H.B. No. 3980 establishes a new regulatory framework for fantasy contests in Texas by adding Chapter 2053 to the Occupations Code. The bill defines key terms such as "fantasy contest," "fantasy contest operator," and "participant," and clarifies that these contests do not fall under the definition of gambling in Texas law. It requires individuals or entities wishing to operate fantasy contests to obtain a license from the Texas Lottery Commission, which will oversee the application process, including background checks and the submission of personal and business information. The bill also mandates that operators implement measures to prevent fraud and ensure responsible gaming practices, such as age verification and identity checks.

Additionally, the bill introduces a tiered licensing fee structure based on the operator's previous activity, with fees ranging from 8% of adjusted gross fantasy contest receipts or a flat rate of $500,000 for established operators, and $5,000 for new operators. It outlines penalties for violations, which may not exceed $5,000 per day for ongoing offenses, and considers various factors in determining penalty amounts. The bill also expands the Texas Lottery Commission's authority to obtain criminal history information for license applicants and mandates the adoption of necessary rules by February 1, 2026. Notably, fantasy contest operators will not be required to pay associated taxes until July 1, 2026, and the bill is set to take effect on September 1, 2025.

Statutes affected:
Introduced: ()