REPORT TITLE:
5-Yr Parimutuel Horse Racing


DESCRIPTION:
Allows 1 pilot parimutuel horse racing facility in the State for
5 years; creates regulatory board in DCCA.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2335
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PARIMUTUEL WAGERING.



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

 1      SECTION 1.  The legislature finds that the most recent Asian
 
 2 economic crisis escalated into a global crisis which has impaired
 
 3 Hawaii's tourism industry.  To revitalize Hawaii's economy, we
 
 4 need to diversify away from tourism and develop high-return, non-
 
 5 polluting, high-technology, and agricultural industries.  The
 
 6 time has come to make the hard choice to support a form of gaming
 
 7 in the State.
 
 8      Horse racing has a long and honorable international history.
 
 9 Parimutuel horse racing is a popular and widespread form of
 
10 legalized wagering in the United States now approved by forty-
 
11 four states.  Parimutuel horse racing and facilities are operated
 
12 by private groups under strict federal and state government
 
13 regulation and law enforcement.  The industry is also regulated
 
14 by the Thoroughbred Racing Association, the Thoroughbred Racing
 
15 Protective Bureau, the United States Trotting Association, and
 
16 the Association of Racing Commissioners International.
 
17      The Hawaiian Jockey Club was founded in 1872 by King
 
18 Kalakaua.  It was the Hawaiian Jockey Club that brought order out
 
19 of the irregular conduct of the early races and organized the
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 sport according to the rules that governed races elsewhere.
 
 2 Among the original members of the club were such prominent
 
 3 personages as King Kalakaua, Governor Dominis, Samuel Parker,
 
 4 Major Cornwell, and A.S. Cleghorn.
 
 5      Horse racing began in Hawaii in the late nineteenth century.
 
 6 Prior to the Second World War, horse racing was an active pursuit
 
 7 for a great many people for recreation and employment on the Big
 
 8 Island.  On Oahu, horse racing officially began in 1939 when the
 
 9 Oahu Jockey Club was incorporated and the Kailua race track was
 
10 constructed.  According to newspaper accounts, modern horse
 
11 racing on Oahu flourished until 1952.  The sport of horse racing
 
12 enjoyed the hearty patronage of King Kamehameha V.  The
 
13 anniversary of the birth of Kamehameha the Great was first made a
 
14 legal holiday on June 11, 1872, the occasion being celebrated by
 
15 horse races at Kapiolani Park.  A few years later, the races were
 
16 held on a regular mile course, and on every recurring holiday,
 
17 crowds gathered there to enjoy racing and trotting events.
 
18 Attempts to conduct horse racing at Kapiolani Park failed in
 
19 1949, and a bill to permit horse racing on Maui failed to pass
 
20 the house of representatives in 1959.
 
21      From an economic standpoint, a fully operating track will
 
22 employ more than six thousand employees in well-paying union
 
23 jobs.  In areas where a race track was built, this industry has
 

 
Page 3                                                     
                                     S.B. NO.           2335
                                                        
                                                        

 
 1 spawned the development of many small businesses.  It has been
 
 2 estimated that one hundred thousand new jobs have been created in
 
 3 cities with race tracks.
 
 4      Race track activities include betting, which is classified
 
 5 as parimutuel, as opposed to casino gambling.  With parimutuel
 
 6 betting, approximately eighty per cent is paid out to the players
 
 7 (which is the reason for the established odds) while ten per cent
 
 8 is paid to the State in taxes and the remaining ten per cent is
 
 9 applied to track expenses.  Casino gambling, on the other hand,
 
10 pays eighty per cent to the house with ten per cent paid to the
 
11 players.
 
12      In addition to the open space, the race track will add
 
13 another dimension to our medical community in the form of an
 
14 increased need for veterinarians.  This need for veterinarians
 
15 may encourage the John Burns School of Medicine to expand its
 
16 programs in this area accordingly.  The motion picture industry
 
17 has indicated that a race track is a huge pre-requisite for major
 
18 involvement in Hawaii.
 
19      Development of a parimutuel horse racing industry in Hawaii
 
20 would provide many more economic development opportunities,
 
21 including the expansion of horse breeding, training, feed, and
 
22 other related agricultural industries, as well as increased
 
23 sources of revenue from newly generated business, hotel,
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 restaurant, and airline activities.  A horse racing facility
 
 2 could even be included in the planning and development of an
 
 3 international sports complex in Hawaii.
 
 4      The development of a horse racing industry would serve to
 
 5 bolster the State's key tourism industry.  The State is currently
 
 6 losing revenues as many residents travel to other states to
 
 7 observe and wager on horse racing and participate in other casino
 
 8 gaming activities.
 
 9      Finally, horse racing which is controlled and regulated by
 
10 the State will serve to prevent and deter unlawful bookmaking and
 
11 gambling activities.
 
12      The purpose of this Act is to establish a pilot five-year
 
13 program of horse racing and parimutuel wagering on horse racing
 
14 in Hawaii, subject to strict regulation.
 
15      The intent of this Act is to:
 
16      (1)  Assure protection of the health, peace, safety, and
 
17           general welfare of the people of this State;
 
18      (2)  Prevent and deter unlawful bookmaking and betting on
 
19           horse races;
 
20      (3)  Generate and maintain stable public revenues for the
 
21           State's general fund and for the counties;
 
22      (4)  Promote the commercial and economic benefits from a new
 
23           horse racing industry, including benefits to the
 

 
Page 5                                                     
                                     S.B. NO.           2335
                                                        
                                                        

 
 1           tourism industry;
 
 2      (5)  Perpetuate the recreational and entertainment value and
 
 3           the longstanding appreciation of Hawaii's people for
 
 4           the horse and horse racing, historically recognized as
 
 5           a sport in Hawaii;
 
 6      (6)  Encourage agriculture and the breeding of horses in
 
 7           Hawaii;
 
 8      (7)  Provide for maximum expansion of horse racing
 
 9           opportunities in the public interest; and
 
10      (8)  Provide uniformity of regulation for each type of horse
 
11           racing.
 
12      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
13 a new chapter to be appropriately designated and to read as
 
14 follows:
 
15                             "CHAPTER
 
16                PILOT FIVE-YEAR PARIMUTUEL WAGERING
 
17                         AND HORSE RACING
 
18         -1 Definitions.  As used in this chapter, unless the
 
19 context otherwise requires:
 
20      "Association" means any person engaged in the conduct of a
 
21 recognized horse racing meet.
 
22      "Board" means the Hawaii horse racing board.
 
23      "Breakage" means the odd cents by which the amount payable
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 on each dollar wagered exceeds a multiple of 10 cents.
 
 2      "Licensee" means a person, individual, corporation,
 
 3 partnership, association, or other body holding a valid license
 
 4 issued under this chapter.
 
 5      "Parimutuel horse racing facility" means any facility where
 
 6 horse races are viewed live or by way of telecast, and parimutuel
 
 7 wagers are made on the outcomes of those horse races.
 
 8      "Parimutuel wagering" means any system whereby wagers with
 
 9 respect to the outcome of a horse race are placed with, or in, a
 
10 wagering pool conducted by a person licensed or otherwise
 
11 permitted to do so under Hawaii law, and in which the
 
12 participants are wagering with each other and not against the
 
13 operator, such that all sums wagered on competitors in a horse
 
14 race are pooled and holders of winning tickets share the total
 
15 amount bet minus a percentage for the licensee and the State as
 
16 set forth in this chapter.
 
17      "Race" means any horse race conducted live in Hawaii or
 
18 telecast from a state other than Hawaii, or a foreign country
 
19 where parimutuel horse racing is legal.
 
20         -2 Hawaii horse racing board; establishment.(a)
 
21 There is established the Hawaii horse racing board for the
 
22 purpose of implementing this chapter.  The board shall be placed
 
23 within the department of commerce and consumer affairs for
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 administrative purposes.
 
 2      (b)  The board shall consist of three members, who shall not
 
 3 be public officers or employees, appointed by the governor in
 
 4 accordance with this section.  The members shall be from the
 
 5 general public and selected on the basis of their knowledge,
 
 6 interest, and proven expertise in, but not limited to, one or
 
 7 more of the following fields:  both equitation and operations of
 
 8 the horse racing industry, accounting, agriculture, commerce and
 
 9 trade, computer science, corporate management, economics,
 
10 finance, law, law enforcement, marketing, and the parimutuel
 
11 industry.
 
12      (c)  Members shall serve for five years.  One member shall
 
13 be appointed by the governor.  The second member shall be
 
14 appointed by the governor from a list of nominees submitted by
 
15 the president of the senate.  The third member shall be appointed
 
16 by the governor from a list of nominees submitted by the speaker
 
17 of the house of representatives.
 
18      (d)  Whenever a member appointed from a list of nominees
 
19 submitted by the president of the senate or the speaker of the
 
20 house of representatives vacates the member's seat on the board
 
21 prior to the expiration of the member's term, the governor shall
 
22 fill the vacancy for the unexpired term by appointment from a
 
23 list of two nominees submitted by the nominating authority in
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 subsection (c).
 
 2      (e)  An appointment required to be made from a list of
 
 3 nominees submitted by either of the nominating authorities shall
 
 4 be made by the governor within ten days of receipt of the list of
 
 5 nominees.  The governor shall appoint the members of the board
 
 6 prior to July 1, 2000, pursuant to section 26-34.
 
 7      (f)  Terms of members of the board shall commence on July 1,
 
 8 2000, and expire on June 30, 2005.
 
 9      (g)  The governor may remove or suspend for cause any member
 
10 of the board after due notice and public hearing.
 
11      (h)  Members shall serve part time and shall be compensated
 
12 $75 for each day in the performance of official duties; provided
 
13 that the compensation of a member shall not exceed $5,000 in any
 
14 one year.  Members shall also be reimbursed for expenses,
 
15 including travel expenses, incurred in the performance of
 
16 official duties.
 
17      (i)  Officers of the board, including the chairperson, shall
 
18 be selected by the members.
 
19         -3 Powers and duties of the board.(a)  The board
 
20 shall exercise all powers assigned to it under this chapter
 
21 necessary to effectuate the purposes of this chapter.
 
22      (b)  The board shall also have the power to:
 
23      (1)  Maintain an office;
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1      (2)  Keep detailed records of all meetings and of all
 
 2           business transacted, including, but not limited to,
 
 3           collections and disbursements;
 
 4      (3)  Adopt rules pursuant to chapter 91 which will establish
 
 5           the selection process for the licensee to conduct
 
 6           parimutuel wagering at parimutuel horse racing
 
 7           facilities in the State;
 
 8      (4)  Approve the licensee to conduct the parimutuel wagering
 
 9           at parimutuel horse racing facilities in the State; and
 
10      (5)  Employ staff and other employees as necessary for the
 
11           performance of the board's duties, including, but not
 
12           limited to, an executive secretary, auditors,
 
13           inspectors, and security personnel to ensure the
 
14           integrity of parimutuel horse racing as conducted by
 
15           the licensee in the State.  The duties and compensation
 
16           of the employees of the board shall be determined by
 
17           the board, and their compensation shall be paid from
 
18           the administrative fund of the board established in
 
19           section    -7.  The board may combine in a single
 
20           person the duties of one or more employees or
 
21           officials, as efficiency and economy require.  The
 
22           employees appointed by the board under this paragraph
 
23           shall not be subject to chapter 76 or 77 but shall be
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1           members of the employees' retirement system of the
 
 2           State and shall be eligible to receive the benefits of
 
 3           any state or federal employee benefit program generally
 
 4           applicable to officers and employees of the State.
 
 5           Employees may be dismissed by the board at its
 
 6           pleasure.
 
 7      (c)  The board shall submit an annual report during the
 
 8 five-year pilot program to the governor and the legislature which
 
 9 shall include a complete accounting of all income and
 
10 disbursements.
 
11         -4 Oath by board members.  Before entering upon the
 
12 discharge of the duties of the office, each member of the board
 
13 shall take an oath that the member will faithfully execute the
 
14 duties of the member's office according to the laws of the State.
 
15         -5 Bond required.  Prior to the commencement of the
 
16 term of office, each member of the board shall procure a surety
 
17 bond.  The bond shall be approved by the governor and the
 
18 attorney general, payable to the State in the sum of $100,000,
 
19 and conditioned upon the faithful performance of the member's
 
20 duties and the correct accounting and payment of all sums within
 
21 the member's control under this chapter.  Each bond, upon
 
22 execution and approval, shall be filed with the attorney general.
 
23 When, in the governor's opinion, the bond of any member of the
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 board has become or is likely to become invalid or insufficient,
 
 2 the governor shall require that member to renew the bond.  The
 
 3 renewed bond shall be approved by the governor in the sum
 
 4 prescribed in this section.  The cost of any bond given by any
 
 5 member of the board under this section shall be part of the
 
 6 necessary expenses of the board.
 
 7         -6 Meetings and quorum requirements.(a)  The powers
 
 8 of the board are vested in the members thereof.  All actions
 
 9 taken and motions and resolutions adopted by the board at any
 
10 meeting of the board shall require an affirmative vote of at
 
11 least two members.
 
12      (b)  Two members of the board shall constitute a quorum, or
 
13 in the instance of a vacancy, a majority of the members remaining
 
14 qualified.
 
15         -7  Administrative fund; parimutuel education fund;
 
16 established.(a)  There is created the administrative fund which
 
17 shall be administered by the board.  Revenues received shall be
 
18 deposited in the administrative fund subject to section    -12.
 
19 Expenditures from the administrative fund shall be used for all
 
20 necessary expenses and payments permitted or required by this
 
21 chapter.
 
22      (b)  There is created the parimutuel education fund which
 
23 shall be administered by the board.  Revenues received shall be
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 deposited in the parimutuel education fund subject to section
 
 2    -12.  Expenditures from the parimutuel education fund shall be
 
 3 used exclusively to fund education in the State.
 
 4         -8 Prohibitions.(a)  No member, employee, or
 
 5 appointee of the board shall:
 
 6      (1)  Directly or indirectly, individually or as a member of
 
 7           a partnership, or as a shareholder of a corporation,
 
 8           have any interest in the licensee or any subcontractor
 
 9           to the licensee which conducts, or seeks to conduct,
 
10           parimutuel wagering in the State; or
 
11      (2)  Directly or indirectly, wager at any parimutuel
 
12           wagering facility authorized under this chapter.
 
13      (b)  In addition, no board member shall:
 
14      (1)  Accept any form of employment by a business
 
15           organization regulated under this chapter for a period
 
16           of two years following the termination of the member's
 
17           service on the board;
 
18      (2)  Engage in any oral ex parte communications with any
 
19           representative, agent, officer, or employee of any
 
20           business organization regulated under this chapter
 
21           concerning any matter pending before the board; or
 
22      (3)  Participate actively in the management or conducting of
 
23           any political campaign, which includes:
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1           (A)  Holding office in a political party, political
 
 2                organization, or political club;
 
 3           (B)  Campaigning for a candidate in a partisan election
 
 4                by making speeches or writing on behalf of a
 
 5                candidate;
 
 6           (C)  Soliciting votes in support of or in opposition to
 
 7                a candidate; and
 
 8           (D)  Making contributions of time and effort to any
 
 9                political party, political organization, political
 
10                club, or candidate.
 
11         -9 Subpoena powers.(a)  In administering this
 
12 chapter, any member of the board, or an agent authorized by the
 
13 board, may subpoena witnesses, examine them under oath, and
 
14 require the production of books, papers, documents, electronic
 
15 and computer records, or any other objects or things which the
 
16 member or agent deems relevant or material to the inquiry.  Upon
 
17 application by the member or agent, enforcement of the subpoena
 
18 may be sought in the circuit court of the circuit in which the
 
19 person subpoenaed resides or is found in the same manner as a
 
20 subpoena issued by the clerk of a circuit court.
 
21      (b)  The board, upon the request of any person interested in
 
22 a matter before the board, shall issue subpoenas for the
 
23 attendance of witnesses or the production of books, records,
 

 
Page 14                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1 documents, or things on behalf of the person.
 
 2      (c)  The board's subpoenas may be served by any person
 
 3 appointed by the board.  The subpoenas shall be served, and
 
 4 witness fees and mileage shall be paid, pursuant to sections
 
 5 607-8 and 607-12.
 
 6         -10  Bonding of employees.  The board may require any of
 
 7 its employees to be bonded in an amount that it determines.  Upon
 
 8 execution and approval, every bond shall be filed with the
 
 9 attorney general.  The cost of the bond shall be part of the
 
10 necessary expenses of the board.
 
11         -11  Printing of rules.  All rules of the board shall be
 
12 adopted under chapter 91.  The board shall make copies of all
 
13 rules available in convenient form at least annually, before
 
14 February 1, of each year.  The board shall furnish copies of the
 
15 rules to each parimutuel horse racing facility, all employees
 
16 authorized by this chapter, and any other person who desires the
 
17 copies.
 
18         -12  Parimutuel wagering; one parimutuel horse racing
 
19 facility; wagering facilities; fees.(a)  There shall be not
 
20 more than one parimutuel horse racing facility in the State.
 
21      (b)  The State's share of moneys received at the parimutuel
 
22 horse racing facility shall be deposited into the administrative
 
23 fund established pursuant to section    -7.  The chairperson,
 

 
Page 15                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1 with the approval of the board, shall supervise all receipts,
 
 2 disbursements, and accounting of the administrative fund,
 
 3 including that portion which shall be transmitted to the state
 
 4 general fund.
 
 5      (c)  From the total moneys wagered at the parimutuel horse
 
 6 racing facility, the board shall collect from the licensee and
 
 7 distribute appropriately the following:
 
 8      (1)  One-half of one per cent, which shall be deposited into
 
 9           the administrative fund;
 
10      (2)  Four per cent, which shall be deposited into the state
 
11           general fund; and
 
12      (3)  Four per cent, which shall be deposited into the
 
13           parimutuel education fund.
 
14      (d)  The licensee may deduct not more than ten per cent from
 
15 all moneys wagered at the parimutuel horse racing facility as the
 
16 licensee's share.  The remainder of moneys wagered shall be
 
17 distributed according to formulas established by the board to
 
18 holders of winning parimutuel tickets.  A licensee shall compute
 
19 the breakage in the parimutuel horse racing system at the nearest
 
20 10 cents to be distributed as follows:  fifty per cent shall be
 
21 retained by the licensee and fifty per cent shall be transmitted
 
22 to the board for deposit into the state general fund; subject to
 
23 the rules adopted by the board.
 

 
Page 16                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1      (e)  The board may adopt higher takeout formulas for bets
 
 2 commonly known as "exotics".
 
 3      (f)  The licensee who conducts parimutuel horse racing shall
 
 4 maintain for each race an unclaimed winnings account which shall
 
 5 show the total amount due on outstanding winning parimutuel horse
 
 6 racing tickets not presented for payment.  A statement of the
 
 7 balance of the unclaimed winning account shall be furnished to
 
 8 the board within twenty-four hours after any change in the
 
 9 account balance.
 
10      (g)  Any person claiming to be entitled to any winnings of a
 
11 parimutuel wager who fails to claim the money due at the
 
12 completion of the race for which the parimutuel horse racing
 
13 ticket was purchased, may file a claim with the licensee within
 
14 ninety calendar days after the day of the race, in such form as
 
15 the board prescribes, accompanied by the valid winning ticket.
 
16 If the claimant establishes a right to the winnings of the
 
17 parimutuel wager, the licensee shall pay the winnings to the
 
18 claimant.  At the expiration of the ninety-day period, the holder
 
19 of a winning ticket shall possess no right to any portion of the
 
20 wager.  Any unclaimed winnings remaining after the expiration of
 
21 the ninety-day period shall be transmitted to the board for
 
22 deposit into the state general fund.
 
23      (h)  The licensee shall not make any payment to anyone
 

 
Page 17                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1 claiming the winnings of a parimutuel wager, except upon the
 
 2 presentation of a valid, clearly identifiable winning ticket.
 
 3      (i)  The licensee shall operate one pool for all parimutuel
 
 4 wagering facilities statewide.
 
 5      (j)  Notwithstanding sections    -13,   -14, and    -15, no
 
 6 parimutuel wagering shall be allowed in the State until a horse
 
 7 racing facility has actually been constructed and has become
 
 8 operational in the State.
 
 9         -13  Interstate wagering; common pools.  Subject to
 
10 section    -12(j) and applicable federal laws, including but not
 
11 limited to the Interstate Horseracing Act of 1978 (15 U.S.C.
 
12 3001, et seq.), the board may permit the licensee to participate
 
13 in interstate common pools (including common pools which may
 
14 include international jurisdictions).  All provisions of law
 
15 governing parimutuel betting under this chapter shall apply to
 
16 parimutuel betting in interstate common pools except as otherwise
 
17 provided in this section or in the board's rules.
 
18      Participation in a common pool solely as a sending track or
 
19 as a receiving track shall not cause that track to be deemed to
 
20 be doing business in this State, or in the other state, for any
 
21 purpose.
 
22         -14  Where licensee is receiving the race from a sending
 
23 racetrack in another state.  Subject to section    -12(j) and
 

 
Page 18                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1 with the prior approval of the board, the licensee, who is
 
 2 permitted to accept wagers in this State on horse races conducted
 
 3 at racetracks located outside of this State, may combine
 
 4 parimutuel pools in this State with comparable pools at the
 
 5 sending racetrack.  Notwithstanding other provisions of this
 
 6 chapter and subject to the approval of the board, the types of
 
 7 wagering, takeout, distribution of winnings, and rules of racing
 
 8 in effect for parimutuel pools at the sending racetrack shall
 
 9 govern wagers placed in this State and merged into the interstate
 
10 common pool.  Breakage for interstate common pools shall be
 
11 calculated in accordance with the law or rules governing the
 
12 sending racetrack, and shall be distributed between participating
 
13 jurisdictions in a manner agreed to between the licensee and the
 
14 sending racetrack.
 
15      With the prior approval of the board and concurrence of the
 
16 sending racetrack, an interstate common pool may be formed among
 
17 the licensee and other receiving persons or entities in any state
 
18 other than the state in which the sending racetrack is located.
 
19 For such an interstate common pool, the board may approve the
 
20 types of wagering, takeout, distribution of winnings, rules of
 
21 racing, and calculation of breakage which are different from
 
22 those which would otherwise be applied in this State but are
 
23 consistent for all parties to the interstate common pool.
 

 
Page 19                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1      The licensee may deduct from wagers placed in any interstate
 
 2 common pool any fee to the person or entity conducting the race
 
 3 for the privilege of conducting parimutuel wagering on the race,
 
 4 payment of costs incurred in transmitting the broadcast of the
 
 5 race, and participation in the interstate common pool.
 
 6      Provisions of law or contract, if any, governing the
 
 7 distribution of shares of the takeout, from wagers placed in this
 
 8 State in separate parimutuel pools on races run in another state,
 
 9 either to this State as parimutuel taxes or respectively to
 
10 breeder awards and to purses in this State, shall remain in
 
11 effect for wagers placed in interstate common pools; provided
 
12 that:
 
13      (1)  If the board approves an adjustment in the takeout
 
14           rate, the distribution of the takeout within this State
 
15           shall be adjusted proportionately to reflect the
 
16           adjustment in the takeout rate; and 
 
17      (2)  With the concurrence of the licensee and the
 
18           organization representing a majority of the breeders,
 
19           the respective share to breeder awards or to purses may
 
20           be modified.
 
21         -15  Where licensee's racetrack is the sending
 
22 racetrack.  Subject to section    -12(j) and with the prior
 
23 approval of the board, the licensee may permit one or more of its
 

 
Page 20                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1 races to be utilized for parimutuel wagering at one or more
 
 2 locations in other states, may transmit audiovisual signals of
 
 3 races the licensee conducts to one or more locations outside the
 
 4 State, and may also permit parimutuel pools in other states to be
 
 5 combined with its comparable wagering pools or with wagering
 
 6 pools established by other states.  The board may modify its
 
 7 rules and adopt separate rules governing interstate common pools,
 
 8 and may establish by rule separate provisions for interstate
 
 9 common pools governing the calculation of breakage.
 
10      Parimutuel taxes shall not be imposed upon any amounts
 
11 wagered in an interstate common pool other than upon amounts
 
12 wagered within this State.
 
13      Provisions of law or contract, if any, governing the
 
14 distribution of shares of the takeout, from wagers placed in
 
15 other states in separate parimutuel pools on races run in this
 
16 State, respectively to breeder awards and to purses in this
 
17 State, shall remain in effect for wagers placed in interstate
 
18 common pools; provided that with the concurrence of the licensee
 
19 and the organization representing a majority of the breeders, the
 
20 respective share of breeder awards or purses may be modified.
 
21         -16  Application for pilot project license.(a)
 
22 Applications for a license to conduct parimutuel horse racing at
 
23 a parimutuel horse racing facility shall be filed with the board.
 

 
Page 21                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1 The application shall set forth information requested by the
 
 2 board in its rules adopted pursuant to this chapter.
 
 3      (b)  The application for the license shall be accompanied by
 
 4 a license fee in the form of a certified check on a bank
 
 5 maintaining an office and licensed to do business in Hawaii in an
 
 6 amount equal to $500.  The license fee shall be deposited into
 
 7 the administrative fund.
 
 8         -17  Criteria for license; selection of licensee.
 
 9 Pursuant to section    -3(4), the board shall select a licensee
 
10 to conduct parimutuel wagering at a parimutuel horse racing
 
11 facility in the State; provided that:
 
12      (1)  The licensee shall have not less than twenty-five years
 
13           experience in the parimutuel horse racing industry;
 
14      (2)  The licensee shall hold or have held not less than six
 
15           different parimutuel horse racing industry licenses,
 
16           with at least three licenses in the area of equitation
 
17           and at least three licenses in the area of operations,
 
18           issued by an existing state horse racing board and
 
19           validated by the Federal Gaming Commission;
 
20      (3)  The licensee shall be legally domiciled in the State of
 
21           Hawaii for not less than ten years; and
 
22      (4)  The rules shall promote the integrity and quality of
 
23           the activity, the convenience of the public, and
 

 
Page 22                                                    
                                     S.B. NO.           2335
                                                        
                                                        

 
 1           efficiency of operation.
 
 2         -18  Grounds for refusal to award a license.  The board
 
 3 may refuse to grant a license if the licensee:
 
 4      (1)  Is a partnership, corporation, limited liability
 
 5           company, firm, association, or other entity that is not
 
 6           duly authorized to conduct business within the State;
 
 7      (2)  Has any individual member who has been convicted of a
 
 8           crime involving moral turpitude, or is in whole or in
 
 9           part controlled or operated, directly or indirectly, by
 
10           a person who has been convicted of a crime involving
 
11           moral turpitude;
 
12      (3)  Has violated any of the provisions of this chapter or
 
13           any rule of the board or any law or rule relating to
 
14           gambling or parimutuel wagering in any other
 
15           jurisdiction;
 
16      (4)  In the belief of the board should not, in the best
 
17           interest of the safety, welfare, health, peace, and
 
18           morals of the people of this State, be granted a
 
19           license; or
 
20      (5)  Has made a false statement of a material fact to the
 
21           board.
 
22         -19  Termination of engagement.  The licensee shall not
 
23 terminate or discontinue the engagement, employment, or
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 activities in preparation for, or in connection with, the
 
 2 establishment of parimutuel horse racing, or otherwise refuse to
 
 3 cooperate or participate, unless the board is given notice in
 
 4 writing at least thirty days prior to the termination or
 
 5 discontinuance.  The board, upon notification of all interested
 
 6 parties, may conduct hearings with respect to the termination or
 
 7 discontinuance.
 
 8         -20  No transfer of license.  Any license issued under
 
 9 this chapter shall not be transferred.
 
10         -21  Subcontracting for services.  The licensee may
 
11 subcontract all or part of the services for which licensed;
 
12 provided that all subcontracts shall be subject to board
 
13 approval.
 
14         -22  Revocation of license.  The board may revoke the
 
15 license upon any of the grounds upon which the board could refuse
 
16 to issue the license under section    -18, or if the licensee
 
17 fails to pay to the board all sums required under this chapter.
 
18      A license shall be revoked only after reasonable notice and
 
19 opportunity for hearing pursuant to chapter 91.
 
20      Revocation of the license shall constitute a forfeiture of
 
21 all rights and privileges granted by the board.
 
22         -23  Liability insurance.  The licensee shall carry
 
23 public liability insurance written on an approved form by a
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 company licensed to do business in this State.
 
 2         -24  Surety bond.  The licensee shall provide and
 
 3 deliver to the board a bond signed by a surety company authorized
 
 4 to do business in this State in such form as the board requires.
 
 5 The bond shall be in the amount required by the board but not
 
 6 less than $250,000.  The bond shall require the licensee to:
 
 7      (1)  Pay to the State all moneys due under this chapter;
 
 8      (2)  Pay and discharge all obligations to the employees,
 
 9           subcontractors, and other persons furnishing services,
 
10           labor, and material in connection with the
 
11           construction, operation, maintenance, and repair of the
 
12           parimutuel horse racing system;
 
13      (3)  Conduct the parimutuel horse racing in strict
 
14           accordance with this chapter and the rules of the
 
15           board; and
 
16      (4)  Comply with all laws of the State.
 
17 The attorney general shall prosecute all actions relating to the
 
18 bond on behalf of the State."
 
19      SECTION 3.  Chapter 712, Hawaii Revised Statutes, is amended
 
20 by adding a new section to part III to be appropriately
 
21 designated and to read as follows:
 
22      "712-    Parimutuel wagering exemption.  Parimutuel
 
23 wagering conducted in conformance with chapter     does not
 

 
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                                     S.B. NO.           2335
                                                        
                                                        

 
 1 constitute an offense under this part."
 
 2      SECTION 4.  This Act does not affect rights and duties that
 
 3 matured, penalties that were incurred, and proceedings that were
 
 4 begun, before its effective date.
 
 5      SECTION 5.  New statutory material is underscored.
 
 6      SECTION 6.  This Act shall take effect on July 1, 2000, and
 
 7 shall be repealed on June 30, 2005.
 
 8 
 
 9                           INTRODUCED BY:  _______________________