REPORT TITLE:
Bingo; Parimutuel; Nonprofits


DESCRIPTION:
Authorizes tax-exempt charitable nonprofits to conduct bingo
games to raise funds for lawful purposes only, with 10% surtax
for the general fund.  Authorizes nonprofit parimutuel horse
racing and wagering with 4% tax to general fund and 0.5% to the
county.  Authorizes board to distribute remainder to charitable
nonprofits in Hawaii.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2297
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO GAMBLING TO BENEFIT NONPROFIT ENTITIES.



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

 1      SECTION 1.  The legislature finds that Hawaii's depressed
 
 2 economy, which has spanned almost a decade, has shown very few
 
 3 signs of turning around.  Unfortunately, those who are hurt the
 
 4 most are the poor, the disabled, and the elderly for whom
 
 5 necessary services have been severely restricted.  The depressed
 
 6 state economy has dictated the operation of extremely tight
 
 7 governmental budgets and additional restrictions in spending by
 
 8 the governor, much of which disproportionately hurt those least
 
 9 able to help themselves.
 
10      Traditionally, nonprofit health and human services agencies
 
11 in the State have provided many of the services needed by the
 
12 poor, the disabled, and the elderly.  However, many of these
 
13 nonprofits have also depended to a great extent on the State as a
 
14 primary source of funding to carry on their work.  The
 
15 legislature finds that not only will bingo and parimutuel
 
16 horseracing create a significant alternative source of income for
 
17 these nonprofits, but will make them less dependent on government
 
18 for funding and more responsible for their own programs.
 
19      The purpose of this Act is to allow charitable nonprofit
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 organizations to conduct bingo and parimutuel wagering in Hawaii.
 
 2                              PART I.
 
 3      SECTION 2.  Chapter 712, Hawaii Revised Statutes, is amended
 
 4 by adding a new section to part III to be appropriately
 
 5 designated and to read as follows:
 
 6      "§712-    Bingo games conducted by tax exempt nonprofit
 
 7 organizations allowed; application; license and fees; lawful
 
 8 purpose.  (1)  Any nonprofit bona fide religious, charitable,
 
 9 service, fraternal, or veterans' organization that is tax exempt
 
10 under section 501(c)(3) of the Internal Revenue Code of 1986, as
 
11 amended, may lawfully conduct bingo games for the sole purpose of
 
12 raising funds that are to be used for lawful purposes only.
 
13      (2)  An organization listed under subsection (1) shall:
 
14      (a)  Be incorporated in this State as a nonprofit
 
15           corporation or organized in this State as a religious
 
16           or nonprofit organization;
 
17      (b)  Have at least fifteen members in good standing;
 
18      (c)  Conduct activities within this State in addition to the
 
19           conduct of bingo;
 
20      (d)  Be authorized by its constitution, articles, charter,
 
21           or bylaws to further a lawful purpose in this State;
 
22      (e)  Operate without profit to its members, and allow no
 
23           part of the net earnings of the organization to inure
 

 
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 1           to the benefit of any private shareholder or
 
 2           individual;
 
 3      (f)  Have been in existence for five years immediately
 
 4           preceding its application for a license, and have had
 
 5           during that five-year period a bona fide membership
 
 6           actively engaged in furthering a lawful purpose; and
 
 7      (g)  Have received and used and continue to receive and use,
 
 8           for a lawful purpose, funds derived from sources other
 
 9           than from the conduct of bingo.
 
10      (3)  Each organization wishing to conduct lawful bingo games
 
11 pursuant to this section shall file with the department of
 
12 commerce and consumer affairs an application for a license on a
 
13 form prescribed by the department.  The application shall
 
14 include:
 
15      (a)  The name and address of the nonprofit organization;
 
16      (b)  Sufficient facts relating to the incorporation or
 
17           organization of the organization to enable the
 
18           department to determine whether the organization is
 
19           eligible for a license under this section;
 
20      (c)  The name and address of each officer of the
 
21           organization;
 
22      (d)  The place and date of each proposed bingo event to be
 
23           conducted during the effective period of the license;
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1      (e)  The name and address of the owner of the premises in
 
 2           which bingo will be conducted and the approximate
 
 3           capacity of the premises;
 
 4      (f)  The name, date of birth, and address of each bona fide
 
 5           and active member of the organization acting as
 
 6           supervisor during each bingo event, one or more of whom
 
 7           shall be present and in immediate charge of and be
 
 8           responsible for the conduct of each bingo event when
 
 9           bingo games are conducted;
 
10      (g)  The specific lawful purposes to which the profits from
 
11           the conduct of bingo are to be devoted; and
 
12      (h)  Other information which the department deems necessary.
 
13      (4)  An application for an annual license to conduct bingo
 
14 games shall be accompanied by:
 
15      (a)  A sworn statement by each designated supervising member
 
16           that the member will be responsible for compliance with
 
17           this section and rules adopted under it for each bingo
 
18           event supervised by the member;
 
19      (b)  A sworn statement by the organization that all profits
 
20           shall be spent for a lawful purpose as provided under
 
21           subsection (5);
 
22      (c)  Proof of the organization's tax exempt status under the
 
23           Internal Revenue Code of 1986, as amended; and
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1      (d)  A $25 annual bingo license fee for the organization, a
 
 2           $10 license fee for each bingo event proposed to be
 
 3           conducted, and a $5 annual license fee for each
 
 4           designated supervising member.  The fees shall be paid
 
 5           to the department which shall deposit the fees in the
 
 6           state treasury to the credit of the general fund.
 
 7      (5)  All profits from bingo games conducted under this
 
 8 section shall be used entirely for lawful purposes.  For the
 
 9 purposes of this section, "lawful purposes" means one or more of
 
10 the following:
 
11      (a)  Benefiting persons by enhancing their opportunity for
 
12           religious or educational advancement, by relieving or
 
13           protecting them from disease, suffering, or distress,
 
14           by contributing to their physical well-being, by
 
15           assisting them in establishing themselves in life as
 
16           worthy and useful citizens, or by increasing their
 
17           comprehension of and devotion to the principles upon
 
18           which this nation was founded;
 
19      (b)  Initiating, performing, or fostering worthy public
 
20           works, or enabling or furthering the erection or
 
21           maintenance of public structures;
 
22      (c)  Lessening the burdens borne by government, or
 
23           voluntarily supporting, augmenting, or supplementing
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1           services which government would normally render to the
 
 2           people; or
 
 3      (d)  Maintaining, improving, building an addition to,
 
 4           repairing, or retiring the debt on existing buildings
 
 5           and real property used for purposes enumerated in
 
 6           paragraphs (a) to (c).
 
 7      "Lawful purpose" does not include the erection of a building
 
 8 or acquisition of any real property except as provided in
 
 9 paragraph (d), unless the department specifically authorizes the
 
10 expenditures after a finding that the property will be used
 
11 exclusively for one or more of the purposes specified in
 
12 paragraphs (a) to (d).  The term also does not include any
 
13 activities consisting of an attempt to influence legislation or
 
14 participate in any political campaign on behalf of any elected
 
15 official or person who is or has been a candidate for public
 
16 office.
 
17      (6)  Subsection (5) notwithstanding, each licensee, semi-
 
18 annually by June 30 and December 31, shall:
 
19      (a)  Report to the department of commerce and consumer
 
20           affairs the number of bingo events held during the
 
21           reporting period and the total gross amount wagered at
 
22           all bingo events during the reporting period; and
 
23      (b)  Remit to the department, ten per cent of the gross
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1           amount wagered at all bingo events held by the licensee
 
 2           during the reporting period;
 
 3 and the director of commerce and consumer affairs shall verify
 
 4 the amounts reported and deposit the amounts to the credit of the
 
 5 state general fund.
 
 6      (7)  The department of commerce and consumer affairs may
 
 7 adopt rules under chapter 91 to implement this section."
 
 8      SECTION 3.  Section 712-1220, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "§712-1220  Definitions of terms in this part.  In this
 
11 part, unless the context plainly requires a different meaning
 
12 [plainly is required, the following definitions apply.]:
 
13      [(1)  "Advance] "Advancing gambling activity"[.  A] means an
 
14 act in which a person ["advances gambling activity" if he]
 
15 engages in conduct that materially aids any form of gambling
 
16 activity[.]; except that bingo games conducted by tax exempt
 
17 nonprofit organizations pursuant to this part, and parimutuel
 
18 horseracing and wagering conducted by tax exempt nonprofit
 
19 organizations pursuant to chapter      shall not be considered
 
20 gambling.  Conduct of this nature includes but is not limited to
 
21 conduct directed toward the creation or establishment of the
 
22 particular game, contest, scheme, device, or activity involved,
 
23 toward the acquisition or maintenance of premises, paraphernalia,
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 equipment, or apparatus therefor, toward the solicitation or
 
 2 inducement of persons to participate therein, toward the actual
 
 3 conduct of the playing phases thereof, toward the arrangement of
 
 4 any of its financial or recording phases, or toward any other
 
 5 phase of its operation.  A person advances gambling activity if,
 
 6 having substantial proprietary control or other authoritative
 
 7 control over premises being used with [his] the person's
 
 8 knowledge for purposes of gambling activity, [he] the person
 
 9 permits that activity to occur or continue or makes no effort to
 
10 prevent its occurrence or continuation.  A person advances
 
11 gambling activity if [he] the person plays or participates in any
 
12 form of gambling activity. 
 
13      "Bingo event" means a single gathering or session at which a
 
14 series of successive bingo games is played.
 
15      [(2)] "Bookmaking" means advancing gambling activity by
 
16 accepting bets from members of the public upon the outcomes of
 
17 future contingent events. 
 
18      [(3)] "Contest of chance" means any contest, game, gaming
 
19 scheme, or gaming device in which the outcome depends in a
 
20 material degree upon an element of chance, notwithstanding that
 
21 skill of the contestants may also be a factor therein[.]; except
 
22 that bingo games conducted by tax exempt nonprofit organizations
 
23 pursuant to this part, and parimutuel horseracing and wagering
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 conducted by tax exempt nonprofit organizations pursuant to
 
 2 chapter      shall not be considered a contest of chance.
 
 3      [(4)] "Gambling"[.  A] means an act in which a person
 
 4 [engages in gambling if he] stakes or risks something of value
 
 5 upon the outcome of a contest of chance or a future contingent
 
 6 event not under [his] the person's control or influence, upon an
 
 7 agreement or understanding that [he] the gambler or someone else
 
 8 will receive something of value in the event of a certain
 
 9 outcome.  Gambling does not include bona fide business
 
10 transactions valid under the law of contracts, including but not
 
11 limited to contracts for the purchase or sale at a future date of
 
12 securities or commodities, and agreements to compensate for loss
 
13 caused by the happening of chance, including but not limited to
 
14 contracts of indemnity or guaranty and life, health, or accident
 
15 insurance.  Gambling also does not include bingo games conducted
 
16 by tax exempt nonprofit organizations pursuant to this part, and
 
17 parimutuel horseracing and wagering conducted by tax exempt
 
18 nonprofit organizations pursuant to chapter     .
 
19      [(5)] "Gambling device" means any device, machine,
 
20 paraphernalia, or equipment that is used or usable in the playing
 
21 phases of any gambling activity, whether that activity consists
 
22 of gambling between persons or gambling by a person involving the
 
23 playing of a machine.  However, lottery tickets and other items
 

 
Page 10                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1 used in the playing phases of lottery schemes are not gambling
 
 2 devices within this definition. 
 
 3      [(6)] "Lottery" means a gambling scheme; provided that bingo
 
 4 games conducted by tax exempt nonprofit organizations pursuant to
 
 5 this part, and parimutuel horseracing and wagering conducted by
 
 6 tax exempt nonprofit organizations pursuant to chapter      are
 
 7 not considered to be lotteries, in which:
 
 8      (a)  The players pay or agree to pay something of value for
 
 9           chances, represented and differentiated by numbers or
 
10           by combinations of numbers or by some other medium, one
 
11           or more of which chances are to be designated the
 
12           winning ones; [and]
 
13      (b)  The winning chances are to be determined by a drawing
 
14           or by some other method based on an element of chance;
 
15           and
 
16      (c)  The holders of the winning chances are to receive
 
17           something of value.
 
18      [(7)] "Mutuel" means a form of lottery in which the winning
 
19 chances or plays are not determined upon the basis of a drawing
 
20 or other act on the part of persons conducting or connected with
 
21 the scheme, but upon the basis of the outcome or outcomes of a
 
22 future contingent event or events otherwise unrelated to the
 
23 particular scheme.
 

 
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 1      [(8)] "Player" means a person who engages in gambling solely
 
 2 as a contestant or bettor.
 
 3      [(9)] "[Profit] To profit from gambling activity"[.  A
 
 4 person "profits from gambling activity" if he] means an act in
 
 5 which a person accepts or receives money or other property
 
 6 pursuant to an agreement or understanding with any other person
 
 7 whereby [he] the person participates or is to participate in the
 
 8 proceeds of gambling activity.
 
 9      [(10)] "Social gambling" is defined in section 712-1231. 
 
10      [(11)] "Something of value" means any money or property, any
 
11 token, object, or article exchangeable for money or property, or
 
12 any form of credit or promise directly or indirectly
 
13 contemplating transfer of money or property or of any interest
 
14 therein, or involving extension of a service or entertainment."
 
15      SECTION 4.  Section 712-1223, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "§712-1223  Gambling.(1)  A person commits the offense of
 
18 gambling if the person knowingly advances or participates in any
 
19 gambling activity[.]; provided that the playing of bingo games
 
20 conducted by tax exempt nonprofit organizations pursuant to this
 
21 part, and parimutuel horseracing and wagering conducted by tax
 
22 exempt nonprofit organizations pursuant to chapter      shall not
 
23 be considered an offense of gambling.
 

 
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 1      (2)  Gambling is a misdemeanor."
 
 2                             PART II.
 
 3      SECTION 5.  The Hawaii Revised Statutes is amended by adding
 
 4 a new chapter to be appropriately designated and to read as
 
 5 follows:
 
 6                             "CHAPTER
 
 7             HAWAII NONPROFIT PARIMUTUEL HORSE RACING
 
 8      §   -1 Definitions.  As used in this chapter, unless the
 
 9 context otherwise requires:
 
10      "Board" means the Hawaii nonprofit parimutuel horse racing
 
11 board.
 
12      "Breakage" means the odd cents by which the amount payable
 
13 on each dollar wagered exceeds a multiple of 10 cents.
 
14      "Charitable nonprofit organization" means any bona fide
 
15 nonprofit religious, charitable, service, fraternal, or veterans'
 
16 organization that is tax exempt under section 501(c)(3) of the
 
17 Internal Revenue Code of 1986, as amended,
 
18      "Fund" means the Hawaii nonprofit parimutuel horse racing
 
19 fund.
 
20      "Licensee" means a nonprofit corporation holding a valid
 
21 license issued under this chapter to operate a parimutuel horse
 
22 racing operation.
 
23      "Parimutuel horse racing facility" means any facility where
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 horse races are viewed live or by way of telecast, and parimutuel
 
 2 wagers are made on the outcomes of those horse races.
 
 3      "Parimutuel wagering" means any system whereby wagers with
 
 4 respect to the outcome of a horse race are placed with, or in, a
 
 5 wagering pool conducted by a licensee under this chapter, and in
 
 6 which the participants wager with each other and not against the
 
 7 operator, such that all sums wagered on competitors in a horse
 
 8 race are pooled and holders of winning tickets share the total
 
 9 amount bet, minus a percentage for the licensee for operational
 
10 and administrative expenses only to be deposited into the
 
11 administrative fund, four per cent to be deposited into the state
 
12 general fund, and       per cent to be deposited into the Hawaii
 
13 nonprofit parimutuel horse racing fund.
 
14      "Race" means any horse race conducted live in Hawaii or
 
15 telecast from a state other than Hawaii, or a foreign country
 
16 where parimutuel horse racing is legal.
 
17      §   -2 Hawaii nonprofit parimutuel horse racing board;
 
18 establishment.(a)  There is established the Hawaii nonprofit
 
19 parimutuel horse racing board for the purpose of implementing
 
20 this chapter.  The board shall be placed within the department of
 
21 commerce and consumer affairs for administrative purposes.
 
22      (b)  The board shall consist of five members to be appointed
 
23 by the governor in accordance with this section.  The members
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 shall not be public officers or employees and shall be from the
 
 2 general public and be selected on the basis of their knowledge,
 
 3 interest, and proven expertise in, but not limited to, one or
 
 4 more of the following fields:  operation of charitable nonprofit
 
 5 organizations, equitation and operation of horse racing,
 
 6 accounting, agriculture, commerce and trade, computer science,
 
 7 corporate management, economics, finance, law, law enforcement,
 
 8 marketing, and the parimutuel industry.
 
 9      (c)  Three members shall be appointed by the governor for a
 
10 term of three years.
 
11      (d)  One member shall be appointed by the governor from a
 
12 list of nominees submitted by the president of the senate and
 
13 shall serve for a term of three years.  The initial appointee
 
14 under this subsection shall be appointed from a list of two
 
15 nominees submitted by the president of the senate; provided that
 
16 subsequent appointments under this subsection shall be subject to
 
17 subsection (f).
 
18      (e)  One member, by and with the consent of the senate,
 
19 shall be appointed by the governor from a list of nominees
 
20 submitted by the speaker of the house of representatives and
 
21 shall serve for a term of three years.  The initial appointee
 
22 under this subsection shall be appointed from a list of two
 
23 nominations submitted by the speaker of the house of
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 representatives; provided that subsequent appointments under this
 
 2 subsection shall be subject to subsection (f).
 
 3      (f)  Whenever a member appointed from a list of nominees
 
 4 submitted by the president of the senate or the speaker of the
 
 5 house of representatives vacates the member's seat on the board
 
 6 prior to the expiration of the member's term, the governor shall
 
 7 fill the vacancy for the unexpired term by appointment from a
 
 8 list of two nominees submitted by the nominating authority in
 
 9 subsection (d) or (e), as the case may be.  Whenever the term of
 
10 a member appointed from a list of nominees submitted by any of
 
11 the nominating authorities expires, the governor shall appoint a
 
12 member from a list of two nominees submitted by that nominating
 
13 authority, as the case may be; provided that the nominating
 
14 authority may nominate and the governor may reappoint a member to
 
15 another term so long as the reappointment is not contrary to
 
16 subsection (h).
 
17      (g)  An appointment required to be made from a list of
 
18 nominees submitted by either of the nominating authorities shall
 
19 be made by the governor within ten days of receipt of the list of
 
20 nominees.  The governor shall appoint the members of the board
 
21 prior to July 1, 2000, to staggered terms pursuant to
 
22 section 26-34.
 
23      (h)  Each term of a member of the board shall commence on
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 July 1, and expire on June 30.  No person shall be appointed
 
 2 consecutively to more than two terms as a member of the board.
 
 3 No person shall serve as a member of the board for more than six
 
 4 consecutive years.
 
 5      (i)  Any member of the board whose term has expired and who
 
 6 is not disqualified from membership under subsection (h) may
 
 7 continue in office as a holdover member until a successor is
 
 8 appointed; provided that a holdover member shall not hold office
 
 9 beyond the end of the second regular session of the legislature
 
10 following the expiration of the member's term of office.
 
11      (j)  The governor may remove or suspend for cause any member
 
12 of the board after due notice and public hearing.
 
13      (k)  Members shall be compensated $75 for each day in the
 
14 performance of official duties; provided that the compensation of
 
15 a member shall not exceed $5,000 in any one year.  Members shall
 
16 also be reimbursed for expenses, including travel expenses,
 
17 incurred in the performance of official duties.
 
18      (l)  Officers of the board, including the chairperson, shall
 
19 be selected by the members.
 
20      §   -3 Powers and duties of the board.(a)  The board
 
21 shall exercise all powers assigned to it under this chapter
 
22 necessary to effectuate the purposes of this chapter, including,
 
23 but not limited to, the adoption of rules concerning:
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1      (1)  The final determination of the allocation and
 
 2           distribution of revenues derived from parimutuel horse
 
 3           racing under this chapter to charitable nonprofit
 
 4           organizations in Hawaii;
 
 5      (2)  The regulation of stewards, racing officials, and other
 
 6           persons involved in horse racing;
 
 7      (3)  The maximum number and allocation of racing days and
 
 8           weeks;
 
 9      (4)  Racing at state, county, and district agricultural
 
10           association fairs;
 
11      (5)  Equine medication, drug testing, health, and
 
12           performance;
 
13      (6)  Satellite wagering and satellite wagering facilities;
 
14      (7)  Breeders' and stallions' awards, and owners' premiums;
 
15      (8)  Prohibited acts and administrative penalties.
 
16      (b)  The board shall also have the power to:
 
17      (1)  Maintain an office;
 
18      (2)  Keep detailed records of all meetings and of all
 
19           business transacted, including collections and
 
20           disbursements;
 
21      (3)  Adopt rules to establish the selection process for the
 
22           licensee to conduct nonprofit parimutuel wagering at
 
23           parimutuel horse racing facilities in the State;
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

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

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 all income and disbursements.
 
 2      §   -4 Oath by board members.  Before entering upon the
 
 3 discharge of the duties of the office, each member of the board
 
 4 shall take an oath that the member will faithfully execute the
 
 5 duties of the member's office according to the laws of the State.
 
 6      §   -5 Bond required.  Prior to the commencement of the
 
 7 term of office, each member of the board shall procure a surety
 
 8 bond.  The bond shall be approved by the governor and the
 
 9 attorney general, payable to the State in the sum of $100,000,
 
10 and conditioned upon the faithful performance of the member's
 
11 duties and the correct accounting and payment of all sums within
 
12 the member's control under this chapter.  Each bond, upon
 
13 execution and approval, shall be filed with the attorney general.
 
14 When, in the governor's opinion, the bond of any member of the
 
15 board has become or is likely to become invalid or insufficient,
 
16 the governor shall require that member to renew the bond.  The
 
17 renewed bond shall be approved by the governor in the sum
 
18 prescribed in this section.  The cost of any bond given by any
 
19 member of the board under this section shall be part of the
 
20 necessary expenses of the board.
 
21      §   -6 Meetings and quorum requirements.(a)  Three
 
22 members of the board shall constitute a quorum.  All actions
 
23 taken, and motions and resolutions adopted by the board at any
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 meeting of the board shall require an affirmative vote of at
 
 2 least three members.
 
 3      §   -7 Administrative fund; establishment.  The board shall
 
 4 establish and administer an administrative fund.  All revenues,
 
 5 except the      per cent to be deposited into the Hawaii
 
 6 nonprofit parimutuel horse racing fund, shall be deposited in the
 
 7 administrative fund.  Expenditures from the fund shall be used
 
 8 for all necessary expenses and payments permitted or required by
 
 9 this chapter.
 
10      §   -8 Prohibitions.(a)  No member, employee, or
 
11 appointee of the board shall:
 
12      (1)  Directly or indirectly, individually or as a member of
 
13           a partnership, or as a shareholder of a corporation,
 
14           have any interest in the licensee or any subcontractor
 
15           to the licensee that conducts, or seeks to conduct,
 
16           nonprofit parimutuel wagering in the State; or
 
17      (2)  Directly or indirectly, wager at any nonprofit
 
18           parimutuel wagering facility authorized under this
 
19           chapter.
 
20      (b)  In addition, no board member shall:
 
21      (1)  Accept any form of employment by a business
 
22           organization regulated under this chapter for a period
 
23           of two years following the termination of the member's
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1           service on the board;
 
 2      (2)  Engage in any oral ex parte communications with any
 
 3           representative, agent, officer, or employee of any
 
 4           business organization regulated under this chapter
 
 5           concerning any matter pending before the board; or
 
 6      (3)  Participate actively in the management or conducting of
 
 7           any political campaign, which includes:
 
 8           (A)  Holding office in a political party, political
 
 9                organization, or political club;
 
10           (B)  Campaigning for a candidate in a partisan election
 
11                by making speeches or writing on behalf of a
 
12                candidate;
 
13           (C)  Soliciting votes in support of or in opposition to
 
14                a candidate; and
 
15           (D)  Making contributions of time and effort to any
 
16                political party, political organization, political
 
17                club, or candidate.
 
18      §   -9 Subpoena powers.(a)  In administering this
 
19 chapter, any member of the board, or an agent authorized by the
 
20 board, may subpoena witnesses, examine them under oath, and
 
21 require the production of books, papers, documents, electronic
 
22 and computer records, or any other objects or things which the
 
23 member or agent deems relevant or material to the inquiry.  Upon
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 application by the member or agent, enforcement of the subpoena
 
 2 may be sought in the circuit court of the circuit in which the
 
 3 person subpoenaed resides or is found in the same manner as a
 
 4 subpoena issued by the clerk of a circuit court.
 
 5      (b)  The board, upon the request of any person interested in
 
 6 a matter before the board, shall issue subpoenas for the
 
 7 attendance of witnesses or the production of books, records,
 
 8 documents, or things on behalf of the person.
 
 9      (c)  The board's subpoenas may be served by any person
 
10 appointed by the board.  The subpoenas shall be served, and
 
11 witness fees and mileage shall be paid, pursuant to sections
 
12 607-8 and 607-12.
 
13      §   -10  Bonding of employees.  The board may require any of
 
14 its employees to be bonded in any amount that it determines.
 
15 Upon execution and approval, every bond shall be filed with the
 
16 attorney general.  The cost of the bond shall be part of the
 
17 necessary expenses of the board.
 
18      §   -11  Printing of rules.  All rules of the board shall be
 
19 adopted under chapter 91.  The board shall make copies of all
 
20 rules available in convenient form at least annually, before
 
21 February 1, of each year.  The board shall furnish copies of the
 
22 rules to each nonprofit parimutuel horse racing facility, all
 
23 employees authorized by this chapter, and any other person who
 

 
Page 23                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1 desires the copies.
 
 2      §   -12  Nonprofit parimutuel wagering; deposit of revenues
 
 3 into funds; wagering facilities; fees.(a)  The State's share of
 
 4 moneys received at parimutuel horse racing facilities shall be
 
 5 deposited into the administrative fund established pursuant to
 
 6 section    -7.  Moneys to be allocated and distributed to
 
 7 charitable nonprofit organizations in Hawaii shall be deposited
 
 8 into the Hawaii nonprofit parimutuel horse racing fund pursuant
 
 9 to section    -24.
 
10      (b)  The chairperson, with the approval of the board, shall
 
11 supervise all receipts, disbursements, and accounting of the:
 
12      (1)  Administrative fund, including that portion which shall
 
13           be transmitted to the state general fund; and
 
14      (2)  Hawaii nonprofit parimutuel horse racing fund.
 
15      (c)  From the total moneys wagered at each parimutuel horse
 
16 racing facility, less the      per cent to be deposited into the
 
17 Hawaii nonprofit parimutuel horse racing fund, the board shall
 
18 collect from the licensee and distribute appropriately the
 
19 following from the administrative fund:
 
20      (1)  One-half of one per cent, which shall be transmitted to
 
21           the county in which the facility is located;
 
22      (2)  One-half of one per cent, which shall be retained in
 
23           the administrative fund;
 

 
Page 24                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1      (3)  Four per cent, which shall be deposited into the state
 
 2           general fund.
 
 3      (d)  The remainder of moneys wagered shall be distributed
 
 4 according to formulas established by the board to holders of
 
 5 winning parimutuel tickets.  A licensee shall compute the
 
 6 breakage in the parimutuel horse racing system at the nearest ten
 
 7 cents to be distributed as follows:  fifty per cent shall be
 
 8 retained by the licensee and fifty per cent shall be transmitted
 
 9 to the board for deposit into the state general fund; subject to
 
10 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 parimutuel horse racing shall
 
14 maintain for each race an unclaimed winnings account which shall
 
15 show the total amount due on outstanding winning parimutuel horse
 
16 racing tickets not presented for payment.  A statement of the
 
17 balance of the unclaimed winning account shall be furnished to
 
18 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 parimutuel wager who fails to claim the money due at the
 
22 completion of the race for which the parimutuel horse racing
 
23 ticket was purchased, may file a claim with the licensee within
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 ninety calendar days after the day of the race, in the form that
 
 2 the board prescribes, accompanied by the valid winning ticket.
 
 3 If the claimant establishes a right to the winnings of the
 
 4 parimutuel 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 parimutuel wager, except upon the
 
12 presentation of a valid, clearly identifiable winning ticket.
 
13      (i)  The licensee shall operate one pool for all parimutuel
 
14 wagering facilities statewide.
 
15      (j)  Notwithstanding sections    -13,   -14, and    -15, no
 
16 parimutuel wagering shall be allowed in the State until a horse
 
17 racing track has actually been constructed and has become
 
18 operational in the State.
 
19      §   -13  Interstate wagering; common pools.(a)  Subject to
 
20 section    -12(j) and applicable federal laws, including but not
 
21 limited to the Interstate Horseracing Act of 1978 (15 U.S.C.
 
22 §3001, et seq.), the board may permit the licensee to participate
 
23 in interstate common pools (including common pools which may
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 include international jurisdictions).  All provisions of law
 
 2 governing nonprofit parimutuel wagering under this chapter shall
 
 3 apply to parimutuel wagering in interstate common pools except as
 
 4 otherwise provided in this section or in the board's rules.
 
 5      (b)  Participation in a common pool solely as a sending
 
 6 track or as a receiving track shall not cause that track to be
 
 7 deemed to be doing business in this State, or in the other state,
 
 8 for any purpose.
 
 9      §   -14  Where licensee is receiving the race from a sending
 
10 racetrack in another state.  (a)  Subject to section    -12(j)
 
11 and with the prior approval of the board, a licensee who is
 
12 permitted to accept wagers in this State on horse races conducted
 
13 at racetracks located outside of this State may combine
 
14 parimutuel pools in this State with comparable pools at the
 
15 sending racetrack.  Notwithstanding other provisions of this
 
16 chapter and subject to the approval of the board, the types of
 
17 wagering, takeout, distribution of winnings, and rules of racing
 
18 in effect for parimutuel pools at the sending racetrack, except
 
19 for the      per cent of wagers placed in Hawaii to be deposited
 
20 into the Hawaii nonprofit parimutuel horse racing fund for
 
21 charitable nonprofit organizations in Hawaii, shall govern wagers
 
22 placed in this State and merged into the interstate common pool.
 
23 Breakage for interstate common pools shall be calculated in
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1 accordance with the law or rules governing the sending racetrack,
 
 2 and shall be distributed between participating jurisdictions in a
 
 3 manner agreed to between the licensee and the sending racetrack.
 
 4      (b)  With the prior approval of the board and concurrence of
 
 5 the sending racetrack, an interstate common pool may be formed
 
 6 among the licensee and other receiving persons or entities in any
 
 7 state other than the state in which the sending racetrack is
 
 8 located.  For such an interstate common pool, the board may
 
 9 approve, except for the      per cent of wagers placed in Hawaii
 
10 to be deposited into the Hawaii nonprofit parimutuel horse racing
 
11 fund for charitable nonprofit organizations in Hawaii, the types
 
12 of wagering, takeout, distribution of winnings, rules of racing,
 
13 and calculation of breakage which are different than those which
 
14 would otherwise be applied in this State but are consistent for
 
15 all parties to the interstate common pool.
 
16      (c)  The licensee may deduct from wagers placed in any
 
17 interstate common pool any fee to the person or entity conducting
 
18 the race for the privilege of conducting parimutuel wagering on
 
19 the race, payment of costs incurred in transmitting the broadcast
 
20 of the race, and participation in the interstate common pool.
 
21      (d)  Provisions of law or contract, if any, governing the
 
22 distribution of shares of the takeout, from wagers placed in this
 
23 State in separate parimutuel pools on races run in another state,
 

 
Page 28                                                    
                                     S.B. NO.           2297
                                                        
                                                        

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

 
Page 29                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1 common pools governing the calculation of breakage.
 
 2      Parimutuel taxes shall not be imposed upon any amounts
 
 3 wagered in an interstate common pool other than upon amounts
 
 4 wagered within this State.
 
 5      Provisions of law or contract, if any, governing the
 
 6 distribution of shares of the takeout, from wagers placed in
 
 7 other states in separate parimutuel pools on races run in this
 
 8 State, respectively to breeder awards and to purses in this
 
 9 State, shall remain in effect for wagers placed in interstate
 
10 common pools, except for the      per cent of wagers placed in
 
11 Hawaii to be deposited into the Hawaii nonprofit parimutuel horse
 
12 racing fund for charitable nonprofit organizations in Hawaii;
 
13 provided that with the concurrence of the licensee and the
 
14 organization representing a majority of the breeders, the
 
15 respective share of breeder awards or purses may be modified.
 
16      §   -16  Application for license.(a)  Applications for a
 
17 license to conduct nonprofit parimutuel horse racing at a
 
18 parimutuel horse racing facility in Hawaii shall be filed with
 
19 the board.  The application shall set forth any information that
 
20 the board requires in its rules adopted pursuant to this chapter.
 
21      (b)  The application for the license shall be accompanied by
 
22 a license fee of $500 in the form of a certified check on a bank
 
23 maintaining an office and licensed to do business in Hawaii.  The
 

 
Page 30                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1 license fee shall be deposited into the administrative fund.
 
 2      §   -17  Eligibility for license; selection of licensee.
 
 3 (a)  Pursuant to section     -3, the board shall select a
 
 4 qualified person and award that person a license to conduct
 
 5 parimutuel wagering at nonprofit parimutuel horse racing
 
 6 facilities throughout the State.  The selection of a licensee
 
 7 shall be made pursuant to the rules established by the board;
 
 8 provided that:
 
 9      (1)  The number of licenses to be awarded shall be limited
 
10           to one license per every one million residents in the
 
11           State; and
 
12      (2)  The applicant for a license shall have at least twenty-
 
13           five years of experience in operating a parimutuel
 
14           horse racing facility.
 
15      (b)  No parimutuel wagering shall be allowed and no
 
16 nonprofit parimutuel horse racing facility shall be established
 
17 in any county for the purpose of receiving moneys on the results
 
18 of races unless authorized by ordinance enacted by the
 
19 legislative body of that county.
 
20      §   -18  Grounds for refusal to license.  The board may
 
21 refuse to grant a license to any applicant if the applicant:
 
22      (1)  Is a for-profit partnership, corporation, limited
 
23           liability company, firm, association, or other entity,
 

 
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                                     S.B. NO.           2297
                                                        
                                                        

 
 1           or is a nonprofit corporation that has not been duly
 
 2           incorporated in this State as a nonprofit corporation
 
 3           or organized in this State as a religious or nonprofit
 
 4           organization for at least five years;
 
 5      (2)  Is in whole or in part controlled or operated, directly
 
 6           or indirectly, by a person who has been convicted of a
 
 7           crime involving moral turpitude;
 
 8      (3)  Has violated this chapter or any rule of the board or
 
 9           any law or rule relating to gambling or parimutuel
 
10           wagering in any other jurisdiction;
 
11      (4)  In the belief of the board, should not, in the best
 
12           interest of the safety, welfare, health, peace, and
 
13           morals of the people of this State, be granted a
 
14           license; or
 
15      (5)  Has made a false statement of a material fact to the
 
16           board.
 
17      §   -19  Termination of engagement.  The licensee shall not
 
18 terminate or discontinue the engagement, employment, or
 
19 activities in preparation for, or in connection with, the
 
20 establishment of nonprofit parimutuel horse racing, or otherwise
 
21 refuse to cooperate or participate, unless the board is given
 
22 notice in writing at least thirty days prior to the termination
 
23 or discontinuance.  The board, upon notification of all
 

 
Page 32                                                    
                                     S.B. NO.           2297
                                                        
                                                        

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

 
Page 33                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1 deliver to the board a bond signed by a surety company authorized
 
 2 to do business in this State in any form that the board requires.
 
 3 The bond shall be in the amount required by the board but shall
 
 4 not be less than $250,000.  The bond shall require the licensee
 
 5 to:
 
 6      (1)  Pay to the State all moneys due under this chapter;
 
 7      (2)  Pay and discharge all obligations to the employees,
 
 8           subcontractors, and other persons furnishing services,
 
 9           labor, and material in connection with the
 
10           construction, operation, maintenance, and repair of the
 
11           nonprofit parimutuel horse racing system;
 
12      (3)  Conduct nonprofit parimutuel horse racing in strict
 
13           accordance with this chapter and the rules of the
 
14           board; and
 
15      (4)  Comply with all laws of the State.
 
16      (b)  The attorney general shall prosecute all actions
 
17 relating to the bond on behalf of the State.
 
18      §   -24  Hawaii nonprofit parimutuel horse racing fund;
 
19 established; deposits and disbursements.(a)  The board shall
 
20 create and administer the Hawaii nonprofit parimutuel horse
 
21 racing fund into which shall be deposited      per cent of the
 
22 total moneys wagered at each nonprofit parimutuel horse racing
 
23 facility in the State.
 

 
Page 34                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1      (b)  Each charitable nonprofit organization that wishes to
 
 2 receive an allocation of moneys from the fund shall submit to the
 
 3 board every two years evidence of its incorporation or
 
 4 organization in this State as a charitable nonprofit organization
 
 5 in order to be considered for receipt of moneys from the fund.
 
 6 The nonprofit licensee who operates nonprofit parimutuel horse
 
 7 racing and wagering in the State shall recommend to the board the
 
 8 charitable nonprofit organizations to receive an allocation of
 
 9 the moneys in the fund.  The board shall allocate and distribute
 
10 moneys from the fund to verified charitable nonprofit
 
11 organizations annually.
 
12      (c)  Moneys that are allocated and distributed to qualifying
 
13 charitable nonprofit organizations shall be used only for lawful
 
14 purposes of the charitable nonprofit organization.  For the
 
15 purposes of this section, "lawful purposes" means one or more of
 
16 the following:
 
17      (1)  Benefiting persons by enhancing their opportunity for
 
18           religious or educational advancement, by relieving or
 
19           protecting them from disease, suffering, or distress,
 
20           by contributing to their physical well-being, by
 
21           assisting them in establishing themselves in life as
 
22           worthy and useful citizens, or by increasing their
 
23           comprehension of and devotion to the principles upon
 

 
Page 35                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1           which this nation was founded;
 
 2      (2)  Initiating, performing, or fostering worthy public
 
 3           works, or enabling or furthering the erection or
 
 4           maintenance of public structures;
 
 5      (3)  Lessening the burdens borne by government, or
 
 6           voluntarily supporting, augmenting, or supplementing
 
 7           services which government would normally render to the
 
 8           people; or
 
 9      (4)  Maintaining, improving, building an addition to,
 
10           repairing, or retiring the debt on existing buildings
 
11           and real property used for purposes enumerated in
 
12           paragraphs (1) to (3).
 
13      "Lawful purpose" does not include the erection of a building
 
14 or acquisition of any real property except as provided in
 
15 paragraph (4), unless the board specifically authorizes the
 
16 expenditures after a finding that the property will be used
 
17 exclusively for one or more of the purposes specified in
 
18 paragraphs (1) to (4).  The term also does not include any
 
19 activities consisting of an attempt to influence legislation or
 
20 participate in any political campaign on behalf of any elected
 
21 official or person who is or has been a candidate for public
 
22 office.
 
23      (d)  The board shall adopt rules in accordance with chapter
 

 
Page 36                                                    
                                     S.B. NO.           2297
                                                        
                                                        

 
 1 91 to carry out this section, including verification of a
 
 2 charitable nonprofit organization's status and criteria for the
 
 3 award of moneys from the fund to charitable nonprofit
 
 4 organizations."
 
 5      SECTION 6.  Chapter 712, Hawaii Revised Statutes, is amended
 
 6 by adding a new section to part III to be appropriately
 
 7 designated and to read as follows:
 
 8      "§712-     Nonprofit parimutuel wagering exemption.
 
 9 Nonprofit parimutuel wagering conducted in conformance with
 
10 chapter      does not constitute an offense under this part."
 
11      SECTION 7.  This Act does not affect rights and duties that
 
12 matured, penalties that were incurred, and proceedings that were
 
13 begun, before its effective date.
 
14      SECTION 8.  Statutory material to be repealed is bracketed.
 
15 New statutory material is underscored.
 
16      SECTION 9.  This Act shall take effect on July 1, 2000.
 
17 
 
18                           INTRODUCED BY:  _______________________