85R12629 DMS-F

By: Kuempel H.B. No. 3926

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of horse racing and greyhound racing and pari-mutuel wagering in connection with that racing.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1.03, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by amending Subdivisions (2), (6), (18), (46), (50), (67), and (74) and adding Subdivisions (82), (83), and (84) to read as follows:

(2) "Association" or "racetrack association" means a person licensed under this Act to offer [conduct a horse race meeting or a greyhound race meeting with] pari-mutuel wagering on horse racing or greyhound racing.

(6) "Horse race meeting" means the conducting of live, simulcast, or purpose-driven pari-mutuel wagering on horse races on a day or during a period of consecutive or nonconsecutive days.

(18) "Pari-mutuel wagering" means the form of wagering on the outcome of greyhound or horse races [racing] in which [those who wager purchase tickets of various denominations on an animal or animals and] all wagers [for each race] are pooled and held by the racing association for distribution of the total amount, less the deductions authorized by this Act, to winning wagers [holders of tickets on the winning animals].

(46) "Multiple wagering" means wagering on two or more entries [animals] in one race or on one or more entries [animals] in more than one race. "Multiple two wagering" means wagering on two entries [animals] in one or more races. "Multiple three wagering" means wagering on three or more entries [animals] in one or more races.

(50) "Greyhound racing days" means 24-hour periods ending at 12 midnight [days] on which a permitted racetrack association may conduct [conducts] greyhound racing. ["One racing day" means a period commencing at noon and ending at 2 a.m. the next calendar day, except in the case of days on which there are matinee races.]

(67) "Racetrack facility" means a facility operated by a racetrack [an] association within its enclosure for the purpose of offering [presenting races for] pari-mutuel wagering on the outcome of greyhound or horse races.

(74) "Race" includes previously run races, whether digitally represented, simulated, or presented by video recording and a live audio and visual signal of a race.

(82) "Purpose-driven pari-mutuel wagering" means wagering on a greyhound race or horse race, whether running or harness, that:

(A) was previously conducted at a facility licensed to offer pari-mutuel wagering on the outcome of greyhound or horse races;

(B) concluded with official results; and

(C) concluded without a scratch, disqualification, or dead-heat finish.

(83) "Purpose-driven pari-mutuel pool" means the total amount of money wagered by patrons within the enclosure of a racetrack association on the results of a previously run race.

(84) "Purpose-driven pari-mutuel wagering system provider" means a person, company, or association that contracts with a racetrack association to provide the necessary systems and hardware to conduct purpose-driven pari-mutuel wagering.

SECTION 2. Section 3.02(a), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(a) The commission shall regulate and supervise every race meeting in this state involving wagering on the result of live, simulcast, or previously run greyhound or horse races [racing]. All persons and things relating to the operation of those meetings are subject to regulation and supervision by the commission. The commission shall adopt rules for conducting greyhound or horse racing in this state involving wagering and shall adopt other rules to administer this Act that are consistent with this Act. The commission shall also make rules, issue licenses, and take any other necessary action relating exclusively to horse racing or to greyhound racing.

SECTION 3. Section 3.021(a), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(a) Any provision in this Act to the contrary notwithstanding, the commission may license and regulate all aspects of greyhound racing and horse racing offered in this state, whether or not that racing involves pari-mutuel wagering.

SECTION 4. Section 3.09, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Subsection (c) to read as follows:

(c) A pari-mutuel pool may be funded with money allocated to initiate the pool or a guaranteed amount.

SECTION 5. Section 6.01, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 6.01. LICENSE REQUIRED. A person may not conduct wagering on a greyhound race or a horse race [meeting] without first obtaining a racetrack license from the commission. A person who violates this section commits an offense.

SECTION 6. Sections 6.03(a) and (b), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), are amended to read as follows:

(a) The commission shall require each applicant for an original racetrack license to pay the required application fee and to submit an application, on a form prescribed by the commission, containing the following information:

(1) if the applicant is an individual, the full name of the applicant, the applicant's date of birth, a physical description of the applicant, the applicant's current address and telephone number, and a statement by the applicant disclosing any arrest or conviction for a felony or for a misdemeanor, except a misdemeanor under Subtitle C, Title 7, Transportation Code, [the Uniform Act Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil Statutes)] or a similar misdemeanor traffic offense;

(2) if the applicant is a corporation:

(A) the state in which it is incorporated, the names and addresses of the corporation's agents for service of process in this state, the names and addresses of its officers and directors, the names and addresses of its stockholders, and, for each individual named under this subdivision, the individual's date of birth, current address and telephone number, and physical description, and a statement disclosing any arrest or conviction for a felony or for a misdemeanor, except a misdemeanor under Subtitle C, Title 7, Transportation Code, [the Uniform Act Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil Statutes)] or a similar misdemeanor traffic offense; and

(B) identification of any other beneficial owner of shares in the applicant that bear voting rights, absolute or contingent, any other person that directly or indirectly exercises any participation in the applicant, and any other ownership interest in the applicant that the applicant making its best effort is able to identify;

(3) if the applicant is an unincorporated business association:

(A) the names and addresses of each of its members and, for each individual named under this subdivision, the individual's date of birth, current address and telephone number, and physical description, and a statement disclosing any arrest or conviction for a felony or for a misdemeanor, except a misdemeanor under Subtitle C, Title 7, Transportation Code, [the Uniform Act Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil Statutes)] or a similar misdemeanor traffic offense; and

(B) identification of any other person that exercises voting rights in the applicant or that directly or indirectly exercises any participation in the applicant and any other ownership interest in the applicant that the applicant making its best effort is able to identify;

(4) the exact location at which a race meeting is to be conducted;

(5) if the racing facility is in existence, whether it is owned by the applicant and, if leased to the applicant, the name and address of the owner and, if the owner is a corporation or unincorporated business association, the names and addresses of its officers and directors, its stockholders and members, if any, and its agents for service of process in this state;

(6) if construction of the racing facility has not been initiated, whether it is to be owned by the applicant and, if it is to be leased to the applicant, the name and address of the prospective owner and, if the owner is a corporation or unincorporated business association, the names and addresses of its officers and directors, the names and addresses of its stockholders, the names and addresses of its members, if any, and the names and addresses of its agents for service of process in this state;

(7) identification of any other beneficial owner of shares that bear voting rights, absolute or contingent, in the owner or prospective owner of the racing facility, or any other person that directly or indirectly exercises any participation in the owner or prospective owner and all other ownership interest in the owner or prospective owner that the applicant making its best effort is able to identify;

(8) a detailed statement of the assets and liabilities of the applicant;

(9) the kind of racing to be conducted and the dates requested;

(10) proof of residency as required by Section 6.06 of this Act;

(11) a copy of each management, concession, [and] totalisator contract, and purpose-driven pari-mutuel wagering system provider contract dealing with the proposed license at the proposed location in which the applicant has an interest for inspection and review by the commission; the applicant or licensee shall advise the commission of any change in any management, concession, [or] totalisator contract, or purpose-driven pari-mutuel wagering system provider contract; all management, concession, [and] totalisator contracts, and purpose-driven pari-mutuel wagering system provider contracts must have prior approval of the commission; the same fingerprint, criminal records history, and other information required of license applicants pursuant to Sections 5.03 and 5.04 and Subdivisions (1) through (3) of this subsection shall be required of proposed totalisator firms, purpose-driven pari-mutuel wagering system providers, concessionaires, and managers and management firms; and

(12) any other information required by the commission.

(b) When the commission receives a plan for the security of a racetrack facility, or a copy of a management, concession, [or] totalisator contract, or purpose-driven pari-mutuel wagering system provider contract for review under Subdivision (11) of Subsection (a) of this section, the commission shall review the contract or security plan in an executive session. Documents submitted to the commission under this section by an applicant are subject to discovery in a suit brought under this Act but are not public records and are not subject to Chapter 552, Government Code [424, Acts of the 63rd Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes)]. In reviewing and approving contracts under this subsection, the commission shall attempt to ensure the involvement of minority owned businesses whenever possible.

SECTION 7. Section 6.04, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Subsections (e) and (f) to read as follows:

(e) A racetrack association licensed to offer pari-mutuel wagering on horse races, whether live or simulcast, and granted live or simulcast race dates may offer purpose-driven pari-mutuel wagering on any day during the calendar year.

(f) A racetrack association licensed to offer pari-mutuel wagering on greyhound races, whether live or simulcast, and granted live or simulcast race dates may offer purpose-driven pari-mutuel wagering on any day during the calendar year.

SECTION 8. Section 6.08(b)(3), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(3) The horse racetrack [racing] association shall transfer the amount set aside for purses from any live, purpose-driven, and simulcast pools and shall deposit the amounts in purse accounts maintained by breed by the horsemen's organization in one or more federally insured depositories. Legal title to purse accounts is vested in the horsemen's organization. The horsemen's organization may contract with a racetrack [an] association to manage and control the purse accounts and to make disbursements from the purse accounts:

(A) to an owner whose horse won a purse;

(B) to the horsemen's organization for its expenses; or

(C) for other disbursements as provided by contract between the horsemen's organization and the association.

SECTION 9. Section 6.08, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by amending Subsections (i) and (j) and adding Subsections (o) and (p) to read as follows:

(i) Ten percent of the total breakage from a live pari-mutuel pool, purpose-driven pari-mutuel pool, or a simulcast pari-mutuel pool is to be paid to the commission for use by the appropriate state horse breed registry, subject to rules promulgated by the commission. The appropriate breed registry for Thoroughbred horses is the Texas Thoroughbred [Breeders] Association, for quarter horses is the Texas Quarter Horse Association, for Appaloosa horses is the Texas Appaloosa Horse Club, for Arabian horses is the Texas Arabian Breeders Association, and for paint horses is the Texas Paint Horse Breeders Association.

(j) Ten percent of the total breakage from a live pari-mutuel pool, purpose-driven pari-mutuel pool, or a simulcast pari-mutuel pool is to be retained by the racetrack association to be used in stakes races restricted to accredited Texas-bred horses. The appropriate state horse breed registry shall pay out the remaining 80 percent of the total breakage as follows:

(1) 40 percent of the remaining breakage is allocated to the owners of the accredited Texas-bred horses that finish first, second, or third;

(2) 40 percent is allocated to the breeders of the accredited Texas-bred horses that finish first, second, or third; and

(3) 20 percent is allocated to the owner of the stallion standing in this state at the time of conception whose Texas-bred get finish first, second, or third.

(o) A racetrack association may not begin offering purpose-driven pari-mutuel wagering until the association executes:

(1) a valid contract with the officially recognized horsemen's organization to establish the portion of the association's commission on purpose-driven pari-mutuel pools that will be set aside for purses; and

(2) a valid contract with the official breed registries to establish the portion of the association's commission on purpose-driven pari-mutuel pools that will be set aside for breeder incentives.

(p) The commission shall be the final arbiter of any disagreements between a racetrack association and the horsemen's organization, or between a racetrack association and the official breed registries when reaching the terms of a valid contract.

SECTION 10. Section 6.09, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by amending Subsections (a) and (d) and adding Subsections (g) and (h) to read as follows:

(a) Every racetrack association authorized under this Act to conduct pari-mutuel wagering at a greyhound race meeting on races run shall distribute all sums deposited in any live or simulcast pari-mutuel pool to the holders of the winning tickets if those tickets are presented for payment within 60 days after the closing day of the race meeting at which the pool was formed, less an amount paid as a commission of 18 percent of the total deposits in pools resulting from regular win, place, and show wagering, and an amount not to exceed 21 percent of the total deposits in pools resulting from multiple two wagering and an amount not to exceed 25 percent of the total deposits in pools resulting from multiple three wagering.

(d) Fifty percent of the breakage for live, previously run, or simulcast races is to be paid to the appropriate state greyhound breeding registry. Of that portion of the breakage 25 percent of that breakage is to be used in stakes races and 25 percent of that total breakage from a live pari-mutuel pool, purpose-driven pari-mutuel pool, or a simulcast pari-mutuel pool is to be paid to the commission for the use by the state greyhound breed registry, subject to rules promulgated by the commission.

(g) A racetrack association may not begin offering purpose-driven pari-mutuel wagering until the association executes a valid contract with the Texas Greyhound Association that establishes the portions of the association's commission on purpose-driven pari-mutuel pools that will be set aside for purses and breeder incentives.

(h) The commission shall be the final arbiter of any disagreements between an association and the Texas Greyhound Association when reaching the terms of a valid contract.

SECTION 11. Sections 6.092(a) and (c), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), are amended to read as follows:

(a) The commission shall adopt reporting, monitoring, and auditing requirements or other appropriate performance measures for any funds distributed to or used by or any function or service provided by the expenditure of any funds distributed to or used by any organization that receives funds generated by live, purpose-driven, or simulcast pari-mutuel wagering [racing].

(c) An organization receiving funds generated by pari-mutuel wagering on live, purpose-driven, or simulcast [pari-mutuel] racing shall annually file with the commission a copy of an audit report prepared by an independent certified public accountant. The audit shall include a verification of any performance report sent to or required by the commission.

SECTION 12. Article 6, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Section 6.095 to read as follows:

Sec. 6.095. DEDUCTIONS FROM PURPOSE-DRIVEN PARI-MUTUEL POOL. (a) For each dollar wagered in a purpose-driven pari-mutuel pool, a racetrack association shall set aside for this state an amount equal to one percent to be distributed in the following order of priority:

(1) $20 million is allocated to pay the costs of body armor for law enforcement officers in this state;

(2) $10 million is allocated as death benefits for families of law enforcement officers killed in the line of duty; and

(3) any remainder is allocated for deposit to the general revenue fund to be used at the discretion of this state.

(b) For each dollar wagered in a purpose-driven pari-mutuel pool, a racetrack association shall set aside for nonprofit corporations an amount equal to one percent.

(c) At any time purpose-driven pari-mutuel wagering is offered, each racetrack association shall contract with 10 nonprofit corporations to provide contributions to the corporations from purpose-driven pari-mutuel wagering. A contract with a nonprofit corporation may be for a term of 30 days or more.

(d) Any nonprofit corporation registered under 26 U.S.C. Section 501(c)(3) that has operations in this state and that filed an Internal Revenue Service Form 990 in the previous calendar year is eligible to participate. The commission shall adopt rules on the application process and selection criteria under this section.

(e) Of the 10 nonprofit corporations contracted under Subsection (c):

(1) at least one must benefit law enforcement programs;

(2) at least one must benefit veterans of the armed forces of this state or the United States; and

(3) not more than three may benefit the racing industry.

SECTION 13. Section 6.11(a), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(a) In no event shall the purse in a greyhound race be less than a minimum of 4.7 percent of the total deposited in each live or simulcast pool.

SECTION 14. Section 6.14(a), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(a) A racetrack [An] association may not conduct greyhound or horse racing or offer pari-mutuel wagering on greyhound or horse races, whether live, simulcast, or purpose-driven, at any place other than the place designated in the license except as provided by this section or by Section 6.15 of this Act. However, if the racetrack or enclosure designated in the license becomes unsuitable for racing because of fire, flood, or other catastrophe, the affected association, with the prior approval of the commission, may conduct a race meeting or any remaining portion of a meeting temporarily at any other racetrack licensed by the commission to conduct the same type of racing as may be conducted by the affected association if the licensee of the other racetrack also consents to the usage.

SECTION 15. Section 11.01(a), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(a) Pari-mutuel wagering on the outcome of greyhound races and horse races, whether live, simulcast, or previously run, is authorized under this Act. The commission shall adopt rules to regulate wagering on the outcome of greyhound races and horse races, whether live, simulcast, or previously run, under the system known as pari-mutuel wagering. Wagering may be conducted only by a racetrack [an] association within its enclosure. A person may not accept, in person, by telephone, or over the Internet, a wager for a horse race or greyhound race conducted inside or outside this state from a person in this state unless the wager is authorized under this Act.

SECTION 16. Section 11.04(a), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(a) Only a person inside the enclosure where [both] live or [and] simulcast race meetings are authorized may wager on the results [result] of [a] live, previously run, or simulcast races [race] presented by the racetrack association in accordance with commission rules. Except as provided by this section, a person may not place, in person, by telephone, or over the Internet, a wager for a horse race or greyhound race conducted inside or outside this state. The commission shall adopt rules to prohibit wagering by employees of the commission and to regulate wagering by persons licensed under this Act.

SECTION 17. Section 6.09(e), Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is repealed.

SECTION 18. As soon as practicable after the effective date of this Act, the Texas Racing Commission shall adopt the rules necessary to implement the changes in law made by this Act.

SECTION 19. This Act takes effect September 1, 2017.