Part 6.
TEXAS MOTOR VEHICLE BOARD
Chapter 111.
GENERAL DISTINGUISHING NUMBERS
16 TAC §111.2, §111.18
The Texas Motor Vehicle Board adopts amendments to §111.2,
General Distinguishing Numbers, Definitions, and new §111.18, Proof of
Valid License Required of Foreign Motor Vehicle Dealers, as published in the
November 9, 2001 issue of the
Texas Register
(26 TexReg 8975). Section 111.18 is adopted with changes. Section 111.2 is
adopted without changes and will not be republished.
The amendments and new section require Texas licensees to require proof
of licensure from persons claiming to hold a license in a foreign jurisdiction,
to identify and keep copies of certain license records pertaining to Mexican
motor vehicle dealers with whom they do business, and to affix a "For Export
Only" stamp with the selling dealer's General Distinguishing Number on the
title of every vehicle sold to a foreign motor vehicle dealer.
A significant number of vehicles in Texas are sold to persons claiming
to be foreign licensed dealers and who represent that the vehicles are purchased
for export when the vehicles are actually not taken out of the country, but
are "curbstoned" or sold in unlicensed and unregulated lots near the border
with Mexico. These lots compete unfairly with licensed and regulated dealers,
who must make a significant investment in facilities and inventory. Additionally,
consumers have no recourse against such dealers, who do not meet license requirements
such as maintaining a security bond or a permanent place of business. These
rules are designed to reduce or eliminate the supply of vehicles to unlicensed
dealers by requiring Texas licensees to obtain proof that the international
dealer is, in fact, licensed in his or her home nation. They will also assist
local law enforcement by reducing the number of curbstoners in the border
communities.
Additionally, the rules support the efforts of other nations to require
licensing of their dealer bodies. By restricting access to a steady supply
of American vehicles to those who have obtained licenses from their governments
to sell vehicles, Texas will provide a strong incentive for would-be dealers
to meet the requirements for licensing.
The rules specifically require certain documents from dealers claiming
to be licensed by the Republic of Mexico. The Board supports Mexico's requirements
by requiring Texas dealers to maintain copies of appropriate documents and
to verify that the Mexican dealer's license is active and in good standing.
The Board's position is based on the special relationship that exists between
Texas and the Republic of Mexico. Texas and Mexico share a long border, where
both sides have developed a highly integrated economy. Texas supports the
Republic of Mexico in its efforts to limit the trade in motor vehicles to
licensed dealers, and to that end the Motor Vehicle Board proposes specific
requirements concerning Mexican motor vehicle dealers. The more general requirements
are intended for all non-United States dealers.
Proponents of the proposal commented that adoption will increase tax revenues
and help eliminate curbstoning. Reduction of curbstoning will help eliminate
unfair competition by curbstoners, who have no overhead costs, against small
businesses in the border communities and help protect consumers against gypsy
salespersons who do not transfer titles and cannot be located after the sale.
The proposed rule will also greatly reduce unlicensed sales of motor vehicles.
Commenters stated that the requirement of stamping titles would reduce illegal
sales within the United States and in Mexico because only a licensed dealer
would be able to sell the vehicles without titling them in the dealer's name.
A consumer would be alerted by the title stamp that the vehicle was sold for
export only. An auto auction commented that they were already following the
proposed procedures, and did not find them burdensome.
Small businessmen stated that they are losing money to curbstoners, and
noted that there are 120 legitimate businessmen in Brownsville and 1,000 curbstoners
who do not pay taxes, have overhead or the expense of permanent facilities.
Opponents argued that the rule would be overly costly and burdensome for
dealers, without achieving the purpose of reducing curbstoning. Commenters
stated that the burden of requiring dealers to verify the license status from
all foreign dealers would outweigh the benefit of a minor reduction in unlicensed
sales. Additionally, it was asserted that the rule gave no guidance on how
dealers would verify foreign licenses from countries other than Mexico. One
commenter suggested it would not be difficult to wash the title in another
state, thereby defeating the purpose of the rule. Another argued that the
proposal would not accomplish its purpose, but create another layer of bureaucracy
and opportunity for innocent mistakes.
Comments in favor of §111.18 were received from Rene O. Oliveira,
Chairman of the House Ways and Means Committee, and the Tax Assessor-Collectors
of Cameron, El Paso, Hidalgo and Webb Counties, the Cameron County Commissioners
Court, the Brownsville Used Car Dealer Association, the El Paso Independent
Automobile Dealers' Association, the San Antonio Auto Auction, and independent
businessmen.
Comments in opposition to the proposal were received from the Texas Automobile
Dealers Association, the Texas Independent Automobile Dealers Association,
the Texas Wholesale Auto Auction Association, and Copart Salvage Auto Auction.
The Board agreed with comments that §111.18(c)(2), requiring auctions
and dealers to telephonically confirm a buyer's license status with the Mexican
licensing authorities, would be impractical and overly burdensome, and deleted
that section. The Board further agreed that the wording of proposed §111.18(c)(4)
was incorrect and should be changed to correctly identify the "Texas Motor
Vehicle Sales Tax Exemption Certificate For Vehicles Taken Out of State" instead
of "Texas Motor Vehicle Sales Tax Resale Certificate". The Board disagreed
that the burden of requiring dealers to otherwise verify the license status
of all foreign dealers would outweigh the benefit of a minor reduction in
unlicensed sales. It believes that there are ways to verify dealer licenses
through international dealer associations, and that the greater good that
will be achieved through adoption of the rule cannot be overlooked.
The amendments and new rule are adopted under the Texas Motor
Vehicle Commission Code, §§3.01, 3.03, and 3.06, which provides
the Board with authority to amend and adopt rules as necessary and convenient
to effectuate the provisions of the Motor Vehicle Commission Code and Transportation
Code.
Texas Transportation Code Sections 503.021, 503.036, and 503.038 are affected
by the proposed amendments and new rule.
§111.18Proof of valid license required of foreign motor vehicle dealers.
(a)
All holders of General Distinguishing Numbers must verify
that a foreign motor vehicle dealer holds a valid license from the foreign
dealer's country of origin before permitting the foreign motor vehicle dealer
to purchase vehicles.
(b)
All auctions or dealers who sell a vehicle to a foreign
motor vehicle dealer shall stamp in black ink on the back of the title in
all unused dealer reassignment spaces the words "For Export Only" and their
General Distinguishing Number. The stamp shall also be placed on the front
of the title in a manner that does not obscure any names, dates, or mileage
statements. The stamp must be at least two inches wide, and all words must
be clearly legible.
(c)
Where the purchaser is a Mexican motor vehicle dealer or
the agent of a Mexican motor vehicle dealer the following documents must be
obtained prior to the sale and maintained in the sales file for each vehicle:
(1)
A copy of the Republic of Mexico license issued by the
Secretaria de Economia to the Mexican Motor Vehicle Dealer;
(2)
A copy of identification documents issued by the Republic
of Mexico indicating that the person claiming to be a Mexican dealer is, in
fact, a resident of Mexico. Such documents include but are not limited to
Mexican driver's licenses, voter registration documents, or official identification
cards, if the card contains a picture of the person and lists a physical address;
(3)
A completed Texas Motor Vehicle Sales Tax Exemption Certificate
For Vehicles Taken Out of State for each vehicle sold to a Mexican dealer,
indicating that the vehicle has been purchased for export to the Republic
of Mexico; and
(4)
A copy of the front and back of the title to the vehicle,
showing the "For Export Only" stamp and the General Distinguishing Number
of the auction or dealer;
(5)
In the case of agents of Mexican motor vehicle dealers,
the file must contain copies of the listed documents for the dealer and documentation
supporting the person's claim to be acting as an agent for an Mexican motor
vehicle dealer.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on February 15, 2002.
TRD-200200980
Brett Bray
Director
Texas Motor Vehicle Board
Effective date: March 7, 2002
Proposal publication date: November 9, 2001
For further information, please call: (512) 416-4899
Chapter 401.
ADMINISTRATION OF THE STATE LOTTERY ACT
Subchapter D. LOTTERY GAME RULES
16 TAC §401.305, §401.312
The Texas Lottery Commission adopts amendments to 16 TAC §401.305
and §401.312 relating to the Lotto Texas and Texas Two Step on-line game
rules with changes to the proposed text as published in the December 21, 2001
issue of the
Texas Register
(26TexReg10465).
The change is in response to comment received that the language regarding
the direct prize category contribution for the Lotto Texas first prize (jackpot)
does not set a minimum amount. Specifically, the change clarifies the Commission's
intent to pay no less than 68.24% of the prize pool in the direct prize category
for the Lotto Texas first prize.
The amendments provide for the payment of the greater of the advertised
jackpot amount or the jackpot amount based on sales determined in part by
the applicable interest rate factor; and, definitions of "advertised jackpot",
"annual payment option", and "jackpot amount". The amendments also delete
language that provides that no prize amount shall be less than $5.00. While
the 3 of 6 prize pays a guaranteed $5.00, it is statistically possible, albeit
a remote possibility, that the 4 of 6 prize category could pay less than $5.00
because of the pari-mutuel nature of that prize category. Therefore, the Commission
deletes the language in the rule. The amendments, in part, also eliminate
redundant, confusing, or obsolete language and update the rules to current
agency practice. Additionally, the Commission received a comment prior to
undergoing this rulemaking in which the commenter suggested the Commission
reconsider the wording "cash value option" and instead use the phrase "net
present cash value" in the "Lotto Texas" rule. The Commission agrees with
the commenter and adopts new language as a definition for "net present cash
value option". With regard to Texas Two Step, the amendments also allow players
to claim prizes up to $999,999 at claims centers, clarify what numbers selected
by the player must match the numbers drawn to win a prize, and more accurately
describe how the advertised jackpot is determined.
The amendments make the rules consistent with existing law and clarify
current agency practices and procedures relating to the game rules. Additional
amendments to the "Lotto Texas" and "Texas Two Step" rules relating to the
advertised jackpot make clear that the Commission will pay the advertised
jackpot amount or, in the case of "Lotto Texas", the net present cash value
of the advertised jackpot amount, depending on the payment option and consistent
with the provisions of the rule. The amendments also define the phrase "advertised
jackpot" to mean the jackpot amount the Commission establishes for each drawing
and the amount the Commission authorizes its vendors to publicize. The amendments
also include a definition of "annual payment option" so players will have
a better understanding of the meaning of this term at the time the player
is making his/her purchase.
The Commission believes that Lotto Texas rule amendment relating to paying
the greater of the advertised jackpot amount or the jackpot amount based on
sales determined in part by the applicable interest rate factor benefits the
players and makes clear to the players as to what the Commission will pay
in connection with the First Prize.
Government Code §2001.039, and the General Appropriations Act, Article
IX, §9-10.13, 76th Legislature (1999), requires each state agency to
review and consider for readoption each rule adopted by that agency pursuant
to the Government Code, Chapter 2001 (Administrative Procedures Act). 16 TAC
Chapter 401 has been reviewed in its entirety and the Commission determined
that reasons for adopting certain sections continue to exist. The certain
sections that have been readopted pursuant to Commission Order No. 00-0004,
dated January 28, 2000, are set out in Exhibit "A" to the Order. The notice
of the proposed rule review was published in the November 12, 1999 issue of
the
Texas Register
, (24 TexReg 10149). No
comments were received regarding the agency's rule review of Chapter 401.
This rulemaking relating to the "Lotto Texas" On-Line Game rule is consistent
with and, in part, the result of the agency's rule review.
Written comments were received. The Commission conducted a hearing to receive
comment on the proposed amendments. The hearing was properly noticed for January
9, 2002 at 9:00 a.m. at the Commission auditorium, 611 E. Sixth Street, Austin,
Texas. No persons attended the hearing and no comment was received at the
hearing. Many of the commenters made the same comments since the comments
were submitted in a "form" format. These commenters are in opposition to:
"winning less than $5 for matching 4 of 6 numbers playing Lotto Texas", "the
rule not stating specifically how much a 6 of 6 winner will win", "the use
of the word "may" instead of "shall" when referring to the percentage due
a 6 of 6 winner", "the Commission paying the amount it advertises and not
guaranteeing a minimum percentage of sales that the 6 of 6 winner will receive",
"the 6 of 6 prize amount not being pari-mutuel", "the Commission allocating
such a high percentage of sales to the 3 of 6 prize category since it's never
been needed to pay the prize", "players not receiving a minimum of 55% of
sales when the rule state that players shall receive 55%", and the change
to Texas Two Step that changes the direct prize category contribution of 45.56%
of the prize pool for the drawing from mandatory to discretionary.
Other comments submitted by a commenter are E-mail messages to that commenter.
The following is a summary of those comments and Commission response. The
Commission should pay "more smaller payoffs rather than several million to
one winner because a person would rather have better odds of winning $100,000
than zilch". The Commission disagrees with this comment because the Lotto
Texas game is designed to have one jackpot. Other Commission games offer better
odds of winning a prize, in a manner as the commenter suggests. Another commenter
suggests that when a product is not selling, the price should be reduced.
The commenter indicates that if the Commission removed the four balls, the
odds would have improved and prizes would have increased by at least 40%.
This commenter would like to share smaller prizes more often. The Commission
disagrees with the comment because adding the four balls to the game produced
the desired result, higher jackpots and increased sales.
One commenter suggests that the language regarding the direct prize category
for the Lotto Texas jackpot amount should be based on a minimum of 68.24%
of the prize pool and the language should be specific. The Commission agrees
with the comment and has revised the language to clarify that the direct prize
category for the Lotto Texas jackpot amount shall be no less than 68.24% of
the prize pool. The commenter also objects to the deletion of the language
indicating that no Lotto Texas prize shall be less than $5.00 and indicates
that there should never be even a remote possibility that a Lotto Texas prize
could be less than $5.00. The Commission disagrees with the comment because
while the 3 of 6 prize pays a guaranteed $5.00, it is statistically possible,
albeit a remote possibility, that the 4 of 6 prize category could pay less
than $5.00 because of the pari-mutuel nature of that prize category. The commenter
also believes the language regarding the Lotto Texas jackpot prize should
not reference that the jackpot amount based on sales is determined in part
by the applicable interest rate factor because the interest rate factor has
no bearing on the amount allocated from sales. The Commission disagrees with
the comment because the applicable interest rate factor is one of the factors
used to determine the jackpot amount. The commenter also believes that the
players are not receiving a minimum of 55% of Lotto Texas sales because money
is withheld from the amount allocated to the players. The commenter refers
to the prize reserve fund, the allocation of money to pay 3 of 6 prizes, and
to the reversion of unclaimed prizes to the State after the prize claim period
has expired. The Commission disagrees with the comment because the rule sets
out a prize reserve fund and the amount to be allocated to the fund based
on the difference between the prizes won and the direct prize category contribution
for the 3 of 6 category. Likewise, should there be more 3 of 6 prizes than
what is allocated, the contribution would come from the fund. The prize reserve
fund is functioning as it was designed, in part, to pay 3 of 6 prizes. Additionally,
unclaimed prizes have never been a part of the prize reserve fund and have
not been used to supplement on-line games. The commenter believes that deleting
language from the prize reserve fund provision of the Lotto Texas game rule
is intended to allow the Commission to place excess funds from the 6 of 6
prize monies into the fund. The Commission disagrees with the comment because
there will be no excess funds from the 6 of 6 prize category. The purpose
of deleting the language from the prize reserve provision is have the fund
function consistent with the rule changes. For example, if the advertised
jackpot amount is greater than the jackpot amount based on sales, the monies
in the fund will supplement the 6 of 6 prize. The commenter also believes
that the Texas Two Step jackpot direct prize category provision language should
be mandatory and not discretionary. The Commission disagrees with the comment
because the Texas Two Step jackpot is an advertised jackpot. The Commission
pays the amount advertised, not the amount based on sales. The jackpot prize
category contribution must have the flexibility to pay above or below the
percentage of the prize pool for the drawing in order to pay the advertised
amount. The commenter also suggests that the Commission underestimated the
January 1, 2002 Texas Two Step jackpot because the commenter believes sales
are down and the Commission needed the extra money to help offset the "starting
$200,000 jackpot". The commenter believes that the Commission needed the money
because the prize pool for the draw only had $187,000 in the pool to pay the
winner. The Commission is not intentionally underestimating the jackpot amount.
The Texas Two Step game was designed to pay the advertised amount. The Commission
tries to be as accurate as possible when estimating the jackpot amount and
the Commission has procedures it follows to estimate the jackpot as accurately
as possible.
One commenter wants the Commission to pay the "actual amount" of the Lotto
Texas jackpot, not the advertised amount. The Commission disagrees with the
comment because the jackpot amount to be paid will be the greater of the advertised
jackpot amount or the amount based on sales. Therefore, the player will always
be benefited by the rule change. The commenter suggests the games be "proper
pari-mutual games". The commenter also wants the unclaimed prizes to roll
into the prize reserve fund. The commenter wants the number of games played
to change to eliminate some of the competition for dollars. The commenter
believes the Commission doesn't listen to the players and that has caused
a lack of faith in the lottery. The commenter wants the Commission to make
staff changes. The Commission disagrees with the comment that all games should
be pari-mutuel. Each game is designed to respond to different player interests.
Not all players want pari-mutuel games. The Commission must respond to its
market. Further, prior to introducing a new game, the Commission researches
game ideas and designs and tests ideas and designs through player research.
The number of games played is also introduced to player groups. Once the Commission
gathers and analyzes its research results, it introduces the games, including
the frequency of a game in a period of time. The Commission listens to its
players and responds to market demands constantly.
One group or association, The Lotto Report, is opposed to the rule amendments.
The amendments are adopted under Government Code, Section 466.015
which authorizes the Commission to adopt all rules necessary to administer
the State Lottery Act and to adopt rules governing the establishment and operation
of the lottery, and under Government Code, Section 467.102 which authorizes
the Commission to adopt rules for the enforcement and administration of the
laws under the Commission's jurisdiction.
The amendments, repeal, and new rules affect Government Code, Chapter 466.
§401.305."Lotto Texas" On-Line Game Rule.
(a)
Lotto Texas. A Texas Lottery on-line game to be known as
"Lotto Texas" 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 section and §401.304 of this title (relating to On-Line
Game Rules (General)), this section shall have precedence.
(b)
Definitions. In addition to the definitions provided in §401.301of
this title (relating to General Definitions), and unless the context in this
section otherwise requires, the following definitions apply.
(1)
Advertised jackpot-The jackpot amount the commission establishes
for each Lotto Texas drawing and authorizes commission vendors to publicize.
The advertised jackpot or share of the advertised jackpot is the amount the
commission may pay as the annual payment option in 25 annual payments consistent
with the provisions of this rule. The advertised jackpot is determined by
the indirect prize category and by estimating the direct prize category and
may be increased prior to the draw by the commission based on sales projections.
(2)
Annual payment option-The option selected if the player
elects at the time the player purchases a ticket or if the player makes no
election at the time the player purchases the ticket. The option is to be
paid the jackpot amount in 25 annual payments, in the event the player has
a valid winning jackpot ticket and consistent with the provisions of the rule.
(3)
Jackpot amount-The greater of either the advertised jackpot
or the jackpot based on sales determined in part by the applicable interest
rate factor. The amount actually paid will either be a winner's share of the
net present cash value of the jackpot amount or a winner's share of the jackpot
amount, depending on the payment option and consistent with the provisions
of the rule.
(4)
Net Present Cash value option--An election a player makes
at the time the player purchases a ticket to be paid the net present cash
value of the player's share of the jackpot amount, in the event the player
has a valid winning jackpot ticket. The net present cash value is the cost
that the Comptroller of Public Accounts informs the commission is the cost
to purchase a 25-year annuity on the first business day after the drawing.
The term "net present cash value option" is synonymous with the terms "cash
value option", "cash option", and "net present value".
(5)
Number--Any play integer from one through 54 inclusive.
(6)
Play--The six numbers selected on each play board and printed
on the ticket.
(7)
Play board--A field of the 54 numbers found on the playslip.
(8)
Playslip--An optically readable card issued by the commission
used by players of Lotto Texas to select plays. There shall be five play boards
on each playslip identified at 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)
Price of ticket. The price of each Lotto Texas play shall
be $1.00. A player may purchase up to five plays on one ticket. Multiple draws
are available for up to 10 consecutive draws beginning with the current draw.
(d)
Play for Lotto Texas.
(1)
Type of play. A Lotto Texas player must select six numbers
in each play or allow number selection by a random number generator operated
by the computer, referred to as Quick Pick. A winning play is achieved only
when three, four, five, or six of the numbers selected by the player match,
in any order, the six winning numbers drawn by the lottery.
(2)
Method of play. The player may use playslips to make number
selections. The on-line terminal will read the playslip and issue ticket(s)
with corresponding plays. If a playslip is not available or if a player is
unable to complete a playslip, the on-line retailer may enter the selected
numbers via the keyboard. However, the retailer shall not accept telephone
or mail-in requests to manually enter selected numbers. A player may leave
all play selections to a random number generator operated by the computer,
commonly referred to as Quick Pick.
(3)
One prize per play. The holder of a winning ticket may
win only one prize per play in connection with the winning numbers drawn and
shall be entitled only to the highest prize category won by those numbers.
(e)
Prizes for Lotto Texas.
(1)
Prize amounts. The prize amounts, for each drawing, paid
to each Lotto Texas player who selects a matching combination of numbers will
vary due to a pari-mutuel calculation, with the exception of the fourth prize,
which is a guaranteed $5.00. The calculation of a prize shall be rounded down
so that prizes can be paid in multiples of whole dollars. Each prize category
breakage, with the exception of the fourth prize breakage, will carry forward
to the next drawing for each respective prize category. The fourth prize category
breakage will be placed in the reserve fund. The pari-mutuel prize amounts,
except the jackpot prize amount, are based on the total amount in the prize
category for that Lotto Texas drawing distributed equally over the number
of matching combinations in each prize category. The jackpot amount will be
the greater of either the advertised jackpot or the jackpot based on sales
determined in part by the applicable interest rate factor. The amount actually
paid will either be a winner's share of the net present cash value of the
jackpot amount or a winner's share of the jackpot amount, depending on the
payment option and consistent with the provisions of the rule.
Figure: 16 TAC §401.305(e)(1)
(2)
Prize pool. The prize pool for Lotto Texas prizes shall
be a minimum of 55% of Lotto Texas sales.
(3)
Prize categories.
(A)
First prize (jackpot).
(i)
In the event of a prize winner who does not select the
net present cash value option, the prize winner's share of the jackpot amount
shall be paid in 25 installments. To determine the annuitized future value
of each share (prize amount), the annuitized future value of the jackpot amount
is divided by the shares. A share is the matching combination, in one play,
of all six numbers drawn by the commission (in any order). Each share will
be paid in 25 installments. The initial payment shall be paid only upon completion
of all internal validation procedures. The subsequent 24 payments shall be
paid annually by monies generated by the purchase of securities which shall
be purchased through the Comptroller of Public Accounts-Treasury Operations,
State of Texas, after each drawing for which lottery records reflect the sale
of one or more winning Lotto Texas six of six plays, and the value of the
24 installments shall be determined by the face or market value of said securities
at purchase. Annual installment payments shall be based on the annual maturity
value of the securities purchased. The payment of annual annuities will be
made on the 15th day of the anniversary of the month in which the ticket won.
If the net present cash value of each share is equal to or greater than the
amount required to pay an initial first-year cash installment and 24 subsequent
annuitized annual installments yielding total payments greater than $2 million,
each share shall be paid in 25 installments in the same manner as described
in this paragraph. If the net present cash value of each share is less than
the amount required to pay an initial first-year cash installment and 24 subsequent
installments yielding total payments of $2 million or less, each share shall
be paid the net present cash value of each share in one payment.
(ii)
In the event of a prize winner who selects the net present
cash value option, the prize winner's share will be paid in a single, lump
sum payment based on the discounted, net present cash value of the prize winner's
share of the jackpot amount on the next business day after the drawing. The
player must make the election of the net present cash value option at the
time of purchasing a Lotto Texas ticket. If the player does not make any election
at the time of purchasing a Lotto Texas ticket, the share will be paid in
accordance with clause (i) of this subparagraph.
(iii)
The six of six jackpot prize must be claimed at the Austin
claim center. The jackpot amount is determined by the indirect prize category
and by estimating the direct prize category. The total prize category contribution
for a drawing will include the following.
(I)
The direct prize category contribution shall be no less
than 68.24% of the prize pool for the drawing.
(II)
The indirect prize category contribution, which may be
increased by the executive director, will include the roll-over from the previous
drawing, if any.
(III)
The commission will pay the greater of either the advertised
jackpot or the jackpot based on sales determined in part by the applicable
interest rate factor. The amount actually paid will either be a winner's share
of the net present cash value of the jackpot amount or a winner's share of
the jackpot amount, depending on the payment option and consistent with the
provisions of the rule.
(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 five of the six numbers
drawn by the commission (in any order). The total prize category contribution
will include the following.
(i)
The direct prize category contribution shall be 5.07% of
the prize pool for the drawing.
(ii)
The indirect prize category contribution, which may be
increased by the executive director, will include the breakage and/or roll-over
from the previous drawing, if any.
(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 four of the six numbers
drawn by the commission (in any order). The total prize category contribution
will include the following.
(i)
The direct prize category contribution shall be 12.51%
of the prize pool for the drawing.
(ii)
The indirect prize category contribution, which may be
increased by the executive director, will include the breakage and/or roll-over
from the previous drawing, if any.
(D)
Fourth prize. The prize amount is a guaranteed minimum
$5.00. The difference between the prizes won and the direct prize category
contribution will increase or decrease the prize reserve fund. The total prize
category contribution will include the direct prize category contribution
of 12.18% of the prize pool for the drawing.
(4)
Prize reserve fund.
(A)
The Lotto Texas prize reserve is 2.0% of the prize pool.
(B)
The Lotto Texas prize reserve fund may be increased or
decreased by paying Lotto Texas prizes. The Lotto Texas prize reserve fund
may be used only for the Lotto Texas game.
(f)
Ticket purchases.
(1)
Lotto Texas tickets may be purchased only at a licensed
location from a lottery retailer authorized by the lottery director to sell
on-line tickets.
(2)
Lotto Texas tickets shall show the player's selection of
numbers or Quick Pick (QP) numbers, boards played, drawing date, jackpot payment
option, and validation and reference numbers.
(3)
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. A ticket is a bearer instrument until signed.
(4)
Except as provided in subsection (d)(2) of this section,
Lotto Texas tickets must be purchased using official Lotto Texas playslips.
Playslips which have been mechanically completed are not valid. Lotto Texas
tickets must be printed on official Texas lottery paper stock and purchased
at a licensed location through an authorized Texas lottery retailer's on-line
terminal.
(g)
Drawings.
(1)
The Lotto Texas drawings shall be held each week on Wednesday
and Saturday evenings at 9:59 p.m. Central Time except that the drawing schedule
may be changed by the executive director, if necessary.
(2)
Lotto Texas tickets will not be sold during the draw break
for the Lotto Texas game on Wednesday and Saturday nights.
(3)
The drawings will be conducted by lottery officials.
(4)
Each drawing shall determine, at random, six winning numbers
in accordance with Lotto Texas drawing procedures. Any numbers drawn are not
declared winning numbers until the drawing is certified by the commission
in accordance with the drawing procedures. The winning numbers shall be used
in determining all Lotto Texas winners for that drawing.
(5)
Each drawing shall be witnessed by an independent certified
public accountant. All drawing equipment used shall be examined by at least
one commission security representative, the drawing supervisor, and the independent
certified public accountant immediately prior to a drawing and immediately
after the drawing.
(6)
A drawing will not be invalidated based on the financial
liability of the commission.
(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(s).
§401.312. "Texas Two Step" On-line Game.
(a)
Texas Two Step. A commission on-line game to be known as
"Texas Two Step" 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 section and §401.304 of this title (relating to On-Line
Game Rules (General)), this section shall have precedence.
(b)
Definitions. In addition to the definitions provided in §401.301,
and unless the context in this section otherwise requires, the following definitions
apply.
(1)
Advertised jackpot--The jackpot amount the commission establishes
for each Texas Two Step drawing and authorizes commission vendors to publicize.
(2)
Number--Any play integer from 1 through 35 inclusive.
(3)
Play--The five numbers selected on each play board and
printed on the ticket. Four numbers are selected from the first field of 35
numbers and one number is selected from the second field of 35 numbers.
(4)
Play board--Two fields of 35 numbers each found on the
playslip.
(5)
Playslip--An optically readable card issued by the commission
used by players of Texas Two Step to select plays. There shall be five play
boards on each playslip identified at 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)
Price of ticket. The price of each Texas Two Step play
shall be $1.00. A player may purchase up to five plays on one ticket. Multiple
draws are available for up to 10 consecutive draws beginning with the current
draw.
(d)
Play for Texas Two Step.
(1)
Type of play. A Texas Two Step player must select four
numbers from the first field of numbers from 1 through 35 and an additional
one number from the second field of numbers from 1 through 35 in each play
or allow number selection by a random number generator operated by the computer,
referred to as Quick Pick. A winning play is achieved only when three or four
numbers selected from the first field of 35 numbers match, in any order, the
four numbers drawn from the first field of 35 numbers in addition to matching
either zero or one number drawn from the second field of 35 numbers or when
zero, one or two numbers selected from the first field of 35 numbers match,
in any order, the four numbers drawn from the first field of 35 numbers in
addition to matching the one number drawn from the second field of 35 numbers.
(2)
Method of play. The player may use playslips to make number
selections. The on-line terminal will read the playslip and issue ticket(s)
with corresponding plays. If a playslip is not available or if a player is
unable to complete a playslip, the on-line retailer may enter the selected
numbers via the keyboard. However, the retailer shall not accept telephone
or mail-in requests to manually enter selected numbers. A player may leave
all play selections to a random number generator operated by the computer,
commonly referred to as Quick Pick.
(3)
One prize per play. The holder of a winning ticket may
win only one prize per play in connection with the winning number drawn and
shall be entitled only to the highest prize category won by those numbers.
(e)
Prizes for Texas Two Step.
(1)
Prize amounts. The prize amounts, for each drawing, paid
to each Texas Two Step player who selects a matching combination of numbers
will vary due to a pari-mutuel calculation, with the exception of the sixth
and seventh prize, which are guaranteed prizes of $7.00 and $5.00, respectively.
The calculation of pari-mutuel prize categories 2 through 5 shall be rounded
down so those prizes can be paid in multiples of whole dollars. Each prize
category breakage will carry forward to the next drawing for each respective
prize category. The prize amounts, except the First prize (jackpot), are based
on the total amount in the prize category for that Texas Two Step drawing
distributed equally over the number of matching combinations in each prize
category.
Figure: 16 TAC 401.312 (e)(1)
(2)
Prize pool. The prize pool for Texas Two Step prizes shall
be a minimum of 50% of Texas Two Step sales.
(3)
Prize categories.
(A)
First prize (jackpot) - The prize winner's share of the
first prize or advertised jackpot is won by matching all four numbers drawn
(in any order) from the first field of 35 numbers in addition to matching
the number drawn from the second field of 35 numbers. The jackpot share (prize
amount) shall be calculated by dividing the advertised jackpot by the number
of shares for the prize category. Each first prize or jackpot share will be
paid in one lump sum payment. The first prize or jackpot share of $600 to
$999,999 must be claimed at a commission claim center. First prize or jackpot
share of $1,000,000 or larger must be claimed at the commission headquarters
in Austin. The advertised jackpot is determined by the indirect prize category
and by estimating the direct prize category. The total prize category contribution
for a drawing will include the following.
(i)
The direct prize category contribution may be 45.56% of
the prize pool for the drawing.
(ii)
The indirect prize category contribution, which may be
increased by the executive director, will include the roll-over from the previous
drawing, if any.
(iii)
The commission will pay the advertised jackpot amount
for Texas Two Step. If the direct and indirect prize category contributions
are greater than the advertised jackpot amount, the difference will be added
to the Texas Two Step prize reserve fund and will be used for future Texas
Two Step jackpot prizes. If the direct and indirect prize category contributions
are less than the advertised jackpot amount, the difference will be taken
from the Texas Two Step prize reserve fund to fund the advertised jackpot
amount.
(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 all four numbers drawn
(in any order) from the first field of 35 numbers in addition to matching
zero numbers from the second field of 35 numbers drawn by the commission.
The total prize category contribution will include the following.
(i)
The direct prize category contribution shall be 5.57% of
the prize pool for the drawing.
(ii)
The indirect prize category contribution, which may be
increased by the executive director, will include the breakage from the previous
drawing, if any.
(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 three of four numbers
drawn (in any order) from the first field of 35 numbers in addition to matching
the number from the second field of 35 numbers drawn by the commission. The
total prize category contribution will include the following.
(i)
The direct prize category contribution shall be 0.68% of
the prize pool for the drawing.
(ii)
The indirect prize category contribution, which may be
increased by the executive director, will include the breakage from the previous
drawing, if any.
(D)
Fourth 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 three of four numbers
drawn (in any order) from the first field of 35 numbers in addition to matching
zero numbers from the second field of 35 numbers drawn by the commission.
The total prize category contribution will include the following.
(i)
The direct prize category contribution shall be 9.20% of
the prize pool for the drawing.
(ii)
The indirect prize category contribution, which may be
increased by the executive director, will include the breakage from the previous
drawing, if any.
(E)
Fifth 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 two of four numbers drawn
(in any order) from the first field of 35 numbers in addition to matching
the number from the second field of 35 numbers drawn by the commission. The
total prize category contribution will include the following.
(i)
The direct prize category contribution shall be 6.09% of
the prize pool for the drawing.
(ii)
The indirect prize category contribution, which may be
increased by the executive director, will include the breakage from the previous
drawing, if any.
(F)
Sixth prize. The prize amount is a guaranteed minimum $7.00.
The difference between the prizes won and the direct prize contribution will
increase or decrease the prize reserve fund. The total prize category contribution
will include the direct prize category contribution of 13.73% of the prize
pool for the drawing.
(G)
Seventh prize. The prize amount is a guaranteed minimum
$5.00. The difference between the prizes won and the direct prize contribution
will increase or decrease the prize reserve fund. The total prize category
contribution will include the direct prize category contribution of 17.17%
of the prize pool for the drawing.
(4)
Prize reserve fund.
(A)
The Texas Two Step prize reserve fund is 2.0% of the prize
pool.
(B)
The Texas Two Step prize reserve fund may be increased
or decreased by the difference between the first prize category's (advertised
jackpot), sixth and seventh prize category prizes that are actually won and
the respective prize category's share of the prize pool. The Texas Two Step
prize reserve fund may be used only for the Texas Two Step game.
(f)
Ticket purchases.
(1)
Texas Two Step tickets may be purchased only at a licensed
location from a commission retailer authorized by the lottery director to
sell on-line tickets.
(2)
Texas Two Step tickets shall show the player's selection
of numbers or Quick Pick (QP) numbers, boards played, drawing date(s) and
validation and reference numbers.
(3)
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. A ticket is a bearer instrument until signed.
(4)
Except as provided in subsection (d)(2) of this section,
Texas Two Step tickets must be purchased using official Texas Two Step playslips.
Playslips which have been mechanically completed are not valid. Texas Two
Step tickets must be printed on official Texas Lottery paper stock and purchased
at a licensed location through an authorized commission retailer's on-line
terminal.
(g)
Drawings.
(1)
The Texas Two Step drawings shall be held each week on
Tuesday and Friday evenings at 9:59 p.m. Central Time except that the drawing
schedule may be changed by the executive director, if necessary.
(2)
Texas Two Step tickets will not be sold during the draw
break for the Texas Two Step game on Tuesday and Friday evenings.
(3)
The drawings will be conducted by commission officials.
(4)
Each drawing shall determine, at random, five winning numbers
in accordance with Texas Two Step drawing procedures. Any numbers drawn are
not declared winning numbers until the drawing is certified by the commission
in accordance with the drawing procedures. The winning numbers shall be used
in determining all Texas Two Step winners for that drawing.
(5)
Each drawing shall be witnessed by an independent certified
public accountant. All drawing equipment used shall be examined by at least
one commission security representative, the drawing supervisor, and the independent
certified public accountant immediately prior to a drawing and immediately
after the drawing.
(6)
A drawing will not be invalidated based on the financial
liability of the commission.
(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(s).
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 14, 2002.
TRD-200200926
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Effective date: March 6, 2002
Proposal publication date: December 21, 2001
For further information, please call: (512) 344-5113
16 TAC §402.580
The Texas Lottery Commission adopts new rule 16 TAC §402.580,
relating to the filing of bingo reports with changes to the proposed text
as published in the November 23, 2001, issue of the
Texas Register
(26 TexReg 9491). The change adds language to §§402.580(c)(2)
and (d)(2) and is in response to comment received. Specifically, the change
eliminates ambiguity.
The new section sets out the different reports that must be filed with
the Charitable Bingo Operations Division, when the reports must be filed,
what information must be included in the reports, and under what circumstances
an extension of time to file a report may be granted. The new section sets
out the requirements of the filing of bingo reports so that licensees will
be informed of the Charitable Bingo Operations Division's process and procedures
in connection with the filing of bingo reports.
The agency received comments from the Bingo Interest Group and the charities
that conduct bingo at River City Bingo on the proposed rule. The charities
that conduct bingo at River City Bingo submitted one letter but co-signed
by representatives of the following organizations: The Arc of the Capital
Area, Texas Hillel Foundation, Family Eldercare, Inc., North Austin Foundation,
and Project Normalization. While the charities conducting bingo at River City
Bingo indicated that they believe the goal of the rule is worthy, they are
in opposition to the proposed rule as proposed. The commenters suggested that
the provisions of proposed §§402.580(c)(2) and (d)(2) represented
a burden and increased cost of operations for the organizations conducting
Charitable Bingo. However, none of the commenters submitted examples of those
costs. They did suggest that the language of the rule would require that each
individual officer and director of an organization receive a copy of the quarterly
report. One commentor suggested that the copy of the report would have to
be mailed to each officer or director. One commenter suggested that board
members are fiduciaries and have a right of access to all information regarding
the finances of the charitable organization and, additionally, the quarterly
reports are public records. The commenter believes that each board member
ought to be able to obtain whatever information they need to do the jobs for
which they are responsible. The commenter suggested, as an alternative, that
the Commission restate the responsibility of directors for the operations
of the organization, that directors are charged with the knowledge of the
organization's finances and reports, and that a director shall be promptly
provided with the quarterly report upon the director's request.
The Commission disagrees with the comment that the requirements of §§402.580(c)(2)
and (d)(2) are burdensome. The commenters did not provide specific examples
showing how these provisions would be burdensome. Absent specific examples
of the increase of cost anticipated by the commenters, the Charitable Bingo
Operations Division conducted a cost benefit analysis. Generally, organizations
conducting Charitable Bingo have an average of seven officers and/or directors.
Assuming a copy cost of $.08 per copy, first class postage of $.34 and four
quarterly reports a year, the average cost would be: 7 x $.08 (per copy) +7
x $.34 (postage) x 4 (quarters) = $11.76
The Commission disagrees with the commentors who state that $11.76 per
year represents a burden or increased cost of operations for organizations
conducting Charitable Bingo when the smallest class of operations represents
gross receipts of up to $25,000 per year.
An additional reason the Commission disagrees with the commenters is because
there are alternative methods for complying with this provision than those
suggested by the commenters. However, since the commenters interpret this
provision as requiring that each officer and director must receive their own
copy of the report, the Commission has revised the language to eliminate ambiguity.
The revision is consistent with the commenter who suggests that the responsibility
for obtaining information about the organization's finances and reports rests
with the officers and directors.
The Bingo Interest Group commented on §402.580(d)(1) recommending
there be a period for public comment regarding a form change and a complete
explanation of the need for any information requested that does not respond
directly to a statutory requirement. The Commission disagrees with the commentor
that there should be a period for public comment for a form revision. The
"Texas Bingo Lessor's Quarterly Report" has not been revised since it was
first implemented in September 1991 due to a statutory requirement. The Division,
through the Charitable Bingo website and the Bingo Bulletin, make licensees
aware of any changes made to forms as a result of the implementation of new
statutory and rule requirements.
The new section is adopted under the Government Code, §467.102
and the Occupations Code, §2001.054 which provide the Commission with
the authority to adopt rules for the enforcement and administration of the
laws under the Commission's jurisdiction.
The new section implements Occupations Code, Chapter 2001.
§402.580.Bingo Reports.
(a)
On or before the 15th of the month prior to the end of
the calendar quarter, the commission will mail the "Texas Bingo Conductor's
Quarterly Reports", "Texas Lessor Quarterly Reports", and "Manufacturer/Distributor
Quarterly Reports and Supplements" to its licensees.
(b)
Quarterly reports and payments due to be submitted on a
date occurring on a Saturday, Sunday, or legal holiday will be due the next
business day. The report will be deemed filed when deposited with the United
States Postal Service or private mail service, postage or delivery charges
paid and the postmark or shipping date indicated on the envelope is the date
of filing.
(c)
Quarterly Report for information relating to the conduct
of bingo games.
(1)
An authorized organization holding an annual license, temporary
license, or a temporary authorization to conduct bingo must file on a form
prescribed by the commission or in an electronic format prescribed by the
commission a quarterly report for financial and statistical information relating
to the conduct of bingo games. The report must be filed with the commission
on or before the 15th day of the month following the end of the calendar quarter
even if there were no games conducted during that quarter.
(2)
The report must be filed under oath attesting to the information
being true and correct. Each officer and director is responsible for knowing
the contents of the report. The person signing the report must promptly provide
a copy of the report to such officer and director upon his/her request.
(d)
Quarterly report for information relating to the lease
of bingo premises.
(1)
A commercial lessor holding a license to lease bingo premises
must file on a form prescribed by the commission or in an electronic format
prescribed by the commission a quarterly report stating the rental income
received. The report must be filed with the commission on or before the 15th
day of the month following the end of the calendar quarter regardless of whether
income was received.
(2)
The report must be filed under oath attesting to the information
being true and correct. Each officer and director is responsible for knowing
the contents of the report. The person signing the report must promptly provide
a copy of the report to such officer and director upon his/her request.
(e)
Quarterly report for information relating to a manufacturer
or distributor license.
(1)
A manufacturer or distributor shall file a report on a
form prescribed by the commission or in an electronic format prescribed by
the commission, reflecting each sale or lease of bingo equipment, and to the
total sales of cards, sheets, pads and instant bingo to a person or organization
in this state or for use in this state.
(2)
The report shall be filed with regard to each calendar
quarter and is due on or before the last day of the month following the end
of the quarter. The report is due to the commission regardless of whether
sales or lease of bingo equipment occurred during the quarter.
(3)
The report must be filed under oath attesting to the information
being true and correct.
(f)
A manufacturer or distributor shall use the eleven digit
taxpayer numbers on file with the commission when submitting information relating
to the sale or lease of bingo equipment, sales of cards, sheets, pads and
instant bingo. If six or more taxpayer numbers are incorrect on the report,
the commission will return the report to the manufacturer or distributor for
correction. If five or less taxpayer numbers are incorrect, the commission
will notify the licensee in writing of the taxpayer numbers that were changed
and the correct numbers to be used in the future.
(g)
Quarterly report for information relating to a system service
provider license.
(1)
A system service provider shall file a report on a form
prescribed by the commission or in an electronic format prescribed by the
commission, reflecting each sale or lease of an automated bingo system to
a person or organization in this state or for use in this state.
(2)
The report shall be filed with regard to each calendar
quarter and is due on or before the last day of the month following the end
of the quarter. The report is due to the commission regardless of whether
a sale or lease of an automated bingo system occurred during the quarter.
(3)
The report must be filed under oath attesting to the information
being true and correct.
(h)
A system service provider shall use the eleven digit taxpayer
numbers on file with the commission when submitting information relating to
the sale or lease of an automated bingo system. If six or more taxpayer numbers
are incorrect on the report, the commission will return the report to the
system provider for correction. If five or less taxpayer numbers are incorrect,
the commission will notify the licensee in writing of the taxpayer numbers
that were changed and the correct numbers to be used in the future.
(i)
Failure to receive forms. The failure of a licensee to
receive forms from the commission does not relieve the licensee from the requirement
of filing reports and remitting prize fees or taxes as applicable on a timely
basis.
(j)
If a licensee fails to file a quarterly report as required
by Occupations Code, Section 2001.504, the Charitable Bingo Division will
mail to the licensee a letter stating the quarterly report has not been filed.
The applicable penalty and/or interest is due on the amount of prize fee or
rental tax that was not filed timely. The licensee must file a report with
the commission even if no games were conducted or no rental tax collected.
(k)
Incorrect calculation of "Texas Bingo Conductor's Quarterly
Report". If the total receipts and total expenses do not total correctly,
the commission will mail the conductor a letter, with a copy of the adjusted
report, stating an adjustment has been made to the quarterly report. If the
adjusted quarterly report is correct, the licensee will maintain the copy
in its file and no further action is required. If the licensee does not agree
with the adjusted quarterly report, an amended quarterly report reflecting
the correct data must be submitted to the commission by the licensee.
(l)
The commission will deny a renewal application for a license
to conduct bingo or a license to lease bingo premises or revoke a license
to conduct bingo or a license to lease bingo premises if the licensee has
failed to pay timely the prize fee or rental tax due three times within a
12-month period.
(m)
Extensions
(1)
Filing extension because of natural disaster.
(A)
The Director will grant to a licensee who has been identified
as a victim of a natural disaster an extension of not more than 90 days to
file a quarterly report or pay rental tax or prize fees provided the licensee
has filed a timely request for an extension. In determining the natural disaster
victims, the commission shall recognize the counties that have been identified
by the Comptroller of Public Accounts.
(B)
The person owing the quarterly report, rental tax or prize
fees must file a written request for an extension at any time before the expiration
of five working days after the original due date in order to obtain an extension.
(C)
If an extension under this paragraph is granted, interest
on the unpaid rental tax or prize fee does not begin to accrue until the day
after the day on which the extension expires, and rental tax, prize fees,
and penalties are assessed and determined as though the last day of the extension
were the original due date.
(2)
Filing extension for reasons other than natural disaster.
(A)
The Director may grant an extension of not more than 30
days for the filing of a quarterly report. Before a request for extension
may be granted, a written request setting out the reasons or grounds for an
extension and 90% of the prize fees or rental tax estimated to be due must
be received by the commission postmarked on or before the due date of the
quarterly report.
(B)
The granting of a request is within the discretion of the
Director and the licensee will be notified in five working days of the request
of the decision of the Director.
(C)
If the request is denied, there will be no penalty assessed
if the return is filed and remaining prize fee or rental tax is paid not later
than ten days from the date of the denial of the request of the extension.
(3)
A request postmarked after the due date for the filing
of a request will not be considered.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on February 13, 2002.
TRD-200200906
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Effective date: March 5, 2002
Proposal publication date: November 23, 2001
For further information, please call: (512) 344-5113
Part 9.
TEXAS LOTTERY COMMISSION
Chapter 402.
BINGO REGULATION AND TAX