REPORT TITLE:
Pari-Mutuel Horse Racing


DESCRIPTION:
Creates HI gaming control commission; allows pari-mutuel horse
racing; establishes wagering facilities and procedures.  Gives
10% of wagers to licensee; 4% to general fund;    % and    % for
administration & problem gambler services.  Takes effect only if
electorate approves casino gaming in an advisory referendum.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2196
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PARI-MUTUEL 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 which 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 which lays fallow since the closure of our sugar
 
 8 plantations number in the thousands of acres, and may continue
 
 9 indefinitely.  One industry which 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 may employ more than six thousand employees
 
14 in well-paying union jobs.  In areas where a race track was
 
15 built, this industry has spawned the development of many small
 
16 businesses.  It has been estimated that one hundred thousand new
 
17 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
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1 betting, approximately eighty per cent is paid out to the players
 
 2 while ten per cent is paid to the State in taxes and the
 
 3 remaining ten per cent is applied to track expenses.  The
 
 4 favorable feature of this activity is that the bettors number in
 
 5 the thousands, who will then have money in their pockets to
 
 6 spend, which will boost the State's economy.  Casino gambling, on
 
 7 the other hand, pays eighty per cent to the house with ten per
 
 8 cent paid to the players.
 
 9      The motion picture industry has indicated that a race track
 
10 is a huge pre-requisite for major involvement in Hawaii.  "Build
 
11 it and they will come."
 
12      Pari-mutuel horse racing is a popular and widespread form of
 
13 legalized wagering in the United States, having been approved by
 
14 forty-four states.  Pari-mutuel horse racing and facilities are
 
15 operated by private groups under strict federal and state
 
16 government regulation and law enforcement.  The industry is also
 
17 regulated by the Thoroughbred Racing Association, the
 
18 Thoroughbred Racing Protective Bureau, the United States Trotting
 
19 Association, and the Association of Racing Commissioners
 
20 International.
 
21      Horse racing began, in Hawaii, in the early twentieth
 
22 century with the importation by the Big Island's Parker Ranch of
 
23 top racing lines of horses from the United States mainland and
 

 
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 1 England to develop thoroughbreds in Hawaii.  Horse racing was an
 
 2 active pursuit for a great many people for recreation and
 
 3 employment on the Big Island for many years prior to the Second
 
 4 World War.  On Oahu, horse racing officially began in 1939 when
 
 5 the Oahu Jockey Club was incorporated and the Kailua race track
 
 6 was constructed.  According to newspaper accounts, modern horse
 
 7 racing on Oahu flourished until 1952.  Attempts to conduct horse
 
 8 racing at Kapiolani Park failed in 1949, and a bill in 1959 to
 
 9 permit horse racing on Maui failed to pass the house of
 
10 representatives.
 
11      The legislature believes that the development of a pari-
 
12 mutuel horse racing industry in Hawaii would provide many
 
13 economic development opportunities, including the expansion of
 
14 horse breeding, feed, and other related agricultural industries,
 
15 and increased sources of revenue from newly generated business,
 
16 hotel, restaurant, and airline activities.  New jobs, such as
 
17 stable hands, blacksmiths, jockeys, track maintenance and food
 
18 service personnel, and computer and telecommunications operators
 
19 resulting from such economic development opportunities would have
 
20 a multiplier effect (multiplier of 3 reported by State of
 
21 Florida)on creating more new jobs in other support and travel
 
22 industries. In the travel industry, a new monied segment of
 
23 equestrian Asian travelers could be exploited.
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1      The development of a pari-mutuel horse racing industry in
 
 2 Hawaii also would provide many educational opportunities,
 
 3 especially in the areas of travel industry and business
 
 4 management, blacksmithing, television broadcasting, and other
 
 5 media and information processing technologies.  A horse racing
 
 6 facility could even be included in the planning and development
 
 7 of an international sports complex in Hawaii.
 
 8      The purpose of this Act is to establish horse racing and
 
 9 pari-mutuel wagering on horse racing in Hawaii, including strict
 
10 regulations.
 
11      The intent of this Act is to:
 
12      (1)  Generate and maintain stable public revenues for the
 
13           State's general fund and for the counties;
 
14      (2)  Promote the commercial and economic benefits from a new
 
15           horse racing industry, including benefits to the
 
16           tourism industry;
 
17      (3)  Perpetuate the recreational and entertainment value and
 
18           the longstanding appreciation of Hawaii's people for
 
19           the horse and horse racing, historically recognized as
 
20           a sport in Hawaii;
 
21      (4)  Encourage agriculture and the breeding of horses in
 
22           Hawaii;
 
23      (5)  Provide for maximum expansion of horse racing
 

 
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 1           opportunities in the public interest; and
 
 2      (6)  Provide uniformity of regulation for each type of horse
 
 3           racing.
 
 4      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 5 a new chapter to be appropriately designated and to read as
 
 6 follows:
 
 7                             "CHAPTER
 
 8               PARI-MUTUEL WAGERING AND HORSE RACING
 
 9      §   -1 Definitions.  As used in this chapter, unless the
 
10 context otherwise requires:
 
11      "Association" means any person engaged in the conduct of a
 
12 recognized horse racing meeting.
 
13      "Commission" means the Hawaii gaming control commission.
 
14      "Breakage" means the odd cents by which the amount payable
 
15 on each dollar wagered exceeds a multiple of 10 cents.
 
16      "Licensee" means a person, corporation, partnership,
 
17 association, or other body holding a valid license issued under
 
18 this chapter.
 
19      "Pari-mutuel wagering" means any system whereby wagers with
 
20 respect to the outcome of a horse race are placed with, or in, a
 
21 wagering pool conducted by a person licensed or otherwise
 
22 permitted to do so under Hawaii law, and in which the
 
23 participants are wagering with each other and not against the
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1 operator, such that all sums wagered on competitors in a horse
 
 2 race are pooled and holders of winning tickets share the total
 
 3 amount bet minus a percentage for the licensee and the State as
 
 4 set forth in this chapter.
 
 5      "Pari-mutuel horse racing facility" means any facility where
 
 6 horse races are viewed live or by way of telecast and pari-mutuel
 
 7 wagers are made on the outcomes of those horse races.
 
 8      "Race" means any horse race conducted live in Hawaii or
 
 9 telecast from a state other than Hawaii or a foreign country
 
10 where pari-mutuel horse racing is legal.
 
11      §   -2 Hawaii gaming control commission; establishment.
 
12 (a)  There is established the Hawaii gaming control commission
 
13 for the purpose of implementing this chapter.  The commission
 
14 shall be placed within the department of business, economic
 
15 development, and tourism for administrative purposes.
 
16      (b)  The commission shall consist of five members to be
 
17 appointed by the governor with the advice and consent of the
 
18 senate under section 26-34.  Of the five members, two shall be
 
19 appointed from a list of nominees submitted by the president of
 
20 the senate, and two shall be appointed from a list of nominees
 
21 submitted by the speaker of the house of representatives.  All
 
22 appointments to the commission shall be made within sixty days of
 
23 the effective date of this Act.  The members shall elect one from
 

 
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 1 among them to be the chairperson.  Each member shall have
 
 2 reasonable knowledge, interest, and proven expertise in one or
 
 3 more of the following fields:  both horsemanship and operations
 
 4 of the horse racing industry, accounting, agriculture, commerce
 
 5 and trade, computer science, corporate management, economics,
 
 6 finance, law, law enforcement, marketing, and the pari-mutuel
 
 7 industry.  Each member shall either be a resident of Hawaii or
 
 8 shall certify that the member will become a resident of Hawaii
 
 9 before taking office.
 
10      (c)  No person shall be appointed a member or continue to be
 
11 a member of the commission if:
 
12      (1)  The person is an elected state official or a public
 
13           employee;
 
14      (2)  The person or the person's spouse, child, or parent is,
 
15           a member of the board of directors of, or a person
 
16           financially interested in, any pari-mutuel horse racing
 
17           operation subject to the jurisdiction of this
 
18           commission; or
 
19      (3)  The person is related to any other person within the
 
20           second degree of consanguinity or affinity who is
 
21           licensed by the commission pursuant to this chapter; or
 
22      (4)  The person is not of good moral character or has been
 
23           convicted of, or is under indictment for, a felony
 

 
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 1           under the laws of Hawaii, or any other state, or the
 
 2           United States.
 
 3      (d)  The term of office of a commission member shall be
 
 4 three years, except that the terms of office of the initial
 
 5 members appointed shall be staggered, with one member serving one
 
 6 year, two members serving two years, and two members serving
 
 7 three years.  No member shall serve more than two consecutive
 
 8 three-year terms.  Vacancies in the commission shall be filled
 
 9 for the unexpired term in like manner as the original
 
10 appointments.
 
11      (e)  The governor may remove or suspend any member of the
 
12 commission after due notice and public hearing.  The president of
 
13 the senate or the speaker of the house of representatives may
 
14 request that the governor remove or suspend a member of the
 
15 commission nominated by either the president of the senate or
 
16 speaker of the house of representatives.
 
17      (f)  Members shall:
 
18      (1)  Serve part-time;
 
19      (2)  Be paid compensation of $300 for each day in the
 
20           performance of official duties; and
 
21      (3)  Be reimbursed for expenses, including travel expenses,
 
22           incurred in the performance of official duties.
 
23      (g)  Officers of the commission, including the chairperson,
 

 
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 1 shall be selected by the members.  The commission, subject to
 
 2 chapter 92, shall hold at least one meeting in each quarter of
 
 3 the State's fiscal year.  Special meetings may be called by the
 
 4 chairperson or any three members upon seventy-two hours written
 
 5 notice to each member.  Three members shall constitute a quorum,
 
 6 and a majority vote of the members present shall be required for
 
 7 any final determination by the commission.  The commission shall
 
 8 keep a complete and accurate record of all its meetings.
 
 9      §   -3 Powers and duties of the commission.(a)  The
 
10 commission shall exercise all powers assigned to it under this
 
11 chapter necessary to effectuate the purposes of this chapter.
 
12      (b)  The commission shall also have the power to:
 
13      (1)  Maintain an office;
 
14      (2)  Keep detailed records of all meetings and of all
 
15           business transacted, including, but not limited to,
 
16           collections and disbursements;
 
17      (3)  Adopt rules pursuant to chapter 91 to establish the
 
18           selection process for the licensee to conduct pari-
 
19           mutuel wagering at pari-mutuel horse racing facilities
 
20           in the State;
 
21      (4)  Select the licensee to conduct the pari-mutuel wagering
 
22           at pari-mutuel horse racing facilities in the State;
 
23           and
 

 
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 1      (5)  Employ staff and other employees as necessary for the
 
 2           performance of the commission's duties, including, but
 
 3           not limited to, an executive secretary, auditors,
 
 4           inspectors, and security personnel to ensure the
 
 5           integrity of pari-mutuel horse racing as conducted by
 
 6           the licensee in the State.  The duties and compensation
 
 7           of the employees of the commission shall be determined
 
 8           by the commission, and their compensation shall be paid
 
 9           from the administrative fund of the commission
 
10           established in section    -6.  The commission may
 
11           combine in a single person the duties of one or more
 
12           employees or officials, as efficiency and economy
 
13           require.  The employees appointed by the commission
 
14           under this paragraph shall not be subject to chapter 76
 
15           or 77 but shall be members of the employees' retirement
 
16           system of the State and shall be eligible to receive
 
17           the benefits of any state or federal employee benefit
 
18           program generally applicable to officers and employees
 
19           of the State.  Employees may be dismissed by the
 
20           commission at its pleasure.
 
21      (c)  The commission shall submit an annual report to the
 
22 governor and the legislature which shall include a complete
 
23 accounting of all income and disbursements.
 

 
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 1      §   -4 Oath by commission members.  Before entering upon
 
 2 the discharge of the duties of the office, each member of the
 
 3 commission shall take an oath that the member will faithfully
 
 4 execute the duties of the member's office according to the laws
 
 5 of the State.
 
 6      §   -5 Bond required.  Prior to assuming office, each
 
 7 commission member shall procure a surety bond.  The bond shall be
 
 8 approved by the governor and the attorney general, payable to the
 
 9 State in the sum of $100,000, and conditioned upon the faithful
 
10 performance of the member's duties and the correct accounting and
 
11 payment of all sums within the member's control under this
 
12 chapter.  Each bond, upon execution and approval, shall be filed
 
13 with the attorney general.  When, in the governor's opinion, the
 
14 bond of any member of the commission has become or is likely to
 
15 become invalid or insufficient, the governor shall require that
 
16 member forthwith to renew the bond.  The renewed bond shall be
 
17 approved by the governor in the sum prescribed in this section.
 
18 The cost of any bond given by any member of the commission under
 
19 this section shall be part of the necessary expenses of the
 
20 commission.
 
21      §   -6  Administrative fund; establishment.  The commission
 
22 shall establish and administer an administrative fund.  All
 
23 revenues received shall be deposited in the administrative fund.
 

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

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

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1      (c)  The commission's subpoenas may be served by any person
 
 2 appointed by the commission.  The subpoenas shall be served, and
 
 3 witness fees and mileage shall be paid, pursuant to sections
 
 4 607-8 and 607-12.
 
 5      §   -9 Bonding of employees.  The commission may require
 
 6 any of its employees to be bonded in such amount as it
 
 7 determines.  Upon execution and approval, every bond shall be
 
 8 filed with the attorney general.  The cost of the bond shall be
 
 9 part of the necessary expenses of the commission.
 
10      §   -10  Printing of rules.  All rules of the commission
 
11 shall be adopted under chapter 91.  The commission shall publish
 
12 all rules in convenient pamphlet form at least annually, on or
 
13 before January 31 of each year.  The commission shall furnish
 
14 copies of the pamphlets to each pari-mutuel horse racing
 
15 facility, all employees authorized by this chapter, and any other
 
16 person who desires the pamphlets.
 
17      §   -11  Pari-mutuel wagering; wagering facilities; fees.
 
18 (a)  The State's share of moneys received at pari-mutuel horse
 
19 racing facilities shall be deposited into the administrative fund
 
20 established pursuant to section    -6.
 
21      (b)  The chairperson, with the approval of the commission,
 
22 shall supervise all receipts, disbursements, and accounting of
 
23 the administrative fund, including that portion that shall be
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1 transmitted to the state general fund.
 
 2      (c)  From the total moneys wagered at each pari-mutuel horse
 
 3 racing facility, the commission shall collect from the licensee
 
 4 and distribute appropriately the following:
 
 5      (1)  One-half of one per cent, which shall be transmitted to
 
 6           the county in which the facility is located;
 
 7      (2)  One-half of one per cent, which shall be deposited into
 
 8           the administrative fund for the expenses of
 
 9           administration and enforcement;
 
10      (3)          per cent, which shall be used by the commission
 
11           to administer services and programs for problem
 
12           gamblers; and
 
13      (4)  Four per cent, which shall be deposited into the state
 
14           general fund.
 
15      (d)  The licensee may deduct not more than ten per cent from
 
16 all moneys wagered at pari-mutuel horse racing facilities as the
 
17 licensee's share.  The remainder of moneys wagered shall be
 
18 distributed according to formulas established by the commission
 
19 to holders of winning pari-mutuel tickets.  A licensee shall
 
20 compute the breakage in the pari-mutuel horse racing system at
 
21 the nearest 10 cents to be distributed as follows:  fifty per
 
22 cent shall be retained by the licensee and fifty per cent shall
 
23 be transmitted to the commission for deposit into the state
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

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

 
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 1      (h)  The licensee shall not make any payment to anyone
 
 2 claiming the winnings of a pari-mutuel wager, except upon the
 
 3 presentation of a valid, clearly identifiable winning ticket.
 
 4      (i)  The licensee shall operate one pool for all pari-mutuel
 
 5 wagering facilities statewide.
 
 6      § -12  Interstate wagering; common pools.  Subject to
 
 7 applicable federal laws, including the Interstate Horseracing Act
 
 8 of 1978 (15 U.S.C. §3001, et seq.), the commission may permit a
 
 9 licensee to participate in interstate common pools (including
 
10 common pools which may include international jurisdictions).  All
 
11 provisions of law governing pari-mutuel betting apply to pari-
 
12 mutuel betting in interstate common pools except as otherwise
 
13 provided in this section or in the commission's rules.
 
14      Participation in a common pool solely as a sending track or
 
15 as a receiving track shall not cause that track to be deemed to
 
16 be doing business in this State, or in the other state, for any
 
17 purpose.
 
18      § -13  Where licensee is receiving the race from a sending
 
19 racetrack in another state.  With the prior approval of the
 
20 commission, a licensee who is permitted to accept wagers in this
 
21 State on horse races conducted at racetracks located outside of
 
22 this State may combine pari-mutuel pools in this State with
 
23 comparable pools at the sending racetrack.  Notwithstanding other
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

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

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 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 pari-mutuel pools on races run in another
 
 4 state, either to this State as pari-mutuel taxes or respectively
 
 5 to 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 commission shall have approved an adjustment in
 
 9           the takeout rate, the distribution of the takeout
 
10           within this State shall be adjusted proportionately to
 
11           reflect the 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      § -14  Where licensee's racetrack is the sending
 
17 racetrack.(a)  With prior commission approval, a licensee may
 
18 permit one or more of its races to be utilized for pari-mutuel
 
19 wagering at one or more locations in other states, may transmit
 
20 audiovisual signals of races the licensee conducts to one or more
 
21 locations outside the State, and may also permit pari-mutuel
 
22 pools in other states to be combined with its comparable wagering
 
23 pools or with wagering pools established by other states.  The
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

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

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1 amount equal to $500.  The license fee shall be deposited into
 
 2 the administrative fund.
 
 3      §   -16  Eligibility for license; selection of licensee.
 
 4 (a)  Pursuant to section    -3, the commission shall select a
 
 5 qualified individual and award that individual a license to
 
 6 conduct pari-mutuel wagering at pari-mutuel horse racing
 
 7 facilities throughout the State.  The selection of a licensee
 
 8 shall be made pursuant to the rules established by the
 
 9 commission; provided that:
 
10      (1)  Not more than one license shall be awarded per two
 
11           million persons in the population of the State of
 
12           Hawaii;
 
13      (2)  The licensee shall have not less than twenty-five years
 
14           experience in the pari-mutuel horse racing industry;
 
15      (3)  The licensee shall hold or have held not less than six
 
16           different pari-mutuel horse racing industry licenses,
 
17           with at least three licenses in the area of
 
18           horsemanship and at least three licenses in the area of
 
19           operations, issued by an existing state horse racing
 
20           commission and validated by the Federal Gaming
 
21           Commission;
 
22      (4)  The licensee shall be legally domiciled in the State of
 
23           Hawaii for not less than five years; and
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1      (5)  The rules shall promote the integrity and quality of
 
 2           the activity, the convenience of the public, and
 
 3           efficiency of operation.
 
 4      (b)  No pari-mutuel horse racing facility shall be
 
 5 established in any county for the purpose of receiving moneys on
 
 6 the results of races where prohibited by the legislative body of
 
 7 that county.
 
 8      §   -17  Grounds for refusal to license.  The commission may
 
 9 refuse to grant a license to any applicant if the applicant:
 
10      (1)  Is a partnership, corporation, firm, or association
 
11           which is not duly authorized to conduct business within
 
12           the State;
 
13      (2)  Is an individual who has been convicted of a crime
 
14           involving moral turpitude, or, if a partnership,
 
15           corporation, firm, or association, is in whole or in
 
16           part controlled or operated, directly or indirectly, by
 
17           a person who has been convicted of a crime involving
 
18           moral turpitude;
 
19      (3)  Has violated any of the provisions of this chapter or
 
20           any rule of the commission or any law or rule relating
 
21           to gambling or pari-mutuel wagering in any other
 
22           jurisdiction;
 
23      (4)  In the belief of the commission should not, in the best
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1           interest of the safety, welfare, health, peace, and
 
 2           morals of the people of this State, be granted a
 
 3           license; or
 
 4      (5)  Has made a false statement of a material fact to the
 
 5           commission.
 
 6      §   -18  Termination of engagement.  The licensee shall not
 
 7 terminate or discontinue the engagement, employment, or
 
 8 activities in preparation for, or in connection with, the
 
 9 establishment of pari-mutuel horse racing, or otherwise refuse to
 
10 cooperate or participate, unless the commission is given notice
 
11 in writing at least thirty days prior to the termination or
 
12 discontinuance.  The commission, upon notification of all
 
13 interested parties, may conduct hearings with respect to the
 
14 termination or discontinuance.
 
15      §   -19  Transfer of license.  Any license issued under this
 
16 chapter shall not be transferred without prior consent of the
 
17 commission.
 
18      §   -20  Subcontracting for services.  The licensee may
 
19 subcontract all or part of the services for which licensed;
 
20 provided that all subcontracts are subject to commission
 
21 approval.
 
22      §   -21  Revocation of license.(a)  The commission may
 
23 revoke the license upon any of the grounds upon which the
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1 commission could refuse to issue the license under section
 
 2    -17, or if the licensee fails to pay to the commission all
 
 3 sums required under this chapter.
 
 4      (b)  A license shall be revoked only after reasonable notice
 
 5 and opportunity for hearing pursuant to chapter 91.  Revocation
 
 6 of the license shall constitute a forfeiture of all rights and
 
 7 privileges granted by the commission.
 
 8      §   -22  Liability insurance.  The licensee shall carry
 
 9 public liability insurance written on an approved form by a
 
10 company licensed to do business in this State.
 
11      §   -23  Surety bond.  The licensee shall provide and
 
12 deliver to the commission a bond signed by a surety company
 
13 authorized to do business in this State in such form as the
 
14 commission requires.  The bond shall be in the amount required by
 
15 the commission but not less than $250,000.  The bond shall
 
16 require the licensee to:
 
17      (1)  Pay to the State all moneys due under this chapter;
 
18      (2)  Pay and discharge all obligations to the employees,
 
19           subcontractors, and other persons furnishing services,
 
20           labor and material in connection with the construction,
 
21           operation, maintenance, and repair of the pari-mutuel
 
22           horse racing system;
 
23      (3)  Conduct the pari-mutuel horse racing in strict
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1           accordance with this chapter and the rules of the
 
 2           commission; and
 
 3      (4)  Comply with all laws of the State.
 
 4 The attorney general shall prosecute all actions relating to the
 
 5 bond on behalf of the State."
 
 6      SECTION 3.  Chapter 712, Hawaii Revised Statutes, is amended
 
 7 by adding a new section to part III to be appropriately
 
 8 designated and to read as follows:
 
 9      "§712-     Pari-mutuel wagering exemption.  Pari-mutuel
 
10 wagering conducted in conformance with chapter      does not
 
11 constitute an offense under this part."
 
12      SECTION 4.  At the 2000 general election there shall be an
 
13 advisory referendum on the question of Hawaii's need for
 
14 legalized pari-mutuel horse racing.  The chief election officer
 
15 of the State shall submit the following question to the
 
16 electorate with instructions as follows:
 
17      1.  The proposal shall read:  "Shall the State of Hawaii
 
18 allow legalized pari-mutuel horse racing?"
 
19      The chief election officer shall publish a notice of the
 
20 referendum proposal and descriptive information concerning pari-
 
21 mutuel horse racing, in a newspaper of general circulation in the
 
22 State at least thirty days before the date of the referendum.
 
23 The notice of the referendum shall also be available at all
 

 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1 public libraries in the State and the office of the county clerk
 
 2 of each county.
 
 3      The ballot shall print the question and the question shall
 
 4 have designated spaces to mark YES or NO.  The proposal shall be
 
 5 considered approved only if approved by a majority of all the
 
 6 votes tallied upon the question, this majority constituting more
 
 7 than fifty per cent of the total votes cast at the election.
 
 8      SECTION 5.  This Act does not affect rights and duties that
 
 9 matured, penalties that were incurred, and proceedings that were
 
10 begun, before its effective date.
 
11      SECTION 6.  New statutory material is underscored.
 
12      SECTION 7.  This Act shall take effect upon its approval;
 
13 provided that:
 
14      (1)  Sections 1 to 3 of this Act shall be inoperative until
 
15           such time as the chief elections officer of the State
 
16           certifies that the electorate has approved the proposal
 
17           in the advisory referendum provided for in section 4 of
 
18           this Act, at which time, sections 1 to 3 of this Act
 
19           shall become operative; and
 

 
 
 
 
 
 
 
 
 
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                                     S.B. NO.           2196
                                                        
                                                        

 
 1      (2)  This Act shall be repealed on January 1, 2001, if
 
 2           sections 1 to 3 of this Act have not become operative
 
 3           by that date.
 
 4 
 
 5                           INTRODUCED BY:  _______________________