H. B. 4411


(By Delegates Manuel and Doyle)
[Introduced February 9, 1994; referred to the
Committee on the Judiciary then Finance.]




A BILL to amend article twenty-three, chapter nineteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new section, designated section twelve-c; and to amend said chapter nineteen by adding thereto a new article, designated article twenty-three-a, all relating to horse racing generally; authorizing telephone pari-mutuel wagering and accounts within any licensed thoroughbred racetrack enclosure; permitting pari-mutuel wagering at satellite facilities to which racing events are simultaneously telecommunicated from other in-state or out-of-state locations; defining certain terms and legislative intent; empowering the racing commission to promulgate rules and regulations; requiring licensure of satellite facilities and their operating plans and permits for facility employees and new construction; outlining license application approval and suspension procedures, standards and due process; permitting standardization of reports, accounting practices and investigations; authorizing a pari-mutuel wagering system at satellite facilities for telecommunicated in-state and out-of-state racing events which permits commission deductions from pari-mutuel pools for an affected county or municipality; imposing additional rules on interstate pari-mutuel pools and limiting their obligations for other licenses and taxes to only specified deductions; and providing a notice and redemption system for a satellite facility's unredeemed and irredeemable pari-mutuel tickets.
Be it enacted by the Legislature of West Virginia:

That article twenty-three, chapter nineteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new section, designated section twelve-c; and that said chapter nineteen be amended by adding thereto a new article, designated article twenty-three-a, all to read as follows:
ARTICLE 23. HORSE AND DOG RACING.

§ 19-23-12c. Telephone pari-mutuel wagering system; telephone wagering accounts; wagers accepted only from account holders.

(a) The racing commission may, upon request by any licensed thoroughbred racetrack, grant permission to said licensee to conduct a telephone account wagering system: Provided, That all telephone messages to place wagers must be to a place within the racetrack enclosure: Provided, however, That all money used to place telephone wagers be on deposit in an amount sufficient to cover the wager at the thoroughbred racetrack where the account is opened. The racing commission shall promulgate rules to regulate telephone account wagering. All moneys wagered as a result of telephone account wagering shall be included in the amount wagered each racing day for purposes of taxation under section ten, article twenty-three of this chapter and shall be included in the same pari-mutuel pools for each posted race. All telephone account wagering systems shall be solely operated by a licensed thoroughbred racetrack.

(b) A licensed thoroughbred racetrack shall accept and tabulate a wager only by a direct telephone call from the holder of a telephone wagering account. No person may act, directly or indirectly, as an intermediary, transmitter or agent in the placing of wagers for a holder of a telephone wagering account. No person may place any wager by telephone in any manner to a facility in the racetrack enclosure on behalf of a holder of a telephone wagering account. Only the holder of a telephone wagering account may place a telephone wager.
ARTICLE 23A. SATELLITE PARI-MUTUEL WAGERING.

§ 19-23A-1. Short title.

This article shall be known and cited as the "West Virginia Satellite Pari-Mutuel Wagering Law."

§ 19-23A-2. Legislative intent and purposes.

The purpose of this article is to authorize, enable, license and regulate facilities wherein the public may participate in satellite wagering. The racing commission may permit as provided in this article racing events that are running in this state or other states to be simultaneously telecommunicated from the place of origin and simultaneously received and displayed by a facility so that patrons may wager on the outcome of such racing events in the same manner as if they actually were in attendance at the racing events. For telecommunications from in-state racetracks, the wagering and odds at each site shall be based upon the integrated pools of the track and the satellite facilities. For interstate telecommunications of racing events, each satellite facility shall commingle its wagering pools with the wagering pools of the host association.

§ 19-23A-3. Definitions.

Unless the context indicates otherwise, the following terms have the meaning ascribed to them below:

(a) "Applicant" means any person or racing association applying for a license under the provisions of this article.
(b) "Code" means the code of West Virginia, one thousand nine hundred thirty-one, as heretofore and hereinafter amended.
(c) "Horse racing" means any type of horse racing including, but not limited to, thoroughbred and harness racing.
(d) "Legitimate breakage" means the percentage left over in the division of a pool.
(e) "License" means the license required by the provisions of this article.
(f) "Licensee" means any person, racing association, corporation, or other entity holding a license that is required by the provisions of this article.
(g) "Pari-mutuel facility" means any pari-mutuel racetrack conducting race meetings during the racing season in the year one thousand nine hundred ninety-one.
(h) "Racing commission" or "commission" means the West Virginia racing commission.
(i) "Satellite facility" means any new or existing physical facility which shall have the means of simultaneously receiving the transmissions of live telecommunicated racing events so that patrons wager on the outcome of such events in the same way as if they were in attendance at the racing events.
(j) "Third-party operator" means an individual, group or association licensed by the racing commission which has a contract with a racing association to operate satellite wagering facilities in West Virginia.
(k) "Racing association" means any horse or dog racing association licensed by the racing commission under the provisions of article twenty-three of this chapter.
§ 19-23A-4. General jurisdiction; license required for satellite wagering facility and pari-mutuel wagering in connection therewith; permits required for satellite wagering facility employment positions; construction permits for satellite wagering facilities.

(a) The racing commission has general jurisdiction over the operation of all satellite wagering facilities in the state. The racing commission shall issue rules in accordance with the provisions of chapter twenty-nine-a of this code in order to ensure the accomplishment of the purposes of this article and to protect the thoroughbred racing and breeding industry within this state. Any racing association licensed by the commission may accept and transmit wagers as provided in this article and engage in all necessary activities to establish appropriate satellite wagering facilities to accomplish this purpose. Such activities shall include, but not be limited to:

(1) Live simulcast of racing from all operating West Virginia thoroughbred tracks;
(2) Live simulcast of races from the host track;
(3) Construction or leasing of satellite wagering facilities including, but not be limited to, existing food and beverage establishments and hotels or resort facilities;
(4) Sale of food and beverages;
(5) Advertising and promotion; and
(6) All other related activities.
(b) No racing association, person or third-party operator may hold, telecast, broadcast or otherwise conduct any satellite wagering enterprise of any kind whatsoever unless it possesses a license therefor from the racing commission and complies with the provisions of this article and all reasonable rules of the racing commission.
(c) Personnel not licensed by the racing commission pursuant to subsection (b) of this section are not permitted to be employed by the licensee at a licensed satellite facility as a pari-mutuel employee or in any other capacity specified in the racing commission's reasonable rules unless such person receives a permit from the racing commission as required in section two, article twenty-three of this chapter and complies with the provisions of this article.
(d) In order to ensure the well-being of the horse and dog racing and breeding industries in this state, the racing commission shall only give consideration to the applications filed by existing thoroughbred racing associations or their designated third parties for proposed satellite wagering facilities. For the purpose of this section, "existing thoroughbred racing association" means those thoroughbred associations operating under the provisions of section one, article twenty-three of this chapter prior to the effective date of this article.
(e) No racing association, person or third-party operator may construct or cause to be constructed a facility for satellite wagering without a construction permit issued by the racing commission in conjunction with its approval of the applicant's plan of operation. Any person who desires to obtain a construction permit and who submits a plan of operation shall file an application with the racing commission. The racing commission shall prescribe blank forms to be used in making such application; however, the racing commission may accept the required information in any other form or format it considers acceptable.
(f) No application for a construction permit for the construction and establishment of a satellite facility described in this article may be acted upon or issued by the racing commission for the construction or establishment of a satellite wagering facility which is to be located within fifty-five air miles of an existing horse track, or within thirty-five miles of an existing satellite wagering facility or an existing dog track: Provided, That existing thoroughbred racing associations, with the approval of the authorized representative of a majority of the owners and trainers at their track who hold the permits required by section four, have the sole right subject to the provisions of this article and the approval of the racing commission to apply for a construction permit and to apply, establish and operate a satellite wagering facility within fifty-five air miles of their on-track thoroughbred racing facility.
For the purpose of this subsection, an existing horse or dog racetrack means any licensed horse or dog racing association licensed under the provisions of article twenty-three of this chapter which is operational, meaning that it is running live racing in compliance with the provisions of subsection (b), section twelve-b, article twenty-three of this chapter.
§ 19-23A-5. License applications; standards.

(a) In order to accomplish the objectives of this article, the racing commission shall investigate all applications filed and approve or disapprove them within thirty days of receipt. The applicant shall provide, upon request, any information considered necessary by the commission. In the event the applicant fails to provide the requested information in the form prescribed by the commission, the commission shall disapprove the application. All license applications for each facility shall be accompanied by a deposit of one thousand dollars to cover the cost of the necessary investigation of the applicant. Nothing in this article prevents a licensee from jointly owning or contracting for the management of any and all licensed satellite facilities.

(b) A satellite facility authorized under this article must provide a minimum of one hundred seats in the wagering area. The satellite facility shall be operated in conjunction either with a hotel or resort facility which has at least sixty rooms available for public use or in conjunction with a restaurant serving food and beverage which has obtained a license under article sixteen, chapter eleven and article seven, chapter sixty of this code. The satellite simulcasts must be displayed so that spectators in attendance are afforded a clear presentation of the races.
(c) Any applicant whose application is denied shall be granted a hearing before the racing commission if a hearing is requested within ten days of receipt of the commission's denial.
(d) A maximum of twenty facilities may be authorized and operating at any time. At such time as twenty facilities are operating, additional facilities may be licensed only in the event of discontinuance by a licensed facility for any purpose whatsoever.
(e) The racing commission shall annually review each satellite wagering facility. Each satellite wagering facility is required to be licensed annually by the racing commission.
§ 19-23A-6. License suspensions; due process.

(a) The racing commission may suspend its approval of any applicants or licensees if they, their retained agents or a third party which has contracted to operate the satellite facility fails to conduct satellite wagering on horse races in accordance with the provisions of this article and the rules of the racing commission. The commission may suspend the license if the applicant, licensee, third-party operator or its officers or directors knowingly permits illegal lotteries, pool selling or bookmaking or any other form of illegal gambling on any of its premises. Suspension shall continue until the situation necessitating it has been corrected.

(b) If the racing commission suspends an applicant's license, it shall give the applicant, licensee or third-party operator involved notice of a time and place of a hearing at which the applicant may appeal the ruling. The racing commission may continue such hearing from time to time for the convenience of all parties. Any of the parties affected by such hearing may be represented by counsel. In the conduct of such hearing, the racing commission shall apply the rules of evidence set forth in section two, article five, chapter twenty-nine-a of this code. A written record shall be made of all proceedings and all evidence offered, together with any exhibits, and the findings of the racing commission shall be permanently preserved and shall constitute the record of the racing commission in such case. The racing commission may by order, if the occasion requires, refer to one or more of its members the duty of taking testimony in such matter and reporting back to the racing commission; however, no determination on the suspension shall be made except by the racing commission. Within thirty days after a hearing, the racing commission shall make a final determination based solely upon the evidence presented at the hearing and the commission's order shall be based upon substantial evidence. If it is determined that an approval should be suspended, the commission shall issue such an order and cause it to be entered on its minutes with a copy served on the applicant. Such an order of suspension shall be construed as a final order, subject to judicial review under the provisions of the state administrative procedures act in section two, article five, chapter twenty-nine-a of this code.
§ 19-23A-7. Reports; accounts; investigations.

The racing commission is authorized to prescribe uniform methods of keeping accounts, records and books to be observed by applicants, licensees and third-party operators. The racing commission also may require, by order, that certain forms of accounts, records and memoranda be kept by applicants, licensees and third-party operators and is empowered to visit, investigate and place racing commission accountants or other employees, as necessary, in the office or other places of business of an applicant, licensee or third-party operator to ensure compliance with the provisions of this article and the commission's rules.

Each applicant, licensee or third-party operator approved to conduct satellite pari-mutuel wagering shall submit daily accounting reports to the racing commission, within twenty-four hours after each racing day, accounting for all tickets sold and cashed or refunds issued and such other information as the racing commission may require.
Every applicant, licensee or third-party operator subject to the provisions of this article shall annually submit to the racing commission and to the Legislature financial statements, including a balance sheet, income statement, statement of change in financial position and any other requested financial data as well as the results of an audit of any electronic data system used for pari-mutuel tickets and wagering, all of which are to be audited in accordance with generally accepted auditing standards as recognized by the American Institute of Certified Public Accountants and as certified by a certified public accountant.
The reports required under this section shall be in the form and contain such other matters as the racing commission may determine to be necessary to disclose accurately the financial condition and operations of each applicant, licensee or third-party operator. The racing commission may, for good cause, grant a reasonable extension of time for filing any such report.
§ 19-23A-8. Pari-mutuel system of wagering and commission deductions from pari-mutuel pools authorized.

(a) The pari-mutuel system of wagering upon the simultaneously telecommunicated results of any horse race at any horse race meeting, whether conducted in-state or out-of-state by an applicant, licensee or designated third party created under the provisions of this article, is hereby authorized if, and only if, pari-mutuel wagering is conducted by such applicant, licensee or third-party operator within the confines of his or her approved satellite facility. The provision of section one, article ten, chapter sixty-one of the code, relating to gaming shall not apply to the pari-mutuel system of wagering conducted in compliance with this article.

(b) An applicant, licensee or third party authorized to construct or operate a satellite wagering facility under the provisions of this article is hereby expressly authorized to deduct a commission from the pari-mutuel pools on all in-state races as set forth in section twenty-three, article nine of this chapter: Provided, That the one tenth of one percent of the pari-mutuel pool deducted for wagers at a satellite facility shall be paid into the general fund of the county commission of the county in which the satellite facility is located, unless the satellite facility is located in a municipality and then the percentage shall be paid into the municipality's general fund.
(c) Any satellite facility offering interstate or intrastate horse races shall pay a daily license tax of twenty-five dollars on each day on which wagering on horse races is offered.
(d) Any satellite facility licensed by the racing commission to simultaneously telecommunicate in-state horse races and permit and conduct pari-mutuel wagers shall pay to the racing commission, in addition to the daily license tax, a tax calculated pursuant to section ten, article twenty-three of this chapter from the commissions retained each day by the licensees from the pari-mutuel pools on thoroughbred racing.
(e) The handle from televised intrastate simulcast racing shall be included in the tabulation of "average daily handle" as it is calculated in section ten, article twenty-three of this chapter to determine the alternative daily pari-mutuel pool tax.
§ 19-23A-9. Interstate pari-mutuel pools; authority; merging; deductions on all interstate merged pari-mutuel pools.

(a) Each licensed satellite facility is hereby authorized to offer interstate telecommunication of horse racing on a daily basis and may commingle its wagering pools with the wagering pools of the host racing association. If the pools are commingled, the wager at the licensees' facilities must be on tabulated equipment capable of issuing pari-mutuel tickets and electronically linked with the equipment at the sending track. Subject to the approval of the commission, the types of betting, licensee commissions and distribution of winnings on pari-mutuel pools of the sending licensee racetrack are those in effect at the licensee's racetrack. Breakage for pari-mutuel pools on a televised racing day must be calculated in accordance with the law or rule governing the sending track and must be distributed in a manner agreed to between the licensee and the sending racetrack.

(b) From the licensee commissions authorized by subsection (a) of this section, the satellite licensee shall pay one tenth of one percent of the total pari-mutuel pool into the general fund of the county commission of the county in which the satellite facility is located, unless the satellite facility is located in a municipality, then in that event the percentage shall be paid into the municipality's general fund.
(c) From the license commissions authorized by subsection (a) of this section after payments are made in accordance with subsection (b) of this section, the satellite licensee shall pay for each televised racing day one fourth of one percent of the total pari-mutuel pools for and on behalf of all employees of the licensed racing association by making a deposit into a special fund to be established by the racing commission and to be used for payments into the pension plan for all employees of the licensed racing association.
(d) From the license commission authorized by subsection (a) of this section after payments are made in accordance with subsections (b) and (c) of this section, the satellite licensee shall pay, for each televised racing day, one percent of the total pari-mutuel pool into the special fund established by the racing commission, to be used for the payment of breeders' awards as authorized by section thirteen-b, article twenty-three of this chapter.
(e) After the deductions required by subsections (b), (c) and (d) of this section and the amount required to be paid under the terms of the contract with the legal wagering entity of another state, the satellite facility shall make a deposit equal to fifty percent of the remainder into the purse fund established under the provisions of subdivision (1), subsection (b), section nine, article twenty-three of this chapter.
(f) The provisions of the "Federal Interstate Horse Racing Act of 1978," also known as Public Law 95-515, Section 3001-3007 of Title 15, United States Code, as amended, controls in determining the intent of this section.
(g) The handle from televised interstate simulcast racing shall not be included in the calculation of "average daily handle" as it is calculated in section ten, article twenty-three of this chapter to determine the alternative daily pari-mutuel pool tax.
§ 19-23A-10. Disposition of funds for payment of outstanding and unredeemed pari-mutuel tickets; publication of notice; irredeemable tickets.

(a) All moneys held by the applicant, licensee or third-party operator for the payment of outstanding and unredeemed pari-mutuel tickets, if not claimed within ninety days after the close of the last business day of the calendar quarter in connection with which the tickets were issued, shall be turned over by the applicant, licensee or third-party operator to the racing commission within fifteen days after the expiration of such ninety-day period and the applicant, licensee or third-party operator shall give such information as the racing commission may require concerning such unredeemed tickets. All such moneys shall be deposited by the racing commission in a bank of its choice in a special account to be known as "West Virginia Racing Commission Special Account - Unredeemed Pari-Mutuel Tickets." Notice of the amount, date and place of such deposit shall be given by the racing commission in writing to the state treasurer. Within fifteen days of receiving such moneys, the racing commission shall publish in the county in which the satellite facility is located a Class I advertisement complying with article three, chapter fifty-nine of this code notifying holders of outstanding and unredeemed pari-mutuel tickets to present their tickets for payment at the principal office of the racing commission within ninety days from the date of the notice's publication.

(b) Further disposition of any such pari-mutuel tickets that are not presented for payment within ninety days from the date of the publication shall be made pursuant to subsection (b), article twenty-three, chapter nineteen of this code.
(c) The director of audit and any other auditors employed by the racing commission who are certified or experienced public accountants shall have free access to the space or enclosure where the pari-mutuel system of wagering is conducted or calculated at any satellite facility for the purpose of ascertaining whether or not the licensee is complying with the provisions of this section. Similarly, they shall have full and free access to all records and papers pertaining to such pari-mutuel system of wagering for the same purpose and shall report to the racing commission in writing, under oath, whether or not the licensee has complied or failed to comply with the provisions of this section.
(d) No licensee may permit or allow any individual under eighteen years of age to wager at any satellite facility, knowing or having reasons to believe that said individual is under age eighteen.
§ 19-23A-11. Deductions from pari-mutuel pools in lieu of all other licenses and taxes.

The deductions from pari-mutuel pools provided in section nine of this article shall be in lieu of all other license, income, excise, special franchise, special or franchise taxes of this state or of any county or municipality within this state.




NOTE: This bill authorizes a licensed thoroughbred racetrack to operate a telephone pari-mutuel wagering system and to maintain wagering accounts for that purpose. Furthermore, the bill permits satellite facilities to offer a pari-mutuel system of wagering on racing events conducted at racetracks at other in-state or out-of-state locations by simultaneously telecommunicating the racing events. The bill also establishes standards for satellite facilities, employees and operating and accounting practices and specifies required deductions from pari-mutuel wagering pools, including a percentage for the county or municipality in which the satellite facility is located.

§19-23-12c and §19-23A are new; therefore, strike-throughs and underscoring have been omitted.