Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 5‑101, Arizona Revised Statutes, is amended to read:
5-101. Definitions
In this article, unless the context otherwise requires:
1. "Additional wagering facility" means a facility that is not the enclosure in which authorized racing takes place but that meets the requirements of section 5‑111, subsection A and is used by a permittee for handling pari‑mutuel wagering.
2. "Advance deposit wagering" means a form of pari-mutuel wagering that allows a person to deposit monies in advance in an account with an advance deposit provider and use the monies to pay for pari-mutuel wagering on live or simulcast racing that the advance deposit pari-mutuel wagering permittee accepts or makes.
3. "Advance deposit wagering provider" means a betting system or multijurisdictional wagering provider that is authorized to conduct advance deposit wagering pursuant to this article.
4. "Applicant" means a person, partnership, association or corporation placing before the department an application for a permit or license.
5. "Association" means a body of persons, corporations, partnerships or associations, united and acting together without a charter from the state for the prosecution of some common enterprise.
6. "Commercial horse racing" means horse racing conducted other than by a county fair association.
7. "Commission" means the Arizona racing commission.
8. "Concessionaire" means a person, partnership, association or corporation that offers goods or services for sale to the public, a permittee or a licensee at an enclosure in which authorized racing takes place or an additional wagering facility.
9. "County fair facility" means any place, enclosure or track constructed in accordance with a permit issued by the commission for the purpose of running county fair horse racing dates as well as any commercial dates for horse racing that may be awarded by the commission in reference to the location.
10. "County fair racing association" means an association duly authorized by the board of supervisors to conduct a county fair racing meeting for the benefit of the county.
11. "Dark day simulcast" means a simulcast received on a day when there are no posted races conducted at the enclosure in which authorized racing takes place.
12. "Department" means the department of gaming.
13. "Desensitized" means that a horse's or dog's legs on arrival at the receiving barn, or saddling paddock or lockout kennel do not respond appropriately to tests for feeling administered by an official veterinarian.
14. "Director" means the director of the department of gaming.
15. "Dog racing" means racing in which greyhound dogs chase a mechanical lure.
16. "Entered" means that a horse or dog has been registered with an authorized racing official as a participant in a specified race and has not been withdrawn prior to presentation of the horse or dog for inspection and testing as provided in section 5‑105.
17. "Financial interest" means any direct pecuniary interest.
18. "Firm" means a business unit or enterprise that transacts business.
19. "Handle" means the total amount of money contributed to all pari‑mutuel pools by bettors.
20. "Harness racing" means horse racing in which the horses are harnessed to a sulky, carriage or similar vehicle and driven by a driver.
21. "Horse racing" means racing in which horses are mounted and ridden by jockeys. For purposes of county fair racing meetings, "horse racing" means racing in which horses or mules are mounted and ridden by jockeys.
22. "License" means the license issued by the department to each employee or other person participating in any capacity in a racing meeting, including officials and employees of the pari‑mutuel department.
23. "Pari‑mutuel wagering" means a system of betting that provides for the distribution among the winning patrons of at least the total amount wagered less the amount withheld under state law.
24. "Permit" means a permit for a racing meeting issued under the provisions of this article.
25. "Racing meeting" means a number of days of racing allotted by the commission in one permit.
26. "Simulcast" means the telecast shown within this state of live audio and visual signals of horse, harness or dog races conducted at an out‑of‑state track or the telecast shown outside this state of live audio and visual signals of horse or harness races originating within this state for the purpose of pari‑mutuel wagering.
27. "Source market fee" means the fee that an advance deposit wagering provider pays to a commercial live-racing permittee in the state where the advance deposit wagering customer resides.
28. "Telephone" means any device that a person uses for voice communications in connection with the services of a telephone company.
29. "Undesirable" includes known bookmakers, touts, persons convicted of a violation of any provision of this article or of any law prohibiting bookmaking or any other illegal forms of wagering, or any other person whose presence would, in the opinion of the director, be inimical to the interests of the state.
30. "Week" means seven consecutive days beginning on Monday and ending on Sunday, mountain standard time.
Sec. 2. Section 5-101.01, Arizona Revised Statutes, is amended to read:
5-101.01. Division of racing; director; qualifications; term; deputy director; conflict of interest
A. There is established a division of racing within the department of gaming.
B. The director shall administer the division. To be eligible for appointment as director, a person must have a minimum of five years of experience in business and administration and shall not have a financial interest in a racetrack or in the racing industry in this state during his that person's appointment.
C. The director may establish the position of deputy director of the division.
D. The position of deputy director, if applicable, is exempt from title 41, chapter 4, articles 5 and 6. The deputy director, if applicable, is eligible to receive compensation pursuant to section 38‑611.
E. The provisions of title 38, chapter 3, article 8, relating to conflict of interest, apply to the director and all other employees of the department.
F. Neither the director, any employee of the department nor any member of the immediate family of the director or other employee of the department may:
1. Have any pecuniary interest in a racetrack in this state or in any kennel, stable, compound or farm licensed under this chapter.
2. Wager money at a racetrack enclosure or additional wagering facility in this state or wager money on the results of any race held at a racetrack enclosure in this state.
3. Hold more than a five percent interest in any entity doing business with a racetrack in this state.
4. Have any interest, whether direct or indirect, in a license issued pursuant to this chapter or in a licensee, facility or entity that is involved in any way with pari‑mutuel wagering. For the purposes of this paragraph, "interest" includes employment.
G. Failure to comply with subsection F of this section is grounds for dismissal.
H. For the purposes of subsection F of this section, "immediate family" means a spouse or children who regularly reside in the household of the director or other employee of the department.
Sec. 3. Section 5-104, Arizona Revised Statutes, is amended to read:
5-104. Arizona racing commission; director; department; powers and duties
A. The commission shall:
1. Issue racing dates.
2. Prepare and adopt complete rules to govern the racing meetings as may be required to protect and promote the safety and welfare of the animals participating in racing meetings, to protect and promote public health, safety and the proper conduct of racing and pari‑mutuel wagering and any other matter pertaining to the proper conduct of racing within this state.
3. Conduct hearings on applications for permits and approve permits and shall conduct rehearings on licensing and regulatory decisions made by the director as required pursuant to rules adopted by the commission.
4. Conduct all reviews of applications to construct capital improvements at racetracks as provided in this chapter.
5. Adopt rules governing the proper and humane methods for the disposition and transportation of dogs by breeders, kennels or others.
B. The director shall license personnel and shall regulate and supervise all racing meetings held and pari‑mutuel wagering conducted in this state and cause the various places where racing meetings are held and wagering is conducted to be visited and inspected on a regular basis. The director may delegate to stewards any of the director's powers and duties as are necessary to fully carry out and effectuate the purposes of this chapter. The director shall exercise immediate supervision over the department. The director is subject to ongoing supervision by the commission, and the commission may approve or reject decisions of the director in accordance with rules established by the commission.
C. The commission or the department is authorized to allow stewards, with the written approval of the director, to require a jockey, apprentice jockey, sulky driver, groom, horseshoer, outrider, trainer, assistant trainer, exercise rider, pony rider, starter, assistant starter, jockey's agent, veterinarian, assistant veterinarian, cool‑out, lead‑out, paddock employee, security or maintenance worker, official or individual licensed in an occupational category whose role requires direct hands‑on contact with horses or greyhounds, while on the grounds of a permittee, to submit to a test if the stewards have reason to believe the licensee is under the influence of or unlawfully in possession of any prohibited substance regulated by title 13, chapter 34.
D. The department shall employ the services of the office of administrative hearings to conduct hearings on matters requested to be heard by the director or the commission for the department except for those rehearings that are required by the terms of this chapter to be conducted by the commission. Any person adversely affected by a decision of a steward or by any other decision of the department may request a hearing on the decision. The decision of the administrative law judge becomes the decision of the director unless rejected or modified by the director within thirty days. The commission may hear any appeal of a decision of the director in accordance with title 41, chapter 6, article 10.
E. The department may visit and investigate the offices, tracks or places of business of any permittee and place in those offices, tracks or places of business expert accountants and other persons as it deems necessary for the purpose of ascertaining that the permittee or any licensee is in compliance with the rules adopted pursuant to this article.
F. The department shall establish and collect the following licensing fees and regulatory assessments, which shall not be reduced for capital improvements pursuant to section 5‑111.02 or 5‑111.03:
1. For each racing license issued, a license fee.
2. From the purse accounts provided for in section 5-111, a regulatory assessment to pay for racing animal medication testing, animal safety and welfare.
3. From each permittee, a regulatory assessment for each day of dark day simulcasting conducted in excess of the number of live racing days conducted by the permittee.
4. From each commercial racing permittee, a regulatory assessment payable from amounts deducted from pari-mutuel pools by the permittee, in addition to the amounts the permittee is authorized to deduct pursuant to section 5‑111, subsection C B from amounts wagered on live and simulcast races from in‑state and out‑of‑state wagering handled by the permittee.
G. The commission shall establish financial assistance procedures for promoting adoption of racing greyhounds as domestic pets and for promoting adoption of retired racehorses. The provision of financial assistance to nonprofit enterprises for the purpose of promoting adoption of racing greyhounds as domestic pets and for the purpose of promoting adoption of retired racehorses is contingent on a finding by the commission that the program presented by the enterprise is in the best interest of the racing industry and this state. On a finding by the commission, the commission is authorized to make grants to nonprofit enterprises whose programs promote adoption of racing greyhounds or adoption of retired racehorses. The commission shall develop an application process. The commission shall require an enterprise to report to the commission on the use of grants under this subsection. Financial assistance for nonprofit enterprises for the purpose of promoting adoption of racing greyhounds as domestic pets under this subsection shall not exceed the amount collected for license fees under subsection F of this section for greyhound racing kennels, farms or other operations where greyhounds are raised for the purpose of dog racing. Financial assistance for nonprofit enterprises that promote adoption of retired racehorses under this subsection shall not exceed the amount of retired racehorse adoption surcharges collected pursuant to this subsection. The commission shall collect a retired racehorse adoption surcharge in addition to each civil penalty assessed in connection with horse or harness racing pursuant to this article. The amount of the retired racehorse adoption surcharge shall be five percent of the amount collected for each applicable civil penalty.
H. A license is valid for the period established by the commission, but not to exceed three years, except for a temporary license issued pursuant to section 5‑107.01, subsection F. The licensing period for horse racing shall begin July 1. The licensing period for greyhound racing shall begin February 1.
I. On application in writing by an objector to any decision of track stewards, made within three days after the official notification to the objector of the decision complained of, the department or administrative law judge shall review the objection. In the case of a suspension of a license by the track stewards, the suspension shall run for a period of not more than six months. Before the end of this suspension period, filing an application for review is not cause for reinstatement. If at the end of this suspension period the department or administrative law judge has not held a hearing to review the decision of the stewards, the suspended license shall be reinstated until the department or administrative law judge holds a hearing to review the objection. Except as provided in section 41‑1092.08, subsection H, a final decision of the commission is subject to judicial review pursuant to title 12, chapter 7, article 6.
J. The commission or the director may issue subpoenas for the attendance of witnesses and the production of books, records and documents relevant and material to a particular matter before the commission or department and the subpoenas shall be served and enforced in accordance with title 41, chapter 6, article 10.
K. Any member of the commission, the administrative law judge or the director or the director's designee may administer oaths, and the oaths shall be administered to any person who appears before the commission to give testimony or information pertaining to matters before the commission.
L. The commission shall adopt rules that require permittees to retain for three months all official race photographs and videotapes. The department shall retain all photographs and videotapes that are used as evidence in an administrative proceeding until the conclusion of the proceeding and any subsequent judicial proceeding. All photographs and videotapes must be available to the public on request, including photographs and videotapes of races concerning which an objection is made, regardless of whether the objection is allowed or disallowed.
M. The director may establish a management review section for the development, implementation and operation of a system of management reports and controls in major areas of department operations, including licensing, work load management and staffing, and enforcement of this article and the rules of the commission.
N. In cooperation with the department of public safety, the director shall establish a cooperative fingerprint registration system. Each applicant for a license or permit under this article or any other person who has a financial interest in the business or corporation making the application shall submit to fingerprint registration as part of the background investigation conducted pursuant to section 5‑108. The cooperative fingerprint registration system shall be maintained in an updated form using information from available law enforcement sources and shall provide current information to the director on request as to the fitness of each racing permittee and each racing licensee to engage in the racing industry in this state.
O. The director shall develop and require department staff to use uniform procedural manuals in the issuance of any license or permit under this article and in the enforcement of this article and the rules adopted under this article.
P. The director shall submit an annual report containing operational and economic performance information as is necessary to evaluate the department's budget request for the forthcoming fiscal year to the governor, the speaker of the house of representatives, the president of the senate and the Arizona state library, archives and public records no later than September 30 each year. The annual report shall be for the preceding fiscal year and shall contain performance information as follows:
1. The total state revenues for the previous fiscal year from the overall pari‑mutuel handle with an itemization for each dog racing meeting, each horse racing meeting, each harness racing meeting, each advanced deposit wagering permittee and each additional wagering facility.
2. The total state revenues for the previous fiscal year from the regulation of racing, including licensing fees assessed pursuant to subsection F of this section and monetary penalties assessed pursuant to section 5‑108.02.
3. The amount and use of capital improvement funds pursuant to sections section 5‑111.02 and 5‑111.03 that would otherwise be state revenues.
4. The number of licenses and permits issued, renewed, pending and revoked during the previous fiscal year.
5. The investigations conducted during the previous fiscal year and any action taken as a result of the investigations.
6. The department budget for the immediately preceding three fiscal years, including the number of full‑time, part‑time, temporary and contract employees, a statement of budget needs for the forthcoming fiscal year and a statement of the minimum staff necessary to accomplish these objectives.
7. Revenues generated for this state for the preceding fiscal year by persons holding horse, harness and dog racing racing meeting and advanced deposit wagering permits.
8. Recommendations for increasing state revenues from the regulation of the racing industry while maintaining the financial health of the industry and protecting the public interest.
Q. The commission may certify animals as Arizona bred or as Arizona stallions. The commission may delegate this authority to a breeders' association it contracts with for these purposes. The commission may authorize the association, racing organization or department to charge and collect a reasonable fee to cover the cost of breeding or ownership certification or transfer of ownership for racing purposes.
R. The department has responsibility for the collection and accounting of revenues for the state boxing and mixed martial arts commission, including licensing fees required by section 5‑230, the levy of the tax on gross receipts imposed by section 5‑104.02 and cash deposited pursuant to section 5‑229. All revenues collected pursuant to this subsection, from whatever source, shall be reported and deposited pursuant to section 5‑104.02, subsection C, except that licensing fees required by section 5‑230 shall be deposited in the racing regulation fund established by section 5‑113.01. The director shall adopt rules as necessary to accomplish the purposes of this subsection and chapter 2, article 2 of this title.
S. The commission may obtain the services of the office of administrative hearings on any matter that the commission is empowered to hear.
T. Notwithstanding any other rule or law, on application by a dog racing permittee, the director may reduce the number of kennels required for any race to not less than five kennels.
U. T. The department may adopt rules pursuant to title 41, chapter 6 to carry out the purposes of this article, ensure the safety and integrity of racing in this state and protect the public interest.
Sec. 4. Section 5-105, Arizona Revised Statutes, is amended to read:
5-105. Appointment of personnel; tests; reports; detention of animals; testing facilities
A. For purposes of detecting violations of this article, the department shall appoint qualified veterinarians, biochemists and such other personnel subject to title 41, chapter 4, article 4 as the department considers necessary or may contract with a duly qualified chemical laboratory located either within or outside this state. The testing personnel may, in accordance with such procedures as the commission by regulation prescribes:
1. Examine horses entered in a race within six hours before the start of the race to determine if the horse has been desensitized or drugged. For the purposes of the examination a horse does not have to be held in a retaining barn.
2. Examine dogs at weigh‑in or weigh‑out time to determine if the dog has been desensitized or drugged.
3. 2. Perform such other tests and inspections as the department considers necessary to carry out this article including the random splitting of samples.
4. 3. Store blood, urine and saliva samples in a frozen state or in any other appropriate manner by which they may be preserved for future analysis.
5. 4. Perform tests on horses or dogs that die while on property under the jurisdiction of the department.
6. 5. Analyze samples of urine, blood or saliva taken immediately after a race from the horse that won the race to determine if the horse has been drugged. The department may additionally analyze samples of any other animal entered in a race.
7. Analyze samples of urine or saliva taken either immediately prior to or after a race from the dog that won the race to determine if the dog has been drugged. The department may additionally analyze samples of any other animal entered in a race.
B. The veterinarian authorized by the department may order the taking and analysis of samples from a losing favorite or from any other horse or dog when the veterinarian, based upon on the performance of the horse or dog in the race, has probable cause to believe that the horse or dog has been drugged or desensitized. If a blood sample is required, the veterinarian shall take the sample.
C. The identity of any horse or dog determined under this section to be drugged or desensitized shall, in accordance with such procedures as the commission prescribes by regulation, be reported to a steward and the appropriate county attorney. If any horse or dog is not made available in accordance with such regulations as the commission prescribes for any test or inspection required under this section the identity of such horse or dog shall be reported to a steward.
D. A permittee shall, in accordance with regulations prescribed by the commission, provide the testing personnel with adequate space and facilities so that the inspections, tests and other procedures described in subsection A of this section may be performed. Access to such space and facilities shall be restricted in accordance with regulations prescribed by the commission.
E. Testing personnel may detain for a period of not to exceed twenty‑four hours for examination, testing or the taking of evidence any horse or dog at a race which that is drugged or desensitized or which that such person, based upon on the results of an inspection, test or other procedure conducted under this section, has probable cause to believe is drugged or desensitized. Any horse or dog which that is detained may not be moved during such detention from the place where the horse or dog is detained except as authorized by testing personnel pursuant to rule and regulation of the commission.
F. The department shall retain for three years copies of all post‑mortem reports on animals. The department shall retain all such reports which are used as evidence in a judicial proceeding at least until the conclusion of the proceeding.
Sec. 5. Repeal
Section 5-105.01, Arizona Revised Statutes, is repealed.
Sec. 6. Section 5-106, Arizona Revised Statutes, is amended to read:
5-106. Supervisor of mutuels; pari‑mutuel auditors; other employees; stewards
A. The director shall appoint a supervisor of mutuels, security personnel and as many other employees as may be necessary for the enforcement of the laws of this state and the rules relating to racing.
B. The director shall determine which employees shall give bond to the state for the faithful performance of their respective duties in an amount as the department shall prescribe. The cost of providing the bonds shall be a charge against the state.
C. The compensation of employees shall be as determined pursuant to section 38‑611.
D. The director shall keep a record of all proceedings and preserve all books, documents and papers of the commission and department.
E. The supervisor of mutuels shall monitor the wagering and the pari‑mutuel departments at all racing meetings and additional wagering facilities and shall enter into no other employment or contracts of employment involving racing or pari‑mutuel wagering either within or without the state during days of racing in the state.
F. The security personnel appointed by the director shall assist in keeping the peace at all racing meetings and additional wagering facilities, shall enforce all laws of the state relating to racing and all rules of the commission and shall perform other duties as the commission or director shall prescribe and in the discharge of their duties shall have the authority of peace officers.
G. The director shall establish a security section charged with the responsibility for investigative matters relating to the proper conduct of racing and greyhound breeding, inspections of off‑track kenneling of greyhounds used, trained or bred for racing purposes and pari‑mutuel wagering including barring undesirables from racing, undercover investigations, fingerprinting persons licensed by the department and reviewing license applications. The person in charge of the security section shall have at least five years of experience in law enforcement or in conducting or supervising investigations in some aspect of racing law enforcement.
H. For purposes of inspecting off‑track greyhound training or breeding facilities, the director may request and accept volunteer assistance from a member or representative of the national greyhound association in any instance in which the director believes specialized knowledge or advice may be useful or necessary in the enforcement of this chapter.
I. H. If on investigation by the department there is substantial evidence indicating that the security at any track or additional wagering facility is not satisfactory, the director may order the permittee to remedy the deficiency. If after ten days following the order the permittee has not remedied the deficiency, the department may institute its own security personnel program until the deficiency in security is remedied and may charge the permittee the actual costs incurred therefor. The permittee may petition the department for a hearing at any time to review the necessity of the department further maintaining its own security personnel.
J. I. Persons employed by the department as investigators must have training in a general investigation course, including instruction in appropriate Arizona law, conducted or approved by the director.
K. J. For each horse, or harness or dog racing meeting, the director, with the approval of the commission, shall employ two persons qualified as stewards. For each horse, or harness or dog racing meeting, the permittee, with the approval of the commission, shall employ one person qualified and licensed by the department as a steward. An applicant who wishes to be licensed or employed as a steward by the department for a commercial horse or harness racing meeting must be certified as a steward by a national organization approved by the department. The director shall designate one of the two stewards employed by the department pursuant to this section as chief steward for each horse, or harness or dog racing meeting. The director shall designate the remaining stewards as assistant stewards. For each horse, or harness or dog racing meeting conducted by a county fair racing association, the director, with the approval of the commission, shall employ three persons qualified as stewards. The director shall designate one of the three stewards as chief steward for each horse, or harness or dog racing meeting conducted by a county fair racing association, and shall designate the remaining stewards as assistant stewards.
Sec. 7. Section 5-107, Arizona Revised Statutes, is amended to read:
5-107. Nature of racing meeting permits; application for permit; cash deposit; return; bond; conditions and priorities for satisfaction of bond
A. Permits to conduct racing meetings are deemed to be personal in nature, are nontransferable and shall terminate upon on a substantial change of ownership of the permittee. The sale or transfer of twenty‑five per cent percent or more of the equity of a permittee shall be considered a substantial change of ownership. Nothing in this subsection shall be construed so as to cause the termination of a permit upon on the death of the permittee, or if a corporation, the death of a shareholder thereof, during the period for which such permit was granted.
B. Every applicant making application for a permit to hold a racing meeting shall file an application with the commission. The commission shall promulgate rules and regulations regarding application procedures. The application shall include:
1. The full name and address of the applicant, and if a corporation, the name of the state under which it is incorporated. If such applicant is an association or corporation, the residence addresses of the members of the association and the names of all directors of the corporation shall be included, and the stock certificate records of such applicant shall be made available to the department upon on request of the director. The department shall be notified within ten days of the election of any new officer or director of a permittee, and the identity of every person who acquires ten per cent percent or more of a permittee's equity or interest. Each new officer, director or substantial owner shall furnish all information requested by the department to facilitate approval of his participation in racing in this state.
2. The exact location where it is desired to conduct or hold a racing meeting.
3. A statement as to whether or not the racing plant is owned or leased, and if leased, the name and residence of the fee owner, or if a corporation, the names and addresses of the directors of the corporation.
4. A complete financial statement and balance sheet of the person, corporation or other business entity making such application, completed and certified by a certified public accountant. In the case of applications for renewal of dog racing meeting permits which that were in existence before May 5, 1972, such financial statement and balance sheet shall be on a calendar year basis. In the case of applications for renewal of horse or harness racing meeting permits which that were in existence before May 5, 1972, such financial statement and balance sheet shall be on a fiscal year basis. In the case of all new permit applications made from and after May 5, 1972, and renewal applications of such permits, such financial statement and balance sheet shall be on either a calendar year or fiscal year basis, at the discretion of the department. In addition, the application shall identify any guarantors or any indebtedness of the applicant, and the department shall be provided, upon on request, with a statement from a certified public accountant certifying that the net worth of any guarantor or guarantors is at least equal to the amount of the unpaid indebtedness so guaranteed. Applications for racing meetings operated by county fair racing associations are exempt from this paragraph.
5. A complete list of all management and concession contracts in effect at the time of the application, copies of which shall be furnished to the department upon on request. If the applicant is granted a permit he shall further be required, upon on the request of the department, to submit a complete list of all subsequent management and concession contracts, and copies of such contracts shall be submitted to the department upon on request.
6. Such other relevant and material information pertaining to the application as the department may require.
C. Not less than ten days prior to before the commencement of a commercial racing meeting, the permittee shall submit to the department a cash deposit in such amount, but not to exceed five thousand dollars, as the director deems necessary to insure payment of fees and the amount due the state as the percentage of pari‑mutuel receipts payable to the state as prescribed by law. Upon On termination of the racing meeting, the deposit shall be returned to the applicant, less any fees or pari‑mutuel receipts remaining unpaid.
D. In addition to the cash deposit and prior to before the issuance of a racing meeting permit, the applicant shall deposit with the department a bond payable to the state for the benefit of the state and any person covered by this section, in such amount, but not to exceed one hundred thousand dollars in the case of dog racing meeting permittees, and not to exceed three hundred thousand dollars in the case of horse or harness racing meeting permittees, as the director deems necessary, with a surety or sureties to be approved by the department and the attorney general and conditioned in accordance with the following order of priorities:
1. That the permittee shall first faithfully pay to the state the percentage of the pari‑mutuel receipts, as applicable, prescribed by law and all taxes due to the state.
2. That thereafter the permittee shall pay to the owner thereof all funds held by the permittee for the account of such owner, including purses won, if such owner is or has been licensed by the department.
3. That thereafter the permittee shall pay all salaries and wages due to the employees of such permittee in connection with the conduct of the racing meeting.
4. That thereafter the permittee shall pay all amounts due to the breeder of any horse or dog for a breeder's award.
E. Any person, including the state, claiming against the bond may maintain an action at law against the permittee and the surety or sureties, and the surety or sureties may be sued upon on the bond in successive actions until the penal sum thereof is exhausted. If it appears that there is more than one claim upon on such bond or if it appears that the state may have an interest therein, the state or any other claimant may move the court in which such actions are filed to intervene or to consolidate such actions to determine the priority order of claims in accordance with subsection D of this section. No suit may be commenced upon on the bond after the expiration of one year following the day of the closing of the racing meeting during which any act or failure to act giving rise to a claim against the bond shall arise.
F. The bond prescribed by this section shall be effective for the period of the racing permit granted by the commission, and the liability of the surety for all claims shall be limited to the face amount of the bond. If the surety desires to make payment without awaiting court action, the amount of any bond filed in compliance with this chapter shall be reduced to the extent of any payments made by such surety in good faith thereunder. Any such payment shall be based first upon on the priority of claim order as established by subsection D of this section and thereafter upon on the priority of the date the written claims are received by the surety prior to before court action.
Sec. 8. Section 5-107.01, Arizona Revised Statutes, is amended to read:
5-107.01. Necessity for permits for racing meetings; licenses for officials and other persons
A. A person, association or corporation shall not hold any racing meeting without having first obtained and having in full force and effect a permit that is issued by the department.
B. A trainer, driver, jockey, apprentice jockey, horse owner, dog owner, greyhound racing kennel owner or operator, breeder of racing greyhounds, exercise rider, agent, jockey's agent, stable foreman, groom, valet, veterinarian, horseshoer, steward, stable watchman, starter, timer, judge, food and beverage concessionaire, manager or other person acting as a participant or official at any racing meeting including all employees of the pari‑mutuel department and any other person or official the department deems proper shall not participate in racing meetings without having first obtained and having in full force and effect a license or credentials that are issued by the department, pursuant to such rules as the commission shall make. The department shall not revoke a license except for cause and after a hearing. For the purposes of this subsection, participate in a dog racing meeting includes breeding, raising and training a dog and certifying as an Arizona bred dog.
C. Each person, association or corporation that holds a permit or a license under this chapter shall comply with all rules and orders of the commission or department.
D. Any credential or license that is issued by the department to a licensee shall be used only as prescribed by commission rule or order of the director. Use for purposes other than those prescribed is grounds for suspension or revocation or imposition of a civil penalty as provided in section 5‑108.02, subsection E.
E. All applicants for a permit or license shall submit to the department a full set of fingerprints, background information and the fees that are required pursuant to section 41‑1750. The department of gaming shall submit the fingerprints to the department of public safety for the purpose of obtaining a state and federal criminal records check pursuant to section 41‑1750 and Public Law 92‑544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation. The applicant shall pay the fingerprint fee and costs of the background investigation in an amount that is determined by the department. For such purpose the department of gaming and the department of public safety may enter into an intergovernmental agreement pursuant to title 11, chapter 7, article 3. The fees shall be credited pursuant to section 35‑148.
F. The director may issue a temporary license to an owner, trainer, driver or jockey who is duly licensed in another jurisdiction for special races or special circumstances for a period of not to exceed thirty days. The director may allow a trainer so licensed to complete an application for a temporary license for an owner if the owner is not immediately available to personally submit the application.
G. A licensed owner, lessee or trainer of a qualified horse who has applied to a permittee to be stabled at a track and who has not been granted a stall shall not be prohibited from bringing the horse on the race grounds for the purpose of entering the animal in races that are held by the permittee or for the purposes of qualifying to race solely for the reason that the animal is not being stabled at the track if the owner, lessee or trainer is in compliance with rules adopted by the commission. A dog racing permittee may not prohibit a licensed owner or a licensed lessee of a qualified animal who has applied to be kenneled at the track and who has not been granted a kennel to enter the animal in races that are held by the permittee and to bring the animal on the track for purposes of qualifying to race or to race solely for the reason that the animal is not being kenneled at the track.
Sec. 9. Section 5-109, Arizona Revised Statutes, is amended to read:
5-109. Identification of animals; exemptions
No A horse or dog shall not take part in any race conducted under this article unless satisfactorily identified and registered by an association recognized by the department. A horse shall not be allowed to leave the racetrack premises unless it is accompanied by the certificate required by section 3‑1335 unless:
1. An emergency situation requires immediate removal of the animal from the premises.
2. The director of the Arizona department of agriculture issues special permission in situations he determines to be in the best interest of the animal.
Sec. 10. Section 5-109.01, Arizona Revised Statutes, is amended to read:
5-109.01. Requirements of permittee regarding Arizona bred horses; powers of commission
A. A permittee, in addition to all other requirements, shall:
1. Admit to qualifying or official schooling races any horse that is foaled in this state or any dog that is whelped and raised six months of the first year in this state at a facility licensed by the department and that is:
(a) Of suitable racing age.
(b) Physically qualified and registered pursuant to department requirements.
(c) Owned by a resident of this state, who has been engaged for at least two consecutive years, in this state, in the business of breeding, racing, raising or training horses or dogs for racing purposes.
2. Adopt no rule which that discriminates in any way against a resident of this state who is engaged in this state in the business of breeding, racing, raising or training horses or dogs for racing purposes.
B. Failure of a permittee to comply with subsection A of this section constitutes grounds for revocation of or refusal to renew any permit.
C. The commission may adopt rules to further the purposes of this section.
Sec. 11. Section 5-111, Arizona Revised Statutes, is amended to read:
5-111. Wagering percentage to permittee and state; exemptions
A. The commission shall prescribe rules governing wagering on races under the system known as pari‑mutuel wagering. Wagering shall be conducted by a permittee only by pari‑mutuel wagering and only on the dates for which racing or dark day simulcasting has been authorized by the commission. Wagering for a licensed racing meeting shall be conducted by a commercial live-racing permittee only within an enclosure in which authorized racing takes place and, in counties having a population of less than five hundred thousand persons or at least one million five hundred thousand persons, at those additional facilities that are owned or leased by a permittee, that are approved by the commission and that are used by a permittee for handling wagering as part of the pari‑mutuel system of the commercial live‑racing permittee. In all other counties, wagering may also be conducted at additional facilities that are owned or leased by a commercial live‑racing permittee who is licensed to conduct live racing in those counties or, until January 1, 2019, who has the consent of all commercial permittees currently licensed to conduct live racing in those counties, and that are used by a permittee for handling wagering and as part of the pari‑mutuel system of the commercial live-racing permittee. Beginning January 1, 2019, consent of commercial permittees licensed to conduct live racing in those counties is not required. From and after December 31, 2016, any agreement concerning simulcasting that is executed between a permittee that conducted live dog racing in 2016 and a horse racing facility that is located in a county with a population of more than three million persons shall provide that twenty percent of the commission fee paid to a permittee that conducted live dog racing in 2016 under that agreement be distributed to the recognized horsemen's association that represents horsemen participating in race meets in this state. If the additional facilities have not been used for authorized racing before their use for handling wagering, a permittee shall not use the facilities for handling wagering before receiving approval for use by the governing body of the city or town, if located within the corporate limits, or by the board of supervisors, if located in an unincorporated area of the county. A permittee may televise any live or simulcast races received at the permittee's racing enclosure to the additional facilities at the times the races are conducted or received at the permittee's enclosure. For the purpose of section 5‑110, subsection C only, a race on which wagering is permitted under this subsection shall be deemed to also occur at the additional facility in the county in which the additional facility is located, and shall be limited in the same manner as actual live racing in that county. For the purpose of subsections subsection B and C of this section, the wagering at the additional facility shall be deemed to occur in the county in which the additional facility is located.
B. Until
January 1, 2017, during the period of any permit for dog racing in any county,
the state shall receive five and one‑half percent of all monies handled
in the pari‑mutuel pool operated by the permittee, to be paid daily
during the racing meeting. In all counties having a population of
one million five hundred thousand persons or more, four and three‑quarters
percent of the gross amount of monies handled in a pari‑mutuel pool shall
be deducted from the pari‑mutuel pool and shall be deposited daily into a
trust account for the payment of purse amounts. In counties having a
population of less than one million five hundred thousand persons, four percent
of the gross amount of monies handled in a pari‑mutuel pool shall be
deducted from the pari‑mutuel pool and shall be deposited daily in a
trust account for the payment of purse amounts. Notwithstanding any other
provision of this subsection, the percentage paid by a permittee to the state
does not apply to monies handled in a pari‑mutuel pool for wagering on
simulcasts of out‑of‑state races. During a week in which
a permittee conducts live racing at the permittee's racetrack enclosure, the
permittee shall deduct from monies handled in a pari‑mutuel pool for
wagering on simulcasts of out‑of‑state races and deposit daily in a
trust account for the payment of purse amounts the same percentage of the pari‑mutuel
pool as is deducted for purses for live races unless otherwise agreed by
written contract. Unless otherwise agreed by written contract, if
the commission reasonably determines that live racing will not be conducted
within one calendar year at a racetrack enclosure, the permittee shall deduct
from monies handled in a pari‑mutuel pool for wagering on simulcasts of
out‑of‑state races and deposit daily in a trust account to
supplement purses of any dog track where live racing is conducted within a one
hundred mile radius. The supplementing provided by this subsection
shall be in the most equitable manner possible as determined by the
commission. The permittee shall allocate the funds in the trust
account and pay purse amounts at least biweekly. The permittee, at
the permittee's discretion, may pay additional amounts to augment purses from
the amounts received by the permittee under this subsection.
C. B. During the period of a permit for horse or harness racing, the permittee that conducts the meeting may deduct up to and including twenty‑five percent of the total amount handled in the regular pari‑mutuel pools and, at the permittee's option, may deduct up to and including thirty percent of the total amount handled in the exacta, daily double, quinella and other wagering pools involving two horses, and up to and including thirty‑five percent of the total amount handled in the trifecta or other wagering pools involving more than two horses in one or more races. The amounts if deducted shall be distributed as prescribed in subsection D C of this section and section 5‑111.02 for horse or harness racing permittees. Until January 1, 2017, for dog racing permittees, unless otherwise agreed by written contract, the permittee shall allocate to purses from amounts wagered on live racing conducted in this state an amount equal to fifty percent of any amounts that are deducted pursuant to this subsection in excess of twenty percent of the total amount handled in the regular pari‑mutuel pools, twenty‑one percent of the total amount handled in the exacta, daily double, quinella and other wagering pools involving two dogs or twenty‑five percent of the total amount handled in the trifecta or other wagering pools involving more than two dogs in one or more races. For dog racing permittees the percentages prescribed in subsection B of this section shall be distributed to the state and to the trust account for payment of purse amounts and the permittee shall receive the balance. If the dog racing permittee has made capital improvements, the distribution to the state shall be adjusted as provided in section 5‑111.03. Monies deposited in the trust account for payment of purses pursuant to this subsection shall be in addition to amounts deposited pursuant to subsection B of this section.
D. C. During the period of a permit for horse or harness racing, the state shall receive two percent of the gross amount of the first one million dollars of the daily pari‑mutuel pools and five percent of the gross amount exceeding one million dollars of the daily pari‑mutuel pools. Notwithstanding any other provision of this subsection, the percentage paid by a permittee to the state does not apply to monies handled in a pari‑mutuel pool for wagering on simulcasts of out‑of‑state races. The permittee shall retain the balance of the total amounts deducted pursuant to subsection C B of this section. Of the amount retained by the permittee, minus the amount payable to the permittee for capital improvements pursuant to section 5‑111.02, breakage distributed to the permittee pursuant to section 5‑111.01 and other applicable state, county and city transaction privilege or other taxes, unless otherwise agreed by written contract, fifty percent shall be used for purses. Unless otherwise agreed by written contract, fifty percent of the revenues received by the permittee from simulcasting races as provided in section 5‑112, net of costs of advertising, shall be utilized as a supplement to the general purse structure. All amounts that are deducted from the pari‑mutuel pool for purses pursuant to this section and sections 5‑111.01, 5‑112 and 5‑114 and revenues that are received from simulcasting and that are to be used as a supplement to the general purse structure pursuant to this subsection shall be deposited daily into a trust account for the payment of purse amounts.
E. D. Any county fair racing association may apply to the commission for one racing meeting each year and the commission shall set the number of days and the dates of the meetings. A racing meeting conducted under this subsection shall be operated in such manner so that all profits accrue to the county fair racing association, and the county fair racing association may deduct from the pari‑mutuel pool the same amount as prescribed in subsection C B of this section. All county fair racing meetings, whether conducted by county fair racing associations under this subsection or by an individual, corporation or association other than a county fair racing association, are exempt from the payment to the state of the percentage of the pari‑mutuel pool prescribed by subsection D C of this section and are also exempt from the provisions of section 5‑111.01.
F. E. Monies from charity racing days are exempt from the state percentage of the pari‑mutuel pool prescribed in this section.
G. F. Sums held by a permittee for payment of unclaimed pari‑mutuel tickets are exempt from the revised Arizona unclaimed property act, title 44, chapter 3.
H. G. All of the amounts received by a permittee from the gross amount of monies handled in a pari‑mutuel pool and all amounts held by a permittee for payment of purses pursuant to this section and sections 5‑111.01, 5‑112 and 5‑114 are exempt from the provisions of title 42, chapter 5.
Sec. 12. Section 5‑111.02, Arizona Revised Statutes, is amended to read:
5-111.02. Capital improvements at horse tracks; reduction in percentage to state; approval by commission; definition
A. To encourage the improvement of racing facilities for the benefit of the public, breeders and horse owners, and to increase the revenue to the state from the increase in pari‑mutuel wagering resulting from such improvements, the percentage paid by a permittee to the state as provided in section 5‑111, subsection D C shall be reduced by one per cent percent of the total amount wagered in connection with all racing meetings conducted in counties having a population of five hundred thousand persons or more, according to the most recent United States decennial census, and by two per cent percent of the total amount wagered in connection with all racing meetings conducted in all other counties for those permittees who make capital improvements to racetracks and such amount shall be retained by the permittees making such capital improvements. When a permittee other than the permittee making the capital improvements, such as a lessee, is authorized to conduct racing at the facility being improved, the percentage paid by such permittee to the state as provided in section 5‑111, subsection D C shall be reduced by one per cent percent of the total amount wagered and such amount shall be paid by such permittee to the permittee making the capital improvements.
B. In order to qualify for the reduction in percentage, a permittee shall first apply to the commission in such form as the commission may require. The application shall contain, but is not limited to, full details of the proposed capital improvement and the cost and expenses to be incurred, economic justification for approval of the application by an estimate of the additional pari‑mutuel revenues accruing to this state as the result of the proposed capital improvement, a description of any public safety concerns to be resolved by the proposed capital improvement and a management and construction plan for the indicated capital improvement, including:
1. The approach and structure of construction management.
2. Construction schedules and detailed cost estimates.
3. Construction progress and cost revision reporting systems.
C. More than one capital improvement at a horse track may be consolidated in one application. Following receipt of the application the commission shall either approve or disapprove the application within forty‑five days thereafter and shall, within ten days of after taking action on the application, transmit a copy of the application and notification of the action taken by the commission on the application to the president of the senate and speaker of the house of representatives. If the application submitted by the permittee is approved by the commission, the permittee qualifies for the decrease in percentage prescribed by subsection A of this section. The commission shall not approve an application submitted pursuant to this subsection unless the commission determines that the capital improvement will promote the safety of racing horses or increase the safety, convenience or comfort of the people and is in the best interest of horse racing and this state generally. If the commission approves an application submitted pursuant to this section, the director shall conduct periodic inspections of the capital improvement at least monthly during the construction period of the capital improvement in order to ascertain compliance with the permittee's application. In the event that such approved project has not commenced within one year following approval by the commission, unless such period is extended by the commission, the funds not expended pursuant to the approval of the commission shall revert to the general fund of the state and a decrease in the percentage paid to this state by reason of the approval of the commission shall terminate. The commission may suspend or revoke the authority of the permittee to expend capital improvement monies for failure to comply with the capital improvement application approved pursuant to this subsection B of this section. The permittee shall notify the commission of the completion of construction on each capital improvement authorized pursuant to subsection B of this section.
D. Except as provided in subsection H of this section, the decrease in percentage paid to this state by the permittee pursuant to this section starts from the date horse racing is first conducted following the date of approval by the commission of the permittee's application for the funding of a capital improvement at the horse track and continues until sufficient funds have been obtained for completion of the capital improvement approved by the commission.
E. Following commission approval of an application for funding of a capital improvement at a horse track pursuant to this section, the permittee shall set aside in a separate capital improvement escrow or trust account all monies retained from the decrease in the state's share. The monies in the account and any interest on the monies may be used only for the capital improvement previously approved by the commission. The permittee shall provide to the commission quarterly reports on a form prescribed by the director which that show for the previous calendar quarter:
1. Payments to and expenditures from each capital improvement or trust account established pursuant to this section.
2. The progress of construction on the capital improvement approved by the commission.
F. The cost of a capital improvement shall be determined by generally accepted accounting principles and verified upon on completion of the project by an audit of the permittee's records conducted by the auditor general acting at the instructions of the commission or an independent certified public accountant selected by the permittee and approved by the commission.
G. In this section, unless the context otherwise requires, "capital improvement" means an addition, replacement or remodeling of a racetrack facility involving an expenditure of at least fifty thousand dollars. Capital improvement also includes architectural and design expenses directly related to such addition, replacement or remodeling, whether incurred before or after project approval by the commission. Capital improvement does not include the cost of ordinary repairs and maintenance required to keep a racetrack facility in ordinary operating condition and does not include operational expenses, but may include the direct acquisition of water trucks and tractors.
H. In counties with a population of less than five hundred thousand persons according to the most recent United States decennial census, a decrease in the percentage paid to this state by the permittee pursuant to this section shall not begin until from and after June 30, 1995.
I. This section expires on June 30, 1992 for counties with a population of five hundred thousand persons or more according to the most recent United States decennial census. This section expires on June 30, 1999 for counties with a population of less than five hundred thousand persons according to the most recent United States decennial census. Projects approved prior to either of these dates may continue until their completion under the terms of this section and the decrease in percentage paid to the state by the permittee shall continue until sufficient funds have been obtained for completion of the approved capital improvement.
Sec. 13. Repeal
Section 5-111.03, Arizona Revised Statutes, is repealed.
Sec. 14. Section 5-111.04, Arizona Revised Statutes, is amended to read:
5-111.04. Repayment of nonapproved expenditures of capital monies; judicial review
A. If it is determined by the commission, through the findings of the commission or through information provided to the commission by the department or the auditor general, that a permittee has retained monies for approved capital improvements pursuant to sections section 5‑111.02 and 5‑111.03 in excess of the amount approved for such capital improvements, the permittee shall repay the excess amount to this state within one year after notification of the determination by the commission. The commission shall determine the repayment method, and the repayment may be made directly by the permittee or through reductions in future entitlements for capital improvements which have been approved by the commission. This section shall not prohibit the use of capital expenditure monies received pursuant to sections section 5‑111.02 and 5‑111.03 for repayment of obligations of the permittee which directly relate to approved capital improvements.
B. Except as provided in section 41‑1092.08, subsection H, final decisions of the commission are subject to judicial review pursuant to title 12, chapter 7, article 6.
Sec. 15. Section 5-112, Arizona Revised Statutes, is amended to read:
5-112. Wagering legalized; simulcasting of races; unauthorized wagering prohibited; classification; report
A. Except as provided in subsection K J of this section, section 5‑101.01, subsection F and title 13, chapter 33, any person within the enclosure of a racing meeting held pursuant to this article may wager on the results of a race held at the meeting or televised to the racetrack enclosure by simulcasting pursuant to this section by contributing money to a pari‑mutuel pool operated by the permittee as provided by this article.
B. The department, on request by a permittee, may grant permission for electronically televised simulcasts of horse, harness or dog races to be received by the permittee. In counties having a population of one million five hundred thousand persons or more, the simulcasts shall be received at the racetrack enclosure where a horse or harness racing meeting is being conducted, provided that the simulcast may only be received during, immediately before or immediately after a minimum of nine posted races for that racing day. In counties having a population of five hundred thousand persons or more but less than one million five hundred thousand persons, the simulcasts shall be received at the racetrack enclosure where a horse or harness racing meeting is being conducted provided that the simulcast may only be received during, immediately before or immediately after a minimum of four posted races for that racing day. In all other counties, the simulcasts shall be received at a racetrack enclosure at which authorized racing has been conducted, whether or not posted races have been offered for the day the simulcast is received. The simulcasts shall be limited to horse, harness or dog races. The simulcasts shall be limited to the same type of racing as authorized in the permit for live racing conducted by the permittee. The department, on request by a permittee, may grant permission for the permittee to transmit the live race from the racetrack enclosure where a horse or harness racing meeting is being conducted to a facility or facilities in another state. All simulcasts of horse or harness races shall comply with the interstate horseracing act of 1978 (P.L. 95‑515; 92 Stat. 1811; 15 United States Code chapter 57). All forms of pari‑mutuel wagering shall be allowed on horse, harness or dog races, whether or not televised by simulcasting. All monies wagered by patrons on these horse, harness or dog races shall be computed in the amount of money wagered each racing day for purposes of section 5‑111.
C. Notwithstanding subsection B of this section, in counties having a population of one million five hundred thousand persons or more, simulcasts may be received at the racetrack enclosure, and the permittee may offer pari‑mutuel wagering on the simulcast racing at any additional wagering facility used by a permittee for handling wagering as provided in section 5‑111, subsection A during a permittee's racing meeting as approved by the commission, whether or not the simulcasts are televised to the additional wagering facilities and whether or not posted races have been conducted on the day the simulcast is received, if:
1. For horse and harness racing, the permittee's racing permit requires the permittee to conduct a minimum of one hundred fifty‑six days of live racing with an average of nine posted races on an average of five racing days each week at the permittee's racetrack enclosure during the period beginning on October 1 and ending on the first full week in May, unless otherwise agreed in writing by the permittee and the recognized horsemen's organization that represents the horsemen participating in the race meet at the racetrack enclosure, subject to approval by the department.
2. For dog racing, the permittee is required to conduct a minimum of ten posted races on each of four days each week for forty‑one weeks during a calendar year at the permittee's racetrack enclosure.
D. Notwithstanding subsection B of this section, in counties having a population of seven hundred thousand persons or more but less than one million five hundred thousand persons, simulcasts may be received at the racetrack enclosure, and the permittee may offer pari‑mutuel wagering on the simulcast racing at any additional wagering facility used by a permittee for handling wagering as provided in section 5‑111, subsection A during a permittee's racing meeting as approved by the commission, whether or not the simulcasts are televised to the additional wagering facilities and whether or not posted races have been conducted on the day the simulcast is received. , subject to the following conditions:
1. For horse and harness racing, The permittee may conduct wagering on dark day simulcasts for twenty days, provided the permittee conducts a minimum of seven posted races on each of the racing days mandated in the permittee's commercial racing permit. In order to conduct wagering on dark day simulcasts for more than twenty days, the permittee is required to conduct a minimum of seven posted races on one hundred forty racing days at the permittee's racetrack enclosure.
2. For dog racing, the permittee is required to conduct a minimum of nine posted races on each of one hundred days during a calendar year at the permittee's racetrack enclosure, unless a lesser number is otherwise agreed to by written contract entered into by February 1 of each year by a permittee and a majority of licensed persons then participating in a greyhound racing meeting as greyhound racing kennel owners.
E. In an emergency and on a showing of good cause by a permittee, the commission may grant an exception to the minimum racing day requirements of subsections C and D of this section.
F. The minimum racing day requirements of subsections C and D of this section shall be computed by adding all racing days, including any county fair racing days operated in accordance with section 5‑110, subsection F, allotted to the permittee's racetrack enclosure in one or more racing permits.
G. Simulcast signals or teletracking of simulcast signals does not prohibit live racing or teletracking of that live racing in any county at any time.
H. Except as provided in subsection K J of this section, section 5‑101.01, subsection F and title 13, chapter 33, any person within a racetrack enclosure or an additional facility authorized for wagering pursuant to section 5‑111, subsection A may wager on the results of a race televised to the facility pursuant to section 5‑111, subsection A by contributing to a pari‑mutuel pool operated as provided by this article.
I. Notwithstanding subsection B of this section, the department, in counties having a population of one million five hundred thousand persons or more and on request by a permittee for one day each year, may grant permission for simulcasts to be received without compliance with the minimum of nine posted races requirement.
J. I. Except as provided in this article and in title 13, chapter 33, all forms of wagering or betting on the results of a race, including buying, selling, cashing, exchanging or acquiring a financial interest in pari‑mutuel tickets, except by operation of law, whether the race is conducted in this state or elsewhere, are illegal.
K. j. A permittee shall not knowingly permit a person who is under twenty‑one years of age to be a patron of the pari‑mutuel system of wagering.
L. K. Except as provided in title 13, chapter 33, any person who violates this article with respect to any wagering or betting, whether the race is conducted in or outside this state, is guilty of a class 6 felony.
M. l. Simulcasting may only be authorized for the same type of racing authorized by a permittee's live racing permit.
N. M. In addition to pari‑mutuel wagering otherwise authorized by this chapter, a commercial live-racing permittee or a commercial dog racing permittee that conducted live dog racing in 2016 may conduct advance deposit wagering as approved by the commission. The commission also may allow advance deposit wagering by an advance deposit wagering provider if a racing authority in the state where the advance deposit wagering provider is located approves the advance deposit wagering provider and, for horse racing, if the advance deposit wagering provider annually secures the approval of the commercial live horse racing permittees in a county where the advance deposit wagering provider or commercial live‑racing permittee accepts advance deposit wagers for horse racing and of the organization that represents the majority of owners and trainers at each of the commercial live horse racing enclosures in each county. An advance deposit wagering provider that the commission approves shall pay source market fees on wagers placed on horse racing from this state to commercial live horse racing permittees in this state. The advance deposit wagering provider shall divide the source market fees on horse racing wagers on the basis of the proportion of the permittees' total live and simulcast handle during the previous year and the advance deposit wagering provider shall pay source market fees on wagers on dog racing from the county in which the live or simulcast racing is conducted to the commercial live racing permittee in that county. The advance deposit wagering provider shall divide the source market fees on dog racing from wagering in any other county as provided in a written agreement that is submitted to the department between all commercial dog racing permittees.
O. N. The commission may issue a permit to authorize an advance deposit wagering provider to accept advance deposit wagering on racing from persons in this state. The procedures for the approval of the permit must be similar to the procedures for the approval of racing permits under this article, subject to the following requirements:
1. The commission shall issue an advance deposit wagering permit only if the state agency that regulates racing in the state where the advance deposit wagering provider is located approves the permittee or provider to conduct advance deposit wagering.
2. An advance deposit wagering provider may accept advance deposit pari-mutuel wagers from natural persons in this state on racing conducted by a commercial live-racing permittee in this state or on racing conducted outside this state if the commercial live-racing permittee in this state at a racetrack enclosure in a county where live horse or live dog racing has been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure on which advance deposit wagering is accepted or that conducts a racing program with the same type of racing on which the advance deposit wagering is accepted enters into an agreement with the advance deposit wagering provider providing for the payment of a source market fee that is agreed to by the commercial live-racing permittee on all advance deposit wagering.
3. An advance deposit wagering provider shall pay source market fees in an amount that is agreed to by the commercial live-racing permittee on all advance deposit wagering by persons in this state on the same type of racing the commercial live-racing permittee conducts or on the same type of live racing that a commercial dog racing permittee conducted in 2016. Source market fees from wagers by persons in this state through an advance deposit wagering provider shall be allocated as provided in paragraph 7 of this subsection to a commercial live horse racing permittee at a racetrack enclosure in a county where live horse racing has been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure during the period of time that the commercial live-racing permittee conducts a racing program. Source market fees for dog racing from wagering through the advance deposit wagering provider from persons wagering in a county shall be allocated as provided in paragraph 7 of this subsection to a commercial dog racing permittee at a racetrack enclosure in a county where live dog racing had been conducted in 2016 or had been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure. Source market fees from wagers by persons in this state in all other counties for pari‑mutuel wagering on dog racing through an advance deposit wagering provider shall be allocated as provided in paragraph 7 of this subsection.
4. Advance deposit wagering agreements that are executed between permittees in this state must contain the same or substantially equivalent terms and conditions, including provisions for revenue sharing, as the terms and conditions contained in simulcasting agreements that are executed between those same permittees in order to accept advance deposit wagering on horse racing from a county with a commercial dog racing permittee.
5. The advance wagering provider shall transmit daily a percentage determined by the department of the gross revenues generated by advance deposit wagers to the department for deposit in the racing regulation fund established by section 5‑113.01.
6. The advance deposit wagering provider shall file the consent provided for in this subsection with the commission, and the consent is valid for a period of at least one year.
7. The source market fees are allocated, after deductions, as provided for in section 5‑111, subsection B for dog racing or section 5‑111, subsection D C for horse racing for any fees or payments to the state, county and city for taxes or other fees, in the same manner as the proceeds of simulcast pari-mutuel wagering as provided in section 5‑111, subsection B for dog racing and section 5‑111, subsection D C for horse racing. From the source market fees from advance deposit wagering on horse racing allocated for purses as provided in section 5‑111, subsection D C, five percent is paid to the department for deposit in the Arizona breeders' award fund account for distributions for Arizona bred horses as provided in section 5‑114.
P. o. The owner of the advance deposit wagering account may make an advance deposit pari-mutuel wager only by telephone.
Q. P. Only the advance deposit wagering provider may make an advance deposit wager, pursuant to wagering instructions the owner of the monies issues by telephone. The advance deposit wagering provider shall ensure the identification of the owner of the account by using methods and technologies approved by the commission. Any advance deposit wagering provider that accepts wagering instructions on races that are conducted in this state, or accepts wagering instructions originating in this state, shall provide a daily report that contains a full accounting and verification of the source of the wagers made, including the postal zip code of the source of the wagers and all pari-mutuel data, in a form and manner that is approved by the commission. All reasonable costs associated with the creation, provision and transfer of the data is the responsibility of the advance deposit wagering provider.
R. Q. Any person other than a permittee or any advance deposit wagering provider who is approved by the commission under this article and who accepts a wager or who bets on the results of a race, whether the race is conducted in or outside this state, including buying, selling, cashing, exchanging or acquiring a financial interest in a pari‑mutuel ticket from a person in this state outside of a racing enclosure or an additional wagering facility that is approved by the commission and that is located in this state is guilty of a class 6 felony.
S. R. Pursuant to section 13‑108, a pari-mutuel wager or a bet placed or made by a person in this state is deemed for all purposes to occur in this state.
T. S. The department and the attorney general shall enforce subsections R Q and S R of this section and shall submit an annual report that summarizes these enforcement activities to the governor, the speaker of the house of representatives and the president of the senate. The department and the attorney general shall provide a copy of this report to the secretary of state.
Sec. 16. Section 5-113, Arizona Revised Statutes, is amended to read:
5-113. Disposition of revenues and monies; funds; committee
A. All revenues derived from permittees, permits and licenses as provided by this article shall be deposited, pursuant to sections 35‑146 and 35‑147, in the racing regulation fund established by section 5‑113.01. The commission shall further allocate all monies deposited in the Arizona breeders' award fund pursuant to this subsection to support incentives as authorized by subsection F of this section for thoroughbred and quarter horse breeds only.
B. The Arizona county fairs racing betterment fund is established under the jurisdiction of the department. The department shall distribute monies from the fund to the county fair association or county fair racing association of each county conducting a county fair racing meeting in a proportion that the department deems necessary for the promotion and betterment of county fair racing meetings. All expenditures from the fund shall be made on claims approved by the department. In order to be eligible for distributions from the fund, a county fair association must provide the department with an annual certification in the form required by the department supporting expenditures made from the fund. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.
C. The county fairs livestock and agriculture promotion fund is established under the control of the governor and shall be used for the purpose of promoting the livestock and agricultural resources of the state and for the purpose of conducting an annual Arizona national livestock fair by the Arizona exposition and state fair board to further promote livestock resources. The direct expenses less receipts of the livestock fair shall be paid from this fund, but this payment shall not exceed thirty per cent percent of the receipts of the fund for the preceding fiscal year. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund. All expenditures from the fund shall be made upon on claims approved by the governor, as recommended by the livestock and agriculture committee, for the promotion and betterment of the livestock and agricultural resources of this state. The livestock and agriculture committee is established and shall be composed of the following members, at least three of whom are from counties that have a population of less than five hundred thousand persons, appointed by the governor:
1. Three members representing county fairs.
2. One member representing Arizona livestock fairs.
3. One member representing the university of Arizona college of agriculture.
4. One member representing the livestock industry.
5. One member representing the farming industry.
6. One member representing the governor's office.
7. One member representing the Arizona state fair conducted by the Arizona exposition and state fair board.
8. One member representing the general public.
D. The governor shall appoint a chairman from the members. Terms of members shall be four years.
E. Members of the committee are not eligible to receive compensation but are eligible to receive reimbursement for expenses pursuant to title 38, chapter 4, article 2.
F. The Arizona breeders' award fund is established under the jurisdiction of the department. The department shall distribute monies from the fund to the breeder, or the breeder's heirs, devisees or successors, of every winning horse or greyhound foaled or whelped in this state, as defined by section 5‑114, in a manner and in an amount established by rules of the commission to protect the integrity of the racing industry and promote, improve and advance the quality of race horse and greyhound breeding within this state. The department may contract with a breeders' association to provide data, statistics and other information necessary to enable the department to carry out the purposes of this subsection. Persons who are not eligible to be licensed under section 5‑107.01 or persons who have been refused licenses under section 5‑108 are not eligible to participate in the Arizona greyhound breeders' award fund. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund. For the purposes of this subsection, "breeder" means the owner or lessee of the dam of the animal at the time the animal was foaled or whelped.
G. The Arizona stallion award fund is established under the jurisdiction of the department to promote, improve and advance the quality of stallions in this state. The department shall distribute monies from the fund to the owner or lessee, or the owner's or lessee's heirs, devisees or successors, of every Arizona stallion whose certified Arizona bred offspring, as prescribed in section 5‑114, finishes first, second or third in an eligible race in this state. The department may contract with a breeders' association to provide data, statistics and other information necessary to enable the department to carry out the purposes of this subsection. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund. The commission shall adopt rules pursuant to title 41, chapter 6 to carry out the purposes of this subsection. The rules shall prescribe at a minimum:
1. The manner and procedure for distribution from the fund, including eligibility requirements for owners and lessees.
2. Subject to availability of monies in the fund, the amount to be awarded.
3. The requirements for a stallion registered with the jockey club, Lexington, Kentucky or with the American quarter horse association, Amarillo, Texas to be certified as an Arizona stallion.
4. The types and requirements of races for which an award may be made.
H. The greyhound and retired racehorse adoption fund is established. The department shall administer the fund and maintain separate accounts for greyhound adoptions and retired racehorse adoptions. All revenues derived from license fees collected from dog breeders, racing kennels and other operations where greyhounds are raised for the purpose of dog racing pursuant to section 5‑104, subsection F shall be deposited, pursuant to sections 35‑146 and 35‑147, in the greyhound adoption account of the fund. All revenues derived from retired racehorse adoption surcharges collected pursuant to section 5‑104, subsection G shall be deposited, pursuant to sections 35‑146 and 35‑147, in the retired racehorse adoption account of the fund. The department shall distribute monies from the fund to provide financial assistance to nonprofit enterprises approved by the commission to promote the adoption of former racing greyhounds as domestic pets and to promote the adoption of retired racehorses pursuant to section 5‑104, subsection G in a manner and in an amount established by rules of the commission. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.
I. The county fair racing fund is established. The department shall administer the fund. Monies in the fund are continuously appropriated. The department shall use fund monies for the administration of county fair racing. Any monies remaining unspent in the fund at the end of the fiscal year in excess of seventy‑five thousand dollars shall revert to the state general fund.
J. The agricultural consulting and training trust fund is established for the exclusive purpose of implementing, continuing and supporting the agricultural consulting and training program established by section 3‑109.01. The director of the Arizona department of agriculture shall administer the trust fund as trustee. The state treasurer shall accept, separately account for and hold in trust any monies deposited in the state treasury, which are considered to be trust monies as defined in section 35‑310 and which shall not be commingled with any other monies in the state treasury except for investment purposes. On notice from the director, the state treasurer shall invest and divest any trust fund monies deposited in the state treasury as provided by sections 35‑313 and 35‑314.03, and monies earned from investment shall be credited to the trust fund. The beneficiary of the trust is the agricultural consulting and training program established by section 3‑109.01. Surplus monies, including balances remaining in the trust fund at the end of a fiscal year, do not revert to the state general fund.
Sec. 17. Section 5-114, Arizona Revised Statutes, is amended to read:
5-114. Races exclusively for Arizona bred horses; breeders' awards; certification; fee
A. For the purpose of promoting and encouraging the breeding of Arizona bred dogs, each meeting shall offer a number of races equal to an average of not less than one for each day of racing which shall be exclusively for Arizona bred dogs. In the event the race does not fill, it shall be offered as an open race in which Arizona bred dogs have a preference of entry.
B. A. For the purpose of promoting and encouraging the breeding of Arizona bred horses, each meeting shall offer not less than one race each day of racing which shall be exclusively for Arizona bred horses. In the event such race does not fill, it shall be offered as an open race in which Arizona bred horses have a preference of entry.
C. B. To promote and improve the breeding of horses and dogs within the this state, a sum of money equal to ten per cent percent of the first money of every purse won by a horse or dog bred in this state shall be paid by the permittee to the owner or lessee, or his heirs, devisees or successors, of the dam of the animal at the time the animal was foaled or whelped. Such amount shall be paid within thirty days after the close of the racing meeting. All claims or disputes as to the dam of a horse or dog bred in this state shall be determined by the permittee, subject to review by the commission, and the decision of the commission shall be final and conclusive. A horse or dog bred in this state means a horse foaled or a dog whelped in this state and certified by the commission. To be eligible for Arizona bred certification, the horse or dog must be physically present within the this state for not less than six months during the period from the date he is foaled or whelped to the first anniversary date of his having been foaled or whelped. In addition, a dog must be eligible to race pursuant to section 5‑109 in order to be eligible for Arizona bred certification.
D. C. The commission may contract with a breeders' association to certify that an animal is Arizona bred or is an Arizona stallion. The commission may authorize the association, racing organization or department to charge and collect a reasonable fee from the breeder or a stallion owner to cover the cost of certification or transfer and verification that the animal is Arizona bred or an Arizona stallion.
E. Persons who are not licensed under section 5‑107.01 are not eligible to participate in the Arizona greyhound breeders' award fund.
Sec. 18. Section 5‑115, Arizona Revised Statutes, is amended to read
5-115. Violation; classification; civil penalties
A. At any racing meeting conducted under this article, a person is guilty of a class 4 felony, if the person:
1. Knowingly influences or has any understanding or connivance with any official, owner, jockey, trainer, groom, starter, assistant starter or other person associated with a stable, kennel or race in which any horse or dog participates to predetermine the result of a race.
2. Knowingly gives or offers a bribe in any form to any official, owner, trainer, jockey, driver or groom, starter or assistant starter or any other person licensed by the department or accepts or solicits a bribe in any form.
3. Knowingly has in the person's possession or in use, while riding or driving in any horse race, any mechanical or electric device capable of affecting a horse's performance other than an ordinary whip.
4. Knowingly commits any other corrupt or fraudulent practice in relation to racing that affects or may affect the result of a race.
5. For the purpose of selling or offering to sell predictions on horse races, harness races or dog races, advertises that he has predicted the outcome of any race that has been run in this state, unless the person has notified in writing the department or a representative of the department of his predictions at least three hours before the race involved on forms prescribed by the department. A person shall not advertise the fact that he has notified the department or use the name of the department in any way whatsoever to promote the activities described in this section. For the purposes of this paragraph, "advertise" means the use of any newspaper, magazine or other publication, book, notice, circular, pamphlet, letter, handbill, tip sheet, poster, bill, sign, placard, card, label, tag window display, store sign, radio or television announcement, or other means or methods now or hereafter employed to bring to the attention of the public information concerning the outcome of horse or dog races. Nothing contained in this paragraph applies to any daily newspaper of general circulation that is regularly entered in the United States mail, or any other daily publication carrying complete past performances of horses or dogs entered in races, or to any regularly published magazine or periodical devoted to racing news, that has been published for at least two years.
B. It is a class 4 felony for:
1. A trainer or owner to enter a horse or dog in a race if the trainer or owner knows that the horse or dog is drugged or desensitized and that the racing performance of the animal is affected.
2. A person to perform the drugging or desensitizing of a horse or dog if the person knows that the horse or dog will compete in a race while so drugged or desensitized and knows that the racing performance of the animal is affected.
3. A person to intentionally fail to notify a steward as soon as reasonably possible that a horse or dog entered in a race is drugged or desensitized or that a horse or dog was not properly made available for the required tests or inspections and knows that the racing performance of the animal may be affected.
4. A person to intentionally impair or alter the normal performance of a pari‑mutuel wagering system with the intent to defraud or injure the state or a permittee. Alteration of the normal performance of a pari‑mutuel system includes:
(a) Altering, changing or interfering with any equipment or device used in connection with pari‑mutuel wagering.
(b) Causing any false, inaccurate, delayed or unauthorized data, impulse or signal to be fed into, transmitted over, registered in or displayed on any equipment or device used in connection with pari‑mutuel wagering.
5. A person to impair or alter the normal operation of simulcast broadcasts by intentionally doing any of the following with the intent to defraud or injure the state or a permittee:
(a) Intercepting or decoding a transmission of a simulcast signal, either in whole or in part, which has been authorized in writing for the use of pari‑mutuel wagering and that the director has not provided written authorization for the person to receive or decode.
(b) Without written authorization from the director, manufacturing, distributing or selling a device, a plan or a kit for a device capable of intercepting or decoding a transmission of a simulcast signal with the intent that the device, plan or kit be used for interception or decoding.
(c) Without written authorization from the director, possessing a device, a plan or a kit for a device capable of intercepting or decoding a transmission of a simulcast signal with the intent that the device, plan or kit be used for the interception or decoding.
C. The department, in addition to any criminal penalties provided in this chapter and in addition to suspension or revocation of a credential or a license, may levy a civil penalty as to a licensee or a holder of a credential as follows:
1. In an amount of not more than five thousand dollars for each violation of any provision of subsection A of this section.
2. In an amount of not more than two thousand five hundred dollars for each violation of any provision of this chapter that constitutes grounds for suspension or revocation of a credential or license, except for violation of those provisions contained in subsection A of this section. All sums paid to the department pursuant to this subsection shall be deposited, pursuant to sections 35‑146 and 35‑147, in the state general fund.
D. Any person who holds or conducts any racing meeting or operates an additional wagering facility without first complying with the provisions of this article, or any person who fails to submit to a drug test as directed by stewards or who violates any other provision of this article for which no other penalty is prescribed, is guilty of a class 2 misdemeanor.
E. A member of the commission or an employee of the department who at any time, directly or indirectly, knowingly receives any money, bribe, tip or other thing of value or service from any person connected with racing given with an intent to influence the member's or employee's official action, or any person connected with racing who, directly or indirectly, knowingly gives money, a bribe, a tip or any other thing of value or service to a member of the commission or an employee of the department with intent to influence the member's or employee's official action, is guilty of a class 4 felony.
F. A person who knowingly removes or alters, either directly or indirectly, any tattoo, other marking, device, coloration or special characteristic that is required by the department for the purpose of identifying a greyhound used or bred for racing purposes or a person who knowingly subjects a greyhound used or bred for racing purposes regulated under this chapter to grossly inhumane conditions or severe mistreatment is guilty of a class 6 felony. For the purposes of this subsection:
1. "Grossly inhumane conditions" means conditions arising from a person's reckless indifference to the consequences of an act or omission if the person, without any actual intent to injure, is aware from the person's knowledge of existing circumstances and conditions that the person's conduct will inevitably or probably result in injury to a greyhound used or bred for racing purposes.
2. "Severe mistreatment" means the infliction of physical pain, suffering or death on a greyhound used or bred for racing purposes in a manner that is either wanton or with reckless indifference to pain or suffering.
Sec. 19. Section 5-224, Arizona Revised Statutes, is amended to read:
5-224. Division of boxing and mixed martial arts regulation; powers and duties
A. A division of boxing and mixed martial arts regulation is established in the department to provide staff support for the Arizona state boxing and mixed martial arts commission. Subject to title 41, chapter 4, article 4, the director of the department shall appoint an executive director to perform the duties prescribed in this article. The resources for the Arizona state boxing and mixed martial arts commission shall come from monies appropriated to the department from the racing regulation fund established by section 5‑113.01 or from other sources prescribed in section 5‑225, subsection D.
B. The commission shall obtain from a physician licensed to practice in this state rules and standards for the physical examination of boxers and referees. A schedule of fees to be paid physicians by the promoter or matchmaker for the examination shall be set by the commission.
C. The commission may adopt and issue rules pursuant to title 41, chapter 6 to carry out the purposes of this chapter.
D. The commission shall hold regular meetings at least quarterly and in addition may hold special meetings. Except as provided in section 5‑223, subsection B, all meetings of the commission shall be open to the public and reasonable notice of the meetings shall be given pursuant to title 38, chapter 3, article 3.1.
E. The commission shall:
1. Make and maintain a record of the acts of the division, including the issuance, denial, renewal, suspension or revocation of licenses.
2. Keep records of the commission open to public inspection at all reasonable times.
3. Assist the director in the development of rules to be implemented pursuant to section 5‑104, subsection U T.
4. Conform to the rules adopted pursuant to section 5‑104, subsection U T.
F. The commission may enter into intergovernmental agreements with Indian tribes, tribal councils or tribal organizations to provide for the regulation of boxing and mixed martial arts contests on Indian reservations. Nothing in this chapter shall be construed to diminish the authority of the department.
Sec. 20. Section 11‑256.01, Arizona Revised Statutes, is amended to read:
11-256.01. Lease or sublease of county lands and buildings to governmental entity, county fair association or nonprofit corporation; exception
A. Notwithstanding section 11-256, the board may lease or sublease any land or building owned by or under the control of the county to this state, a county fair association which that qualifies to conduct a racing meeting under section 5-111, subsection E D or to receive county monies as provided in section 11-258, a nonprofit corporation, other than a municipal or public finance corporation, organized pursuant to title 10, chapters 24 through 40, an incorporated city or town, a school district or any other political subdivision of this state without holding a public auction and for less than the fair rental value. The board may specify the uses to which the land or building must be devoted and any terms and conditions for the use which that the board determines are in the best interests of the county.
B. Notice of the proposed lease or sublease shall be given by publication once each week for four consecutive weeks in a newspaper of general circulation in the county. The notice shall state all material conditions of the proposed lease, including, if appropriate, the uses to which the land or building must be devoted and any terms and conditions for the use which that the board establishes.
C. If a bid is offered by a person other than the state, a county fair association, a nonprofit corporation, other than a municipal or public finance corporation, or a political subdivision during the notice period, and the bid equals or exceeds the fair rental value of the land or building, the board shall not enter the proposed lease with the state, the county fair association, the nonprofit corporation or the political subdivision and shall offer the land or building for lease in accordance with the provisions of section 11-256.
Sec. 21. Section 42‑5073, Arizona Revised Statutes, is amended to read:
42-5073. Amusement classification
A. The amusement classification is comprised of the business of operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard or pool parlors, bowling alleys, public dances, dance halls, boxing and wrestling matches, skating rinks, tennis courts, except as provided in subsection B of this section, video games, pinball machines, sports events or any other business charging admission or user fees for exhibition, amusement or entertainment, including the operation or sponsorship of events by a tourism and sports authority under title 5, chapter 8. For the purposes of this section, admission or user fees include, but are not limited to, any revenues derived from any form of contractual agreement for rights to or use of premium or special seating facilities or arrangements. The amusement classification does not include:
1. Activities or projects of bona fide religious or educational institutions.
2. Private or group instructional activities. For the purposes of this paragraph, "private or group instructional activities" includes, but is not limited to, performing arts, martial arts, gymnastics and aerobic instruction.
3. The operation or sponsorship of events by the Arizona exposition and state fair board or county fair commissions.
4. A musical, dramatic or dance group or a botanical garden, museum or zoo that is qualified as a nonprofit charitable organization under section 501(c)(3) of the United States internal revenue code and if no part of its net income inures to the benefit of any private shareholder or individual.
5. Exhibition events in this state sponsored, conducted or operated by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4) or 501(c)(6) of the internal revenue code if the organization is associated with major league baseball teams or a national touring professional golfing association and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.
6. Operating or sponsoring rodeos that feature primarily farm and ranch animals in this state and that are sponsored, conducted or operated by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4), 501(c)(6), 501(c)(7) or 501(c)(8) of the internal revenue code and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.
7. Sales of admissions to intercollegiate football contests if the contests are both:
(a) Operated by a nonprofit organization that is exempt from taxation under section 501(c)(3) of the internal revenue code and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.
(b) Not held in a multipurpose facility that is owned or operated by the tourism and sports authority pursuant to title 5, chapter 8.
8. Activities and events of, or fees and assessments received by, a homeowners organization from persons who are members of the organization or accompanied guests of members. For the purposes of this paragraph, "homeowners organization" means a mandatory membership organization comprised of owners of residential property within a specified residential real estate subdivision development or similar area and established to own property for the benefit of its members where both of the following apply:
(a) No part of the organization's net earnings inures to the benefit of any private shareholder or individual.
(b) The primary purpose of the organization is to provide for the acquisition, construction, management, maintenance or care of organization property.
9. Activities and events of, or fees received by, a nonprofit organization that is exempt from taxation under section 501(c)(6) of the internal revenue code if the organization produces, organizes or promotes cultural or civic related festivals or events and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.
10. Arranging an amusement activity as a service to a person's customers if that person is not otherwise engaged in the business of operating or conducting an amusement personally or through others. This exception does not apply to businesses that operate or conduct amusements pursuant to customer orders and send the billings and receive the payments associated with that activity, including when the amusement is performed by third-party independent contractors. For the purposes of this paragraph, "arranging" includes billing for or collecting amusement charges from a person's customers on behalf of the persons providing the amusement.
B. The tax base for the amusement classification is the gross proceeds of sales or gross income derived from the business, except that the following shall be deducted from the tax base:
1. The gross proceeds of sales or gross income derived from memberships, including initiation fees, that provide for the right to use a health or fitness establishment or a private recreational establishment, or any portion of an establishment, including tennis and other racquet courts at that establishment, for participatory purposes for twenty‑eight days or more and fees charged for use of the health or fitness establishment or private recreational establishment by bona fide accompanied guests of members, except that this paragraph does not include additional fees, other than initiation fees, charged by a health or fitness establishment or a private recreational establishment for purposes other than memberships which that provide for the right to use a health or fitness establishment or private recreational establishment, or any portion of an establishment, for participatory purposes for twenty‑eight days or more and accompanied guest use fees.
2. Amounts that are exempt under section 5‑111, subsection H G.
3. The gross proceeds of sales or gross income derived from membership fees, including initiation fees, that provide for the right to use a transient lodging recreational establishment, including golf courses and tennis and other racquet courts at that establishment, for participatory purposes for twenty‑eight days or more, except that this paragraph does not include additional fees, other than initiation fees, that are charged by a transient lodging recreational establishment for purposes other than memberships and that provide for the right to use a transient lodging recreational establishment or any portion of the establishment for participatory purposes for twenty‑eight days or more.
4. The gross proceeds of sales or gross income derived from sales to persons engaged in the business of transient lodging classified under section 42‑5070, if all of the following apply:
(a) The persons who are engaged in the transient lodging business sell the amusement to another person for consideration.
(b) The consideration received by the transient lodging business is equal to or greater than the amount to be deducted under this subsection.
(c) The transient lodging business has provided an exemption certificate to the person engaging in business under this section.
5. The gross proceeds of sales or gross income derived from:
(a) Business activity that is properly included in any other business classification under this article and that is taxable to the person engaged in that classification, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.
(b) Business activity that is arranged by the person who is subject to tax under this section and that is not taxable to the person conducting the activity due to an exclusion, exemption or deduction under this section or section 42‑5062, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.
(c) Business activity that is arranged by a person who is subject to tax under this section and that is taxable to another person under this section who conducts the activity, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.
6. The gross proceeds of sales or gross income derived from entry fees paid by participants for events that either:
(a) Until March 1, 2017, consist of a run, walk, swim or bicycle ride or a similar event, or any combination of these events.
(b) Are operated or conducted by nonprofit organizations that are exempt from taxation under section 501(c)(3) of the internal revenue code and of which no part of the organization's net earnings inures to the benefit of any private shareholder or individual, if the event consists of a run, walk, swim or bicycle ride or a similar event, or any combination of these events.
C. For the purposes of subsection B of this section:
1. "Health or fitness establishment" means a facility whose primary purpose is to provide facilities, equipment, instruction or education to promote the health and fitness of its members and at least eighty percent of the monthly gross revenue of the facility is received through accounts of memberships and accompanied guest use fees which that provide for the right to use the facility, or any portion of the facility, under the terms of the membership agreement for participatory purposes for twenty‑eight days or more.
2. "Private recreational establishment" means a facility whose primary purpose is to provide recreational facilities, such as tennis, golf and swimming, for its members and where at least eighty percent of the monthly gross revenue of the facility is received through accounts of memberships and accompanied guest use fees which that provide for the right to use the facility, or any portion of the facility, for participatory purposes for twenty‑eight days or more.
3. "Transient lodging recreational establishment" means a facility whose primary purpose is to provide facilities for transient lodging, that is subject to taxation under this chapter and that also provides recreational facilities, such as tennis, golf and swimming, for members for a period of twenty‑eight days or more.
D. Until December 31, 1988, the revenues from hayrides and other animal‑drawn amusement rides, from horseback riding and riding instruction and from recreational tours using motor vehicles designed to operate on and off public highways are exempt from the tax imposed by this section. Beginning January 1, 1989, the gross proceeds or gross income from hayrides and other animal‑drawn amusement rides, from horseback riding and from recreational tours using motor vehicles designed to operate on and off public highways are subject to taxation under this section. Tax liabilities, penalties and interest paid for taxable periods before January 1, 1989 shall not be refunded unless the taxpayer requesting the refund provides proof satisfactory to the department that the taxes will be returned to the customer.
E. If a person is engaged in the business of offering both exhibition, amusement or entertainment and private or group instructional activities, the person's books shall be kept to show separately the gross income from exhibition, amusement or entertainment and the gross income from instructional activities. If the books do not provide this separate accounting, the tax is imposed on the person's total gross income from the business.
F. The department shall separately account for revenues collected under the amusement classification for the purposes of section 42‑5029, subsection D, paragraph 4, subdivision (b).
G. For the purposes of section 42‑5032.01, the department shall separately account for revenues collected under the amusement classification from sales of admissions to:
1. Events that are held in a multipurpose facility that is owned or operated by the tourism and sports authority pursuant to title 5, chapter 8, including intercollegiate football contests that are operated by a nonprofit organization that is exempt from taxation under section 501(c)(3) of the internal revenue code.
2. Professional football contests that are held in a stadium located on the campus of an institution under the jurisdiction of the Arizona board of regents.