87R5637 GCB-D     By: Guillen H.B. No. 2731       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of historical racing pari-mutuel   wagering by licensed horse and greyhound racetracks and the   distribution of certain live, simulcast, and historical   pari-mutuel pools.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 2021.003, Occupations Code, is amended   by adding Subdivisions (17-a), (17-b), (17-c), (17-d), (17-e), and   (17-f) and amending Subdivisions (32), (33), (40), (41), and (42)   to read as follows:                (17-a)  "Historical pari-mutuel wagering" means   pari-mutuel wagering on the outcomes of historical racing.                (17-b)  "Historical race" means a previously conducted   horse or greyhound race or groups of horse races or of greyhound   races that were:                      (A)  authorized by the commission or another   racing jurisdiction and conducted in this state or another racing   jurisdiction; and                      (B)  concluded with official results that did not   include any scratches, disqualifications, or dead-heat finishes.                (17-c)  "Historical racing" means the display,   including by graphical representation, of historical races.                (17-d)  "Historical racing machine" means a peripheral   electronic device used by a historical racing totalisator system to   offer historical pari-mutuel racing.                (17-e)  "Historical racing totalisator system" means a   system for registering, computing, or displaying the wagering and   payment of winnings in historical pari-mutuel wagering.                (17-f)  "Historical racing totalisator system company"   means a company selling, leasing, servicing, maintaining, or   operating a historical racing totalisator system.                (32)  "Pari-mutuel pool" means the total amount of   money wagered by patrons on the result of a particular race or   combination of races, divided into separate mutuel pools for win,   place, show, or combinations. The term includes pari-mutuel pools   created by pari-mutuel wagering on live and simulcast races and   pools created by pari-mutuel wagering on historical races.                (33)  "Pari-mutuel voucher" means a bearer instrument,   issued by a pari-mutuel wagering machine or a historical racing   machine, that represents money owned by a wagering patron and held   by a racetrack association, including winnings from a pari-mutuel   wager.                (40)  "Race" includes a live audio and visual signal of   and a graphical representation of a race.                (41)  "Racetrack" means a facility licensed under this   subtitle for the conduct of pari-mutuel wagering on horse racing or   greyhound racing, including historical racing.                (42)  "Racetrack association" means a person licensed   under this subtitle to conduct the following with pari-mutuel   wagering:                      (A)  a horse race meeting;                      (B)  [or] a greyhound race meeting; or                      (C)  a historical race [with pari-mutuel   wagering].          SECTION 2.  Section 2023.001(a), Occupations Code, is   amended to read as follows:          (a)  Notwithstanding any contrary provision in this   subtitle, the commission may license and regulate all aspects of   horse racing and greyhound racing in this state, including   historical racing, regardless of whether that racing involves   pari-mutuel wagering.          SECTION 3.  Section 2023.004(a), Occupations Code, is   amended to read as follows:          (a)  The commission shall adopt:                (1)  rules for conducting horse racing or greyhound   racing in this state, including historical racing, that involves   wagering; and                (2)  rules for administering this subtitle in a manner   consistent with this subtitle.          SECTION 4.  Section 2025.001(d), Occupations Code, is   amended to read as follows:          (d)  The commission by rule shall set fees in amounts   reasonable and necessary to cover the commission's costs of   regulating, overseeing, and licensing live, [and] simulcast, and   historical racing at racetracks.          SECTION 5.  Section 2025.051, Occupations Code, is amended   to read as follows:          Sec. 2025.051.  RACETRACK LICENSE REQUIRED; CRIMINAL   PENALTY. A person may not conduct wagering on a live or simulcast   horse or greyhound race meeting or on a historical race without   first obtaining a racetrack license issued by the commission. A   person who violates this section commits an offense.          SECTION 6.  Section 2025.054, Occupations Code, is amended   to read as follows:          Sec. 2025.054.  MANAGEMENT, CONCESSION, HISTORICAL RACING   TOTALISATOR SYSTEM, AND TOTALISATOR CONTRACTS. (a) The commission   shall require each applicant for an original racetrack license to   submit with the application for inspection and review by the   commission a copy of each management, concession, historical racing   totalisator system, and totalisator contract associated with the   proposed license at the proposed location in which the applicant   has an interest.          (b)  An applicant or license holder shall advise the   commission of any change in any management, concession, historical   racing totalisator system, or totalisator contract.          (c)  The criminal history record information, fingerprint,   and other information required of a license applicant under   Sections 2023.057, 2025.003, and 2025.052(a)(1)-(3) are required   of proposed totalisator firms, historical racing totalisator   system companies, concessionaires, and managers and management   firms.          SECTION 7.  Section 2025.056(a), Occupations Code, is   amended to read as follows:          (a)  The commission shall require a complete personal,   financial, and business background check of the applicant or of any   person who owns an interest in or exercises control over an   applicant for a racetrack license, including the partners,   stockholders, concessionaires, management personnel, management   firms, historical racing totalisator system companies, and   creditors.          SECTION 8.  Section 2025.103(a), Occupations Code, is   amended to read as follows:          (a)  After a racetrack association has been granted a license   to operate a racetrack and before the completion of construction at   the designated place for which the license was issued, the   commission may, on application by the racetrack association, issue   a temporary license that authorizes the racetrack association to   conduct races or offer historical racing at a location in the same   county until the earlier of:                (1)  the second anniversary of the date of issuance of   the temporary license; or                (2)  the completion of the permanent facility.          SECTION 9.  Sections 2025.104(b) and (c), Occupations Code,   are amended to read as follows:          (b)  The commission shall designate a racetrack license as an   active license if the license holder:                (1)  holds live racing events or offers historical   racing at the racetrack; or                (2)  makes good faith efforts to conduct live racing or   offer historical racing.          (c)  The commission by rule shall provide guidance on actions   that constitute, for purposes of this subtitle, good faith efforts   to conduct live racing or offer historical racing.          SECTION 10.  Sections 2025.105(b) and (c), Occupations Code,   are amended to read as follows:          (b)  In determining whether to renew an inactive license, the   commission shall consider:                (1)  the inactive license holder's:                      (A)  financial stability;                      (B)  ability to conduct live racing or offer   historical racing;                      (C)  ability to construct and maintain a   racetrack; and                      (D)  other good faith efforts to conduct live   racing or offer historical racing; and                (2)  other necessary factors considered in the issuance   of the original license.          (c)  The commission may refuse to renew an inactive license   if, after notice and a hearing, the commission determines that:                (1)  renewal of the license is not in the best interests   of the racing industry or the public; or                (2)  the license holder has failed to make a good faith   effort to conduct live racing or offer historical racing.          SECTION 11.  Section 2026.002, Occupations Code, is amended   to read as follows:          Sec. 2026.002.  PREVENTION OF SUBTERFUGE IN RACETRACK   OWNERSHIP OR OPERATION. This subtitle shall be liberally construed   to prevent subterfuge in the ownership and operation of a racetrack   or in the offering of historical racing.          SECTION 12.  Section 2026.151(a), Occupations Code, is   amended to read as follows:          (a)  All concession, management, historical racing   totalisator system, and totalisator contracts submitted by an   applicant under Section 2025.054 must have the prior approval of   the commission.          SECTION 13.  Section 2026.152(a), Occupations Code, is   amended to read as follows:          (a)  On receipt of a plan for the security of a racetrack, or   a copy of a concession, management, historical racing totalisator   system, or totalisator contract for review under Section 2026.151,   the commission shall review the security plan or contract in an   executive session. Documents submitted by an applicant to the   commission under this section or Section 2025.052 or 2025.054 are   subject to discovery in a suit brought under this subtitle but are   not public records and are not subject to Chapter 552, Government   Code.          SECTION 14.  Section 2027.001(a), Occupations Code, is   amended to read as follows:          (a)  The commission shall adopt rules to regulate wagering on   horse races and greyhound races, including historical races, under   the system known as pari-mutuel wagering.          SECTION 15.  Chapter 2027, Occupations Code, is amended by   adding Subchapter C-1 to read as follows:   SUBCHAPTER C-1. PARI-MUTUEL WAGERING ON HISTORICAL RACES          Sec. 2027.151.  HISTORICAL PARI-MUTUEL WAGERING RULES. The   commission shall adopt rules to regulate pari-mutuel wagering on   historical races.           Sec. 2027.152.  HISTORICAL RACING. A racetrack association   may offer historical racing, subject to the requirements of this   subchapter.           Sec. 2027.153.  REQUIREMENTS AND LIMITATIONS ON HISTORICAL   RACING MACHINES. (a) The commission may not require the use of a   particular brand or model of historical racing machine.           (b)  A historical racing machine may not display any   information that would allow a patron to identify the historical   race on which the patron is wagering, including the location of the   race, the date on which the race was run, the names of the animals in   the race, or the names of the jockeys that participated in the race   before the patron places a wager on the machine. This subsection   does not prohibit a historical racing machine from displaying   non-identifying race information in written or graphical form.          (c)  After a patron finalizes the patron's wager selections   on a historical racing machine, the machine must display:                (1)  the race, a portion of the race, or a graphical   representation of the race; and                (2)  the official results and identity of the race.          (d)  A racetrack association offering wagering on a   historical racing machine that has a complete malfunction during   use by a patron shall fully refund the balance of the patron's wager   on the machine at the time of the malfunction, as verified by the   historical racing totalisator system.           (e)  To prevent fraud or liability for malfunction of a   significant portion of the historical racing machines at one   location, a racetrack association shall ensure that all historical   race information used by each historical racing machine at the   location is stored on the machine or a server located within the   association's enclosure.           (f)  A racetrack association shall ensure that:                (1)  a single historical racing totalisator system   controls not more than 40 percent of the historical racing machines   at the association's racetrack; and                (2)  a person does not have a financial interest in or   exercise control over one or more historical racing totalisator   systems that control more than 40 percent of the historical racing   machines at the racetrack.          Sec. 2027.154.  REQUIREMENTS AND LIMITATIONS ON HISTORICAL   RACING TOTALISATOR SYSTEMS. (a) The commission may not require the   use of a particular brand or model of historical racing totalisator   system.          (b)  A historical racing totalisator system may be operated   only within a racetrack association's enclosure. Pari-mutuel   wagering on historical racing may not be offered on a historical   racing totalisator system that is connected to the Internet or   another offsite location.           (c)  Pari-mutuel wagering on historical racing may be   offered only on historical racing machines controlled by a   historical racing totalisator system approved by the commission.           Sec. 2027.155.  REQUEST FOR COMMISSION APPROVAL OF   HISTORICAL RACING TOTALISATOR SYSTEM. (a) A historical racing   totalisator company may request commission approval of a historical   racing totalisator system for use in offering historical racing at   a racetrack.          (b)  A request for commission approval submitted under this   section must be accompanied by a certification and associated   report issued by an independent testing laboratory verifying that:                (1)  the laboratory tested the historical racing   totalisator system to ensure its integrity and proper working   order; and                (2)  the system and the proposed wagers to be offered   through the system meet all applicable state laws and commission   rules for use in offering historical racing at a racetrack.          Sec. 2027.156.  CONSTRUCTION OF LAWS RELATED TO HISTORICAL   RACING. (a) No provision of this subtitle may be construed to   allow pari-mutuel wagering on historical racing, the offer of   historical racing, or the use of historical racing machines at any   location other than a racetrack licensed under this subtitle.           (b)  No provision of this subtitle may be construed to   prohibit pari-mutuel wagering on:                 (1)  a historical horse race offered at a greyhound   racetrack licensed under this subtitle; or                 (2)  a historical greyhound race offered at a horse   racetrack licensed under this subtitle.           Sec. 2027.157.  HISTORICAL RACING PARI-MUTUEL POOLS; SEED   POOLS. (a) Except as otherwise provided by Subsection (c), a   racetrack association shall pay patrons who win historical racing   wagers exclusively from the pari-mutuel pools created by wagers   placed on historical racing.          (b)  A racetrack association may not:                (1)  conduct historical racing in a manner that allows   patrons to wager against the racetrack association or that renders   the association's compensation dependent on the outcome of any   particular historical race or the success of any particular wager   on historical racing;                 (2)  pay a winning wager in an amount that exceeds the   amount available in the applicable historical racing pari-mutuel   pool; or                (3)  pay a patron using any consideration other than   cash or a pari-mutuel voucher.           (c)  A racetrack association shall maintain and fund seed   pools as necessary to ensure a sufficient amount of money is   available to pay a patron the minimum payment for a winning wager   specified by the historical racing machine through which the patron   places the wager. A historical racing totalisator system may   assign a percentage of each historical racing wager to fund seed   pools.           (d)  A racetrack association may provide funding for the   initial seed pool for each type of wager and may be refunded an   amount equal to the amount of the initial funding after the   historical racing pari-mutuel pool is fully funded. Except for   amounts used to fund seed pools under Subsection (c), a racetrack   association may not receive any funding for the initial seed pool   from any person, including any historical racing totalisator system   company.          SECTION 16.  Section 2028.001(a), Occupations Code, is   amended to read as follows:          (a)  For any organization that receives funds generated by   live, [or] simulcast, or historical [pari-mutuel] racing with   pari-mutuel wagering, the commission shall adopt reporting,   monitoring, and auditing requirements or other appropriate   performance measures for:                (1)  any funds distributed to or used by the   organization; and                (2)  any function or service provided by the   expenditure of the funds described by Subdivision (1).          SECTION 17.  Section 2028.002(a), Occupations Code, is   amended to read as follows:          (a)  An organization that receives funds generated by live,   [or] simulcast, or historical [pari-mutuel] racing with   pari-mutuel wagering shall annually file with the commission a copy   of an audit report prepared by an independent certified public   accountant. The audit must include a verification of any   performance report sent to or required by the commission.          SECTION 18.  Section 2028.101(b), Occupations Code, is   amended to read as follows:          (b)  The total maximum deduction under Subsection (a) is:                (1)  18 percent from a regular wagering pool or   historical racing pari-mutuel pool;                (2)  21 percent from a multiple two wagering pool; and                (3)  25 percent from a multiple three wagering pool.          SECTION 19.  Sections 2028.105(b) and (c), Occupations Code,   are amended to read as follows:          (b)  A horse racetrack association shall pay to the   commission for use by the appropriate state horse breed registry,   subject to commission rules, 10 percent of the total breakage from a   live, [pari-mutuel pool or a] simulcast, or historical racing   pari-mutuel pool. The appropriate state horse breed registries are   as follows:                (1)  the Texas Thoroughbred Breeders Association for   Thoroughbred horses;                (2)  the Texas Quarter Horse Association for quarter   horses;                (3)  the Texas Appaloosa Horse Club for Appaloosa   horses;                (4)  the Texas Arabian Breeders Association for Arabian   horses; and                (5)  the Texas Paint Horse Breeders Association for   paint horses.          (c)  A horse racetrack association shall retain 10 percent of   the total breakage from a [live pari-mutuel pool or a simulcast]   pari-mutuel pool to be used in stakes races restricted to   accredited Texas-bred horses.          SECTION 20.  Section 2028.151, Occupations Code, is amended   to read as follows:          Sec. 2028.151.  APPLICATION OF SUBCHAPTER. The deductions   and allocations made under this subchapter apply to live,   simulcast, and historical racing pari-mutuel pools, except as   otherwise specifically provided by this subchapter.          SECTION 21.  Section 2028.152, Occupations Code, is amended   to read as follows:          Sec. 2028.152.  DISTRIBUTION OF LIVE OR SIMULCAST   PARI-MUTUEL POOL. Each greyhound racetrack association shall   distribute all money deposited in any live or simulcast pari-mutuel   pool to the winning ticket holders who present tickets for payment   not later than the 60th day after the closing day of the greyhound   race meeting at which the pool was formed less:                (1)  an amount paid as a commission of 18 percent of the   total deposits in pools resulting from regular win, place, and show   wagering;                (2)  an amount not to exceed 21 percent of the total   deposits in pools resulting from multiple two wagering; and                (3)  an amount not to exceed 25 percent of the total   deposits in pools resulting from multiple three wagering.          SECTION 22.  Section 2028.154, Occupations Code, is amended   by amending Subsection (a) and adding Subsection (a-1) to read as   follows:          (a)  A greyhound racetrack association shall pay 50 percent   of the breakage to the appropriate state greyhound breed registry.   Of that breakage percentage:                (1)  25 percent is to be used in stakes races; and                (2)  25 percent of that total breakage from a live   [pari-mutuel pool] or [a] simulcast pari-mutuel pool is to be paid   to the commission for deposit into the Texas-bred incentive fund   established under Section 2028.301.          (a-1)  The commission shall distribute the money collected   under this section and deposited into the fund to the state   greyhound breed registry for use in accordance with this section   and commission rules.          SECTION 23.  Section 2028.155(a), Occupations Code, is   amended to read as follows:          (a)  The purse in a live or simulcast greyhound race may not   be less than 4.7 percent of the total deposited in each pari-mutuel   pool.          SECTION 24.  Subchapter D, Chapter 2028, Occupations Code,   is amended by adding Section 2028.156 to read as follows:          Sec. 2028.156.  DISTRIBUTION OF HISTORICAL RACING   PARI-MUTUEL POOL. A greyhound racetrack association may receive as   compensation an amount not to exceed 18 percent of the   association's historical racing pari-mutuel pools.          SECTION 25.  Chapter 2028, Occupations Code, is amended by   adding Subchapter E-1 to read as follows:   SUBCHAPTER E-1. GENERAL DEDUCTIONS FROM HISTORICAL RACING    PARI-MUTUEL POOLS          Sec. 2028.231.  SET-ASIDE FROM HISTORICAL RACING   PARI-MUTUEL POOL. A horse or greyhound racetrack association shall   set aside for this state from each pari-mutuel pool created by   historical racing offered at the racetrack an amount equal to 1.25   percent of that pool.          SECTION 26.  As soon as practical after the effective date of   this Act, the Texas Racing Commission shall adopt the rules and   procedures necessary to implement the changes in law made by this   Act.          SECTION 27.  This Act takes effect September 1, 2021.