By: Hupp H.B. No. 76
A BILL TO BE ENTITLED
AN ACT
Relating to the financing of public schools and reduction of school
property taxes through the restricted establishment and operation
of video lottery terminals at Texas racetracks licensed to conduct
pari-mutuel wagering.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1
LIMITED AUTHORIZATION OF VIDEO LOTTERY TERMINALS
SECTION 1.01. Section 466.002, Government Code, is amended
by amending subsection (6) and adding subsection (11) to read as
follows:
(6) "Lottery game" includes a lottery activity
including lottery activity conducted through video lottery
terminals or machines.
(11) "Video Lottery Central System" means the system
of procedures and facilities operated and controlled by the Lottery
Commission that is designed to link together all video lottery
terminals operated in the State, determines the outcome of all
video lottery games, and allows the Lottery Commission to
continuously monitor the activity of each video lottery terminal
and to disable any video lottery terminal in the State.
SECTION 1.02. Section 466.024, Government Code, is amended
to read as follows:
Sec. 466.024. PROHIBITED GAMES. . . .
(b) The Lottery Commission shall adopt rules prohibiting
the operation of any game using a video lottery machine or machine
in any area of the State, except on the premises of horse and
greyhound racetracks licensed by the Texas Racing Commission to
conduct pari-mutuel wagering under the Texas Racing Act (Article
179e, Vernon's Texas Civil Statutes).
(c) * * *
(2) "Video lottery machineterminal" or "machine"
means any electronic video game machine that, upon insertion of
cash, is available to play or simulate the play of a video game,
including video poker, keno, and blackjack, using a video display
and microprocessors in which the player may receive free games or
credits that can be redeemed for cash, coins, or tokens, or that
directly dispenses cash, coins, or tokens.
SECTION 1.03. Chapter 466 of the Government Code is amended
by adding Subchapter K to read as follows:
SUBCHAPTER K: REQUIREMENTS FOR VIDEO LOTTERY
Sec. 466.501. STATE VIDEO LOTTERY CENTRAL SYSTEM. (a) The
Lottery Commission shall establish a State Video Lottery Central
System for the operation of video lottery terminals at horse and
greyhound racetracks licensed by the Texas Racing Commission to
conduct pari-mutuel wagering under the Texas Racing Act (Article
179e, Vernon's Texas Civil Statutes).
(b) The Lottery Commission may contract with a video lottery
central system provider to establish the Video Lottery Central
System as long as the provider has not owned any interest in a
racetrack or held a pari-mutuel license, or video retailer's
license within the preceding five years.
Sec. 466.502. STATE VIDEO LOTTERY ACCOUNT. (a) The Lottery
Commission shall establish a state video lottery account in the
general revenue fund for receipt of all funds received under this
subchapter from the operation of video lottery terminals. Except
as otherwise provided by this subchapter, money in the fund may be
used solely to fund state governmental programs and the
administration of the video lottery system. The Lottery Commission
shall also establish a video lottery purse fund for money
distributed to purses under subsection 466.503(a).
(b) A percent of net terminal income, not to exceed one
percent, of the net terminal income received by the State under
Section 466.590 shall be determined through the budgetary process
and shall be allocated to the Lottery Commission and to the Texas
Racing Commission to defray expenses incurred in administering this
chapter related to video lottery, including expenses incurred to
operate the video lottery central system.
Sec. 466.503. ALLOCATION OF NET TERMINAL INCOME; TRANSFER
OF MONEY. (a) Net terminal income derived from the operation of
video lottery games in the State shall be allocated as follows:
(1) Net terminal income generated from the operation
of video lottery terminals at a video lottery terminal
establishment shall be distributed 40 percent to the State of
Texas, 50 percent to the establishment and 10 percent to the video
lottery purse fund;
(2) Net terminal income generated from the operation
of video lottery terminals on Indian Lands under a gaming agreement
authorized under this subchapter shall be distributed in the amount
set forth in the gaming agreements;
(3) As a means of ensuring expected revenues to the
State from this program, if, after the first full legislative
biennium following the initial operation of video lottery
terminals, the amount of funds distributed to the State under
subsection (a)(1) is less than $1 billion annually, the future
terminal income generated from the operation of video lottery
terminals at a video lottery terminal establishment shall be
distributed at the percentage increase required to generate $1
billion annual revenue to the State of Texas, and the percent
distributions to the establishment and to the video lottery purse
fund shall be reduced (maintaining the original ratio of the
distribution). The percentage distributions shall revert to those
set in subsection (a)(1) of this section after the earlier of five
years after the beginning operation of video lottery terminals or
the time in which the total distribution to the State is $1 billion
annually.
(b) One-quarter of one percent of the net terminal income
received by the State under Subsection (a) shall be allocated to a
compulsive gambling program to be established by the Lottery
Commission.
(c) One-quarter of one percent of the net terminal income
received by the State under Subsection (a) shall be transferred to
the Equine Research Program at the College of Veterinary Medicine
at Texas A&M University for use in equine research under Subchapter
F, Chapter 88, Education Code, and greyhound research.
(d) One-quarter of one percent of the net terminal income
received by the State under Subsection (a) shall be allocated to
both:
(1) the municipality in which the video lottery
terminal establishment is located; and
(2) the county in which the video lottery terminal
establishment is located.
(e) If a video lottery terminal establishment is located in
an unincorporated area, one-quarter of one percent of the net
terminal income received by the State under Subsection (a) shall be
allocated to the county in which the establishment is located and
one-quarter of one percent shall be allocated to any other county
within 20 miles of the facility. If no other county meets this
standard one-half of one percent shall be allocated to the county in
which the establishment is located.
Sec. 466.504. VIDEO LOTTERY RETAILERS
The Lottery Commission shall issue a video lottery retailer's
license to an applicant who meets the eligibility criteria
established by the Lottery Commission.
(a) An applicant for a video lottery retailer's license must
hold a valid racing license granted under the Texas Racing Act
(Article 179e, Vernon's Texas Civil Statutes) and operate a
racetrack in compliance with that Act.
(b) The application fees for a video lottery retailer's
license are as follows:
(1) $500,000 for an applicant applying to operate
video lottery terminals at a Class 1 racetrack, with an annual
renewal fee of $50,000.
(2) $200,000 for an applicant applying to operate
video lottery terminals at a Class 2 or greyhound racetracks, with
an annual renewal fee of $25,000.
(3) $100,000 for an applicant applying to operate
video lottery terminals at a Class 3 racetrack, with an annual
renewal fee of $12,500.
(c) As part of the application, the Lottery Commission shall
determine the minimum number of video lottery terminals that the
licenseholder must have in operation within the first two years of
the date the license is granted. The number of video lottery
terminals approved for each facility shall meet or exceed these
minimums:
(1) 5000 video lottery terminals for a Class 1
racetrack operating in a county with a population of not less than
4.0 million, and 3000 video lottery terminals for a Class 1
racetrack operating in a county of not less than 1.3 million, or in
a county adjacent to a county with such a population;
(2) 2,000 video lottery terminals for a greyhound
racetrack operating in a county with a population of not less than
2.2 million, or in a county adjacent to a county with such a
population, and 1200 video lottery terminals for all other
greyhound racetracks and Class 2 racetracks; and
(3) 500 video lottery terminals for a Class 3
racetrack.
(d) The Lottery Commission shall approve minimum standards
for the facilities used for video lottery terminals. As a condition
of its license, the video lottery retailer is responsible for
construction of the facilities necessary to operate the minimum
number of video lottery terminals required for that facility under
the standards approved by the Lottery Commission.
(e) If a video lottery retailer does not meet the minimum
number of video lottery terminals required in the license, the
video lottery retailer shall make monthly payments to be
distributed to the State in an amount equal to the average monthly
income to the State per machine times the number of video lottery
terminals below the minimum level for that facility. If no machines
are operating, the video lottery retailer shall pay $400 per day
times the minimum number of machines required for that facility.
(f) If no machines are operating within one year of the
granting of a video retailer's license, the commission shall revoke
the license.
(g) A video lottery retailer's license is not transferable.
A potential purchaser of a video lottery retailer's facility must
submit an application for a license to the Lottery Commission and
must pay the application fees set out in subparagraph (c).
ARTICLE 2
ASSIGNMENT OF FUNDS FOR THE DEVELOPMENT OF TEXAS RACEHORSES,
GREYHOUNDS, AND RELATED AGRICULTURE
SECTION 2.01. Vernon's Civil Statutes 179e, section 1.03 is
amended by adding subsection (79) as follows:
(79) Video lottery retailer - a pari-mutuel license
holder for premises where video lottery terminals are operated
pursuant to Government Code Chapter 466, Subchapter K.
SECTION 2.02. Vernon's Civil Statutes 179e, is amended by
adding Section 6.095 to read as follows:
Sec. 6.095. SPECIAL ALLOCATION TO PURSES FROM THE VIDEO
LOTTERY PURSE FUND. (a) A pari-mutuel license holder that owns or
operates a racetrack at which video lottery terminals are operated
under Subchapter K, Chapter 466, Government Code, and the
officially recognized state breed registry representing the breed
conducting live racing at the license holder's racetrack shall
allocate the revenue distributed to the video lottery purse fund
under Government Code Section 466.503(a) for purses at that
racetrack as provided by this section.
(1) If the total purse revenue available from
pari-mutuel wagering and the video lottery purse fund is
insufficient to make purses nationally competitive within the first
five years at a racetrack at which video lottery games are
conducted, the pari-mutuel license holder and the officially
recognized state breed registry representing the breed conducting
live racing at the license holder's racetrack shall enter into a
written agreement to allocate a percentage of the share of the video
lottery proceeds received by the racetrack under Section 466.503
(a), Government Code, to make purses at the racetrack nationally
competitive and to specify the time period for which the percentage
is in effect. If the racetrack is a horse racetrack:
(A) the officially recognized horsemen's
organization must also be a party to the agreement; and
(B) the agreement must provide for the allocation
of the purse amounts by horse breed.
(2) If an agreement cannot be reached under Subsection
(1), any party that would be a necessary party to the agreement may
submit the matter to the Texas Racing Commission 60 days after
failure to reach an agreement for determination of the matter in
accordance with a procedure established by Texas Racing Commission
rule.
(3) The Texas Racing Commission in a determination
under Subsection (2) may not establish a time period for which the
percentage is to be in effect that is less than two years.
(4) The officially recognized state breed registry may
use a portion, not to exceed 10 percent, of the amount allocated for
purses under this section for administration, Accredited
Texas-bred awards, enhancement and promotion of championship
Texas-bred race days and Texas-sired stakes programs, and marketing
and promotion of the Accredited Texas-bred Incentive Program.
(A) From the share of video lottery purse revenue
directed to each officially recognized breed registry, no less than
one-quarter of one percent must be allocated to breed retirement
and adoption programs in the State; and
(B) From the share of video lottery purse revenue
directed to each officially recognized breed registry, no less than
one-quarter of one percent shall be allocated to the state and
national promotion and advertising of other horse and breed
activities upon application and submission of advertising,
promotion and marketing plans from a recognized state equine
organization or activity in the State of Texas to one or more of the
officially recognized state breed registries;
(5) The officially recognized horsemen's organization
may use a portion, not to exceed one percent, of the amount
allocated for purses under this section for administration, health
and dental care for stable area workers, establishment of a
retirement program for stable area workers and other programs as
approved by the Texas Racing Commission.
(6) The Texas Racing Commission shall adopt rules to
administer this section.
(7) A matter considered by the Texas Racing Commission
under this section is a contested case requiring a public hearing
under Chapter 2001, Government Code.
SECTION 2.03. Vernon's Civil Statutes 179e, is amended by
adding Section 6.096 to read as follows:
Sec. 6.096. DISTRIBUTIONS FROM VIDEO LOTTERY RETAILER
ESTABLISHMENT REVENUE RECEIPTS FOR TEXAS TRACK IMPROVEMENT FUND AND
JOCKEY INJURY COMPENSATION FUND. (a) For video lottery retailer
license holders of Class 1 pari-mutuel racetrack licenses, an
amount not less than one percent of net terminal income per year
over the initial five-year period, beginning on the first
anniversary of the date the first video lottery machine is placed in
operation at the establishment, and an amount not less than
one-half of one percent of net terminal income per year for five
years thereafter shall be deposited by each licensee into a
segregated account known as the Texas Track Improvement Fund and
used for improvement of public and backstretch facilities and
maintenance of the stable or kennel area and related buildings and
structures, including community education, assistance and
recreation centers, at the racetrack at which the licensee
operates.
(b) For video lottery retailer license holders of Class 2
pari-mutuel racetrack licenses and greyhound racetrack license
holders, an amount not less than one percent of net terminal income
per year over the initial five-year period, beginning on the first
anniversary of the date the first video lottery machine is placed in
operation at the establishment, and an amount not less than
one-half of one percent of net terminal income per year for five
years thereafter shall be deposited by each licensee into a
segregated account known as the Texas Track Improvement Fund and
used for improvement of public and backstretch facilities and
maintenance of the stable and kennel area and related buildings and
structures, at the racetrack at which the licensee operates.
(c) For holders of Class 3 pari-mutuel racetrack licenses,
an amount not less than one percent of net terminal income per year
over the initial five-year period, beginning on the first
anniversary of the date the first video lottery machine is placed in
operation at the establishment, and an amount not less than
one-half of one percent of net terminal income per year for five
years thereafter shall be deposited by each licensee in a
segregated account known as the Texas Track Improvement Fund and
used for improvement of public and backstretch facilities and
maintenance of stable area and related buildings and structures, at
the racetrack at which the licensee operates.
(d) A holder of a pari-mutuel racetrack license that has not
previously conducted live racing and is also licensed as a video
lottery retailer shall provide evidence to the Texas Racing
Commission of expenditures in the amount of at least $20,000,000 in
the construction of a new racetrack, grandstand/clubhouse,
simulcast area, stable or kennel area and related buildings and
structures and upon satisfactory production of such evidence, the
provisions of Subsections (b), (c) and (d) shall not apply for 10
years beginning with the date of the first pari-mutuel race or the
date the first video lottery terminal is placed in operation,
whichever comes first.
(e) Each pari-mutuel racetrack license holder shall
negotiate with the officially recognized horsemen's organization
and the officially recognized breed registry and jointly consider
the amount of the funds available in the Texas Track Improvement
Fund and determine appropriate expenditures for the next calendar
year before racing dates are considered for that year.
(f) The Texas Racing Commission shall adopt rules governing
the Texas Track Improvement Fund, including procedures for
submission and approval of improvement projects, payment of
projects and resolution of disputes between respective parties.
(g) For holders of Class 1, Class 2 and Class 3 pari-mutuel
licenses that also hold a license as a video lottery retailer,
one-quarter of one percent of net terminal proceeds, not to exceed
$1,000,000 annually, accruing to the video lottery retailer shall
be placed in a segregated account to be known as the Jockey Injury
Compensation Fund to be administered by the Texas Racing
Commission.
(h) The Texas Racing Commission shall adopt rules governing
the Jockey Injury Compensation Fund, including procedures and
limits for jockey licensees to submit medical bills related to
injuries sustained in a race at a licensed Texas racetrack and
methods of payment approvals.
SECTION 2.04. Vernon's Civil Statutes 179e, is amended by
adding Section 6.097 to read as follows:
Sec. 6.097. LIVE RACING REQUIREMENT. (a) Except as
provided by Subsections (b) and (c) of this section, a person who
holds a Class 1 or Class 2 racetrack license that is a video lottery
terminal establishment under Subchapter K, Chapter 466, Government
Code, shall conduct the greater of:
(1) for each breed, not less than the number of live
racing days conducted by the racetrack for that breed in 2002 or,
(2) for quarter horses and thoroughbreds, not less
than 50 live race days or 500 live races.
(b) A person who holds a Class 1 racetrack license may
conduct fewer live racing days than required by Subsection (a) of
this section if the racetrack, the affected officially recognized
breed registry, and the officially recognized horsemen's
organization enter into a written agreement to conduct fewer races.
(c) A greyhound racetrack that is a video lottery terminal
establishment under Subchapter K, Chapter 466, Government Code,
shall offer for pari-mutuel wagering not less than 420 live
greyhound racing performances in each calendar year, unless
otherwise agreed to in writing by the racetrack and the officially
recognized greyhound breed registry. For purposes of this
subsection, "greyhound racing performance" means the consecutive
running of not fewer than 12 greyhound races.