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.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2397
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PARIMUTUEL WAGERING AND HORSE RACING.



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,
 
 5 nonpolluting, 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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                                     H.B. NO.           
                                                        
                                                        

 
 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
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

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

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

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

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           State's general fund and for the counties;
 
 2      (4)  Promote the commercial and economic benefits from a new
 
 3           horse racing industry, including benefits to the
 
 4           tourism industry;
 
 5      (5)  Perpetuate the recreational and entertainment value and
 
 6           the longstanding appreciation of Hawaii's people for
 
 7           the horse and horse racing, historically recognized as
 
 8           a sport in Hawaii;
 
 9      (6)  Encourage agriculture and the breeding of horses in
 
10           Hawaii;
 
11      (7)  Provide for maximum expansion of horse racing
 
12           opportunities in the public interest; and
 
13      (8)  Provide uniformity of regulation for each type of horse
 
14           racing.
 
15      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
16 a new chapter to be appropriately designated and to read as
 
17 follows:
 
18                             "CHAPTER
 
19                PILOT FIVE-YEAR PARIMUTUEL WAGERING
 
20                         AND HORSE RACING
 
21      §   -1 Definitions.  As used in this chapter, unless the
 
22 context otherwise requires:
 

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

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 where parimutuel horse racing is legal.
 
 2      §   -2 Hawaii horse racing board; establishment.(a)
 
 3 There is established the Hawaii horse racing board for the
 
 4 purpose of implementing this chapter.  The board shall be placed
 
 5 within the department of commerce and consumer affairs for
 
 6 administrative purposes.
 
 7      (b)  The board shall consist of three members, who shall not
 
 8 be public officers or employees, appointed by the governor in
 
 9 accordance with this section.  The members shall be from the
 
10 general public and selected on the basis of their knowledge,
 
11 interest, and proven expertise in, but not limited to, one or
 
12 more of the following fields:  both equitation and operations of
 
13 the horse racing industry, accounting, agriculture, commerce and
 
14 trade, computer science, corporate management, economics,
 
15 finance, law, law enforcement, marketing, and the parimutuel
 
16 industry.
 
17      (c)  Members shall serve for five years.  One member shall
 
18 be appointed by the governor.  The second member shall be
 
19 appointed by the governor from a list of nominees submitted by
 
20 the president of the senate.  The third member shall be appointed
 
21 by the governor from a list of nominees submitted by the speaker
 
22 of the house of representatives.
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      (d)  Whenever a member appointed from a list of nominees
 
 2 submitted by the president of the senate or the speaker of the
 
 3 house of representatives vacates the member's seat on the board
 
 4 prior to the expiration of the member's term, the governor shall
 
 5 fill the vacancy for the unexpired term by appointment from a
 
 6 list of two nominees submitted by the nominating authority in
 
 7 subsection (c).
 
 8      (e)  An appointment required to be made from a list of
 
 9 nominees submitted by either of the nominating authorities shall
 
10 be made by the governor within ten days of receipt of the list of
 
11 nominees.  The governor shall appoint the members of the board
 
12 prior to July 1, 2000, pursuant to section 26-34.
 
13      (f)  Terms of members of the board shall commence on July 1,
 
14 2000, and expire on June 30, 2005.
 
15      (g)  The governor may remove or suspend for cause any member
 
16 of the board after due notice and public hearing.
 
17      (h)  Members shall serve part time and shall be compensated
 
18 $75 for each day in the performance of official duties; provided
 
19 that the compensation of a member shall not exceed $5,000 in any
 
20 one year.  Members shall also be reimbursed for expenses,
 
21 including travel expenses, incurred in the performance of
 
22 official duties.
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      (i)  Officers of the board, including the chairperson, shall
 
 2 be selected by the members.
 
 3      §   -3 Powers and duties of the board.(a)  The board
 
 4 shall exercise all powers assigned to it under this chapter
 
 5 necessary to effectuate the purposes of this chapter.
 
 6      (b)  The board shall also have the power to:
 
 7      (1)  Maintain an office;
 
 8      (2)  Keep detailed records of all meetings and of all
 
 9           business transacted, including, but not limited to,
 
10           collections and disbursements;
 
11      (3)  Adopt rules pursuant to chapter 91 which will establish
 
12           the selection process for the licensee to conduct
 
13           parimutuel wagering at parimutuel horse racing
 
14           facilities in the State;
 
15      (4)  Approve the licensee to conduct the parimutuel wagering
 
16           at parimutuel horse racing facilities in the State; and
 
17      (5)  Employ staff and other employees as necessary for the
 
18           performance of the board's duties, including, but not
 
19           limited to, an executive secretary, auditors,
 
20           inspectors, and security personnel to ensure the
 
21           integrity of parimutuel horse racing as conducted by
 
22           the licensee in the State.  The duties and compensation
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           of the employees of the board shall be determined by
 
 2           the board, and their compensation shall be paid from
 
 3           the administrative fund of the board established in
 
 4           section    -7.  The board may combine in a single
 
 5           person the duties of one or more employees or
 
 6           officials, as efficiency and economy require.  The
 
 7           employees appointed by the board under this paragraph
 
 8           shall not be subject to chapter 76 or 77 but shall be
 
 9           members of the employees' retirement system of the
 
10           State and shall be eligible to receive the benefits of
 
11           any state or federal employee benefit program generally
 
12           applicable to officers and employees of the State.
 
13           Employees may be dismissed by the board at its
 
14           pleasure.
 
15      (c)  The board shall submit an annual report during the
 
16 five-year pilot program to the governor and the legislature which
 
17 shall include a complete accounting of all income and
 
18 disbursements.
 
19      §   -4 Oath by board members.  Before entering upon the
 
20 discharge of the duties of the office, each member of the board
 
21 shall take an oath that the member will faithfully execute the
 
22 duties of the member's office according to the laws of the State.
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      §   -5 Bond required.  Prior to the commencement of the
 
 2 term of office, each member of the board shall procure a surety
 
 3 bond.  The bond shall be approved by the governor and the
 
 4 attorney general, payable to the State in the sum of $100,000,
 
 5 and conditioned upon the faithful performance of the member's
 
 6 duties and the correct accounting and payment of all sums within
 
 7 the member's control under this chapter.  Each bond, upon
 
 8 execution and approval, shall be filed with the attorney general.
 
 9 When, in the governor's opinion, the bond of any member of the
 
10 board has become or is likely to become invalid or insufficient,
 
11 the governor shall require that member to renew the bond.  The
 
12 renewed bond shall be approved by the governor in the sum
 
13 prescribed in this section.  The cost of any bond given by any
 
14 member of the board under this section shall be part of the
 
15 necessary expenses of the board.
 
16      §   -6 Meetings and quorum requirements.(a)  The powers
 
17 of the board are vested in the members thereof.  All actions
 
18 taken and motions and resolutions adopted by the board at any
 
19 meeting of the board shall require an affirmative vote of at
 
20 least two members.
 
21      (b)  Two members of the board shall constitute a quorum, or
 
22 in the instance of a vacancy, a majority of the members remaining
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 qualified.
 
 2      §   -7  Administrative fund; education special fund;
 
 3 established.(a)  There is created the administrative fund which
 
 4 shall be administered by the board.  Revenues received shall be
 
 5 deposited in the administrative fund subject to section    -12.
 
 6 Expenditures from the administrative fund shall be used for all
 
 7 necessary expenses and payments permitted or required by this
 
 8 chapter.
 
 9      (b)  There is created the education special fund which shall
 
10 be administered by the board.  Revenues received shall be
 
11 deposited in the education special fund subject to section
 
12    -12.  Expenditures from the education special fund shall be
 
13 used exclusively to fund education in the State.
 
14      §   -8 Prohibitions.(a)  No member, employee, or
 
15 appointee of the board shall:
 
16      (1)  Directly or indirectly, individually or as a member of
 
17           a partnership, or as a shareholder of a corporation,
 
18           have any interest in the licensee or any subcontractor
 
19           to the licensee which conducts, or seeks to conduct,
 
20           parimutuel wagering in the State; or
 
21      (2)  Directly or indirectly, wager at any parimutuel
 
22           wagering facility authorized under this chapter.
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

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

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

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

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      §   -11  Printing of rules.  All rules of the board shall be
 
 2 adopted under chapter 91.  The board shall make copies of all
 
 3 rules available in convenient form at least annually, before
 
 4 February 1, of each year.  The board shall furnish copies of the
 
 5 rules to each parimutuel horse racing facility, all employees
 
 6 authorized by this chapter, and any other person who desires the
 
 7 copies.
 
 8      §   -12  Parimutuel wagering; one parimutuel horse racing
 
 9 facility; wagering facilities; fees.(a)  There shall be not
 
10 more than one parimutuel horse racing facility in the State.
 
11      (b)  The State's share of moneys received at the parimutuel
 
12 horse racing facility shall be deposited into the administrative
 
13 fund established pursuant to section    -7.  The chairperson,
 
14 with the approval of the board, shall supervise all receipts,
 
15 disbursements, and accounting of the administrative fund,
 
16 including that portion which shall be transmitted to the state
 
17 general fund.
 
18      (c)  From the total moneys wagered at the parimutuel horse
 
19 racing facility, the board shall collect from the licensee and
 
20 distribute appropriately the following:
 
21      (1)  One-half of one per cent, which shall be deposited into
 
22           the administrative fund;
 

 
 
 
Page 16                                                    2397
                                     H.B. NO.           
                                                        
                                                        

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

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 account balance.
 
 2      (g)  Any person claiming to be entitled to any winnings of a
 
 3 parimutuel wager who fails to claim the money due at the
 
 4 completion of the race for which the parimutuel horse racing
 
 5 ticket was purchased, may file a claim with the licensee within
 
 6 ninety calendar days after the day of the race, in such form as
 
 7 the board prescribes, accompanied by the valid winning ticket.
 
 8 If the claimant establishes a right to the winnings of the
 
 9 parimutuel wager, the licensee shall pay the winnings to the
 
10 claimant.  At the expiration of the ninety-day period, the holder
 
11 of a winning ticket shall possess no right to any portion of the
 
12 wager.  Any unclaimed winnings remaining after the expiration of
 
13 the ninety-day period shall be transmitted to the board for
 
14 deposit into the state general fund.
 
15      (h)  The licensee shall not make any payment to anyone
 
16 claiming the winnings of a parimutuel wager, except upon the
 
17 presentation of a valid, clearly identifiable winning ticket.
 
18      (i)  The licensee shall operate one pool for all parimutuel
 
19 wagering facilities statewide.
 
20      (j)  Notwithstanding sections    -13,   -14, and    -15, no
 
21 parimutuel wagering shall be allowed in the State until a horse
 
22 racing facility has actually been constructed and has become
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 operational in the State.
 
 2      §   -13  Interstate wagering; common pools.  Subject to
 
 3 section    -12(j) and applicable federal laws, including but not
 
 4 limited to the Interstate Horseracing Act of 1978 (15 U.S.C.
 
 5 §3001, et seq.), the board may permit the licensee to participate
 
 6 in interstate common pools (including common pools which may
 
 7 include international jurisdictions).  All provisions of law
 
 8 governing parimutuel betting under this chapter shall apply to
 
 9 parimutuel betting in interstate common pools except as otherwise
 
10 provided in this section or in the board's rules.
 
11      Participation in a common pool solely as a sending track or
 
12 as a receiving track shall not cause that track to be deemed to
 
13 be doing business in this State, or in the other state, for any
 
14 purpose.
 
15      §   -14  Where licensee is receiving the race from a sending
 
16 racetrack in another state.  Subject to section    -12(j) and
 
17 with the prior approval of the board, the licensee, who is
 
18 permitted to accept wagers in this State on horse races conducted
 
19 at racetracks located outside of this State, may combine
 
20 parimutuel pools in this State with comparable pools at the
 
21 sending racetrack.  Notwithstanding other provisions of this
 
22 chapter and subject to the approval of the board, the types of
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 wagering, takeout, distribution of winnings, and rules of racing
 
 2 in effect for parimutuel pools at the sending racetrack shall
 
 3 govern wagers placed in this State and merged into the interstate
 
 4 common pool.  Breakage for interstate common pools shall be
 
 5 calculated in accordance with the law or rules governing the
 
 6 sending racetrack, and shall be distributed between participating
 
 7 jurisdictions in a manner agreed to between the licensee and the
 
 8 sending racetrack.
 
 9      With the prior approval of the board and concurrence of the
 
10 sending racetrack, an interstate common pool may be formed among
 
11 the licensee and other receiving persons or entities in any state
 
12 other than the state in which the sending racetrack is located.
 
13 For such an interstate common pool, the board may approve the
 
14 types of wagering, takeout, distribution of winnings, rules of
 
15 racing, and calculation of breakage which are different from
 
16 those which would otherwise be applied in this State but are
 
17 consistent for all parties to the interstate common pool.
 
18      The licensee may deduct from wagers placed in any interstate
 
19 common pool any fee to the person or entity conducting the race
 
20 for the privilege of conducting parimutuel wagering on the race,
 
21 payment of costs incurred in transmitting the broadcast of the
 
22 race, and participation in the interstate common pool.
 

 
 
 
Page 20                                                    2397
                                     H.B. NO.           
                                                        
                                                        

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

 
 
 
Page 21                                                    2397
                                     H.B. NO.           
                                                        
                                                        

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

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

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

 
 
 
Page 23                                                    2397
                                     H.B. NO.           
                                                        
                                                        

 
 1 may refuse to grant a license if the licensee:
 
 2      (1)  Is a partnership, corporation, limited liability
 
 3           company, firm, association, or other entity that is not
 
 4           duly authorized to conduct business within the State;
 
 5      (2)  Has any individual member who has been convicted of a
 
 6           crime involving moral turpitude, or 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 parimutuel wagering in any other
 
13           jurisdiction;
 
14      (4)  In the belief of the board should not, in the best
 
15           interest of the safety, welfare, health, peace, and
 
16           morals of the people of this State, be granted a
 
17           license; or
 
18      (5)  Has made a false statement of a material fact to the
 
19           board.
 
20      §   -19  Termination of engagement.  The licensee shall not
 
21 terminate or discontinue the engagement, employment, or
 
22 activities in preparation for, or in connection with, the
 

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

 
 
 
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 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
 

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