HB2731 - 541R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Repeal

Section 5-102, Arizona Revised Statutes, is repealed.

Sec. 2. Title 5, chapter 1, article 1, Arizona Revised Statutes, is amended by adding section 5-107.04, to read:

START_STATUTE5-107.04. Special event wagering; restriction

A. The department shall develop a system of special event wagering on the simulcasting of horse races that originate outside this state and that consistently generate high volume pari-mutuel wagering activity. The department shall allow additional wagering facilities in this state and commercial live racing permittees in this state to incorporate modern technology to facilitate special event wagering.

B. The department shall ensure that activities conducted under special event wagering do not result in the elimination of restrictions on and requirements for tribal gaming as prescribed in section 5‑601.02. END_STATUTE

Sec. 3. Section 5-111, Arizona Revised Statutes, is amended to read:

START_STATUTE5-111. Wagering percentage to permittee and state; exemptions

A. The commission department 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 department. Wagering for a licensed racing meeting shall be conducted by a commercial live-racing permittee only within an enclosure and, in counties having with 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 department 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 that is licensed to conduct live racing in those counties or, until January 1, 2019, who that 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 is deemed to also occur at the additional facility in the county in which the additional facility is located, and shall be is limited in the same manner as actual live racing in that county. For the purpose of subsection B of this section, the wagering at the additional facility shall be is deemed to occur in the county in which the additional facility is located.

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 C of this section and section 5‑111.02 for horse or harness racing permittees.

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 $1,000,000 of the daily pari‑mutuel pools and five percent of the gross amount exceeding one million dollars $1,000,000 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 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.

D. Any county fair racing association may apply to the commission department for one racing meeting each year and the commission department 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 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 C of this section and are also exempt from the provisions of section 5‑111.01.

E. Monies from charity racing days are exempt from the state percentage of the pari‑mutuel pool prescribed in this section.

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.

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.

H. For accounting purposes, purse overpayments shall be treated as a recoverable receivable. END_STATUTE

Sec. 4. Section 5-112, Arizona Revised Statutes, is amended to read:

START_STATUTE5-112. Wagering legalized; simulcasting of races; unauthorized wagering prohibited; violation; classification; report

A. Except as provided in subsection 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 with 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 with 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 are limited to horse, harness or dog races. The simulcasts shall be are 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 are 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 the purposes of section 5‑111.

C. Notwithstanding subsection B of this section, in counties having with 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 department, 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 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.

D. Notwithstanding subsection B of this section, in counties having with 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 department, 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. 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, 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.

E. In an emergency and on a showing of good cause by a permittee, the commission department 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 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. 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.

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.

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.

L. Simulcasting may only be authorized for the same type of racing authorized by a permittee's live racing permit.

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 department. The commission department 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 department 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.

N. The commission department 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 department 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. 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 department, 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 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 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 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.

O. The owner of the advance deposit wagering account may make an advance deposit pari-mutuel wager only by telephone.

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 department. 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 department. All reasonable costs associated with the creation, provision and transfer of the data is the responsibility of the advance deposit wagering provider.

Q. Any person other than a permittee or any advance deposit wagering provider who is approved by the commission department 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 department and that is located in this state is guilty of a class 6 felony.

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.

S. The department and the attorney general shall enforce subsections Q and 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.

T. All commercial live-racing permittees in this state shall enter into an agreement that complies with the following requirements:

1. Simulcasts that originate from a racing enclosure that conducts live racing in this state shall be offered to each commercial live-racing permittee in this state and each additional wagering facility in this state.

2. The percentage or rate paid by each commercial live-racing permittee in this state and by each additional wagering facility in this state to receive a simulcast of a race conducted by a commercial live‑racing permittee in this state shall be the same percentage or rate regardless of where the live racing is conducted in this state from which the simulcast originates.

U. Any simulcast of live racing that originates from outside this state shall comply with the following requirements:

1. The simulcast must be offered to each commercial live-racing permittee in this state and each additional wagering facility in this state.

2. The percentage or rate paid by each commercial live-racing permittee in this state and by each additional wagering facility in this state to receive the simulcast shall be the same percentage or rate.

V. _____ percent of purse monies generated at each additional wagering facility shall be allocated to each commercial live-racing permittee in this state. END_STATUTE

Sec. 5. Section 41-3020.16, Arizona Revised Statutes, is amended to read:

START_STATUTE41-3020.16. Department of gaming; termination July 1, 2020

A. The department of gaming terminates on July 1, 2020.

B. Title 5, chapter 1 and sections 5‑601, 5-602, 5‑602.01, 5‑603, and 5-604 and this section are repealed on January 1, 2021. END_STATUTE

Sec. 6. Repeal

Section 41-3024.28, Arizona Revised Statutes, is repealed.

Sec. 7. Laws 2018, chapter 318, section 11 is amended to read:

Sec. 11. Rural county fair racing fund; delayed repeal

A. The rural county fair racing fund is established. The department of gaming shall administer the fund. Monies in the fund are continuously appropriated. The department shall transfer two hundred thousand dollars $200,000 of surplus monies in fiscal year 2018‑2019 from the racing regulation fund established by section 5‑113.01, Arizona Revised Statutes, as amended by this act, into the rural county fair racing fund. The department shall distribute matching grants from the rural county fair racing fund to counties with a population of less than eight hundred thousand persons and that operate county fair racing. The Arizona racing commission department shall establish application procedures for counties to apply for grants from the rural county fair racing fund. The Arizona racing commission department shall review the applications submitted by counties and distribute grant monies from the rural county fair racing fund on a first‑come, first‑served basis. A county is not eligible for a grant from the rural county fair racing fund unless the county agrees to contribute county revenues for county fair racing in an amount that is equal to at least fifty percent of the amount of the grant from the rural county fair racing fund. A county may not receive a grant of more than forty thousand dollars $40,000 from the rural county fair racing fund during any fiscal year.

B. This section is repealed from and after June 30, 2020. Any monies remaining in the rural county fair racing fund that are unspent and unencumbered on July 1, 2020 revert to the department of gaming and shall be deposited in the racing regulation fund established by section 5‑113.01, Arizona Revised Statutes, as amended by this act. END_STATUTE

Sec. 8. Arizona racing commission; termination; transfer; effect; succession

A. Notwithstanding any other law, the Arizona racing commission is terminated on the effective date of this act.

B. All matters, including contracts, orders and judicial or quasi‑judicial actions, whether completed or pending, of the Arizona racing commission are transferred, on the effective date of this act, and maintain the same status with the department of gaming.

C. Rules adopted by the Arizona racing commission are effective until superseded by rules adopted by the department of gaming.

D. All personnel, property and records, all data and investigative findings, all obligations and all appropriated monies remaining unspent and unencumbered of the Arizona racing commission are transferred to the department of gaming and may be used for the purposes of this act.

Sec. 9. Conforming legislation

The legislative council staff shall prepare proposed legislation conforming the Arizona Revised Statutes to the provisions of this act for consideration in the fifty‑fourth legislature, second regular session.

Sec. 10. Retroactivity

A. Section 5-111, subsection A, Arizona Revised Statutes, as amended by this act, applies retroactively to from and after December 31, 2018.

B. Laws 2018, chapter 318, section 11, as amended by this act, applies retroactively to from and after June 30, 2018.