H.B. No. 3980 establishes a new regulatory framework for fantasy contests in Texas by adding Chapter 2053 to the Occupations Code. This chapter defines key terms related to fantasy contests, clarifies that they do not constitute gambling under Texas law, and outlines the Texas Lottery Commission's responsibilities in regulating these contests. The bill requires fantasy contest operators to obtain a license from the commission, which includes submitting criminal history information and fingerprints. It also mandates that each set of fingerprints must be accompanied by a signed authorization for the release of information from the Department of Public Safety and the Federal Bureau of Investigation. Operators who have undergone a national criminal history check within the past year are exempt from resubmitting, provided they submit the results and affirm no changes in their criminal history.

The bill sets an initial license fee structure based on the operator's adjusted gross fantasy contest receipts, with a minimum fee of $5,000 for new operators. It outlines the process for license issuance and renewal, including independent audits and compliance reports, and establishes provisions for participant eligibility and tax obligations. The Texas Lottery Commission is empowered to investigate violations and enforce compliance, with penalties not exceeding $5,000. Additionally, the bill amends Section 411.108(a-1) of the Government Code to expand the commission's authority to obtain criminal history information for individuals licensed under Chapter 2001 and those applying under Chapter 2053. The commission must adopt necessary rules by February 1, 2026, and fantasy contest operators will not be required to pay the associated tax until July 1, 2026. The bill is set to take effect on September 1, 2025.

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