REPORT TITLE:
Parimutuel Horse Racing


DESCRIPTION:
Establishes parimutuel horse racing in Hawaii.  Requires county
approval.  Prohibits parimutuel wagering until horse racing track
is constructed and in operation.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           702
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PARIMUTUEL WAGERING AND HORSERACING.



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

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

 
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                                     S.B. NO.           702
                                                        
                                                        

 
 1 betting, approximately eighty per cent is paid out to the players
 
 2 (which is the reason for the established odds) while ten per cent
 
 3 is paid to the State in taxes and the remaining ten per cent is
 
 4 applied to track expenses.  The favorable feature of this
 
 5 activity is that the bettors, who number in the thousands, will
 
 6 have money in their pockets to spend, which will boost the
 
 7 State's economy.  Casino gambling, on the other hand, pays eighty
 
 8 per cent to the house with ten per cent paid to the players.
 
 9      In addition to preserving open space, the race track will
 
10 add another dimension to the State's struggling motion picture
 
11 industry, which has indicated that a race track is a huge
 
12 prerequisite for major studio involvement in Hawaii.  "Build it
 
13 and they will come".
 
14      Parimutuel horse racing is a popular and widespread form of
 
15 legalized wagering in the United States, having been approved by
 
16 forty-four states.  Parimutuel horse racing and facilities are
 
17 operated by private groups under strict federal and state
 
18 government regulation and law enforcement.  The industry is also
 
19 regulated by the Thoroughbred Racing Association, the
 
20 Thoroughbred Racing Protective Bureau, the United States Trotting
 
21 Association, and the Association of Racing Commissioners
 
22 International.
 
23      The sport of horse racing enjoyed the hearty patronage of
 

 
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                                     S.B. NO.           702
                                                        
                                                        

 
 1 King Kamehameha V.  The anniversary of the birth of Kamehameha
 
 2 the Great was first made a legal holiday, on June 11, 1872, the
 
 3 occasion being celebrated by horse races at Kapiolani Park.  A
 
 4 few years later, the races were held on a regular mile course,
 
 5 and on every recurring holiday, crowds gathered there to enjoy
 
 6 racing and trotting events.
 
 7      Horse racing began in Hawaii in the early twentieth century
 
 8 with the importation by the Big Island's Parker Ranch of top
 
 9 racing lines of horses from the United States mainland and
 
10 England to develop thoroughbreds in Hawaii.  Prior to the Second
 
11 World War, horse racing was an active pursuit for a great many
 
12 people for recreation and employment on the Big Island.  The
 
13 Hawaiian Jockey Club was founded in 1872 by King Kalakaua, an
 
14 avid supporter of the sport.  On Oahu, horse racing officially
 
15 began in 1939 when the Oahu Jockey Club was incorporated and the
 
16 Kailua race track was constructed.  According to newspaper
 
17 accounts, modern horse racing on Oahu flourished until 1952.
 
18 Attempts to conduct horse racing at Kapiolani Park failed in
 
19 1949, and a bill to permit horse racing on Maui failed to pass
 
20 the house of representatives in 1959.
 
21      The legislature believes that the development of a
 
22 parimutuel horse racing industry in Hawaii would provide many
 
23 economic development opportunities, including the expansion of
 

 
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                                     S.B. NO.           702
                                                        
                                                        

 
 1 horse breeding, feed, and other related agricultural industries,
 
 2 as well as increased sources of revenue from newly generated
 
 3 business, hotel, restaurant, and airline activities.  In addition
 
 4 to an increased need for veterinarians, new jobs, such as stable
 
 5 hands, jockeys, track maintenance and food service personnel, and
 
 6 computer and telecommunications operators resulting from such
 
 7 economic development opportunities would have a multiplier effect
 
 8 on creating more new jobs in other support and travel industries.
 
 9      The development of a parimutuel horse racing industry in
 
10 Hawaii also would provide many educational opportunities,
 
11 especially in the areas of travel industry and business
 
12 management, veterinary medicine, television broadcasting, and
 
13 other media and information processing technologies.  A horse
 
14 racing facility could even be included in the planning and
 
15 development of an international sports complex in Hawaii.
 
16      Moreover, as a major visitor destination, the development of
 
17 a horse racing industry would serve to bolster the State's key
 
18 tourism industry.  The State is currently losing revenues as many
 
19 residents travel to other states to observe and wager on horse
 
20 racing and participate in other casino gaming activities.
 
21      Finally, the legislature believes that horse racing which is
 
22 controlled and regulated by the State will serve to prevent and
 
23 deter unlawful bookmaking and gambling activities.
 

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

 
 1      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5               PARIMUTUEL WAGERING AND HORSE RACING
 
 6      §   -1 Definitions.  As used in this chapter, unless the
 
 7 context otherwise requires:
 
 8      "Association" means any person engaged in the conduct of a
 
 9 recognized horse racing meeting.
 
10      "Board" means the Hawaii horse racing board.
 
11      "Breakage" means the odd cents by which the amount payable
 
12 on each dollar wagered exceeds a multiple of 10 cents.
 
13      "Licensee" means a person, corporation, partnership,
 
14 association, or other body holding a valid license issued under
 
15 this chapter.
 
16      "Parimutuel horse racing facility" means any facility where
 
17 horse races are viewed live or by way of telecast, and parimutuel
 
18 wagers are made on the outcomes of those horse races.
 
19      "Parimutuel 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.           702
                                                        
                                                        

 
 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      "Race" means any horse race conducted live in Hawaii or
 
 6 telecast from a state other than Hawaii, or a foreign country
 
 7 where parimutuel horse racing is legal.
 
 8      §   -2 Hawaii horse racing board; establishment.(a)
 
 9 There is established the Hawaii horse racing board for the
 
10 purpose of implementing this chapter.  The board shall be placed
 
11 within the department of commerce and consumer affairs for
 
12 administrative purposes.
 
13      (b)  The board shall consist of three members, who shall not
 
14 be public officers or employees, appointed by the governor in
 
15 accordance with this section.  The members shall be from the
 
16 general public and selected on the basis of their knowledge,
 
17 interest, and proven expertise in, but not limited to, one or
 
18 more of the following fields:  both equitation and operations of
 
19 the horse racing industry, accounting, agriculture, commerce and
 
20 trade, computer science, corporate management, economics,
 
21 finance, law, law enforcement, marketing, and the parimutuel
 
22 industry.
 
23      (c)  One member shall be appointed by the governor for a
 

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

 
 1 fill the vacancy for the unexpired term by appointment from a
 
 2 list of two nominees submitted by the nominating authority in
 
 3 subsection (d) or (e), as the case may be.  Whenever the term of
 
 4 a member appointed from a list of nominees submitted by any of
 
 5 the nominating authorities expires, the governor shall appoint a
 
 6 member from a list of two nominees submitted by that nominating
 
 7 authority, as the case may be; provided that the nominating
 
 8 authority may nominate and the governor may reappoint a member to
 
 9 another term so long as the reappointment is not contrary to
 
10 subsection (h).
 
11      (g)  An appointment required to be made from a list of
 
12 nominees submitted by either of the nominating authorities shall
 
13 be made by the governor within ten days of receipt of the list of
 
14 nominees.  The governor shall appoint the members of the board to
 
15 staggered terms pursuant to section 26-34.
 
16      (h)  Each term of a member of the board shall commence on
 
17 July 1, and expire on June 30.  No person shall be appointed
 
18 consecutively to more than two terms as a member of the board.
 
19 No person shall serve as a member of the board for more than
 
20 eight consecutive years.
 
21      (i)  Any member of the board whose term has expired and who
 
22 is not disqualified from membership under subsection (h) may
 
23 continue in office as a holdover member until a successor is
 

 
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 1 appointed; provided that a holdover member shall not hold office
 
 2 beyond the end of the second regular session of the legislature
 
 3 following the expiration of the member's term of office.
 
 4      (j)  The governor may remove or suspend for cause any member
 
 5 of the board after due notice and public hearing.
 
 6      (k)  Members shall serve part time and shall be compensated
 
 7 $75 for each day in the performance of official duties; provided
 
 8 that the compensation of a member shall not exceed $5,000 in any
 
 9 one year.  Members shall also be reimbursed for expenses,
 
10 including travel expenses, incurred in the performance of
 
11 official duties.
 
12      (l)  Officers of the board, including the chairperson, shall
 
13 be selected by the members.
 
14      §   -3 Powers and duties of the board.(a)  The board
 
15 shall exercise all powers assigned to it under this chapter
 
16 necessary to effectuate the purposes of this chapter, including,
 
17 but not limited to, the adoption of rules concerning:
 
18      (1)  The regulation of stewards, racing officials, and other
 
19           persons involved in horse racing;
 
20      (2)  The maximum number and allocation of racing days and
 
21           weeks;
 
22      (3)  Racing at state, county, and district agricultural
 
23           association fairs;
 

 
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 1      (4)  The designation of charity racing days and
 
 2           beneficiaries;
 
 3      (5)  Equine medication, drug testing, health, and
 
 4           performance;
 
 5      (6)  Satellite wagering and satellite wagering facilities;
 
 6      (7)  Breeders' and stallions' awards, and owners' premiums;
 
 7           and
 
 8      (8)  Prohibited acts and administrative penalties.
 
 9      (b)  The board shall also have the power to:
 
10      (1)  Maintain an office;
 
11      (2)  Keep detailed records of all meetings and of all
 
12           business transacted, including, but not limited to,
 
13           collections and disbursements;
 
14      (3)  Adopt rules which will establish the selection process
 
15           for the licensee to conduct parimutuel wagering at
 
16           parimutuel horse racing facilities in the State;
 
17      (4)  Select the licensee to conduct the parimutuel wagering
 
18           at parimutuel horse racing facilities in the State; and
 
19      (5)  Employ staff and other employees as necessary for the
 
20           performance of the board's duties, including, but not
 
21           limited to, an executive secretary, auditors,
 
22           inspectors, and security personnel to ensure the
 
23           integrity of parimutuel horse racing as conducted by
 

 
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 1           the licensee in the State.  The duties and compensation
 
 2           of the employees of the board shall be determined by
 
 3           the board, and their compensation shall be paid from
 
 4           the administrative fund of the board established in
 
 5           section    -7.  The board may combine in a single
 
 6           person the duties of one or more employees or
 
 7           officials, as efficiency and economy require.  The
 
 8           employees appointed by the board under this paragraph
 
 9           shall not be subject to chapter 76 or 77 but shall be
 
10           members of the employees' retirement system of the
 
11           State and shall be eligible to receive the benefits of
 
12           any state or federal employee benefit program generally
 
13           applicable to officers and employees of the State.
 
14           Employees may be dismissed by the board at its
 
15           pleasure.
 
16      (c)  The board shall submit an annual report to the governor
 
17 and the legislature which shall include a complete accounting of
 
18 all income and disbursements.
 
19      §   -4 Oath by board members.  Before entering upon the
 
20 discharge of the duties of the office, each member of the board
 
21 shall take an oath that the member will faithfully execute the
 
22 duties of the member's office according to the laws of the State.
 
23      §   -5 Bond required.  Prior to the commencement of the
 

 
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 1 term of office, each member of the board shall procure a surety
 
 2 bond.  The bond shall be approved by the governor and the
 
 3 attorney general, payable to the State in the sum of $100,000,
 
 4 and conditioned upon the faithful performance of the member's
 
 5 duties and the correct accounting and payment of all sums within
 
 6 the member's control under this chapter.  Each bond, upon
 
 7 execution and approval, shall be filed with the attorney general.
 
 8 When, in the governor's opinion, the bond of any member of the
 
 9 board has become or is likely to become invalid or insufficient,
 
10 the governor shall require that member to renew the bond.  The
 
11 renewed bond shall be approved by the governor in the sum
 
12 prescribed in this section.  The cost of any bond given by any
 
13 member of the board under this section shall be part of the
 
14 necessary expenses of the board.
 
15      §   -6 Meetings and quorum requirements.(a)  The powers
 
16 of the board are vested in the members thereof.  All actions
 
17 taken, and motions and resolutions adopted by the board at any
 
18 meeting of the board shall require an affirmative vote of at
 
19 least two members.
 
20      (b)  Two members of the board shall constitute a quorum, or
 
21 in the instance of a vacancy, a majority of the members remaining
 
22 qualified.
 
23      §   -7  Administrative fund; establishment.  The board shall
 

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

 
 1 wagering facilities statewide.
 
 2      (j)  Notwithstanding sections    -13,   -14, and    -15, no
 
 3 parimutuel wagering shall be allowed in the State until a horse
 
 4 racing track has actually been constructed and has become
 
 5 operational in the State.
 
 6      §   -13  Interstate wagering; common pools.  Subject to
 
 7 section    -12(j) and applicable federal laws, including the
 
 8 Interstate Horseracing Act of 1978 (15 U.S.C. §3001, et seq.),
 
 9 the board may permit a licensee to participate in interstate
 
10 common pools (including common pools which may include
 
11 international jurisdictions).  All provisions of law governing
 
12 parimutuel betting under this chapter shall apply to parimutuel
 
13 betting in interstate common pools except as otherwise provided
 
14 in this section or in the board's rules.
 
15      Participation in a common pool solely as a sending track or
 
16 as a receiving track shall not cause that track to be deemed to
 
17 be doing business in this State, or in the other state, for any
 
18 purpose.
 
19      §   -14  Where licensee is receiving the race from a sending
 
20 racetrack in another state.  Subject to section    -12(j) and
 
21 with the prior approval of the board, a licensee who is permitted
 
22 to accept wagers in this State on horse races conducted at
 
23 racetracks located outside of this State may combine parimutuel
 

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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                                     S.B. NO.           702
                                                        
                                                        

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

 
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 1 maintaining an office and licensed to do business in Hawaii in an
 
 2 amount equal to $500.  The license fee shall be deposited into
 
 3 the administrative fund.
 
 4      §   -17  Eligibility for license; selection of licensee.
 
 5 (a)  Pursuant to section    -3, the board shall select a
 
 6 qualified individual and award that individual a license to
 
 7 conduct parimutuel wagering at parimutuel horse racing facilities
 
 8 throughout the State.  The selection of a licensee shall be made
 
 9 pursuant to the rules established by the board.
 
10      (b)  No parimutuel wagering shall be allowed and no
 
11 parimutuel horse racing facility shall be established in any
 
12 county for the purpose of receiving moneys on the results of
 
13 races unless authorized by ordinance enacted by the legislative
 
14 body of that county.
 
15      §   -18  Grounds for refusal to license.  The board may
 
16 refuse to grant a license to any applicant if the applicant:
 
17      (1)  Is a partnership, corporation, limited liability
 
18           company, firm, association, or other entity that is not
 
19           duly authorized to conduct business within the State;
 
20      (2)  Is an individual who has been convicted of a crime
 
21           involving moral turpitude, or, if a partnership,
 
22           corporation, firm, limited liability company,
 
23           association, or other entity, is in whole or in part
 

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

 
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 1 chapter shall not be transferred without prior consent of the
 
 2 board.
 
 3      §   -21  Subcontracting for services.  The licensee may
 
 4 subcontract all or part of the services for which licensed;
 
 5 provided that all subcontracts shall be subject to board
 
 6 approval.
 
 7      §   -22  Revocation of license.  The board may revoke the
 
 8 license upon any of the grounds upon which the board could refuse
 
 9 to issue the license under section    -18, or if the licensee
 
10 fails to pay to the board all sums required under this chapter.
 
11      A license shall be revoked only after reasonable notice and
 
12 opportunity for hearing pursuant to chapter 91.
 
13      Revocation of the license shall constitute a forfeiture of
 
14 all rights and privileges granted by the board.
 
15      §   -23  Liability insurance.  The licensee shall carry
 
16 public liability insurance written on an approved form by a
 
17 company licensed to do business in this State.
 
18      §   -24  Surety bond.  The licensee shall provide and
 
19 deliver to the board a bond signed by a surety company authorized
 
20 to do business in this State in such form as the board requires.
 
21 The bond shall be in the amount required by the board but not
 
22 less than $250,000.  The bond shall require the licensee to:
 
23      (1)  Pay to the State all moneys due under this chapter;
 

 
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 1      (2)  Pay and discharge all obligations to the employees,
 
 2           subcontractors, and other persons furnishing services,
 
 3           labor, and material in connection with the
 
 4           construction, operation, maintenance, and repair of the
 
 5           parimutuel horse racing system;
 
 6      (3)  Conduct the parimutuel horse racing in strict
 
 7           accordance with this chapter and the rules of the
 
 8           board; and
 
 9      (4)  Comply with all laws of the State.
 
10 The attorney general shall prosecute all actions relating to the
 
11 bond on behalf of the State."
 
12      SECTION 3.  Chapter 712, Hawaii Revised Statutes, is amended
 
13 by adding a new section to part III to be appropriately
 
14 designated and to read as follows:
 
15      "§712-     Parimutuel wagering exemption.  Parimutuel
 
16 wagering conducted in conformance with chapter      does not
 
17 constitute an offense under this part."
 
18      SECTION 4.  This Act does not affect rights and duties that
 
19 matured, penalties that were incurred, and proceedings that were
 
20 begun, before its effective date.
 
21      SECTION 5.  New statutory material is underscored.
 

 
 
 
 
 
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                                     S.B. NO.           702
                                                        
                                                        

 
 1      SECTION 6.  This Act shall take effect upon its approval.
 
 2 
 
 3                           INTRODUCED BY:  _______________________