Part 9. TEXAS LOTTERY COMMISSION
Chapter 402. CHARITABLE BINGO ADMINISTRATIVE RULES
Subchapter G. COMPLIANCE AND ENFORCEMENT
The Texas Lottery Commission (Commission) adopts new Title 16, Part 9, Chapter 402, Subchapter G, §402.709 (relating to Corrective Action), with changes to the proposed text as published in the October 5, 2007, issue of the Texas Register (32 TexReg 6964). Specifically the changes include: changing the title of the rule from "Corrective Action--Audit" to "Corrective Action"; adding the word "undisputed" to subsection (a)(1); removing the language "non-bingo" from subsection (b)(1); adding the language, "more frequent inspections and compliance audits and/or disciplinary action after notice and Commission action" to subsection (c); adding the words "and/or" at subsection (c)(2); and deleting subsection (c)(4).
The purpose of the new rule is to set out the requirements for licensed authorized organizations to follow in order to address compliance issues identified in an audit of their organization. The new rule provides a process for organizations to take corrective actions for violations noted as a result of an audit of the organization's bingo activities. Specifically, the new rule sets forth the definition of "corrective action," lists examples of corrective actions, and explains what may occur if a licensed authorized organization does not take corrective action.
A public comment hearing was held on October 16, 2007. Several members of the public were present at the hearing. Representatives of the following groups or organizations commented against portions of the new rule: State VFW and several business organizations; Charities that are Bingo Conductors; Tejas Bingo; Palace Bingo; and All Saints Bingo Unit Trust. No written comments were received during the public comment period.
Comment: Subsection (a)(1): The draft rule suggests punitive action will occur even where an organization has a good faith/reasonable dispute with the Division.
Agency Response: The Commission agrees and has clarified subsection (a)(1) by adding the word "undisputed."
Comment: Under subsection (c), the words "notice of" should be inserted at the beginning of paragraphs (1) - (3) because, literally, the Bingo Division cannot issue a license revocation.
Agency Response: The Commission agrees and for clarification has added the language "more frequent inspections and compliance audits and/or disciplinary action after notice and Commission action" to subsection (c).
Comment: In subsection (c)(3), change "and" to "or" because the word "and" is very inclusive and sounds like all of the listed disciplinary actions will be taken without deviation.
Agency Response: The Commission agrees and has clarified subsection (c) by adding the words "and/or" at subsection (c)(2). The Commission has provided further clarification by adding the language "more frequent inspections and compliance audits and/or disciplinary action after notice and Commission action" to subsection (c), and deleting subsection (c)(4).
The new rule is adopted under Occupations Code §2001.054, which authorizes the Commission to adopt rules to enforce and administer the Bingo Enabling Act, and under Government Code §467.102, which authorizes the Commission to adopt rules for the enforcement and administration of this chapter and the laws under the Commission's jurisdiction.
§402.709.Corrective Action.
(a) Definition of Corrective Action--Action(s) required by any of the following in order to resolve audit findings or violations of the Bingo Enabling Act or the Charitable Bingo Administrative Rules:
(1) an undisputed determination letter resulting from a compliance audit;
(2) an agreed order; or
(3) a decision in a contested case.
(b) Examples of corrective actions:
(1) Reimbursement of funds--Funds deposited into a bingo bank account to replenish the account for:
(A) non-permissible expenses; or
(B) bingo proceeds that were not deposited into the account.
(2) Removal of funds--Funds removed from a bingo bank account that are not proceeds from the conduct of bingo.
(3) Additional charitable distribution--Bingo funds disbursed from a bingo account to meet the minimum charitable distribution requirements.
(4) Implementation of internal controls--Controls a licensee or unit develops and implements to minimize or prevent theft or fraud related to its bingo operation.
(5) Implementation of policies and procedures--Written steps and processes a licensee or unit develops and implements to assist in the operation and control of the bingo operation.
(6) Payment of additional prize fees or rental taxes--The amount a licensee or unit must pay for any additional prize fee or rental tax due, including penalty and interest.
(c) If corrective action is not taken as required, the licensee may be subject to more frequent inspections and compliance audits and/or disciplinary action after notice and Commission action such as:
(1) license revocation;
(2) license suspension; and/or
(3) administrative penalty.
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 22, 2008.
TRD-200801072
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Effective date: March 13, 2008
Proposal publication date: October 5, 2007
For further information, please call: (512) 344-5012