must first purchase a PB Play and Power Play, and then must pay an additional one dollar ($1.00) per WTA Play per each PB Play and Power Play Play purchased, including any specific statutorily mandated tax of a Selling Lottery to be included in the price of a lottery ticket. The WTA Play shall be recorded on the commission's lottery gaming system as a WTA Play.

(A) A Power Play purchase is required for each WTA Play purchase.

(B) Advance Plays are permitted per paragraph (7) of subsection (e) of this section.

(3) Winner Take All Prize Pool. The prize pool for the WTA Prize shall consist of fifty percent (50%) of each WTA Drawing period's WTA Play sales, inclusive of any specific statutorily mandated tax of a Selling Lottery to be included in the price of a WTA Play, and including contributions to the prize pool accounts. For the WTA promotion, the Winner Take All Prize Pool (WTAPP), which is used to fund the WTA Prize, is hereby established. The contribution rate to the WTAPP shall be 100% of the prize pool (50.0% of WTA Play sales from each WTA Drawing period). Any amount remaining in the WTAPP when the Product Group declares the end of the promotion shall be returned to the Selling Lotteries participating in the accounts after the end of all claim periods of all Selling Lotteries, carried forward to a replacement game or promotion, or otherwise expended in a manner at the election of the individual Participating Lotteries in accordance with jurisdiction statute. No amount of the WTAPP shall be used to fund Powerball or Power Play prizes. No Powerball or Power Play prize pool accounts or prize reserve accounts shall be used to fund WTA Prizes.

(4) Winner Take All® Expected Prize Payout Percentage and Winning Numbers Match Determination.

(A) Pari-Mutuel Determination. The WTA Prize payout shall be determined on a pari-mutuel basis. Except as otherwise mandated by jurisdiction statute or judicial requirements, or provided for in the MUSL Powerball game rules, the WTA Prize awarded will consist of 100% of the allocated prize pool and shall be paid as a single lump sum payment to the WTA Play(s) matching the most Winning Numbers in a WTA Drawing as indicated below:

(i) The WTA Prize will be paid to the holder(s) of the winning WTA Play(s) that matches all five (5) of the first set, plus one (1) of the second set selected in the WTA Drawing.

(ii) If the WTA Prize has not been awarded under clause (i) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches all five (5) of the first set and none (0) of the second set.

(iii) If the WTA Prize has not been awarded under clause (i) or (ii) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches any four (4) of the first set plus one (1) of the second set.

(iv) If the WTA Prize has not been awarded under clauses (i) through (iii) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches any four (4) of the first set and none (0) of the second set.

(v) If the WTA Prize has not been awarded under clauses (i) through (iv) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches any three (3) of the first set plus one (1) of the second set.

(vi) If the WTA Prize has not been awarded under clauses (i) through (v) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches any three (3) of the first set and none (0) of the second set.

(vii) If the WTA Prize has not been awarded under clauses (i) through (vi) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches any two (2) of the first set plus one (1) of the second set.

(viii) If the WTA Prize has not been awarded under clauses (i) through (vii) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches any one (1) of the first set plus one (1) of the second set.

(ix) If the WTA Prize has not been awarded under clauses (i) through (viii) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches none (0) of the first set plus one (1) of the second set.

(x) If the WTA Prize has not been awarded under clauses (i) through (ix) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches any two (2) of the first set and none (0) of the second set.

(xi) If the WTA Prize has not been awarded under clauses (i) through (x) of this subparagraph, then the WTA Prize will be awarded to the WTA Play(s) that matches any one (1) of the first set and none (0) of the second set.

(xii) If the WTA Prize has not been awarded under clauses (i) through (xi) of this subparagraph, then the WTAPP shall be carried forward to the subsequent Drawing.

(B) WTA Prize Pool Allocation. The WTAPP money allocated to the WTA Prize shall be divided on a pari-mutuel basis by the number of winning WTA Plays. The WTA Prize shall not be multiplied by the Power Play multiplier.

(C) WTA Prize Pool Carried Forward. The WTAPP shall be carried forward to subsequent draws if all or a portion of it is not needed to pay the WTA Prize(s) awarded in the current draw (See clause (xi) of subparagraph (4)(A) of subsection (l) and subparagraph (D) of paragraph (6) of subsection (l) of this section).

(5) Winner Take All Probabilities. The following table sets forth the probability of a WTA Play matching the Winning Numbers from the WTA Drawing:

Figure: 16 TAC 401.317(l)(5) (.pdf)

(6) Winner Take All Prize Payment. The WTA Prize shall be paid with a single lump sum payment and will be divided on a pari-mutuel basis among all winning WTA Plays.

(A) WTA Prize payments (whether described as "cash" payment prizes or otherwise) shall be paid through the Selling Lottery(ies) that sold the winning WTA Play(s) and at the discretion of the Selling Lottery(ies) that sold the winning WTA Play(s) may be paid by cash, check, warrant or electronic transfer.

(B) A Selling Lottery may begin making WTA Prize payment(s) after receiving confirmation from MUSL of the WTA prize winning Play(s) and WTA Prize amount(s) to be paid.

(C) A lottery may elect to make WTA Prize payment(s) from its own funds after validation, without having received a transfer from MUSL, with prior notice to MUSL.

(D) WTA Prize Rounded; Breakage Carried Forward. The WTA Prize is a single prize that will be divided on a pari-mutuel basis among all holders of winning WTA Plays, is therefore, a pari-mutuel prize and may be rounded down so that amounts may be paid in multiples of whole dollars. Breakage resulting from rounding these prizes shall be carried forward to the prize pool for the next Drawing.

(E) WTA Prize Claim Period. WTA Prize claims shall be submitted within one hundred eighty (180) days after the Drawing date.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 6, 2017.

TRD-201704022

Bob Biard

General Counsel

Texas Lottery Commission

Earliest possible date of adoption: November 19, 2017

For further information, please call: (512) 344-5012


CHAPTER 402. CHARITABLE BINGO OPERATIONS DIVISION

The Texas Lottery Commission (Commission) proposes amendments to 16 TAC §§402.400 (General Licensing Provisions), 402.401 (Temporary License), 402.402 (Registry of Bingo Workers), 402.404 (License and Registry Fees), 402.405 (Temporary Authorization), 402.407 (Unit Manager), 402.410 (Amendment of a License- General Provisions), 402.411 (License Renewal), 402.413 (Military Service Members, Military Veterans, and Military Spouses), 402.420 (Qualifications and Requirements for Conductor's License), 402.422 (Amendment to a Regular License to Conduct Charitable Bingo), 402.424 (Amendment of a License by Electronic Mail, Telephone or Facsimile), and 402.603 (Bond or Other Security).

The purpose of the proposed amendments is to implement statutory changes required by newly-enacted HB 2578, SB 549, and SB 2065 from the Regular Session of the 85th Texas Legislature. The proposed amendments remove all references to bingo conductor and worker fees, while revising the license application and renewal process. In addition, the proposed amendments facilitate the HB 2578 requirement that the Commission retain a portion of the bingo prize fees otherwise allocable to counties and municipalities to fund the administration of the charitable bingo regulatory program. Further, the proposed amendments allow commercial lessors, distributors, and manufacturers to recover up to half of their application fee if they withdraw their application before a license is issued or if their application is denied. The proposed amendments also remove the licensing requirements for bingo unit managers while maintaining those managers' reporting and notification requirements. Last, the proposed amendments correct typographical errors and make non-substantive conforming changes to the rules.

Kathy Pyka, Controller, has determined that for each year of the first five years the amendments will be in effect, there will be no fiscal impact for state or local governments as a result of the proposed amendments that is not attributable to the newly-enacted legislation. There will be no adverse effect on small businesses or rural communities, micro businesses, or local or state employment. There will be no additional economic cost to persons required to comply with the amendments, as proposed. Furthermore, an Economic Impact Statement and Regulatory Flexibility Analysis is not required because the proposed amendments will not have an adverse economic effect on small businesses or rural communities as defined in Texas Government Code §2006.001(1-a) and (2).

Alfonso D. Royal III, Director of the Charitable Bingo Operations Division, has determined that for each year of the first five years the proposed amendments will be in effect, the anticipated public benefit is reducing the fiscal and administrative burden on bingo conductors and workers by removing their application fees and simplifying their application process. In addition, commercial lessors, bingo distributors, and bingo manufacturers will have a refund process for applications that are withdrawn or denied. The proposed amendments also benefit the public by aligning the Commission's rules with the newly-enacted statutory language.

The Commission requests comments on the proposed amendments from any interested person. Comments on the proposed amendments may be submitted to Ryan Mindell, Assistant General Counsel, by mail at Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630; by facsimile at (512) 344-5189; or by email at legal.input@lottery.state.tx.us. Comments must be received within 30 days after publication of this proposal in the Texas Register in order to be considered. The Commission also will hold a public hearing to receive comments on this proposal at 10:00 a.m. on November 8, 2017, at 611 E. 6th Street, Austin, Texas 78701.

SUBCHAPTER D. LICENSING REQUIREMENTS

16 TAC §§402.400 - 402.402, 402.404, 402.405, 402.407, 402.410, 402.411, 402.413, 402.420, 402.422, 402.424

The amendments are proposed under the Texas Occupations Code §2001.054, which authorizes the Commission to adopt rules to enforce and administer the Bingo Enabling Act; Texas Government Code §467.102, which authorizes the Commission to adopt rules for the laws under the Commission's jurisdiction; and Section 13 of HB 2578 from the Regular Session of the 85th Texas Legislature, which required the Commission to adopt rules for its implementation.

This proposal is intended to implement the Texas Occupations Code, Chapter 2001.

§402.400.General Licensing Provisions.

(a) Any person who wants to engage in a bingo related activity shall apply to the Commission for a license. The application must be on a form prescribed by the Commission and all required information must be legible, correct and complete. The initial submittal of an [An] application is incomplete if the following information is not provided:

(1) All information requested on the application form and supplemental forms; [applicable schedules;]

(2) All supplemental information requested during the pre-licensing investigation period;

(3) The applicable license fee for a lessor, distributor, or manufacturer; and [;]

[(4) The required bond or other security, if applicable; and]

(4) [(5)] Authorized signatures as required by the Commission.

(b) Information submitted by an applicant on [in the form of] an applicable form [schedule] shall be considered to be part of the application. Supplemental information should be submitted on a form prescribed by the Commission and all information required must be correct and complete.

(c) Information submitted by an applicant in a format other than an applicable form [schedule] must be legible and must include the following:

(1) the name and address of the organization as it appears on the application;

(2) the Texas taxpayer identification number; or, if sole owner, the individual's social security number;

(3) a statement identifying the information submitted;

(4) the signature, printed name and telephone number of the person authorized to submit the information; and

(5) all supplemental information requested during the pre-licensing investigation period.

(d) Within 21 calendar days after the Commission has received an original application, the Commission will review the application and notify the applicant if additional information is required.

(e) If an application is incomplete, the Commission will notify the applicant. The applicant must provide the requested information within 21 calendar days of such notification. Failure to provide the requested information within the 21 calendar day time line or providing incomplete information may result in the denial of the license application.

(f) For an application to conduct bingo, an organization may choose to submit the application form without including a bond or other security; information regarding previously held licenses; justice precinct, city or county certification; and information on intended playing location, days, times, and starting date.

(1) All other information requested on the application and the accompanying supplements must be complete and in compliance with all other requirements of the Bingo Enabling Act and the Charitable Bingo Administrative Rules.

(2) Within a number of calendar days required by the Commission on the applicable forms, the organization must remit the required bond or other security to the Commission and inform the Commission on the applicable supplemental forms of the intended playing location, days, times, and starting date of the occasions. If the organization fails to provide the required bond or other security as well as complete and accurate supplement forms within the required timeframe, the Commission will deny the application.

(3) An organization that has submitted the appropriate bond or other security and a complete application, including all applicable supplemental forms, must also submit updated, certified meeting minutes, current as of the submission of the applicable supplemental information, stating that the organization voted to conduct bingo at the licensed location.

(g) [(f)] Prior to the issuance of a license, the Commission may require an applicant to attend a pre-licensing interview. The Commission will identify the person or persons for the applicant who must attend the pre-licensing interview. The pre-licensing interview will consist of, at a minimum, the following:

(1) review of the Bingo Enabling Act;

(2) review of the Charitable Bingo Administrative Rules;

(3) licensee responsibilities;

(4) process pertaining to the different types of license application;

(5) bookkeeping and record keeping requirements as it involves bingo; and

(6) a statement from the person or persons attending the pre-licensing interview that they are aware of and will comply with the provisions of the Bingo Enabling Act and the Charitable Bingo Administrative Rules.

(h) [(g)] The Commission may deny an application based on information obtained that indicates non-compliance with the provisions of the Bingo Enabling Act and/or the Charitable Bingo Administrative Rules in connection with a pre-licensing interview and/or location inspection.

(i) [(h)] Each licensed authorized organization [and organization] issued a temporary authorization is required to file timely and complete required reports, as applicable to the type of licensing activity requested. [current license held.]

(j) [(i)] A license applicant may withdraw an application at any time prior to the approval or denial of the application. Once the written request for withdrawal is received by the Commission, all processing of the application will cease and the withdrawal is considered final. License application fees for withdrawn license applications will be refunded, as provided for in the Bingo Enabling Act. [License fees submitted with an application that is subsequently withdrawn are not eligible for refund.] If the organization wants to reapply for a license, a complete new application and new license fee, if applicable, are required.

(k) [(j)] Voluntary surrender of a license.

(1) A licensee may surrender its license for cancellation provided it has completed and submitted to the Commission the prescribed form.

(2) If surrendering a license to conduct bingo, the prescribed form must be signed by the bingo chairperson.

(3) If surrendering any other type of license, the prescribed form must be signed by the sole owner, or by two officers, directors, limited liability corporation members, or partners of the organization.

(4) The cancellation of the license shall be final and effective upon receipt by the Charitable Bingo Operations Division of a copy of the resolution, or other authoritative statement of the licensee, requesting cancellation of the license and providing a requested effective date.

(A) The cancellation is effective as of the date identified in the letter provided that the date has not passed.

(B) If no date is identified in the letter, or the date has passed, the effective date shall be the date the Commission receives the letter.

(5) Notwithstanding cancellation of the license, the licensee must file all reports, returns and remittances required by law.

(6) The licensee shall surrender the license to the Commission on the effective date of the surrender.

(7) The Commission will send the licensee a letter confirming the surrender and resulting cancellation of the license.

(l) [(k)] Administrative Hold. A licensed authorized organization or commercial lessor, other than an association of licensed authorized organizations, may request to place its regular license in administrative hold, but only at the time of license renewal, as provided in §402.411 of this Chapter.

(1) The placement of a license in administrative hold shall be effective on the first day of the license period for which the administrative hold is requested.

(2) The licensee shall submit the license in administrative hold, or a certified statement that the license is not available, to the Commission no later than seven (7) calendar days after the effective date of the placement of the license in administrative hold.

(3) Once the license has been placed in administrative hold, all bingo activity (i.e. leasing, conducting bingo) must cease until the licensee files an amendment and the amended license is issued by the Commission and received by the licensee. A licensed authorized organization with its regular license in administrative hold may not conduct bingo under a temporary license.

(4) Notwithstanding placement of the license in administrative hold, the licensee must file with the Commission:

(A) all applicable reports, returns and remittances required by law; and

(B) a timely and complete application for renewal of the license each time the license is ripe for renewal.

(5) If at the time of license renewal a licensed authorized organization does not have a designated playing location, that license will be placed in administrative hold.

(6) Except for licensed commercial lessors subject to §2001.152(b) of the Occupation Code, a license may not be in administrative hold for more than twelve (12) consecutive quarters.

(7) The fee for a license in administrative hold is set in §402.404(d)(3) of this Chapter.

(8) A license may be removed from administrative hold at any time during a license period. To remove a license from administrative hold, the licensee must file a license amendment application as provided in §2001.306 of the Occupations Code and §402.410 of this Chapter.

(m) [(l)] Each person required to be named in an application for license under the Bingo Enabling Act other than a temporary license will have a criminal record history inquiry at state and/or national level conducted. Such inquiry may require submission of fingerprint card(s). FBI fingerprint cards are required for an individual listed in an application for a distributor or manufacturer's license and for an individual listed on an application who is not a Texas resident. A criminal record history inquiry at the state and/or national level may be conducted on the operator and officer or director required to be named in an application for a non-annual temporary license under the Bingo Enabling Act.

(n) [(m)] Representation; personal receipt of documents. For purposes of this subsection, an individual shall be recognized by the Commission as an applicant or licensee's authorized representative only if the applicant or licensee has filed with the Commission a form prescribed by the Commission identifying the individuals currently listed as directors, officers, or operators, or if they are identified on the completed Authorization of Representation for Bingo Licenses form. A person is not an authorized representative of the applicant or licensee unless specifically named on a form prescribed by the Commission as part of the application, or on [in] the Authorization of Representation for Bingo Licenses form that is on file with the Commission. Only those persons specifically named on a form prescribed by the Commission or on [in] the Authorization of Representation for Bingo Licenses form as an authorized representative shall be recognized by the Commission concerning any matter relating to the licensing process or license. Only the applicant or licensee or its authorized representative may receive from the Commission documents relating to the application or license without being required to submit a request under the Public Information Act.

[(n) Eligibility determination pending identification of playing location, days, times, and starting date.]

[(1) An organization may submit an original application for a license to conduct bingo without including information on intended playing location, days, times, and starting date if requesting a determination of eligibility status.]

[(2) All other information requested on the application and the accompanying supplements must be complete and in compliance with all other requirements of the Act and Rules before the Commission determines eligibility status.]

[(3) An organization requesting a determination of eligibility status must submit with its application a non-refundable processing fee in an amount equal to a Class A regular license fee, which will be applied towards the organization's license fee should the organization become licensed.]

[(4) Upon a determination that the requirements in paragraph (2) and (3) of this subsection have been met, the Commission will provide to the authorized organization written notice of the eligibility status of the applicant.]

[(5) Within 180 calendar days of the date the Commission provides notice of the eligibility status of an applicant, the authorized organization must inform the Commission on a form prescribed by the Commission of the intended playing location, days, times, and starting date of the occasions. If the authorized organization fails to provide the information to the Commission within 180 calendar days, the Commission will proceed with denial of the application.]

[(6) After review of the applicant's submitted intended playing location, days, times, starting date, and upon request by the applicant, the Commission may issue temporary authorization to conduct bingo for a period of 60 calendar days if the Commission determines that the intended playing location, days, times, and starting date comply with the Bingo Enabling Act.]

[(7) In order to receive a regular license to conduct bingo, an authorized organization that has received an eligibility determination and informed the Commission of its intended playing location, days, times, and starting date of the occasions must also submit the required bond or security, any remainder of the appropriate license fee, a Texas Request for Licensure for Eligible Organization form, certified meeting minutes stating that the organization voted to conduct bingo at the licensed location, and confirmation of the accuracy of information provided on the application to conduct bingo. The Commission will notify the applicant of the required license fee and bond amounts within 21 calendar days of receipt of the organization's intended playing location, days, times, and starting date.]

§402.401.Temporary License.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Bingo liability--Includes, but is not limited to, any applicable license fee, late license renewal fee, prize fee, penalty, interest, or administrative penalty.

(2) Regular license--A license to conduct bingo that is effective for a period of one year [or two years] unless revoked or suspended by the Commission. A regular license may be referred to as an annual license.

(3) Temporary license--A license to conduct bingo that is in effect for a single bingo occasion.

(b) General.

(1) Requirements. The Commission may not issue a temporary license if the applicant has failed to file a required report, failed to pay a bingo liability, has not distributed the proceeds calculated on the quarterly report for a charitable purpose, or has a regular license in administrative hold.

(2) Duration. A temporary license is valid for no more than four consecutive hours during any day.

(3) Display. The licensed authorized organization must conspicuously display during a temporary bingo occasion at the licensed bingo premises a temporary license, and, if applicable, verification of notification as referred to in subsection (d)(3)(D) [(d)(4)(E) ] of this section.

[(4) Occasion not held. If a licensed temporary occasion is not held, the organization will forfeit any license fees paid.]

(4) [(5)] Voluntary surrender of regular license.

(A) An authorized organization that no longer holds a regular license to conduct bingo may conduct any remaining designated temporary occasions so long as the total number of occasions does not exceed six per calendar year. If over six previously specified occasions remain, the licensed authorized organization must provide to the Commission written notification of no more than six of the dates of the temporary licenses that will be utilized. This notification must be provided within ten days of surrender of the regular license. The Commission will automatically revoke all temporary licenses in excess of the six per year [and the organization will forfeit any license fees paid].

(B) If the Commission denies or revokes a regular license by final and unappealable order, any temporary license held by the regular license holder that stated the specific date and time of any bingo occasion will likewise be denied or revoked.

(5) [(6)] All records that are required to be maintained under a regular license must be maintained for a temporary bingo license.

(c) The playing time of a temporary bingo occasion may not conflict with the playing time of any other license at the bingo premises on that date unless otherwise provided by law.

(d) Regular license holder.

(1) A regular license holder must apply for a temporary license at least seven calendar days prior to the bingo occasion.

[(2) A regular license holder may submit an application for a temporary license by fax only if the organization has sufficient credit or escrow funds with the Commission to cover the total number of temporary occasions requested.]

(2) [(3)] Quarterly reports filed by a regular license holder must include proceeds from all licensed temporary occasions held during the quarter.

(3) [(4)] The Commission may issue a temporary license to a regular license holder without listing the specific date or time of a bingo occasion. The temporary bingo occasion must be conducted at the same location as shown on the organization's regular license.

(A) The regular license holder must submit an application on the prescribed form that indicates the number of temporary licenses requested for the license period [along with the total amount of license fees for all temporary licenses requested].

(B) The regular license holder must notify the Commission of the date and time the temporary license will be used by submitting a form prescribed by the Commission.

(C) Any temporary license issued without the specific date or time identified must be used prior to the expiration date of the regular license in effect at the time the temporary license application was filed.

[(D) The Commission will not credit or refund a temporary license fee when an organization fails to timely notify the Commission of the playing date and time prior to the expiration of the regular license that was in effect when the temporary license was issued.]

(D) [(E)] The Commission shall provide a verification of receipt of notification that must be posted adjacent to the applicable temporary license during the bingo occasion.

(4) [(5)] In accordance with Occupations Code, §2001.108(e), the Commission may issue to a regular license holder additional temporary licenses in excess of the number of temporary licenses specified under Occupations Code, §2001.103(e) if the following conditions are met:

(A) The regular license holder submits a completed application on the form prescribed by the Commission;

(B) The date and times stated on the application are consistent with the day and times licensed to the organization that has ceased or will cease to conduct bingo as provided in Occupations Code, §2001.108; and

(C) The Commission has not acted on an amendment application filed under Occupations Code, §2001.108(a).

(5) [(6)] If the organization is issued the amendment license filed under Occupations Code, §2001.108 prior to being issued the temporary license, the temporary license application shall be discontinued[, and any temporary license fees submitted will be retained by the Commission].

(e) Non-regular license holder. A non-regular license holder that wishes to conduct a bingo occasion must file a complete application for a temporary license on a form prescribed by the Commission at least 30 calendar days prior to the bingo occasion.

(1) If an organization has never received a temporary license or 3 years have elapsed since the organization last held a temporary bingo occasion, the organization must submit a Texas Application for Temporary Bingo Occasions for Non-Licensed Organization - Section 2.

(2) Organizations who have held a temporary license occasion in the past three years may submit Texas Application for a Temporary Bingo Occasions for Non-Licensed Organization - Section 1 to apply for a temporary license.

[(f) Credits and Refunds.]

[(1) Except as otherwise provided in this subsection, temporary license fees submitted to the Commission are not eligible for refund or credit.]

[(2) If an organization applies for one or more temporary licenses and mistakenly submits more money than is actually required for the temporary license(s), the overpayment will be credited to the organization. The Commission will determine whether an overpayment has occurred on a case by case basis. Overpayments credited to an organization may be used for the organization's outstanding bingo liabilities, including subsequent license fees, but the credits must be used within four years of the latest date the temporary license fees were due. Overpayments credited to an organization remain eligible for refund under paragraph (3) of this subsection until the credits are used or the four year refund period expires, whichever comes first.]

[(3) An overpayment of a temporary license fee may be eligible for refund. In order for an overpayment to be refunded to an organization, an authorized representative of the organization must submit a complete written request for a refund to the Commission within four years of the latest date the temporary license fees were due. Upon the receipt and review of a timely and sufficient refund request, the Commission may either deny the refund request or certify to the Comptroller of Public Accounts that a refund is warranted. The Commission will not certify that a refund is warranted if the requesting organization has any outstanding bingo liabilities to the State or has failed to file all necessary quarterly reports. Pursuant to Government Code §403.077, if the Commission certifies to the Comptroller of Public Accounts that a refund is warranted, the ultimate decision on whether to grant the refund will still be made by the Comptroller of Public Accounts.]

[(4) An overpayment of a temporary license fee must either be used as credit or claimed for refund within four years of the latest date on which the temporary license fees were due. If an organization fails to use the credits or request a refund within this time period, the overpayments will be retained by the Commission.]

§402.402.Registry of Bingo Workers.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Bingo Chairperson--an individual named in accordance with Texas Occupations Code §2001.002(4-a) and §2001.102(b)(6).

(2) Bookkeeper--an individual ultimately responsible for the preparation of any financial records for information reported on the Texas Bingo Conductor's Quarterly Report or for preparation and maintenance of bingo inventory records for a licensed authorized organization.

(3) Caller--an individual who operates the bingo ball selection device and announces the balls selected.

(4) Cashier--an individual who sells and records bingo card and pull-tab [pull tab] sales to bingo players and/or pays winners the appropriate prize.

(5) Completed Application--A registry application or renewal form prescribed by the Commission which is legible and lists at a minimum the applicant's complete legal name, address, social security number or registry number, date of birth, race, gender and signature.

(6) Manager--an individual who oversees the day-to-day operation of the bingo premises.

(7) Operator--means an active bona fide member of a licensed authorized organization that has been designated on a form prescribed by the Commission prior to acting in the capacity as the organization's operator.

(8) Provisional Employee--an individual who is employed by a licensed authorized organization as an operator, manager, cashier, usher, caller, or salesperson while awaiting the results of a background check, whether paid or not.

(9) Salesperson--an individual who monitors bingo players, sells bingo cards and pull-tabs [pull tabs], verifies winning cards and pull-tabs and/or delivers the prize money to the winners; may be referred to as an usher, floor worker, or runner.

(10) Usher--an individual who monitors bingo players, sells bingo cards and pull-tabs [pull tabs], verifies winning cards and pull-tabs and/or delivers the prize money to the winners; may be referred to as a salesperson, floor worker or runner.

(b) Who must be listed on the Registry of Approved Bingo Workers. Any individual who carries out or performs the functions of a caller, cashier, manager, operator, usher, salesperson, bookkeeper, or bingo chairperson as defined in subsection (a) of this section must be listed on the Registry of Approved Bingo Workers prior to being involved in the conduct of bingo.

(c) Each individual must submit a completed Texas Application for Registry of Approved Bingo Workers as prescribed by the Commission [and the requisite fee set in §402.404(l) of this title (relating to License and Registry Fees)] to remain on the Registry of Approved Bingo Workers.

(d) The registrant will be added to the registry as soon as possible after the Commission has determined that the individual is eligible to be involved in the conduct of bingo or act as an operator.

(e) For purposes of the Registry of Approved Bingo Workers, each operator, bookkeeper, and bingo chairperson must be designated on the licensed authorized organization's license to conduct bingo application.

(f) A licensed authorized organization must submit the name of a registered operator, bookkeeper, or bingo chairperson on a form prescribed by the Commission prior to the individual's acting in that capacity.

(g) A registered worker who fails to timely submit the prescribed form to renew listing on the registry[, along with the requisite fee set in §402.404(l) of this title,] may not be involved in the conduct of bingo until the individual is again added to the registry. [Payment for the employment of a provisional employee as outlined in subsection (a)(8) of this section is an authorized bingo expense; however payment for non-registered workers is not an authorized bingo expense.] It is the responsibility of the licensed authorized organization to review the registry to confirm that the individual's registration is current.

(h) How to be listed on the Registry of Approved Bingo Workers. For an individual to be listed on the Registry of Approved Bingo Workers, an individual must:

(1)submit a completed Texas Application for Registry of Approved Bingo Workers form as prescribed by the Commission;

[(2) submit any required fee;]

(2) [(3)] submit a verifiable FBI or DPS fingerprint card if at the time of registration:

(A) the individual is residing outside of Texas; or

(B) the individual maintains a driver's license or registration in another state; and

(3) [(4)] be determined by the Commission to not be ineligible under Texas Occupations Code, §2001.105(a)(6) or the Commission's Rules.

(i) Incomplete Applications. The Commission will notify the applicant at the address provided if the registry application or renewal form submitted is not complete and will identify what is missing. The original application will be returned to the applicant for correction and resubmission. It is the responsibility of the registry applicant to resubmit a completed application before it may be processed. Failure to submit an FBI or DPS fingerprint card, if required, is grounds for denial or removal of the registration.

(j) An individual listed on the registry must notify the Commission of any changes to information contained on the Texas Application for Registry of Approved Bingo Workers on file with the Commission within 30 days of the change in information. Such notification shall be in writing or other approved electronic means.

(k) Identification Card for Approved Bingo Worker.

(1) The Commission will issue an identification card indicating that the individual is listed on [in] the registry. A registered worker and operator must wear his/her identification card while on duty.

(2) The identification card worn by the registered worker or operator while on duty must be visible.

(3) The identification card shall list the individual's name, unique registration number and registry expiration date as issued by the Commission. An individual may obtain the unique registration number and registry expiration date from the Registry of Approved Bingo Workers on the Commission's website or by requesting the registration number and registry expiration date from the Commission.

(4) An identification card is not transferable and may be worn only by the individual identified on the card.

(5) Upon request by a Commission employee, an individual described in subsection (a) of this section shall present personal photo identification in order to verify the identification card is that individual's card.

(l) How to Obtain Additional Approved Identification Cards.

(1) A completed identification card may be obtained from the Commission by submitting the required form.

(2) An individual who has been approved to work in charitable bingo may complete an identification card form provided by the Commission for use while on duty. Blank identification card forms may be obtained from the Commission. The individual requesting the identification card form(s) must submit any required fee and the required form for the blank identification card form.

(3) The identification card prepared by the individual may only be on a prescribed Commission card form and must be legible and include the individual's name, unique registration number, and registry expiration date.

(m) A licensed authorized organization which is reporting conduct where there is a substantial basis for believing that the conduct would constitute grounds for removal or refusal to list on the registry shall make the report in writing to: Bingo Registry, Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630.

(n) The provisions of the Texas Occupations Code[,] §2001.313, related to the registry of bingo workers, do not apply to an authorized organization that does not have a regular license to conduct bingo who receives a temporary license to conduct bingo.

(o) If the Commission proposes to refuse to add or proposes to remove the individual from the Registry of Approved Bingo Workers consistent with Texas Occupations Code[,] §2001.313, the Commission will give notice of the proposed action as provided by Government Code, Chapter 2001.

(p) An individual receiving notice that the Commission intends to refuse to add to or intends to remove the individual from the Registry of Approved Bingo Workers may request a hearing. Failure to submit a written request for a hearing within 30 calendar days of the date of the notice will result in the denial of the application or removal of the registered worker from the registry.

(q) An individual who has been denied or removed from the registry because of a conviction for an offense listed under Occupations Code[,] §2001.105(b)[,] will not be eligible to reapply to be listed. An individual who has been denied or removed from the registry because of a disqualifying criminal conviction not listed under Occupations Code[,] §2001.105(b)[,] may reapply to be listed no earlier than five years after the commission of the offense, or as otherwise allowed under the Commission's Rules.

(r) A provisional employee must:

(1) indicate the playing location(s) where the individual is provisionally employed on the Texas Application for Registry of Approved Bingo Workers form submitted to the Commission.

(2) immediately stop working:

(A) after 14 days if the individual is not listed on the registry and is a resident of this state.

(B) after 45 days if the individual is not listed on the registry, not a resident of this state, and submitted a fingerprint card for a background investigation. If the fingerprint cards are returned by the law enforcement agency as unclassifiable, the Commission will notify the individual, and the individual may continue to be provisionally employed by submitting a written request and new fingerprint cards within 14 days of the notification.

(C) if found to be ineligible on the basis of the background investigation.

(3) wear an identification card while on duty with the registry applicant's name, "Provisional Employment" as the unique registration number, and the submission date of the registry application as the expiration date.

(s) A licensed authorized organization who employs a provisional employee must maintain a copy of the registry applicant's completed Texas Application for Registry of Approved Bingo Workers form submitted to the Commission until the individual is listed on the registry or the licensed authorized organization is notified that the individual is not eligible to be listed. Payment for the employment of a provisional employee as outlined in subsection (a)(8) of this section is an authorized bingo expense; however, payment for non-registered workers is not an authorized bingo expense.

§402.404.License Classes and [Registry] Fees.

(a) Definitions.

[(1) Escrow Account--An account established with the Commission by an authorized organization in which funds may be deposited for the advance payment of temporary licenses and license amendments.]

(1) [(2)] License period--For purposes of Texas Occupations Code §2001.104 and §2001.158, the term "license period" means the four full calendar quarters immediately preceding the license end date.

(2) [(3)] Regular License Classes and Applicable Fee Amount:

(A) There is no annual fee for a license to conduct bingo. The license-class-related amount used solely by the Commission to estimate the pro rata local share of prize fees related to licenses [annual fee for a license] to conduct bingo shall be as follows:

(i) Class A (annual gross receipts of $25,000 or less) - $132;

(ii) Class B (annual gross receipts of more than $25,000 but not more than $50,000) - $264;

(iii) Class C (annual gross receipts of more than $50,000 but not more than $75,000) - $396;

(iv) Class D (annual gross receipts of more than $75,000 but not more than $100,000) - $528;

(v) Class E (annual gross receipts of more than $100,000 but not more than $150,000) - $792;

(vi) Class F (annual gross receipts of more than $150,000 but not more than $200,000) - $1,188;

(vii) Class G (annual gross receipts of more than $200,000 but not more than $250,000) - $1,584;

(viii) Class H (annual gross receipts of more than $250,000 but not more than $300,000) - $1,980;

(ix) Class I (annual gross receipts of more than $300,000 but not more than $400,000) - $2,640;

(x) Class J (annual gross receipts of more than $400,000) - $3,300.

(B) The annual fee for a commercial lessor license shall be as follows:

(i) Class A (annual gross rentals from licensed organizations of not more than $12,000) - $132;

(ii) Class B (annual gross rentals from licensed organizations of more than $12,000 but not more than $20,000) - $264;

(iii) Class C (annual gross rentals from licensed organizations of more than $20,000 but not more than $30,000) - $396;

(iv) Class D (annual gross rentals from licensed organizations of more than $30,000 but not more than $40,000) - $528;

(v) Class E (annual gross rentals from licensed organizations of more than $40,000 but not more than $50,000) - $792;

(vi) Class F (annual gross rentals from licensed organizations of more than $50,000 but not more than $60,000) - $1,188;

(vii) Class G (annual gross rentals from licensed organizations of more than $60,000 but not more than $70,000) - $1,584;

(viii) Class H (annual gross rentals from licensed organizations of more than $70,000 but not more than $80,000) - $1,980;

(ix) Class I (annual gross rentals from licensed organizations of more than $80,000 but not more than $90,000) - $2,640;

(x) Class J (annual gross rentals from licensed organizations of more than $90,000) - $3,300.

(C) Manufacturer's License. The annual fee for a manufacturer's license shall be $3,000.

(D) Distributor's License. The annual fee for a distributor's license shall be $1,000.

(b) Original License Application.

[(1) License to Conduct Charitable Bingo.]

[(A) An initial license fee for an original license to conduct charitable bingo or an original license to lease bingo premises submitted by an authorized organization that does not have a license issued under the Bingo Enabling Act, must be paid from the organization's general fund bank account.]

[(B) An applicant may be required to submit additional license fees if the estimated gross receipts used to calculate the license fee are not reasonable when compared to gross receipts of other organizations with the same number of occasions conducting bingo at the same bingo premises. If no such organizations exist, the Charitable Bingo Operations Division may use gross receipts amounts from organizations with the same number of occasions conducting bingo at similarly situated bingo premises. These amounts are used to establish the gross receipts amount upon which the applicant's license fee is based and must be submitted.]

(1) [(2)] Commercial License to Lease Bingo Premises.

(A) License fees for an original license to lease bingo premises submitted by an authorized organization licensed to conduct bingo must be paid from the organization's bingo bank account.

(B) An applicant may be required to submit additional license fees if the estimated gross rental income used to calculate the license fee is not reasonable when compared to the gross rental income at similarly situated bingo premises. These comparative amounts are used to establish the gross rental income amount upon which the applicant's license fee is based and must be submitted.

(2) [(3)] Understating the anticipated gross receipts or rental income from a licensed activity for any purpose by an applicant or licensed entity may be grounds for administrative disciplinary action against the licensee.

[(c) Changes Within Six Months of a Licensed Authorized Organization's License Term.]

[(1) An organization shall re-estimate its annual gross receipts and submit any balance due in license fee amount if there is an increase in the number of bingo occasions conducted within six months of the issuance of the original license to conduct bingo.]

(c) [(2)] An organization shall re-estimate its annual gross rental income and submit any balance due in license fee amount if there is an increase within six months of the issuance of the original lessor license in:

(1) [(A)] the number of organizations conducting bingo at a licensed location; and

(2) [(B)] the number of bingo occasions conducted at the licensed location.

(d) License Renewal Fee.

(1) The amount of license fee to be paid upon renewal of a [license to conduct bingo or] license to lease bingo premises is the recalculated license fee amount calculated for the preceding license period.

(2) If the recalculation of the license fee amount for the previous license period reflects an underpayment of the license fee amount for that license period, the incremental difference must be submitted by the organization within 30 days of the license expiration date and before the license may be renewed.

(3) Upon written request by an organization to renew its [license to conduct bingo or] license to lease bingo premises that is in or going in administrative hold, the organization shall pay a Class A license renewal fee, plus any amount due under paragraph (2) of this subsection, in lieu of the recalculated fee amount from the preceding license period. There is no renewal license fee for an organization renewing its license to conduct bingo that is in or going in administrative hold, but the imputed license fee used to estimate the pro rata local share of prize fees for such an organization is a Class A license renewal fee.

(4) The Commission may require an amount of license fee in addition to the recalculated fee at renewal if there is a change in:

(A) playing location; or

(B) rental amount per occasion. [; or]

[(C) increase in the number of occasions bingo is conducted.]

[(5) If an organization requests its license be placed in administrative hold upon the renewal of the license and submits the requisite fee as set in paragraph (3) of this subsection, the Commission may require an organization to submit an additional license fee when it files an application to amend a license to conduct charitable bingo if the organization amends its license to begin conducting bingo within the first six months of the license term.]

(5) [(6)] If a commercial lessor or a licensed authorized organization which leases bingo premises requests its license be placed in administrative hold upon the renewal of its lessor license and submits the requisite fee as set in paragraph (3) of this subsection, the Commission may require the commercial lessor [or licensed authorized organization] to submit an additional license fee when it files the application to amend a commercial license to lease bingo premises, if the commercial lessor [or licensed authorized organization] amends its license to begin leasing bingo premises within the first six months of the license term.

(e) Two-Year License Fee Payments. An applicant for a commercial lessor license [issued under the Bingo Enabling Act] that is effective for two years must pay an amount equal to two times the amount of the annual license fee, as set in §402.404(a)(2)[(3)].

(f) Regular License Class [Fee] Recalculation.

(1) For the purpose of determining the license class [fee] recalculation for a license to conduct bingo or license to lease bingo premises, the annual gross receipts or gross rental income, as applicable, shall be based on the four consecutive quarterly returns due immediately prior to the license expiration date.

(2) For the purposes of determining the license class [fee] recalculation for a two year license to [conduct bingo or license to] lease bingo premises, each year of the license period shall be recalculated separately. The final recalculated fee will be the total of the yearly license classes and their associated fees. The annual [gross receipts or] gross rental income[, as applicable,] shall be based on the four consecutive quarterly returns due immediately prior to the first year period and the four consecutive quarterly returns due immediately prior to the license expiration date of the second year period.

(3) For accounting units, gross receipts used to recalculate the license class [fee] apportioned to a unit member will be calculated by dividing the unit's gross receipts by the total number of members during the quarter [unless the accounting unit bases its distribution of proceeds on the number of occasions].

[(4) For accounting units who base their distribution of proceeds on the number of occasions a member conducts, the gross receipts used to recalculate the license fee apportioned to a unit member will be calculated by dividing the unit's gross receipts by the total number of occasions conducted by all unit members and then multiplying by the number of occasions reported by the unit member.]

[(5) If a quarterly return is due less than 50 days prior to a license expiration, the gross receipts or gross rental income reported on that return will not be available to be used to calculate the annual gross receipts or gross rental income. Instead, the gross receipts or gross rental income reported on the four immediately preceding quarterly returns, as applicable, will be used to recalculate the organization's license fee.]

(4) [(6)] If an organization fails to file a report for one or more quarter(s) of the license period, or if there are not four quarters available for any other reason, the Commission shall average the quarterly gross receipts or gross rental income for the quarter(s) reported to determine the organization's license class. [fee.]

(5) [(7)] License no longer exists.

[(A) Notwithstanding the fact that an organization conducted bingo under a license that ceased to exist for whatever reason, the organization must submit the recalculated license fee for the period that the organization conducted bingo and collected gross receipts.]

(A) [(B)] Notwithstanding the fact that an organization which leased bingo premises under a license that ceased to exist for whatever reason, the organization must submit the recalculated license fee for the period that the organization leased the premises and collected gross rental income.

(B) [(C)] If an organization ceases to be licensed for whatever reason, all gross receipts or gross rental income collected (from the period after the last quarterly return used to recalculate the license class [fee] for the prior year) is used to recalculate the final license class, and if appropriate, any fee due. If the organization fails to file a return for any required period(s), an estimated return will be used. The organization shall submit any balance due after license class [fee] recalculation.

(6) [(8)] The Commission may recalculate license classes [fees] for up to four consecutive immediately preceding license periods if a change in an organization's reported gross receipts or gross rental income occurs as a result of an audit, or if the original recalculation was determined by using estimated gross receipts or gross rental income.

(7) [(9)] If there is a change in an organization's reported gross receipts or gross rental income, the organization may submit a written request to the Charitable Bingo Operations Division to recalculate its license class [fees ] for up to four immediately preceding license periods.

[(10) If an organization issued a license that is effective for two years ceases to be licensed prior to conducting bingo in a quarter used to calculate the second year fee, a Class A license fee will apply for the second year of the license for the purposes of recalculating the license fee.]

(g) Overpayment of License Fee.

(1) An overpayment of a [bingo conductor's or] commercial lessor's annual license fee may occur either through a recalculation of the license fee pursuant to subsection (f) of this section, or if a licensee [or accounting unit] mistakenly submits more money than is actually required for the license fee(s). An overpayment of a manufacturer's or distributor's annual license fee occurs if a licensee mistakenly submits more money than is actually required for the license fee(s). The Commission will determine whether an overpayment has occurred on a case by case basis.

(2) Upon a determination that an overpayment of an annual license fee has occurred, the Charitable Bingo Operations Division shall credit the overpayment to the licensee. Overpayments credited to a licensee may be used for the licensee's outstanding bingo liabilities, including subsequent license fees, but the credits must be used within four years of the latest date on which the annual license fee was due. Overpayments credited to a licensee remain eligible for refund under subsection (h) of this section until the credits are used or the four year refund period expires, whichever comes first.

(3) Overpayments of annual license fees must either be used as credit or claimed for refund within four years of the latest date on which the annual license fees were due. If a licensee fails to use the credits or request a refund within this time period, the overpayments will be retained by the Commission.

[(4) All regular license fee overpayments submitted by an accounting unit for a unit member are only eligible to be credited or refunded to that unit member.]

(h) Refunds.

(1) An applicant or licensee may request a refund of the fee for an initial or renewal commercial lessor's license, initial or renewal distributor's license, or initial or renewal manufacturer's license if they request withdrawal of the application before the license is issued. Upon such a request, the Commission will retain the lesser of 50 percent of the fee or $150 and refund the rest of the fee within 30 days of receiving the request.

(2) If the Commission denies an initial or renewal commercial lessor license application, initial or renewal distributor's license application, or initial or renewal manufacturer's license application, it will retain the lesser of 50 percent of the fee or $150 and refund the rest of the fee within 30 days of denying the application.

[(1) Except as provided by this subsection, regular license fees submitted to the Commission are not eligible for refund.]

(3) [(2)] A current or former licensee that submits an overpayment of a regular license fee may be eligible to receive a refund of that overpayment, provided that the licensee or former licensee:

(A) submits a complete written request for a refund to the Commission within four years of the latest date the regular license fees were due;

(B) does not have any other outstanding bingo liabilities to the State; and

(C) if applicable, files all necessary quarterly reports.

(4) [(3)] Upon the receipt and review of a timely and sufficient refund request, the Commission may either deny the refund request or certify to the Comptroller of Public Accounts that a refund is warranted. Pursuant to Government Code §403.077, if the Commission certifies to the Comptroller of Public Accounts that a refund is warranted, the ultimate decision on whether to grant the refund will still be made by the Comptroller of Public Accounts.

(i) Transfer of Commercial License to Lease Bingo Premises.

(1) All gross rental income collected in connection with a license to lease bingo premises that has been transferred during the term of the license shall be used to recalculate the license fee.

(2) A license fee credit in connection with a license to lease bingo premises that was transferred during the term of the license shall be credited to the current license holder at the time of license renewal.

(3) A license fee balance due for a license to lease bingo premises that was transferred during the term of the license shall be the liability of the current license holder at the time of license renewal.

[(j) Escrow Accounts.]

[(1) An authorized organization may submit funds to the Commission to be placed in an escrow account and used for future temporary license fees or license amendment fees. However, any funds placed in, or otherwise credited to, an escrow account are not eligible for refund and must be used by the end of the licensee's subsequent license period. If a licensed authorized organization fails to use escrow account funds within this time period, the funds will be retained by the Commission.]

[(2) An accounting unit may submit funds to be placed in a unit member's escrow account and used for that member's future temporary license fees or license amendment fees. At the time of submission of the funds, the accounting unit must designate in writing the unit member's escrow account in which the funds will be placed. Funds placed in a unit member's escrow account are not eligible for refund and may not be transferred to another unit member's escrow account or otherwise credited to another unit member.]

(j) [(k)] Temporary Authorization to Conduct Bingo.

(1) The amount of gross receipts collected in connection with a temporary authorization is used to calculate [recalculate ] the regular license class [fee].

(2) An organization conducting bingo pursuant to a temporary authorization must comply with the same statutory and administrative rule requirements[, annual gross receipts fee schedule,] and quarterly return filing requirements as an organization which has a regular license to conduct bingo.

[(3) If an organization conducting bingo pursuant to a temporary authorization does not become licensed to conduct bingo, the fee for the temporary authorization will be determined by the fee schedule for a license to conduct bingo set out in subsection (a)(3)(A) of this section.]

[(l) Registry of Approved Bingo Workers.]

[(1) A fee of $25 must accompany each Texas Application for Registry of Approved Bingo Workers, and each application to renew listing on the registry, submitted to the Commission. The Commission will not consider or act upon an application until the requisite fee is paid.]

[(2) Except as authorized by the Charitable Bingo Operations Director, or their designee, an application to renew listing on the registry received by the Commission more than 60 days prior to the expiration date of the current registry listing will be returned unprocessed by the Commission to the sender.]

§402.405.Temporary Authorization.

(a) A temporary authorization shall be issued only to a person who is not licensed by the Commission but who has filed a complete application for an original license to conduct a charitable bingo activity.

(b) Upon the applicant's request, the Commission will issue a temporary authorization for the activity requested on the license application by the 31st calendar day after the Commission's receipt of an application that is complete in accordance with §402.400(a) of this chapter if the following are in compliance with the Act and the Rules.

(1) For all licenses: eligibility of all persons listed on the application requiring criminal background investigations.

(2) For a commercial lessor license: eligibility of applicant as provided by Texas Occupations Code, §2001.152.

(3) If an applicant asserts in writing that its application is complete, the Commission will grant or deny the application, or make a determination on temporary authorization.

(c) A temporary authorization to conduct a bingo-related activity may only be issued to a person who will conduct a bingo-related activity at the same location for which the person has a pending original application to conduct a bingo-related activity.

(d) A temporary authorization shall be issued for a stated period of time not to exceed 60 days. A temporary authorization may be extended upon written request by the person to whom the temporary authorization was issued. Such request must be filed with the Commission at least seven working days prior to the time the temporary authorization expires. Extensions shall be for a period of time not to exceed 60 days. No more than two extensions may be issued.

(e) A request for an extension shall include:

(1) the complete name of the organization requesting the extension;

(2) the Texas taxpayer identification number of the organization requesting the extension;

(3) a complete explanation of the basis for the request; and

(4) the specific reason(s) supporting the need for an extension.

(f) An organization that is not in compliance with the Bingo Enabling Act and the Charitable Bingo Administrative Rules will not be granted an extension unless the organization becomes compliant during the period of the original temporary authorization.

(g) An organization conducting bingo under a temporary authorization that desires to obtain a temporary license shall be subject to the same requirements in §402.401(e) of this chapter regarding an organization not holding a regular license to conduct bingo.

(h) A temporary authorization is not a license.

(i) A temporary authorization may not be amended.

(j) A regular license that has been issued to an applicant shall expire one year [or two years] from the date of the first issuance of any temporary authorization under this section.

[(k) An organization that has been issued an eligibility determination in accordance with §402.400(n) of this chapter is not eligible for a temporary authorization.]

(k) [(l)] For the purposes of Texas Occupations Code, §2001.304(a), an application for an activity is considered issued or denied on the date the Commission issues a license or notice of denial to the applicant.

§402.407.Unit Manager.

[(a)] Notification.

(1) An individual shall not provide services as a unit manager to licensed authorized organizations that have formed a unit until the following occurs:

(A) the Commission receives the unit accounting agreement executed by all members of the unit with the name of the unit manager designated therein; and

[(B) the individual holds a unit manager license issued by the Commission;]

[(C) the individual posts a bond or security, for each unit, as prescribed by §402.603 of this chapter; and]

(B) [(D)] the individual provides information to the Commission relating to the location where the unit manager services will be performed and where the records will be maintained.

(2) A unit manager shall provide written notification to the Commission of any change in the information in the unit manager's most recent notification to the Commission [application for a unit manager license or renewal]. The unit manager shall notify the Commission of the change in the information not later than the 15th day after the date of the change.

[(b) Annual License Fee for a Unit Manager. The non refundable annual license fee for a unit manager may not exceed $250.00.]

§402.410.Amendment of a License - General Provisions.

(a) The Commission will not approve a license amendment application with an effective date that is not within the licensed authorized organization's or commercial lessor's current license period.

(b) A licensee may amend a license renewal application prior to its approval.

(c) The term "effective date", when used in this section, means the first day that the amended changes are to begin.

(d) A licensee may not begin activities under the amended license until the following have occurred:

(1) the effective date; and

(2) licensee's receipt and display at the playing location of official written notification or the amended license authorizing the change.

(e) The fee to amend any commercial lessor, manufacturer, or distributor license issued under the Bingo Enabling Act shall be $10. The fee to amend a license to conduct bingo is $0.

[(1) Except as otherwise provided in this subsection, fees submitted to the Commission to amend a license are not eligible for refund or credit.]

[(2) If a licensee applies for one or more amendments and mistakenly submits more money than is actually required for the amendment(s), the overpayment will be credited to the licensee. The Commission will determine whether an overpayment has occurred on a case by case basis. Overpayments credited to a licensee may be used for the licensee's outstanding bingo liabilities, including subsequent license fees, but the credits must be used within four years of the latest date the amendment fees were due. Overpayments credited to a licensee remain eligible for refund under paragraph (3) of this subsection until the credits are used or the four year refund period expires, whichever comes first.]

[(3) An overpayment of a license amendment fee may be eligible for refund. In order for an overpayment to be refunded to a licensee, an authorized representative of the licensee must submit a complete written request for a refund to the Commission within four years of the latest date the license amendment fees were due. Upon the receipt and review of a timely and sufficient refund request, the Commission may either deny the refund request or certify to the Comptroller of Public Accounts that a refund is warranted. The Commission will not certify that a refund is warranted if the requesting licensee has any outstanding bingo liabilities to the State or has failed to file all necessary quarterly reports, if applicable. Pursuant to Government Code §403.077, if the Commission certifies to the Comptroller of Public Accounts that a refund is warranted, the ultimate decision on whether to grant the refund will still be made by the Comptroller of Public Accounts.]

[(4) An overpayment of an amendment fee must either be used as credit or claimed for refund within four years of the latest date on which the amendment fees were due. If a licensee fails to use the credits or request a refund within this time period, the overpayments will be retained by the Commission.]

(f) A licensee may request a refund of any license amendment fee paid if the licensee requests withdrawal of the amendment application before an amended license is issued. Upon such a request, the Commission will refund half of any fee paid within 30 days of receiving the request. If the Commission denies an amendment application, it will refund half of any fee paid within 30 days of that denial.

§402.411.License Renewal.

(a) Any license issued under the Bingo Enabling Act expires one calendar year or two calendar years from the first date of the license period, as specified on the license.

(b) In order to renew a license issued under the Bingo Enabling Act, a licensee must timely file an application for renewal with the Commission. The renewal application must be on a form prescribed by the Commission. The Commission will not approve a renewal application until the application is complete and the licensee submits the requisite fee pursuant to §402.404 of this title (relating to License Class and [Registry] Fees). A licensee is solely responsible for the timely filing of an application for renewal of its regular license.

(c) The Commission may notify licensees regarding the expiration of their license(s) and the potential for renewal. Failure of the licensee to receive the renewal notice(s) mailed by the Commission is not a mitigating circumstance for untimely filing of a renewal application.

(d) To be timely filed:

(1) the renewal application and payment, if applicable, of the estimated license fee must be received by the Commission no later than the license expiration date; or

(2) the renewal application's envelope postmarked date must clearly show a date that is no later than the license expiration date, unless the expiration date is a Saturday, Sunday, or legal holiday, in which event the application is due the next day which is not a Saturday, Sunday, or legal holiday; or

(3) an application bearing no legible postmark, postal meter date, or date of delivery to the common carrier shall be considered to have been sent seven calendar days before receipt by the Agency, or on the date of the document if the document date is less than seven days earlier than the date of receipt.

(e) Notwithstanding subsection (b) of this section, if a renewal application is not timely filed, a licensee may renew their license by filing a complete application for renewal with the Commission and, if applicable, submitting the requisite license fee and late license renewal fee. The late license renewal fee is based on the estimated license fee for the renewal period. Penalty amounts are calculated as follows:

Figure: 16 TAC §402.411(e) (No change.)

(f) Any required [The] late license renewal fee is due within 14 calendar days of the date of the written notification by the Commission of the amount due.

(g) The Commission will not issue a temporary license to a licensed authorized organization that has not filed [files] its renewal application [late until the Commission receives the late license renewal fee].

[(h) The Commission will not issue an amended license to a licensed authorized organization or licensed commercial lessor that files its renewal application late until the Commission receives the late license renewal fee.]

(h) [(i)] A late license renewal fee is not refundable.

(i) [(j)] License renewal applications received more than 60 days after the license expiration date will be returned unprocessed by the Commission to the sender.

(j) [(k)] To be complete, an application for renewal must contain all information that is required to be provided in or with the initial license application, as well as any other information required by the Commission.

(1) All information submitted to the Commission must be legible, correct, and complete.

(2) If any information previously submitted to the Commission with the licensee's initial license application or a previous renewal application has not changed since the information was last submitted to the Commission, the renewal applicant need not provide that information again. The applicant must certify on the renewal application that no changes have been made to the specific information since it was last submitted to the Commission.

(k) [(l)] Unless otherwise provided by law or rule, the general licensing provisions in §402.400 of this title (relating to General Licensing Provisions) shall govern the license renewal process, including the submission and review of the renewal application, as if the renewal application was an initial license application.

(l) [(m)] Except as authorized by the Charitable Bingo Operations Director, or their designee, license renewal applications received by the Commission more than 60 days prior to the current license expiration date will be returned unprocessed by the Commission to the sender.

§402.413.Military Service Members, Military Veterans, and Military Spouses.

(a) The following terms used in this section are defined in §55.001 of the Occupations Code as follows:

(1) "Active duty" means current full-time military service in the armed forces of the United States or active duty military service as a member of the Texas military forces, as defined by §437.001, Government Code, or similar military service of another state.

(2) "Armed forces of the United States" means the army, navy, air force, coast guard, or marine corps of the United States or a reserve unit of one of those branches of the armed forces.

(3) "Military service member" means a person who is on active duty.

(4) "Military spouse" means a person who is married to a military service member.

(5) "Military veteran" means a person who has served on active duty and who was discharged or released from active duty.

(b) As soon as practicable after a military service member, military veteran, or military spouse applies in his or her individual capacity for a commercial lessor license, distributor license, manufacturer license, [unit manager license,] or listing on the bingo worker registry, the Commission will process the application and, if warranted, issue the license or list the applicant on the bingo worker registry. A military service member or military veteran must provide the Commission with definitive proof of his or her current or prior military service. A military spouse must provide the Commission with:

(1) definitive proof of his or her spouse's current military service; and

(2) his or her official marriage certificate or other definitive proof of his or her marriage to a military service member.

(c) The Commission will waive the license [or bingo worker registry] fee for a military service member or military veteran that applies in his or her individual capacity for a commercial lessor license, distributor license, or manufacturer license[, unit manager license, or listing on the bingo worker registry]. The applicant must provide the Commission with definitive proof of the applicant's current or prior military service.

(d) The Commission will waive the license [or bingo worker registry] fee for a military spouse that applies in his or her individual capacity for a commercial lessor license, distributor license, or manufacturer license, [unit manager license, or listing on the bingo worker registry,] provided that the applicant holds a current license issued by another state or jurisdiction that is substantially equivalent to the license [or bingo worker registry] for which the applicant is applying. The applicant must provide the Commission with:

(1) definitive proof of his or her spouse's current military service;

(2) his or her official marriage certificate or other definitive proof of his or her marriage to a military service member; and

(3) a photocopy of his or her current out-of-state license that is substantially equivalent to the license [or bingo worker registry] for which the applicant is applying.

(e) An individual licensed in his or her individual capacity as a commercial lessor, distributor, or manufacturer[, or unit manager] is exempt from the late license renewal fee provided for in §402.411(e) of this chapter if the individual can demonstrate, to the satisfaction of the Commission, that the individual failed to renew his or her license in a timely manner because the individual was serving as a military service member.

§402.420.Qualifications and Requirements for Conductor's License.

An applicant must provide with its application documentation demonstrating that it meets all qualifications and requirements for a license to conduct bingo based on the type of organization it is. The qualifications, requirements, and necessary documentation for different types of organizations are shown in the chart below.

Figure: 16 TAC §402.420 (.pdf)

[Figure: 16 TAC §402.420]

§402.422.Amendment to a Regular License to Conduct Charitable Bingo.

(a) A licensed authorized organization must file a form prescribed by the Commission [and submit a $10 fee] to amend its licensed:

(1) playing days;

(2) playing times;

(3) playing location;

(4) bingo chairperson;

(5) organization name; or

(6) primary business office.

(b) Playing days or playing times.

(1) An organization amending its playing day(s) or playing time(s) must specify on the form each playing occasion day and time that the organization intends to conduct bingo at the location.

(2) The playing day(s) or time(s) specified on the form may not:

(A) conflict with the playing day(s) or time(s) of any other application or license issued for that location;

(B) exceed the maximum number of bingo occasions per day allowed under Texas Occupations Code, §2001.419(c) and (d); or

(C) exceed three occasions during a calendar week or four hours per occasion.

(c) Playing location.

(1) An organization amending its playing location must return:

(A) its current bingo license if available, or a certified statement signed by the bingo chairperson indicating that the license is not available, unless the license is currently in administrative hold status or its renewal application is pending; and

(B) a copy of the meeting minutes recording that the organization voted to move the bingo playing location and indicating the exact playing location address and name of the location, if applicable.

(2) A licensee shall display a copy of its license at the current playing location if the license was surrendered upon application for an amendment.

(d) Organization name. An organization amending its organization name must submit a copy of the following:

(1) all amended organizing instruments reflecting the name change;

(2) written notice sent to the Internal Revenue Service updating the organization's record if the organization is required to maintain a 501(c) exemption;

(3) meeting minutes recording that the organization voted to change its name; and

(4) letter approving the name change from the parent organization, if applicable.

(e) Primary business office location.

(1) An organization may not relocate its primary business office to a different county solely for the purpose of relocating its bingo playing location. If the new location is not adjacent to the current county of its primary business office, the organization must have at least 20 percent of its members' residences located in the county to which the organization is moving.

(2) An organization changing its primary business office location must submit a copy of the following:

(A) meeting minutes recording that the licensed authorized organization voted to move its primary business office to the proposed location and the reason for the move;

(B) if moving to a non-adjacent county, the licensed authorized organization's membership list showing names and county of residence with at least 20 percent of the members' residences located in the non-adjacent county to which the organization is moving; and

(C) letter approving the organization's primary business office relocation to another county from the parent organization, if applicable.

(f) Meeting minutes submitted in accordance with subsections (c)(1)(B), (d)(3), and (e)(2)(A) of this section must be signed and certified as true and correct by an officer of the organization.

§402.424.Amendment of a License by Electronic Mail, Telephone or Facsimile.

(a) The term "effective date," when used in this section, shall mean the first day that the changes to the day(s) or time(s) bingo is conducted by the organization are to begin.

(b) A licensed authorized organization may change the day(s) or time(s) it conducts bingo by electronic mail, telephone or facsimile [provided the organization has sufficient amendment license fee credit]. The request should be received no later than noon the business day before the requested effective date of the amended license.

(1) To change by telephone the day(s) or time(s) the organization conducts bingo, an authorized requestor must speak directly to a License and Permit Specialist in the Licensing Services Department of the Charitable Bingo Operations Division, who will verify the caller's authority to request an amendment.

(2) To change by facsimile the day(s) or time(s) the organization conducts bingo, the Commission must receive a complete application at the facsimile number provided on the prescribed application form.

(3) To change by electronic mail the day(s) or time(s) the organization conducts bingo, the Commission must receive a complete application at the bingo service electronic mail address provided on the prescribed application form.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 6, 2017.

TRD-201704032

Bob Biard

General Counsel

Texas Lottery Commission

Earliest possible date of adoption: November 19, 2017

For further information, please call: (512) 344-5392


SUBCHAPTER F. PAYMENT OF TAXES, PRIZE FEES AND BONDS

16 TAC §402.603

The following amendments are proposed under the Texas Occupations Code §2001.054, which authorizes the Commission to adopt rules to enforce and administer the Bingo Enabling Act; Texas Government Code §467.102, which authorizes the Commission to adopt rules for the laws under the Commission's jurisdiction; and Section 13 of HB 2578 from the Regular Session of the 85th Texas Legislature, which required the Commission to adopt rules for its implementation.

§402.603.Bond or Other Security.

(a) Bond or Other Security Required.

(1) An applicant for a regular license to conduct charitable bingo must submit security consistent with the provisions of this section. A licensed authorized organization must maintain the security until the organization ceases to conduct bingo and the license is relinquished or revoked.

(A) Except as otherwise provided in this section, the security amount for a regular license to conduct charitable bingo is based on the license class. The security amount is:

(i) Class A - $125.00.

(ii) Class B - $325.00.

(iii) Class C - $600.00.

(iv) Class D - $825.00.

(v) Class E - $1,225.00.

(vi) Class F - $1,800.00.

(vii) Class G - $2,125.00.

(viii) Class H - $2,675.00.

(ix) Class I - $3,275.00.

(x) Class J - $7,000.00

(B) If at any time a licensed authorized organization fails to fully pay its requisite prize fees by the due date and a jeopardy determination becomes final, then the organization's security amount may be calculated at three times its highest quarterly prize fee for the four most recent quarters or for the highest quarter filed if less than four.

(C) If a licensed authorized organization has fully paid all prize fees and associated penalties, if any, prior to a final jeopardy determination for eight (8) consecutive quarters, the amount of the requisite security will be reduced to $100.00. If at any time an organization paying the reduced security amount fails to fully pay its requisite prize fees and any associated penalties and interest by the due date and a jeopardy determination becomes final, then the Commission may calculate the organization's security amount in accordance with §402.603(a)(1)(A) or (B) of this chapter.

(2) An applicant for a manufacturer's license must submit a cash bond or bond in the amount of $10,000 issued by a surety company chartered or authorized to do business in this state. A licensed manufacturer must maintain the bond until the license is relinquished or revoked.

[(3) An applicant for a unit manager license must submit security consistent with the provisions of this section. A licensed unit manager must maintain the security until the license is relinquished or revoked.]

[(A) Except as otherwise provided in this section, the unit manager's security amount shall be the aggregate of each unit member organization's security amount, as set in §402.603(a)(1) of this chapter.]

[(B) If at any time a unit manager fails to fully pay the unit's requisite prize fees by the due date and a jeopardy determination becomes final, the security amount may be calculated at three times the unit's highest quarterly prize fee liability for the four most recent quarters or for the highest quarter filed if less than four. If the unit manager changes, the new unit manager must file security.]

[(C) Members of an accounting unit with a licensed unit manager are not required to submit security until the member withdraws or is removed from the unit.]

(3) [(4)] Accounting Units.

(A) An accounting unit may submit and maintain one bond or other security to cover each of the unit's member organizations. Except as otherwise provided in this section, the amount of the security shall be the aggregate of each unit member organization's security amount, as set in §402.603(a)(1) of this chapter. If a unit member organization subsequently withdraws or is removed from the unit, that organization is responsible for obtaining and maintaining the requisite security.

(B) If at any time an accounting unit fails to fully pay its requisite prize fees by the due date and a jeopardy determination becomes final, the unit's security amount may be calculated at three times the unit's highest quarterly prize fee liability for the four most recent quarters or for the highest quarter filed if less than four. The financial obligation for such security shall be divided equally among the organizations that were in the unit at the time of the prize fee delinquency. If a unit member organization withdraws or is removed from such a unit, that organization's security amount shall be equivalent to its share of the unit's security amount, and the unit's security amount may be reduced by an amount equivalent to the exiting organization's share. If another organization subsequently joins such a unit, the unit's security amount will increase by the amount of the newly-joined organization's security amount.

(b) Types of bonds or other security. The Commission will accept only the following types of bonds or other security as security for the payment of prize fees:

(1) Cash or check made payable to the state comptroller. Cash security will not earn interest for the licensee.

(2) Irrevocable assignments of accounts, including certificates of deposit or certificates of savings, in banks, savings and loan institutions, and credit unions, whose deposits are insured by an agency of the United States government. This security must be executed on an assignment form approved by the Commission.

(3) Letters of credit from financial institutions.

(4) United States Treasury bonds, readily convertible to cash.

(5) Surety bonds executed on a form approved by the Commission and issued only by a surety company chartered or authorized to do business in the State of Texas. The appointing instrument must be properly notarized and physically attached to the bond.

(c) Forfeiture.

(1) If a licensed authorized organization or [,] accounting unit[, or unit manager] pays less than the total amount of prize fee due, the Commission shall notify the licensed authorized organization or [,] accounting unit [, or unit manager] of the delinquency via the "Texas Notice of Fee Due and Jeopardy Determination" for the quarter in which the liability exists.

(2) If the licensed authorized organization or [,] accounting unit[, or unit manager] does not make the required payment by the date stated in the notice provided under subsection (c)(1), the Commission will demand the bond or other security or any part of the bond or other security from the holder of the bond or other security necessary to pay the amount of prize fee due.

(3) The Commission will notify the licensed authorized organization or [,] accounting unit [, or unit manager] and demand that a new or additional bond or other security for the specified amount be furnished within 20 days of the date of such notice. Failure to comply with the requirements of the notice within the 20 day period will result in the denial of an application for renewal or revocation of the license.

(d) Release of Bond or Other Security. The Commission will release a bond or other security upon the relinquishment or revocation of the license for which the security was furnished, provided that the Commission determines that no prize fee, penalty, or interest remains due and payable. The Commission will notify the former licensee in writing that the security has been released. If an accounting unit maintains one bond or other security for its member organizations, and one or more of the unit member's licenses are relinquished or revoked, then the Commission will notify the accounting unit in writing that its security amount may be reduced to an amount sufficient to cover only current unit members.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 6, 2017.

TRD-201704033

Bob Biard

General Counsel

Texas Lottery Commission

Earliest possible date of adoption: November 19, 2017

For further information, please call: (512) 344-5392