REPORT TITLE:
Pari-mutuel Horse Racing


DESCRIPTION:
Establishes pari-mutuel horse racing in Hawaii, regulated by
board in DCCA.  Establishes licensed wagering facilities and
procedures for application, eligibility refusal, termination,
transfer, subcontracting, and revocation of license.  Describes
conduct of pari-mutuel horse racing.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1192
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO PARI-MUTUEL WAGERING AND HORSE RACING.



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

 1      SECTION 1.  The decision to close Hawaii's sugar plantations
 
 2 is long past, and there is a need for the State to encourage the
 
 3 development of industries that do not impact heavily on our
 
 4 environment.  The legislature recognizes that there is a need to
 
 5 expand the economic base of this great State in order to ensure
 
 6 increasing revenues.
 
 7      The land that lays fallow since the closure of our sugar
 
 8 plantations number in the thousands of acres, and may continue
 
 9 indefinitely.  One industry that has demonstrated its worth to
 
10 communities in the United States is horse racing.  It allows for
 
11 as much as five hundred acres to be retained for an
 
12 environmentally friendly use.  From an economic standpoint, a
 
13 fully operating track will employ more than six thousand
 
14 employees in well-paying union jobs.  In areas where a race track
 
15 was built, this industry has spawned the development of many
 
16 small businesses.  It has been estimated that one hundred
 
17 thousand new jobs have been created in cities with a race track.
 
18      The race track activities will involve betting, which is
 
19 classified as pari-mutuel, as opposed to casino gambling.  With
 

 
Page 2                                                     
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 pari-mutuel betting, approximately eighty per cent is paid out to
 
 2 the players (which is reason for the odds) while ten per cent is
 
 3 paid to the State in taxes and the remaining ten per cent is
 
 4 applied to track expenses.  The favorable feature of this
 
 5 activity is that the bettors number in the thousands, who will
 
 6 then have money in their pockets to spend, which will boost the
 
 7 State's economy.  Casino gambling, on the other hand, pays eighty
 
 8 per cent to the house with ten per cent paid to the players.
 
 9      In addition to preserving open spaces, the race track will
 
10 add another dimension to our medical community in the form of an
 
11 increased need for veterinarians.  This need for veterinarians
 
12 may encourage the John Burns School of Medicine to expand its
 
13 programs in this area accordingly.
 
14      Moreover, the motion picture industry has indicated that a
 
15 race track is a huge pre-requisite for major involvement in
 
16 Hawaii.  "Build it and they will come."
 
17      Pari-mutuel horse racing is a popular and widespread form of
 
18 legalized wagering in the United States, having been approved by
 
19 forty-four states.  Pari-mutuel horse racing and facilities are
 
20 operated by private groups under strict federal and state
 
21 government regulation and law enforcement.  The industry is also
 
22 regulated by the Thoroughbred Racing Association, the
 
23 Thoroughbred Racing Protective Bureau, the United States Trotting
 

 
Page 3                                                     
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 Association, and the Association of Racing Commissioners
 
 2 International.
 
 3      Horse racing began in Hawaii in the early twentieth century
 
 4 with the importation by the Big Island's Parker Ranch of top
 
 5 racing lines of horses from the United States mainland and
 
 6 England to develop thoroughbreds in Hawaii.  Horse racing was an
 
 7 active pursuit by a great many people for recreation and
 
 8 employment on the Big Island for many years prior to the Second
 
 9 World War.  On Oahu, horse racing officially began in 1939, when
 
10 the Oahu Jockey Club was incorporated and the Kailua race track
 
11 was constructed.  According to newspaper accounts, modern horse
 
12 racing on Oahu flourished until 1952.  Attempts to conduct horse
 
13 racing at Kapiolani Park failed in 1949, and a bill in 1959 to
 
14 permit horse racing on Maui failed to pass the house of
 
15 representatives.
 
16      The legislature believes that the development of a pari-
 
17 mutuel horse racing industry in Hawaii would provide many
 
18 economic development opportunities, including the expansion of
 
19 horse breeding, feed, and other related agricultural industries,
 
20 and increased sources of revenue from newly generated business,
 
21 hotel, restaurant, and airline activities.  In addition to
 
22 creating an increased need for veterinarians, these economic
 
23 development opportunities would result in new jobs, such as
 

 
Page 4                                                     
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 stable hands, blacksmiths, jockeys, track maintenance and food
 
 2 service personnel, and computer and telecommunications operators,
 
 3 that would have a multiplier effect (multiplier of three reported
 
 4 by State of Florida) on creating even more new job opportunities
 
 5 in other support and travel industries.  For example, in the
 
 6 travel industry, a new monied segment of equestrian Asian
 
 7 travelers could be exploited.
 
 8      The development of a pari-mutuel horse racing industry in
 
 9 Hawaii also would provide many educational opportunities,
 
10 especially in the areas of travel industry and business
 
11 management, blacksmithing, veterinary medicine, television
 
12 broadcasting, and other media and information processing
 
13 technologies.  A horse racing facility could even be included in
 
14 the planning and development of an international sports complex
 
15 in Hawaii.
 
16      Moreover, as a major visitor attraction, the development of
 
17 a horse racing industry would serve to bolster the State's key
 
18 tourism industry.  Furthermore, the State currently loses
 
19 revenues because a large number of residents frequently travel to
 
20 other states to observe and wager on horse racing and participate
 
21 in other casino gaming activities.
 
22      Finally, the legislature believes that horse racing that is
 
23 controlled and regulated by the State will serve to prevent and
 

 
Page 5                                                     
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 deter unlawful bookmaking and gambling activities.
 
 2      The purpose of this Act is to establish horse racing and
 
 3 pari-mutuel wagering on horse racing in Hawaii under strict
 
 4 regulations.
 
 5      The intent of this Act is to:
 
 6      (1)  Assure protection of the health, peace, safety, and
 
 7           general welfare of the people of this State;
 
 8      (2)  Prevent and deter unlawful bookmaking and betting on
 
 9           horse races;
 
10      (3)  Generate and maintain stable public revenues for the
 
11           State's general fund and for the counties;
 
12      (4)  Promote the commercial and economic benefits from a new
 
13           horse racing industry, including benefits to the
 
14           tourism industry;
 
15      (5)  Perpetuate the recreational and entertainment value and
 
16           the longstanding appreciation of Hawaii's people for
 
17           horses and horse racing, historically recognized as a
 
18           sport in Hawaii;
 
19      (6)  Encourage agriculture and the breeding of horses in
 
20           Hawaii;
 
21      (7)  Provide for maximum expansion of horse racing
 
22           opportunities in the public interest; and
 
23      (8)  Provide uniformity of regulation for each type of horse
 

 
Page 6                                                     
                                     S.B. NO.           1192
                                                        
                                                        

 
 1           racing.
 
 2      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 3 a new chapter to be appropriately designated and to read as
 
 4 follows:
 
 5                             "CHAPTER
 
 6               PARI-MUTUEL WAGERING AND HORSE RACING
 
 7      �   -1 Definitions.  As used in this chapter, unless the
 
 8 context otherwise requires:
 
 9      "Association" means any person engaged in the conduct of a
 
10 recognized horse racing meeting.
 
11      "Board" means the Hawaii horse racing board.
 
12      "Breakage" means the odd cents by which the amount payable
 
13 on each dollar wagered exceeds a multiple of ten cents.
 
14      "Licensee" means a person, corporation, partnership,
 
15 association, or other body holding a valid license issued under
 
16 this chapter.
 
17      "Pari-mutuel wagering" means any system whereby wagers with
 
18 respect to the outcome of a horse race are placed with, or in, a
 
19 wagering pool conducted by a person licensed or otherwise
 
20 permitted to do so under Hawaii law, and in which the
 
21 participants are wagering with each other and not against the
 
22 operator, such that all sums wagered on competitors in a horse
 
23 race are pooled and holders of winning tickets share the total
 

 
Page 7                                                     
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 amount bet minus a percentage for the licensee and the State as
 
 2 set forth in this chapter.
 
 3      "Pari-mutuel horse racing facility" means any facility where
 
 4 horse races are viewed live or by way of telecast and pari-mutuel
 
 5 wagers are made on the outcomes of those horse races.
 
 6      "Race" means any horse race conducted live in Hawaii or
 
 7 telecast from a state other than Hawaii or a foreign country
 
 8 where pari-mutuel horse racing is legal.
 
 9      �   -2 Hawaii horse racing board; establishment.(a)
 
10 There is established the Hawaii horse racing board for the
 
11 purpose of implementing this chapter.  The board shall be placed
 
12 within the department of commerce and consumer affairs for
 
13 administrative purposes.
 
14      (b)  The board shall consist of three members, who shall not
 
15 be public officers or employees, appointed by the governor in
 
16 accordance with this section.  The members shall be from the
 
17 general public and selected on the basis of their knowledge,
 
18 interest, and proven expertise in, but not limited to, one or
 
19 more of the following fields:  both horsemanship and operations
 
20 of the horse racing industry, accounting, agriculture, commerce
 
21 and trade, computer science, corporate management, economics,
 
22 finance, law, law enforcement, marketing, and the pari-mutuel
 
23 industry.
 

 
Page 8                                                     
                                     S.B. NO.           1192
                                                        
                                                        

 
 1      (c)  One member, by and with the advice and consent of the
 
 2 senate, shall be appointed by the governor for a term of three
 
 3 years.
 
 4      (d)  One member, by and with the advice and consent of the
 
 5 senate, shall be appointed by the governor from a list of
 
 6 nominees submitted by the president of the senate.  The initial
 
 7 appointee under this subsection shall be appointed from a list of
 
 8 two nominees submitted by the president of the senate, but the
 
 9 list of nominees for subsequent appointments shall be subject to
 
10 subsection (f).  The member appointed from a list of nominees of
 
11 the president of the senate shall serve for a term of three
 
12 years.
 
13      (e)  One member, by and with the advice and consent of the
 
14 senate, shall be appointed by the governor from a list of
 
15 nominees submitted by the speaker of the house of
 
16 representatives.  The initial appointee under this subsection
 
17 shall be appointed from a list of two nominations submitted by
 
18 the speaker of the house of representatives, but the list of
 
19 nominees for subsequent appointments shall be subject to
 
20 subsection (f).  The member appointed from a list of nominees of
 
21 the speaker of the house of representatives shall serve for a
 
22 term of three years.
 
23      (f)  Whenever a member appointed from a list of nominees
 

 
Page 9                                                     
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 submitted by the president of the senate or the speaker of the
 
 2 house of representatives vacates the member's seat on the board
 
 3 prior to the expiration of the member's term, the governor shall
 
 4 fill the vacancy for the unexpired term by appointment from a
 
 5 list of two nominees submitted by the authority who nominated the
 
 6 departing member.  Whenever the term of a member appointed from a
 
 7 list of nominees submitted by any of the nominating authorities
 
 8 expires, the governor shall appoint a member from a list of two
 
 9 nominees submitted by that nominating authority, as the case may
 
10 be; provided that the nominating authority may nominate and the
 
11 governor may reappoint a member to another term so long as the
 
12 reappointment is not contrary to subsection (h).
 
13      (g)  An appointment required to be made from a list of
 
14 nominees submitted by any of the nominating authorities shall be
 
15 made by the governor within ten days of receipt of the list of
 
16 nominees.  The governor shall appoint the members of the board
 
17 before July 1, 1999, to staggered terms pursuant to section
 
18 26-34.
 
19      (h)  Each term of a member of the board shall commence on
 
20 July 1 and expire on June 30.  No person shall be appointed
 
21 consecutively to more than two terms as a member of the board.
 
22 No person shall serve as a member of the board for more than six
 
23 consecutive years.
 

 
Page 10                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1      (i)  Any member of the board whose term has expired and who
 
 2 is not disqualified from membership under subsection (h) may
 
 3 continue in office as a holdover member until a successor is
 
 4 appointed; provided that a holdover member shall not hold office
 
 5 beyond the end of the second regular session of the legislature
 
 6 following the expiration of the member's term of office.
 
 7      (j)  The governor may remove or suspend for cause any member
 
 8 of the board after due notice and public hearing.
 
 9      (k)  Members shall serve part time and shall be compensated
 
10 $75 for each day in the performance of official duties; provided
 
11 that the compensation of a member shall not exceed $5,000 in any
 
12 one year.  Members shall also be reimbursed for any necessary
 
13 expenses, including travel expenses, incurred in the performance
 
14 of official duties.
 
15      (l)  Officers of the board, including the chairperson, shall
 
16 be selected by the members.
 
17      �   -3 Powers and duties of the board.(a)  The board
 
18 shall exercise all powers assigned to it under this chapter
 
19 necessary to effectuate the purposes of this chapter.
 
20      (b)  The board shall also have the power to:
 
21      (1)  Maintain an office;
 
22      (2)  Keep detailed records of all meetings and of all
 
23           business transacted, including, but not limited to,
 

 
Page 11                                                    
                                     S.B. NO.           1192
                                                        
                                                        

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

 
Page 12                                                    
                                     S.B. NO.           1192
                                                        
                                                        

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

 
Page 13                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 bond.  The renewed bond shall be approved by the governor in the
 
 2 sum prescribed in this section.  The cost of any bond given by
 
 3 any member of the board under this section shall be reimbursed to
 
 4 the member as part of the necessary expenses of the board.
 
 5      �   -6 Meetings and quorum requirements.(a)  The powers
 
 6 of the board are vested in the members thereof.  All actions
 
 7 taken and motions and resolutions adopted by the board at any
 
 8 meeting of the board shall require an affirmative vote of at
 
 9 least two members.
 
10      (b)  Two members of the board shall constitute a quorum, or
 
11 in the instance of a vacancy, a majority of the members remaining
 
12 qualified.
 
13      �   -7  Administrative fund; establishment.  The board shall
 
14 establish and administer an administrative fund.  All revenues
 
15 received shall be deposited in the administrative fund.
 
16 Expenditures from the fund shall be used for all necessary
 
17 expenses and payments permitted or required by this chapter.
 
18      �   -8 Prohibitions.(a)  No member, employee, or
 
19 appointee of the board shall:
 
20      (1)  Directly or indirectly, individually or as a member of
 
21           a partnership, or as a shareholder of a corporation,
 
22           have any interest in the licensee or any subcontractor
 
23           to the licensee which conducts, or seeks to conduct,
 

 
Page 14                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1           pari-mutuel wagering in the State; or
 
 2      (2)  Directly or indirectly, wager at any pari-mutuel
 
 3           wagering facility authorized under this chapter.
 
 4      (b)  In addition, no board member shall:
 
 5      (1)  Accept any form of employment by a business
 
 6           organization regulated under this chapter for a period
 
 7           of two years following the termination of the member's
 
 8           service on the board;
 
 9      (2)  Engage in any oral ex parte communications with any
 
10           representative, agent, officer, or employee of any
 
11           business organization regulated under this chapter
 
12           concerning any matter pending before the board; or
 
13      (3)  Participate actively in the management or conducting of
 
14           any political campaign, which includes:
 
15           (A)  Holding office in a political party, political
 
16                organization, or political club;
 
17           (B)  Campaigning for a candidate in a partisan election
 
18                by making speeches or writing on behalf of a
 
19                candidate;
 
20           (C)  Soliciting votes in support of or in opposition to
 
21                a candidate; and
 
22           (D)  Making contributions of time and effort to any
 
23                political party, political organization, political
 

 
Page 15                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1                club, or candidate.
 
 2      �   -9 Subpoena powers.(a)  In administering this
 
 3 chapter, any member of the board, or an agent authorized by the
 
 4 board, may subpoena witnesses, examine them under oath, and
 
 5 require the production of books, papers, documents, electronic
 
 6 and computer records, or any other objects or things that the
 
 7 member or agent deems relevant or material to the inquiry.  Upon
 
 8 application by the member or agent, a subpoena may be enforced in
 
 9 the circuit court of the circuit in which the person subpoenaed
 
10 resides or is found in the same manner as a subpoena issued by
 
11 the clerk of a circuit court.
 
12      (b)  The board, upon the request of any person interested in
 
13 a matter before the board, shall issue subpoenas for the
 
14 attendance of witnesses or the production of books, records,
 
15 documents, or things on behalf of the person.
 
16      (c)  The board's subpoenas may be served by any person
 
17 appointed by the board.  The subpoenas shall be served, and fees,
 
18 including witness fees and mileage, shall be paid, pursuant to
 
19 sections 607-8 and 607-12.
 
20      �   -10  Bonding of employees.  The board may require any of
 
21 its employees to be bonded in such amount as it determines.  Upon
 
22 execution and approval, every bond shall be filed with the
 
23 attorney general.  The cost of the bond shall be part of the
 

 
Page 16                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 necessary expenses of the board.
 
 2      �   -11  Printing of rules.  All rules of the board shall be
 
 3 adopted under chapter 91.  The board shall publish all rules in
 
 4 convenient pamphlet form at least annually, on or before
 
 5 January 31 of each year.  The board shall furnish copies of the
 
 6 pamphlets to each pari-mutuel horse racing facility, all
 
 7 employees authorized by this chapter, and any other person who
 
 8 desires the pamphlets.
 
 9      �   -12  Pari-mutuel wagering; wagering facilities; fees.
 
10 (a)  The State's share of moneys received at pari-mutuel horse
 
11 racing facilities shall be deposited into the administrative fund
 
12 established pursuant to section    -7.
 
13      (b)  The chairperson, with the approval of the board, shall
 
14 supervise all receipts, disbursements, and accounting of the
 
15 administrative fund, including that portion that shall be
 
16 transmitted to the state general fund.
 
17      (c)  From the total moneys wagered at each pari-mutuel horse
 
18 racing facility, the board shall collect from the licensee and
 
19 distribute appropriately the following:  one-half of one per
 
20 cent, which shall be transmitted to the county in which the
 
21 facility is located; one-half of one per cent, which shall be
 
22 deposited into the administrative fund; and four per cent, which
 
23 shall be deposited into the state general fund.
 

 
Page 17                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1      (d)  The licensee may deduct not more than ten per cent from
 
 2 all moneys wagered at pari-mutuel horse racing facilities as the
 
 3 licensee's share.  The remainder of moneys wagered shall be
 
 4 distributed according to formulas established by the board to
 
 5 holders of winning pari-mutuel tickets.  A licensee shall compute
 
 6 the breakage in the pari-mutuel horse racing system at the
 
 7 nearest ten cents to be distributed as follows:  fifty per cent
 
 8 shall be retained by the licensee and fifty per cent shall be
 
 9 transmitted to the board for deposit into the state general fund,
 
10 subject to the rules adopted by the board.
 
11      (e)  The board may adopt higher takeout formulas for bets
 
12 commonly known as "exotics".
 
13      (f)  A licensee who conducts pari-mutuel horse racing shall
 
14 maintain for each race an unclaimed winnings account, which shall
 
15 show the total amount due on outstanding winning pari-mutuel
 
16 horse racing tickets not presented for payment.  A statement of
 
17 the balance of the unclaimed winning account shall be furnished
 
18 to the board within twenty-four hours after any change in the
 
19 account balance.
 
20      (g)  Any person claiming to be entitled to any winnings of a
 
21 pari-mutuel wager, who fails to claim the money due at the
 
22 completion of the race for which the pari-mutuel horse racing
 
23 ticket was purchased, may file a claim with the licensee within
 

 
Page 18                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 ninety calendar days after the day of the race, in such form as
 
 2 the board prescribes, accompanied by the valid winning ticket.
 
 3 If the claimant establishes a right to the winnings of the pari-
 
 4 mutuel wager, the licensee shall pay the winnings to the
 
 5 claimant.  At the expiration of the ninety-day period, the holder
 
 6 of a winning ticket shall possess no right to any portion of the
 
 7 wager.  Any unclaimed winnings remaining after the expiration of
 
 8 the ninety-day period shall be transmitted to the board for
 
 9 deposit into the state general fund.
 
10      (h)  The licensee shall not make any payment to anyone
 
11 claiming the winnings of a pari-mutuel wager, except upon the
 
12 presentation of a valid, clearly identifiable winning ticket.
 
13      (i)  The licensee shall operate one pool for all pari-mutuel
 
14 wagering facilities statewide.
 
15      � -13  Interstate wagering; common pools.  Subject to
 
16 applicable federal laws, including but not limited to the
 
17 Interstate Horseracing Act of 1978 (15 U.S.C. �3001, et seq.),
 
18 the board may permit a licensee to participate in interstate
 
19 common pools (including common pools that may include
 
20 international jurisdictions).  All provisions of law governing
 
21 pari-mutuel betting apply to pari-mutuel betting in interstate
 
22 common pools, except as otherwise provided in this section or in
 
23 the board's rules.
 

 
Page 19                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1      Participation in a common pool solely as a sending track or
 
 2 as a receiving track shall not cause that track to be deemed to
 
 3 be doing business in this State, or in the other state, for any
 
 4 purpose.
 
 5      � -14  Where licensee is receiving the race from a sending
 
 6 racetrack in another state.  (a)  With the prior approval of the
 
 7 board, a licensee who is permitted to accept wagers in this State
 
 8 on horse races conducted at racetracks located outside of this
 
 9 State may combine pari-mutuel pools in this State with comparable
 
10 pools at the sending racetrack.  Notwithstanding other provisions
 
11 of this chapter and subject to the approval of the board, the
 
12 types of wagering, takeout, distribution of winnings, and rules
 
13 of racing in effect for pari-mutuel pools at the sending
 
14 racetrack shall govern wagers placed in this State and merged
 
15 into the interstate common pool.  Breakage for interstate common
 
16 pools shall be calculated in accordance with the law or rules
 
17 governing the sending racetrack and shall be distributed between
 
18 participating jurisdictions in a manner agreed to between the
 
19 licensee and the sending racetrack.
 
20      (b)  With the prior approval of the board and concurrence of
 
21 the sending racetrack, an interstate common pool may be formed
 
22 among the licensee and other receiving persons or entities in any
 
23 state other than the state in which the sending racetrack is
 

 
Page 20                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 located.  For such an interstate common pool, the board may
 
 2 approve the types of wagering, takeout, distribution of winnings,
 
 3 rules of racing, and calculation of breakage that are different
 
 4 from those that would otherwise be applied in this State, but are
 
 5 consistent for all parties to the interstate common pool.
 
 6      (c)  The licensee may deduct, from wagers placed in any
 
 7 interstate common pool:  any fee paid to the person or entity
 
 8 conducting the race for the privilege of conducting pari-mutuel
 
 9 wagering on the race; and payment of costs incurred in
 
10 transmitting the broadcast of the race and participating in the
 
11 interstate common pool.
 
12      (d)  Provisions of law or contract, if any, governing the
 
13 distribution of shares of the takeout, from wagers placed in this
 
14 State in separate pari-mutuel pools on races run in another
 
15 state, either to this State as pari-mutuel taxes or respectively
 
16 to breeder awards and to purses in this State, shall remain in
 
17 effect for wagers placed in interstate common pools; provided
 
18 that:
 
19      (1)  If the board approves an adjustment in the takeout
 
20           rate, the distribution of the takeout within this State
 
21           shall be adjusted proportionately to reflect the
 
22           adjustment in the takeout rate; and
 
23      (2)  With the concurrence of the licensee and the
 

 
Page 21                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1           organization representing a majority of the breeders,
 
 2           the respective share to breeder awards or to purses may
 
 3           be modified.
 
 4      � -15  Where licensee's racetrack is the sending
 
 5 racetrack.(a)  With the prior approval of the board, a licensee
 
 6 may:
 
 7      (1)  Permit one or more of its races to be utilized for
 
 8           pari-mutuel wagering at one or more locations in other
 
 9           states;
 
10      (2)  Transmit audiovisual signals of races the licensee
 
11           conducts to one or more locations outside the State;
 
12           and
 
13      (3)  Permit pari-mutuel pools in other states to be combined
 
14           with its comparable wagering pools or with wagering
 
15           pools established by other states.
 
16 The board may modify its rules and adopt separate rules governing
 
17 interstate common pools, and may establish by rule separate
 
18 provisions for interstate common pools governing the calculation
 
19 of breakage.
 
20      (b)  Pari-mutuel taxes shall not be imposed upon any amounts
 
21 wagered in an interstate common pool other than upon amounts
 
22 wagered within this State.
 
23      (c)  Provisions of law or contract, if any, governing the
 

 
Page 22                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 distribution of the respective shares of the takeout, from wagers
 
 2 placed in other states in separate pari-mutuel pools on races run
 
 3 in this State, to breeder awards and to purses in this State,
 
 4 shall remain in effect for wagers placed in interstate common
 
 5 pools; provided that with the concurrence of the licensee and the
 
 6 organization representing a majority of the breeders, the
 
 7 respective share of breeder awards or purses may be modified.
 
 8      �   -16  Application for license.(a)  Applications for a
 
 9 license to conduct pari-mutuel horse racing at a pari-mutuel
 
10 horse racing facility shall be filed with the board.  The
 
11 application shall set forth information as requested by the board
 
12 in its rules adopted pursuant to this chapter.
 
13      (b)  The application for the license shall be accompanied by
 
14 a license fee in the form of a certified check on a bank
 
15 maintaining an office and licensed to do business in Hawaii in an
 
16 amount equal to $500.  The license fee shall be deposited into
 
17 the administrative fund.
 
18      �   -17  Eligibility for license; selection of licensee.
 
19 (a)  Pursuant to section     -3, the board shall select a
 
20 qualified individual and award that individual a license to
 
21 conduct pari-mutuel wagering at pari-mutuel horse racing
 
22 facilities throughout the State.  The selection of a licensee
 
23 shall be made pursuant to the rules established by the board;
 

 
Page 23                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 provided that:
 
 2      (1)  Not more than one license shall be awarded per two
 
 3           million persons in the population of the State of
 
 4           Hawaii;
 
 5      (2)  The licensee shall have not less than twenty-five years
 
 6           experience in the pari-mutuel horse racing industry;
 
 7      (3)  The licensee shall hold or have held not less than six
 
 8           different pari-mutuel horse racing industry licenses,
 
 9           with at least three licenses in the area of
 
10           horsemanship and at least three licenses in the area of
 
11           operations, issued by an existing state horse racing
 
12           board and validated by the Federal Gaming Commission;
 
13      (4)  The licensee shall be legally domiciled in the State of
 
14           Hawaii for not less than five years; and
 
15      (5)  The rules shall promote the integrity and quality of
 
16           the activity, the convenience of the public, and
 
17           efficiency of operation.
 
18      (b)  No pari-mutuel horse racing facility shall be
 
19 established in any county for the purpose of receiving moneys on
 
20 the results of races if prohibited by the legislative body of
 
21 that county.
 
22      �   -18  Grounds for refusal to license.  The board may
 
23 refuse to grant a license to any applicant if the applicant:
 

 
Page 24                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1      (1)  Is a partnership, corporation, firm, or association
 
 2           that is not duly authorized to conduct business within
 
 3           the State;
 
 4      (2)  Is an individual who has been convicted of a crime
 
 5           involving moral turpitude or, if a partnership,
 
 6           corporation, firm, or association, is in whole or in
 
 7           part controlled or operated, directly or indirectly, by
 
 8           a person who has been convicted of a crime involving
 
 9           moral turpitude;
 
10      (3)  Has violated any of the provisions of this chapter or
 
11           any rule of the board or any law or rule relating to
 
12           gambling or pari-mutuel wagering in any other
 
13           jurisdiction;
 
14      (4)  In the good faith belief of the board, should not, in
 
15           the best interest of the health, safety, and welfare of
 
16           the people of this State, be granted a license; or
 
17      (5)  Has made a false statement of a material fact to the
 
18           board.
 
19      �   -19  Termination of engagement.  The licensee shall not
 
20 terminate or discontinue the engagement, employment, or
 
21 activities in preparation for, or in connection with, the
 
22 establishment of pari-mutuel horse racing, or otherwise refuse to
 
23 cooperate or participate, unless the board is given notice in
 

 
Page 25                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 writing at least thirty days prior to the termination or
 
 2 discontinuance.  The board, upon notification of all interested
 
 3 parties, may conduct hearings with respect to the termination or
 
 4 discontinuance.
 
 5      �   -20  Transfer of license.  Any license issued under this
 
 6 chapter shall not be transferred without prior consent of the
 
 7 board.
 
 8      �   -21  Subcontracting for services.  The licensee may
 
 9 subcontract all or part of the services for which licensed;
 
10 provided that all subcontracts are subject to board approval.
 
11      �   -22  Revocation of license.  The board may revoke the
 
12 license upon any of the grounds upon which the board could refuse
 
13 to issue the license under section    -18, or if the licensee
 
14 fails to pay to the board all sums required under this chapter.
 
15 A license shall be revoked only after reasonable notice and
 
16 opportunity for hearing pursuant to chapter 91.  Revocation of
 
17 the license shall constitute a forfeiture of all rights and
 
18 privileges granted by the board.
 
19      �   -23  Liability insurance.  The licensee shall carry
 
20 public liability insurance written on an approved form by a
 
21 company licensed to do business in this State.
 
22      �   -24  Surety bond.  The licensee shall provide and
 
23 deliver to the board a bond signed by a surety company authorized
 

 
Page 26                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 to do business in this State.  The bond shall be in the form and
 
 2 the amount required by the board but shall not be less than
 
 3 $250,000.  The bond shall require the licensee to:
 
 4      (1)  Pay to the State all moneys due under this chapter;
 
 5      (2)  Pay and discharge all obligations to the employees,
 
 6           subcontractors, and other persons furnishing services,
 
 7           labor, and material in connection with the
 
 8           construction, operation, maintenance, and repair of the
 
 9           pari-mutuel horse racing system;
 
10      (3)  Conduct the pari-mutuel horse racing in strict
 
11           accordance with this chapter and the rules of the
 
12           board; and
 
13      (4)  Comply with all laws of the State.
 
14 The attorney general shall prosecute all actions relating to the
 
15 bond on behalf of the State."
 
16      SECTION 3.  Chapter 712, Hawaii Revised Statutes, is amended
 
17 by adding a new section to part III to be appropriately
 
18 designated and to read as follows:
 
19      "�712-     Pari-mutuel wagering exemption.  Pari-mutuel
 
20 wagering conducted in conformance with chapter      does not
 
21 constitute an offense under this part."
 
22      SECTION 4.  This Act does not affect rights and duties that
 
23 matured, penalties that were incurred, and proceedings that were
 

 
Page 27                                                    
                                     S.B. NO.           1192
                                                        
                                                        

 
 1 begun, before its effective date.
 
 2      SECTION 5.  New statutory material is underscored.
 
 3      SECTION 6.  This Act shall take effect upon its approval.
 
 4 
 
 5                           INTRODUCED BY:  _______________________