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TEXAS GAMBLING LAW AND

ELECTRONIC SWEEPSTAKES

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⍟  Sweepstakes are legal in Texas.

⍟  Gambling is illegal in Texas.

⍟  When properly operated, sweepstakes are not gambling.

⍟  Tejas Vending distributes software and equipment for lawful electronic sweepstakes games.

⍟  The software distributed by Tejas Vending has been designed by a major national gaming software company that employs experts in software, gaming and gambling laws.

⍟  The electronic sweepstakes games provided by the software and equipment Tejas Vending uses has been thoroughly analyzed and certified as legal.

⍟  If the legality of any electronic sweepstakes games provided by Tejas Vending is challenged by law enforcement authorities, Tejas Vending will provide expert testimony to demonstrate the legality of its sweepstakes.

WHAT’S LEGAL?

Electronic Sweepstakes are Legal in Texas

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THE

KEY IS PROPER OPERATION

Tejas Vending does not allow anything that violates the law.

All sweepstakes games operated by Tejas Vending offer the ability to play for free.

The Sponsor (i.e., the business offering the sweepstakes games to participants) must publicize that the sweepstakes games can be played without having to pay for it.

The KEY to being legal is running a clean sweepstakes game that complies with the law.

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SWEEPSTAKES SOFTWARE

Every participant automatically receives 100 free entries every day they log-in to play the sweepstakes, whether they want it or not.

The sweepstakes rules also provide for unlimited free entries upon request, so long as the participants follow the rules for making those requests.

As a result, the donations made by participants are purely voluntary.

The sweepstakes software that Tejas Vending distributes has built-in features allowing free play.

TEJAS VENDING SOFTWARE

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FREE PLAY OPPORTUNITIES

Sponsors are required to post the sweepstakes rules where they are readily visible to participants.

The sweepstakes rules start by pointing out that no donation is necessary to play the sweepstakes.

Free Play Opportunities are not a secret, they are a feature of the sweepstakes games.

Additionally, the sweepstakes game terminals are set up to display the sweepstakes rules, including the availability of free play just a few screen clicks away.

TEJAS VENDING SOFTWARE

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What is Gambling? Chapter 47 of the Texas Penal Code deals with Gambling.

§ 47.02

(1)

PENAL CODE Penal Code § 47.02 provides that gambling is a misdemeanor criminal offense if a person:

makes a bet on the partial or final result of a game or contest or on the performance of a participant in a game or contest;

(2) makes a bet on the result of any political nomination, appointment, or election or on the degree of success of any nominee, appointee, or candidate; or

(3) plays and bets for money or other thing of value at any game played with cards, dice, balls, or any other gambling device.

So what is a “bet”?

THE LAW

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Other definitions related to Gambling Chapter 47 of the Texas Penal Code deals with Gambling.

§ 47.01 (1)

PENAL CODE Penal Code § 47.01(1) defines a “Bet” as an agreement to win or lose something of value solely or partially by chance.

§ 47.01 (3)

PENAL CODE Penal Code § 47.01(3) defines a “Gambling Place" as a place used for, among other things, “the making or settling of bets, bookmaking, or the conducting of a lottery or the playing of gambling devices.”

§ 47.01 (4)

PENAL CODE Penal Code § 47.01(4) defines a “Gambling Device" as “any electronic, electromechanical, or mechanical contrivance…that for a consideration affords the player an opportunity to obtain anything of value, the award of which is determined solely or partially by chance, even though accompanied by some skill, whether or not the prize is automatically paid by the contrivance.”

THE LAW

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Related Gambling Offenses Chapter 47 of the Texas Penal Code deals with Gambling.

§ 47.03

PENAL CODE

Promote gambling (Penal Code § 47.03);

§ 47.04

PENAL CODE

Keep a gambling place (Penal Code § 47.04);

§ 47.05

PENAL CODE

Communicate gambling information (Penal Code § 47.05); and

Various sections of Chapter 47 of the Penal Code make it a criminal offense to do the following:

§ 47.06

PENAL CODE

Possess a gambling device, equipment or paraphernalia (Penal Code § 47.06).

THE LAW

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CONSIDERATION REQUIRED

Consideration is required for an electronic game terminal to be a gambling device.

“Consideration” means:

•  a payment or benefit that one makes to another, or •  a debt or detriment that one incurs. •  It also includes a promise to do either.

§ 47

PENAL CODE

Under Chapter 47 of the Penal Code, if an electronic game terminal does not require consideration, it is not a gambling device.

THE REQUIREMENTS

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FREE PLAY MEANS NO CONSIDERATION

Because participants can play the sweepstakes for free, there is no consideration required.

Because there is no consideration required, the electronic sweepstakes terminals and software that Tejas Vending uses are not gambling devices.

QUESTION: When is the last time you could play a slot machine at a casino in Las Vegas free of charge, for as long as you wanted, with the same odds of winning as someone who is paying to play?

ANSWER: NEVER!

That is the difference between sweepstakes and gambling.

THE REQUIREMENTS

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RANDOM CHANCE

Chance means that the outcome is “random,” or beyond the capability of the participant or the device to determine in advance.

A random outcome can occur at any time, irrespective of previous outcomes. For example, if winning a specific hand of cards or a particular spin of slot-machine wheels means that the participant’s subsequent hands of cards or subsequent spins of slot-machine wheels are less likely to win, then the outcome is not random.

§ 47

PENAL CODE

Another requirement for gambling, under Penal Code § 47.01(1), is the element of chance.

THE REQUIREMENTS

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FINITE, PRE-DETERMINED ENTRIES

The electronic sweepstakes terminals and software that Tejas Vending uses have a finite set of entries that are pre-determined.

Because the sweepstakes is not random:

The sweepstakes entries are not bets, and

The sweepstakes games are not gambling.

Participants have the ability to instantly reveal whether any or all of their sweepstakes entries are winners. The game theme is simply an entertaining way to reveal the pre-determined outcome.

The outcome and order of each entry is set in advance, and cannot be changed.

This means the sweepstakes is not random.

TEJAS VENDING SOFTWARE

Because there is no consideration required, and the game themes are not games of chance... The electronic sweepstakes terminals and software that Tejas Vending uses are the opposite of gambling.

THE BOTTOM LINE

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Alcohol-Serving Establishments Additionally, establishments that serve alcoholic beverages and are licensed and regulated by the Texas Alcoholic Beverage Commission (TABC) can take solace from the fact that TABC rules allow sweepstakes at retail premises.

§ 108.061 TEXAS ALCOHOLIC BEVERAGE CODE

Texas Alcoholic Beverage Code § 108.061 provides: SWEEPSTAKES PROMOTIONS AUTHORIZED. Notwithstanding the prohibition against prizes given to a consumer in Section 108.06 and subject to the rules of the commission, a manufacturer or nonresident manufacturer may offer a prize to a consumer if the offer is a part of a promotional sweepstakes activity. A purchase or entry fee may not be required of any person to enter in a sweepstakes authorized under this section. A person affiliated with the alcoholic beverage industry may not receive a prize from a sweepstakes promotion.

§ 102.07 (e) TEXAS ALCOHOLIC BEVERAGE CODE

Texas Alcoholic Beverage Code § 102.07 (e) provides:

A permittee . . . may conduct a sweepstakes promotion. A purchase or entry fee may not be required of any person to enter a sweepstakes event authorized under this subsection. A person affiliated with the alcoholic beverage industry may not receive a prize from a sweepstakes promotion.

Title 16, Part 3, Chapter 45, Subchapter D

TEXAS ADMINISTRATIVE CODE Title 16, Part 3, Chapter 45, Subchapter D of the Texas Administrative Code provides at § 45.106(l):

Any sweepstakes promotion that includes prizes that are to be awarded on the basis of some knowledge or skill demonstrated by the sweepstakes participant may not be held or conducted on the licensed premises of a retailer or private club. Sweepstakes sponsors may, with the retailer's permission, place sweepstakes entry forms on retail premises.

THE LAW

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TABC’S RULES

Following TABC rules means the sweepstakes are legal.

Tejas Vending operates at all times within TABC’s rules, and requires its Sponsors to do likewise.

It ensures smooth operations and above-board business operations.

QUESTION: If asked whether the sweepstakes are gambling,

ANSWER: Not just “No,” it’s “HELL, NO!”

THE REQUIREMENTS

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SOFTWARE AGREEMENT

Of course, to ensure that the sweepstakes remains lawful, it is of the utmost importance that it be operated as intended at all times.

SPONSOR shall post, at all times, the rules for the sweepstakes (as they may be amended . . . from time to time) not more than five (5) feet from the nearest sweepstakes computer terminal unit in a manner that is readily visible to participants seated at the sweepstakes terminal units. Such rules shall begin with a headline, in type that is larger than other text in the document, bold-face, italics, all-capitals and/or underlined for emphasis, stating "No Donation Required to Play."

The Software Distributorship Agreement that must be signed by all businesses using Tejas Vending’s electronic sweepstakes terminals and software provides:

TEJAS VENDING SOFTWARE

SOFTWARE DISTRIBUTION AGREEMENT C.

SPONSOR shall adhere, and shall require its employees, staff, agents, contractors and customers to adhere, at all times, to the rules for the sweepstakes (as they may be amended . . . from time to time). SPONSOR and its agents and employees shall refrain from operating the sweepstakes software and/or equipment, and/or its business operations, in a way that deviates from such rules and/or violates state and/or municipal law and/or administrative regulations, including specifically, anti-gambling laws. Operating the sweepstakes computer terminals and/or any related systems or equipment, including software, as a gambling device is conclusively a per se breach of this Agreement, irrespective of notice and/or intent.

D.

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SPONSORS’ RESPONSIBILITIES

As a result, Sponsors must train their staff to:

Post the sweepstakes rules properly, and

The electronic sweepstakes terminals and software provide a participant who plays for free the same odds of winning

as a participant who makes a donation.

Treat free participants no differently than participants who make donations.

TEJAS VENDING SOFTWARE

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CHARITABLE DONATIONS

Each dollar donated entitles a participant to 1,000 sweepstakes entries.

Because playing the sweepstakes is fun, participants enjoy the ease with which they can acquire entries by making donations.

The purpose of the electronic sweepstakes is to promote donations to charitable causes.

The donations are collected by the Sponsor and split, as follows: •  A fixed percentage goes to the Sponsor for rent of the space used for the

electronic sweepstakes terminals, counters, chairs, cabling, power supplies, monitors, computer equipment, peripherals, point-of-sale (POS) cash register system(s) and/or kiosk(s);

•  A fixed percentage goes to the Software owner as a copyright license fee; •  A minimum of 5% goes to a charity or charities of the Sponsor’s choosing; •  A portion pays for prizes redeemed by participants; and •  The remainder goes to Tejas Vending.

THE REQUIREMENTS

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BY FAR, THE FAVORITE CHARITY

The entertainment provided by the sweepstakes benefits America’s veterans and their families.

This makes participants feel good about playing the sweepstakes and making donations.

The charities benefit from passive revenues, which fund their programs at no cost other than the premises, electricity and internet connection used for the sweepstakes equipment.

For some VFW and American Legion posts, electronic sweepstakes provide the largest revenue line item on their yearly profit-and-loss statement.

By far, the favorite charities for donations collected in connection with the electronic sweepstakes terminals and software that Tejas Vending uses are veterans groups

such as Veterans of Foreign Wars (VFW) and the American Legion.

TEJAS VENDING SOFTWARE

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ARE YOU READY?

Are you ready to start making money using equipment you

don’t have to pay for?

Are you ready to turn a small portion of your premises from fallow to profit with

minimal effort?

Are you ready to improve your standing in the

community by making your business a leading charitable donor, while increasing your

profitability?

If so, then you are ready to join Tejas Vending as an electronic sweepstakes Sponsor.

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info@tejasvending.com

Thank you for considering Tejas Vending for your next business innovation.

Texas Vending LP P.O. Box 1628 Round Rock, Texas 78680

TEL: (512) 436-0747 info@tejasvending.com

You can reach us by contacting our Sales division, as follows: