Proposed Rules Title 16

TITLE 16. ECONOMIC REGULATION

CHAPTER 401. ADMINISTRATION OF STATE LOTTERY ACT

The Texas Lottery Commission (Commission or TLC) proposes amendments to 16 TAC §401.158 (Suspension or Revocation of License), §401.160 (Standard Penalty Chart), and §401.355 (Restricted Sales). The purpose of the proposed amendments is to promote and ensure integrity, security, honesty, and fairness in the operation and administration of the Texas Lottery by prohibiting the use of lottery ticket courier services that, by any remote means, such as telephone, Internet application, or mobile application, accept and fulfill, for a fee or compensation, orders to purchase lottery tickets on behalf of another person not present to effect an in-person sale (couriers). The TLC intends to exercise this authority through administrative enforcement proceedings to revoke the lottery ticket sales agent license of a retailer that works in concert with a courier, whether under a common ownership arrangement or otherwise.

Robert Tirloni, Lottery Operations Director, has determined that for each year of the first five years the proposed amendments will be in effect, the anticipated public benefits are the promotion of the integrity, security, honesty, and fairness of the Texas Lottery, and helping to ensure that Texas Lottery retailers will clearly understand that their license will be revoked for knowingly selling lottery tickets to, working with, or otherwise assisting couriers, which will result in enhanced protection of the public from potential crime and other harms.

Sergio Rey, Chief Financial Officer, has determined that for each year of the first five years the proposed 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 rural communities or local or state employment. Those retailers that are small- or micro-businesses whose licenses will be revoked for not abiding by these amendments will be negatively impacted. The Commission is aware of eight licensed retailers that are small businesses, as defined in the Texas Government Code §2006.001(2), that will be negatively impacted by the amendments (out of over 21,000 retailers statewide), and has determined there is no legal and feasible alternative to reduce the negative impact on these retailers and continue to achieve the purpose of the proposed amendments. The impact to small- or micro-business retailers who properly conduct business under a retailer license will vary based on the customer response to their localities. This impact is unquantifiable.

Pursuant to Texas Government Code §2001.0221, the Commission provides the following Government Growth Impact Statement for the proposed amendments. For each year of the first five years the proposed amendments will be in effect, Sergio Rey, Chief Financial Officer, has determined the following:

(1) The proposed amendments do not create or eliminate a government program.

(2) Implementation of the proposed amendments does not require the creation of new employee positions or the elimination of existing employee positions.

(3) Implementation of the proposed amendments does not require an increase or decrease in future legislative appropriations to the Commission.

(4) The proposed amendments do not require an increase or decrease in fees paid to the Commission.

(5) The proposed amendments do create new regulations.

(6) The proposed amendments expand an existing regulation.

(7) The proposed amendments do not increase or decrease the number of individuals subject to the rule's applicability.

(8) The proposed amendments do not positively or adversely affect this state's economy.

The Commission requests comments on the proposed amendments from any interested person. Comments may be submitted to Bob Biard, 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 to be considered. The Commission will also hold a public hearing to receive comments on this proposal at 10:00 a.m. on April 3, 2025, at 1801 Congress Ave., George H. W. Bush Building, 4th Floor, Board Room 4.300, Austin, Texas 78701.

SUBCHAPTER B. LICENSING OF SALES AGENTS

16 TAC §401.158, §401.160

These amendments are proposed under Texas Government Code §466.015(c)(15)(A), which authorizes the Commission to adopt rules to promote and ensure the integrity, security, honesty, and fairness of the operation and administration 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) - (26) (No change.)

(27) licensee sells tickets over the telephone or Internet, [ ~~internet,~~ ] or via mail order sales; or 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 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;

(28) - (40) (No change.)

(41) licensee fails to pay the full amount of money owed to the commission after a nonsufficient funds transfer or non-transfer of funds to the commission's account (revocation only); [ or ]

(42) licensee knowingly sells tickets to, works with, or otherwise assists a lottery ticket courier service (revocation only); or

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

(c) For purposes of this chapter, the term "lottery ticket courier service" means a service that, by any remote means, such as telephone, Internet application, or mobile application, accepts and fulfills, for a fee or compensation, orders to purchase lottery tickets on behalf of another person not present to effect an in-person sale.

§ 401.160. Standard Penalty Chart.

(a) - (g) (No change.)

(h) Standard Penalty Chart.

Figure: 16 TAC §401.160(h) (.pdf)

[ ~~Figure: 16 TAC §401.160(h)~~ ]

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 March 5, 2025.

TRD-202500797

Bob Biard

General Counsel

Texas Lottery Commission

Earliest possible date of adoption: April 20, 2025

For further information, please call: (512) 344-5392

SUBCHAPTER E. RETAILER RULES

16 TAC §401.355

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

§ 401.355. Restricted Sales.

(a) Retailers shall not sell lottery tickets via the Internet [ ~~internet~~ ] or by mail, phone, fax, or other similar method of communications. Retailers shall not sell a lottery ticket or any other document evidencing a right, privilege, or share in a lottery ticket from another jurisdiction by any means.

(b) Retailers shall not knowingly sell tickets to, work with, or otherwise assist a lottery ticket courier service.

(c) [ ~~(b)~~ ] Retailers shall not sell tickets to persons under the age of 18. Any ticket purchased by or sold to an individual under the age of 18 years shall be void and the prize otherwise payable on the ticket is treated as an unclaimed prize under Texas Government Code §466.408.

(d) [ ~~(c)~~ ] Retailers shall not sell a ticket or pay a lottery prize to another person that the retailer knows is:

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

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

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

(4) the spouse, child, brother, sister, or parent of a person described by paragraph (1), (2), or (3) of this subsection who resides within the same household as that person.

(e) [ ~~(d)~~ ] Retailers shall not sell tickets from a game after the game's closing date.