85R12629 DMS-F     By: Kuempel H.B. No. 3926       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of horse racing and greyhound racing and   pari-mutuel wagering in connection with that racing.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 1.03, Texas Racing Act (Article 179e,   Vernon's Texas Civil Statutes), is amended by amending Subdivisions   (2), (6), (18), (46), (50), (67), and (74) and adding Subdivisions   (82), (83), and (84) to read as follows:                (2)  "Association" or "racetrack association" means a   person licensed under this Act to offer [conduct a horse race   meeting or a greyhound race meeting with] pari-mutuel wagering on   horse racing or greyhound racing.                (6)  "Horse race meeting" means the conducting of live,   simulcast, or purpose-driven pari-mutuel wagering on horse races on   a day or during a period of consecutive or nonconsecutive days.                (18)  "Pari-mutuel wagering" means the form of wagering   on the outcome of greyhound or horse races [racing] in which [those   who wager purchase tickets of various denominations on an animal or   animals and] all wagers [for each race] are pooled and held by the   racing association for distribution of the total amount, less the   deductions authorized by this Act, to winning wagers [holders of   tickets on the winning animals].                (46)  "Multiple wagering" means wagering on two or more   entries [animals] in one race or on one or more entries [animals] in   more than one race. "Multiple two wagering" means wagering on two   entries [animals] in one or more races. "Multiple three wagering"   means wagering on three or more entries [animals] in one or more   races.                (50)  "Greyhound racing days" means 24-hour periods   ending at 12 midnight [days] on which a permitted racetrack   association may conduct [conducts] greyhound racing. ["One racing   day" means a period commencing at noon and ending at 2 a.m. the next   calendar day, except in the case of days on which there are matinee   races.]                (67)  "Racetrack facility" means a facility operated by   a racetrack [an] association within its enclosure for the purpose   of offering [presenting races for] pari-mutuel wagering on the   outcome of greyhound or horse races.                (74)  "Race" includes previously run races, whether   digitally represented, simulated, or presented by video recording   and a live audio and visual signal of a race.                (82)  "Purpose-driven pari-mutuel wagering" means   wagering on a greyhound race or horse race, whether running or   harness, that:                      (A)  was previously conducted at a facility   licensed to offer pari-mutuel wagering on the outcome of greyhound   or horse races;                      (B)  concluded with official results; and                      (C)  concluded without a scratch,   disqualification, or dead-heat finish.                (83)  "Purpose-driven pari-mutuel pool" means the   total amount of money wagered by patrons within the enclosure of a   racetrack association on the results of a previously run race.                (84)  "Purpose-driven pari-mutuel wagering system   provider" means a person, company, or association that contracts   with a racetrack association to provide the necessary systems and   hardware to conduct purpose-driven pari-mutuel wagering.          SECTION 2.  Section 3.02(a), Texas Racing Act (Article 179e,   Vernon's Texas Civil Statutes), is amended to read as follows:          (a)  The commission shall regulate and supervise every race   meeting in this state involving wagering on the result of live,   simulcast, or previously run greyhound or horse races [racing].   All persons and things relating to the operation of those meetings   are subject to regulation and supervision by the commission. The   commission shall adopt rules for conducting greyhound or horse   racing in this state involving wagering and shall adopt other rules   to administer this Act that are consistent with this Act. The   commission shall also make rules, issue licenses, and take any   other necessary action relating exclusively to horse racing or to   greyhound racing.          SECTION 3.  Section 3.021(a), Texas Racing Act (Article   179e, Vernon's Texas Civil Statutes), is amended to read as   follows:          (a)  Any provision in this Act to the contrary   notwithstanding, the commission may license and regulate all   aspects of greyhound racing and horse racing offered in this state,   whether or not that racing involves pari-mutuel wagering.          SECTION 4.  Section 3.09, Texas Racing Act (Article 179e,   Vernon's Texas Civil Statutes), is amended by adding Subsection (c)   to read as follows:          (c)  A pari-mutuel pool may be funded with money allocated to   initiate the pool or a guaranteed amount.          SECTION 5.  Section 6.01, Texas Racing Act (Article 179e,   Vernon's Texas Civil Statutes), is amended to read as follows:          Sec. 6.01.  LICENSE REQUIRED. A person may not conduct   wagering on a greyhound race or a horse race [meeting] without first   obtaining a racetrack license from the commission. A person who   violates this section commits an offense.          SECTION 6.  Sections 6.03(a) and (b), Texas Racing Act   (Article 179e, Vernon's Texas Civil Statutes), are amended to read   as follows:          (a)  The commission shall require each applicant for an   original racetrack license to pay the required application fee and   to submit an application, on a form prescribed by the commission,   containing the following information:                (1)  if the applicant is an individual, the full name of   the applicant, the applicant's date of birth, a physical   description of the applicant, the applicant's current address and   telephone number, and a statement by the applicant disclosing any   arrest or conviction for a felony or for a misdemeanor, except a   misdemeanor under Subtitle C, Title 7, Transportation Code, [the   Uniform Act Regulating Traffic on Highways (Article 6701d, Vernon's   Texas Civil Statutes)] or a similar misdemeanor traffic offense;                (2)  if the applicant is a corporation:                      (A)  the state in which it is incorporated, the   names and addresses of the corporation's agents for service of   process in this state, the names and addresses of its officers and   directors, the names and addresses of its stockholders, and, for   each individual named under this subdivision, the individual's date   of birth, current address and telephone number, and physical   description, and a statement disclosing any arrest or conviction   for a felony or for a misdemeanor, except a misdemeanor under   Subtitle C, Title 7, Transportation Code, [the Uniform Act   Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil   Statutes)] or a similar misdemeanor traffic offense; and                      (B)  identification of any other beneficial owner   of shares in the applicant that bear voting rights, absolute or   contingent, any other person that directly or indirectly exercises   any participation in the applicant, and any other ownership   interest in the applicant that the applicant making its best effort   is able to identify;                (3)  if the applicant is an unincorporated business   association:                      (A)  the names and addresses of each of its   members and, for each individual named under this subdivision, the   individual's date of birth, current address and telephone number,   and physical description, and a statement disclosing any arrest or   conviction for a felony or for a misdemeanor, except a misdemeanor   under Subtitle C, Title 7, Transportation Code, [the Uniform Act   Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil   Statutes)] or a similar misdemeanor traffic offense; and                      (B)  identification of any other person that   exercises voting rights in the applicant or that directly or   indirectly exercises any participation in the applicant and any   other ownership interest in the applicant that the applicant making   its best effort is able to identify;                (4)  the exact location at which a race meeting is to be   conducted;                (5)  if the racing facility is in existence, whether it   is owned by the applicant and, if leased to the applicant, the name   and address of the owner and, if the owner is a corporation or   unincorporated business association, the names and addresses of its   officers and directors, its stockholders and members, if any, and   its agents for service of process in this state;                (6)  if construction of the racing facility has not   been initiated, whether it is to be owned by the applicant and, if   it is to be leased to the applicant, the name and address of the   prospective owner and, if the owner is a corporation or   unincorporated business association, the names and addresses of its   officers and directors, the names and addresses of its   stockholders, the names and addresses of its members, if any, and   the names and addresses of its agents for service of process in this   state;                (7)  identification of any other beneficial owner of   shares that bear voting rights, absolute or contingent, in the   owner or prospective owner of the racing facility, or any other   person that directly or indirectly exercises any participation in   the owner or prospective owner and all other ownership interest in   the owner or prospective owner that the applicant making its best   effort is able to identify;                (8)  a detailed statement of the assets and liabilities   of the applicant;                (9)  the kind of racing to be conducted and the dates   requested;                (10)  proof of residency as required by Section 6.06 of   this Act;                (11)  a copy of each management, concession, [and]   totalisator contract, and purpose-driven pari-mutuel wagering   system provider contract dealing with the proposed license at the   proposed location in which the applicant has an interest for   inspection and review by the commission; the applicant or licensee   shall advise the commission of any change in any management,   concession, [or] totalisator contract, or purpose-driven   pari-mutuel wagering system provider contract; all management,   concession, [and] totalisator contracts, and purpose-driven   pari-mutuel wagering system provider contracts must have prior   approval of the commission; the same fingerprint, criminal records   history, and other information required of license applicants   pursuant to Sections 5.03 and 5.04 and Subdivisions (1) through (3)   of this subsection shall be required of proposed totalisator firms,   purpose-driven pari-mutuel wagering system providers,   concessionaires, and managers and management firms; and                (12)  any other information required by the commission.          (b)  When the commission receives a plan for the security of   a racetrack facility, or a copy of a management, concession, [or]   totalisator contract, or purpose-driven pari-mutuel wagering   system provider contract for review under Subdivision (11) of   Subsection (a) of this section, the commission shall review the   contract or security plan in an executive session. Documents   submitted to the commission under this section by an applicant are   subject to discovery in a suit brought under this Act but are not   public records and are not subject to Chapter 552, Government Code   [424, Acts of the 63rd Legislature, Regular Session, 1973 (Article   6252-17a, Vernon's Texas Civil Statutes)]. In reviewing and   approving contracts under this subsection, the commission shall   attempt to ensure the involvement of minority owned businesses   whenever possible.          SECTION 7.  Section 6.04, Texas Racing Act (Article 179e,   Vernon's Texas Civil Statutes), is amended by adding Subsections   (e) and (f) to read as follows:          (e)  A racetrack association licensed to offer pari-mutuel   wagering on horse races, whether live or simulcast, and granted   live or simulcast race dates may offer purpose-driven pari-mutuel   wagering on any day during the calendar year.          (f)  A racetrack association licensed to offer pari-mutuel   wagering on greyhound races, whether live or simulcast, and granted   live or simulcast race dates may offer purpose-driven pari-mutuel   wagering on any day during the calendar year.          SECTION 8.  Section 6.08(b)(3), Texas Racing Act (Article   179e, Vernon's Texas Civil Statutes), is amended to read as   follows:                (3)  The horse racetrack [racing] association shall   transfer the amount set aside for purses from any live,   purpose-driven, and simulcast pools and shall deposit the amounts   in purse accounts maintained by breed by the horsemen's   organization in one or more federally insured depositories. Legal   title to purse accounts is vested in the horsemen's organization.   The horsemen's organization may contract with a racetrack [an]   association to manage and control the purse accounts and to make   disbursements from the purse accounts:                      (A)  to an owner whose horse won a purse;                      (B)  to the horsemen's organization for its   expenses; or                      (C)  for other disbursements as provided by   contract between the horsemen's organization and the association.          SECTION 9.  Section 6.08, Texas Racing Act (Article 179e,   Vernon's Texas Civil Statutes), is amended by amending Subsections   (i) and (j) and adding Subsections (o) and (p) to read as follows:          (i)  Ten percent of the total breakage from a live   pari-mutuel pool, purpose-driven pari-mutuel pool, or a simulcast   pari-mutuel pool is to be paid to the commission for use by the   appropriate state horse breed registry, subject to rules   promulgated by the commission. The appropriate breed registry for   Thoroughbred horses is the Texas Thoroughbred [Breeders]   Association, for quarter horses is the Texas Quarter Horse   Association, for Appaloosa horses is the Texas Appaloosa Horse   Club, for Arabian horses is the Texas Arabian Breeders Association,   and for paint horses is the Texas Paint Horse Breeders Association.          (j)  Ten percent of the total breakage from a live   pari-mutuel pool, purpose-driven pari-mutuel pool, or a simulcast   pari-mutuel pool is to be retained by the racetrack association to   be used in stakes races restricted to accredited Texas-bred horses.   The appropriate state horse breed registry shall pay out the   remaining 80 percent of the total breakage as follows:                (1)  40 percent of the remaining breakage is allocated   to the owners of the accredited Texas-bred horses that finish   first, second, or third;                (2)  40 percent is allocated to the breeders of the   accredited Texas-bred horses that finish first, second, or third;   and                (3)  20 percent is allocated to the owner of the   stallion standing in this state at the time of conception whose   Texas-bred get finish first, second, or third.          (o)  A racetrack association may not begin offering   purpose-driven pari-mutuel wagering until the association   executes:                (1)  a valid contract with the officially recognized   horsemen's organization to establish the portion of the   association's commission on purpose-driven pari-mutuel pools that   will be set aside for purses; and                (2)  a valid contract with the official breed   registries to establish the portion of the association's commission   on purpose-driven pari-mutuel pools that will be set aside for   breeder incentives.          (p)  The commission shall be the final arbiter of any   disagreements between a racetrack association and the horsemen's   organization, or between a racetrack association and the official   breed registries when reaching the terms of a valid contract.          SECTION 10.  Section 6.09, Texas Racing Act (Article 179e,   Vernon's Texas Civil Statutes), is amended by amending Subsections   (a) and (d) and adding Subsections (g) and (h) to read as follows:          (a)  Every racetrack association authorized under this Act   to conduct pari-mutuel wagering at a greyhound race meeting on   races run shall distribute all sums deposited in any live or   simulcast pari-mutuel pool to the holders of the winning tickets if   those tickets are presented for payment within 60 days after the   closing day of the race meeting at which the pool was formed, less   an amount paid as a commission of 18 percent of the total deposits   in pools resulting from regular win, place, and show wagering, and   an amount not to exceed 21 percent of the total deposits in pools   resulting from multiple two wagering and an amount not to exceed 25   percent of the total deposits in pools resulting from multiple   three wagering.          (d)  Fifty percent of the breakage for live, previously run,   or simulcast races is to be paid to the appropriate state greyhound   breeding registry. Of that portion of the breakage 25 percent of   that breakage is to be used in stakes races and 25 percent of that   total breakage from a live pari-mutuel pool, purpose-driven   pari-mutuel pool, or a simulcast pari-mutuel pool is to be paid to   the commission for the use by the state greyhound breed registry,   subject to rules promulgated by the commission.          (g)  A racetrack association may not begin offering   purpose-driven pari-mutuel wagering until the association executes   a valid contract with the Texas Greyhound Association that   establishes the portions of the association's commission on   purpose-driven pari-mutuel pools that will be set aside for purses   and breeder incentives.          (h)  The commission shall be the final arbiter of any   disagreements between an association and the Texas Greyhound   Association when reaching the terms of a valid contract.          SECTION 11.  Sections 6.092(a) and (c), Texas Racing Act   (Article 179e, Vernon's Texas Civil Statutes), are amended to read   as follows:          (a)  The commission shall adopt reporting, monitoring, and   auditing requirements or other appropriate performance measures   for any funds distributed to or used by or any function or service   provided by the expenditure of any funds distributed to or used by   any organization that receives funds generated by live,   purpose-driven, or simulcast pari-mutuel wagering [racing].          (c)  An organization receiving funds generated by   pari-mutuel wagering on live, purpose-driven, or simulcast   [pari-mutuel] racing shall annually file with the commission a copy   of an audit report prepared by an independent certified public   accountant. The audit shall include a verification of any   performance report sent to or required by the commission.          SECTION 12.  Article 6, Texas Racing Act (Article 179e,   Vernon's Texas Civil Statutes), is amended by adding Section 6.095   to read as follows:          Sec. 6.095.  DEDUCTIONS FROM PURPOSE-DRIVEN PARI-MUTUEL   POOL. (a) For each dollar wagered in a purpose-driven pari-mutuel   pool, a racetrack association shall set aside for this state an   amount equal to one percent to be distributed in the following order   of priority:                (1)  $20 million is allocated to pay the costs of body   armor for law enforcement officers in this state;                (2)  $10 million is allocated as death benefits for   families of law enforcement officers killed in the line of duty; and                (3)  any remainder is allocated for deposit to the   general revenue fund to be used at the discretion of this state.          (b)  For each dollar wagered in a purpose-driven pari-mutuel   pool, a racetrack association shall set aside for nonprofit   corporations an amount equal to one percent.          (c)  At any time purpose-driven pari-mutuel wagering is   offered, each racetrack association shall contract with 10   nonprofit corporations to provide contributions to the   corporations from purpose-driven pari-mutuel wagering. A contract   with a nonprofit corporation may be for a term of 30 days or more.          (d)  Any nonprofit corporation registered under 26 U.S.C.   Section 501(c)(3) that has operations in this state and that filed   an Internal Revenue Service Form 990 in the previous calendar year   is eligible to participate. The commission shall adopt rules on the   application process and selection criteria under this section.          (e)  Of the 10 nonprofit corporations contracted under   Subsection (c):                (1)  at least one must benefit law enforcement   programs;                (2)  at least one must benefit veterans of the armed   forces of this state or the United States; and                (3)  not more than three may benefit the racing   industry.          SECTION 13.  Section 6.11(a), Texas Racing Act (Article   179e, Vernon's Texas Civil Statutes), is amended to read as   follows:          (a)  In no event shall the purse in a greyhound race be less   than a minimum of 4.7 percent of the total deposited in each live or   simulcast pool.          SECTION 14.  Section 6.14(a), Texas Racing Act (Article   179e, Vernon's Texas Civil Statutes), is amended to read as   follows:          (a)  A racetrack [An] association may not conduct greyhound   or horse racing or offer pari-mutuel wagering on greyhound or horse   races, whether live, simulcast, or purpose-driven, at any place   other than the place designated in the license except as provided by   this section or by Section 6.15 of this Act. However, if the   racetrack or enclosure designated in the license becomes unsuitable   for racing because of fire, flood, or other catastrophe, the   affected association, with the prior approval of the commission,   may conduct a race meeting or any remaining portion of a meeting   temporarily at any other racetrack licensed by the commission to   conduct the same type of racing as may be conducted by the affected   association if the licensee of the other racetrack also consents to   the usage.          SECTION 15.  Section 11.01(a), Texas Racing Act (Article   179e, Vernon's Texas Civil Statutes), is amended to read as   follows:          (a)  Pari-mutuel wagering on the outcome of greyhound races   and horse races, whether live, simulcast, or previously run, is   authorized under this Act. The commission shall adopt rules to   regulate wagering on the outcome of greyhound races and horse   races, whether live, simulcast, or previously run, under the system   known as pari-mutuel wagering. Wagering may be conducted only by a   racetrack [an] association within its enclosure. A person may not   accept, in person, by telephone, or over the Internet, a wager for a   horse race or greyhound race conducted inside or outside this state   from a person in this state unless the wager is authorized under   this Act.          SECTION 16.  Section 11.04(a), Texas Racing Act (Article   179e, Vernon's Texas Civil Statutes), is amended to read as   follows:          (a)  Only a person inside the enclosure where [both] live or   [and] simulcast race meetings are authorized may wager on the   results [result] of [a] live, previously run, or simulcast races   [race] presented by the racetrack association in accordance with   commission rules. Except as provided by this section, a person may   not place, in person, by telephone, or over the Internet, a wager   for a horse race or greyhound race conducted inside or outside this   state. The commission shall adopt rules to prohibit wagering by   employees of the commission and to regulate wagering by persons   licensed under this Act.          SECTION 17.  Section 6.09(e), Texas Racing Act (Article   179e, Vernon's Texas Civil Statutes), is repealed.          SECTION 18.  As soon as practicable after the effective date   of this Act, the Texas Racing Commission shall adopt the rules   necessary to implement the changes in law made by this Act.          SECTION 19.  This Act takes effect September 1, 2017.