HF 2018

as introduced - 91st Legislature (2019 - 2020) Posted on 03/20/2019 12:29pm

A bill for an act
relating to pari-mutuel horse racing; modifying licensing, reporting, and other
regulatory provisions of the Racing Commission; amending Minnesota Statutes
2018, sections 240.01, by adding a subdivision; 240.02, subdivisions 2, 6; 240.08,
subdivision 5; 240.10; 240.12; 240.13, subdivision 5; 240.131, subdivision 7;
240.135; 240.16, subdivisions 1, 2; 240.18, subdivisions 2, 3; 240.22; 240.27.

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

Section 1.

Minnesota Statutes 2018, section 240.01, is amended by adding a subdivision
to read:

new text begin Subd. 18a. new text end

new text begin Racing or gaming-related vendor. new text end

new text begin "Racing or gaming-related vendor"
means any person or entity that manufactures, sells, provides, distributes, repairs or maintains
equipment or supplies used at a Class A facility, or provides services to a Class A facility
or Class B license holder, that are directly related to the running of a horse race, simulcasting,
pari-mutuel betting, or card playing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 2.

Minnesota Statutes 2018, section 240.02, subdivision 2, is amended to read:

Subd. 2.

Qualifications.

A member of the commission must have been a resident of
Minnesota for at least five years before appointment, and must have a background and
experience as would qualify for membership on the commission. deleted text begin A member must, before
taking a place on the commission, file a bond in the principal sum of $100,000 payable to
the state, conditioned upon the faithful performance of duties. deleted text end No commissioner, nor any
member of the commissioner's immediate family residing in the same household, may hold
a license issued by the commission or have a direct or indirect financial interest in a
corporation, partnership, or association which holds a license issued by the commission.

Sec. 3.

Minnesota Statutes 2018, section 240.02, subdivision 6, is amended to read:

Subd. 6.

deleted text begin Annual deleted text end new text begin Biennial new text end report.

The commission shall on February 15 of each
new text begin odd-numbered new text end year submit a report to the governor and legislature on its activities,
organizational structure, receipts and disbursements, and recommendations for changes in
the laws relating to racing and pari-mutuel betting.

Sec. 4.

Minnesota Statutes 2018, section 240.08, subdivision 5, is amended to read:

Subd. 5.

Revocation and suspension.

(a) new text begin After providing a licensee with notice and an
opportunity to be heard, new text end the commission may new text begin :
new text end

new text begin (1) new text end revoke a class C license for a violation of law or rule which in the commission's
opinion adversely affects the integrity of horse racing in Minnesota, the public health,
welfare, or safety, or for an intentional false statement made in a license application deleted text begin . deleted text end new text begin ; or
new text end

deleted text begin The commission may deleted text end new text begin (2) new text end suspend a class C license for up to deleted text begin one year deleted text end new text begin five years new text end for a
violation of law, order or rule. new text begin If the license expires during the term of suspension, the
licensee shall be ineligible to apply for another license from the commission until the
expiration of the term of suspension.
new text end

new text begin (b) new text end The commission may delegate to its designated agents the authority to impose
suspensions of class C licenses deleted text begin , and deleted text end new text begin .
new text end

new text begin (c) Except as provided in paragraph (d), new text end the deleted text begin revocation or deleted text end suspension of a class C license
may be appealed to the commission according to its rules.

deleted text begin (b) A license revocation or suspension for more than 90 days is a contested case under
sections 14.57 to 14.69 of the Administrative Procedure Act and is in addition to criminal
penalties imposed for a violation of law or rule.
deleted text end

new text begin (d) If the commission revokes or suspends a class C license for more than one year, the
licensee has the right to appeal by requesting a contested case hearing under chapter 14.The
request must be made in writing and sent to the commission by certified mail or personal
service. A request sent by certified mail must be postmarked within ten days after the licensee
receives the order of revocation or suspension from the commission. A request sent by
personal service must be received by the commission within ten days after the licensee
receives the order of revocation or suspension from the commission.
new text end

new text begin (e) new text end The commission may summarily suspend a license for deleted text begin more than deleted text end new text begin up to new text end 90 days deleted text begin prior
to a contested case hearing deleted text end where it is necessary to ensure the integrity of racing or to protect
the public health, welfare, or safety. deleted text begin A contested case hearing must be held within 30 days
of the summary suspension and the administrative law judge's report must be issued within
30 days from the close of the hearing record. In all cases involving summary suspension
the commission must issue its final decision within 30 days from receipt of the report of
the administrative law judge and subsequent exceptions and argument under section 14.61. deleted text end new text begin
The licensee has the right to appeal a summary suspension to the commission according to
its rules.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2018, section 240.10, is amended to read:

240.10 LICENSE FEES.

(a) The fee for a class A license is $253,000 per year and must be remitted on July 1.
The fee for a class B license is $500 for each assigned racing day and $100 for each day on
which simulcasting is authorized and must be remitted on July 1. The fee for a class D
license is $50 for each assigned racing day on which racing is actually conducted. Fees
imposed on class D licenses must be paid to the commission at a time and in a manner as
provided by rule of the commission.

(b) The commission shall by rule establish an annual license fee for each occupation it
licenses under section 240.08.

(c) The initial annual license application fee for a class C license to provide advance
deposit wagering on horse racing under this chapter is $10,000 and an annual license fee
of $2,500 applies thereafter.

new text begin (d) Notwithstanding section 16A.1283, the commission shall by rule establish an annual
license fee for each type of racing or gaming-related vendor it licenses, not to exceed $2,500.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 6.

Minnesota Statutes 2018, section 240.12, is amended to read:

240.12 LICENSE AGREEMENTS.

The commission may enter into agreements new text begin or compacts new text end with comparable bodies in
other racing jurisdictions for the mutual recognition of occupational licenses issued by each
body. The commission may by rule provide for and may charge a fee for the registration of
each license issued in another jurisdiction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2018, section 240.13, subdivision 5, is amended to read:

Subd. 5.

Purses.

(a) From the amounts deducted from all pari-mutuel pools by a licensee, new text begin
including breakage, new text end an amount equal to not less than the following percentages of all money
in all pools must be set aside by the licensee and used for purses for races conducted by the
licensee, provided that a licensee may agree by contract with an organization representing
a majority of the horsepersons racing the breed involved to set aside amounts in addition
to the following percentages, if the contract is in writing and deleted text begin filed with deleted text end new text begin reviewed by new text end the
commission new text begin for compliance with this subdivision new text end :

(1) for live races conducted at a class A facility, 8.4 percent of handle;

(2) for simulcasts conducted any day a class A facility is licensed, not less than 37 percent
of the deleted text begin takeout deleted text end new text begin amount new text end remaining after deduction for the state pari-mutuel tax, payment to
the breeders fund, and payment to the sending out-of-state racetrack for receipt of the signal.

The commission may by rule provide for the administration and enforcement of this
subdivision. The deductions for payment to the sending out-of-state racetrack must be actual,
except that when there exists any overlap of ownership, control, or interest between the
sending out-of-state racetrack and the receiving licensee, the deduction must not be greater
than three percent unless agreed to between the licensee and the horsepersons' organization
representing the majority of horsepersons racing the breed racing the majority of races
during the existing racing meeting or, if outside of the racing season, during the most recent
racing meeting.

The licensee shall pay to the commission for deposit in the Minnesota breeders fund
5-1/2 percent of the takeout from all pari-mutuel pools generated by wagering at the licensee's
facility on simulcasts of races not conducted in this state.

(b) deleted text begin From the money set aside for purses, deleted text end The licensee shall pay to the horseperson's
organization representing the majority of the horsepersons racing the breed involved and
contracting with the licensee with respect to purses and the conduct of the racing meetings
and providing representation to its members, an amount as may be determined by agreement
by the licensee and the horsepersons' organization sufficient to provide benevolent programs,
benefits, and services for horsepersons and their on-track employees. The amount paid may
be deducted deleted text begin only deleted text end from the money set aside for purses to be paid in races for the breed
represented by the horseperson's organization new text begin or may be paid from breakage retained by
the licensee from live or simulcast wagering as agreed between the licensee and horsepersons'
organization new text end . With respect to racing meetings where more than one breed is racing, the
licensee may contract independently with the horseperson's organization representing each
breed racing. new text begin The contract must be in writing and reviewed by the commission for compliance
with this subdivision.
new text end

(c) Notwithstanding sections 325D.49 to 325D.66, a horseperson's organization
representing the majority of the horsepersons racing a breed at a meeting, and the members
thereof, may agree to withhold horses during a meeting.

(d) Money set aside for purses from wagering on simulcasts must be used for purses for
live races involving the same breed involved in the simulcast except that money set aside
for purses and payments to the breeders fund from wagering on simulcasts of races not
conducted in this state, occurring during a live mixed meet, must be allotted to the purses
and breeders fund for each breed participating in the mixed meet as agreed upon by the
breed organizations participating in the live mixed meet. The agreement shall be in writing
and deleted text begin filed with deleted text end new text begin reviewed by new text end the commission new text begin for compliance with this subdivision new text end prior to
the first day of the live mixed meet. In the absence of a written agreement deleted text begin filed with deleted text end new text begin reviewed
by new text end the commission, the money set aside for purses and payments to the breeders fund from
wagering on simulcasts, occurring during a live mixed meet, shall be allotted to each breed
participating in the live mixed meet in the same proportion that the number of live races
run by each breed bears to the total number of live races conducted during the period of the
mixed meet.

(e) The allocation of money set aside for purses to particular racing meets may be
adjusted, relative to overpayments and underpayments, by contract between the licensee
and the horsepersons' organization representing the majority of horsepersons racing the
breed involved at the licensee's facility. new text begin The contract must be in writing and reviewed by
the commission for compliance with this subdivision.
new text end

(f) Subject to the provisions of this chapter, money set aside from pari-mutuel pools for
purses must be for the breed involved in the race that generated the pool, except that if the
breed involved in the race generating the pari-mutuel pool is not racing in the current racing
meeting, or has not raced within the preceding 12 months at the licensee's class A facility,
money set aside for purses may be distributed proportionately to those breeds that have run
during the preceding 12 months or paid to the commission and used for purses or to promote
racing for the breed involved in the race generating the pari-mutuel pool, or both, in a manner
prescribed by the commission.

(g) This subdivision does not apply to a class D licensee.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 8.

Minnesota Statutes 2018, section 240.131, subdivision 7, is amended to read:

Subd. 7.

Payments to state.

(a) A regulatory fee is imposed at the rate of one percent
of all amounts wagered by Minnesota residents with an authorized advance deposit wagering
provider. The fee shall be declared on a form prescribed by the commission. The ADW
provider must pay the fee to the commission no more than deleted text begin seven deleted text end new text begin 15 new text end days after the end of
the month in which the wager was made. Fees collected under this paragraph must be
deposited in the state treasury and credited to a racing and card-playing regulation account
in the special revenue fund and are appropriated to the commission to offset the costs
associated with regulating horse racing and pari-mutuel wagering in Minnesota.

(b) A breeders fund fee is imposed in the amount of one-quarter of one percent of all
amounts wagered by Minnesota residents with an authorized advance deposit wagering
provider. The fee shall be declared on a form prescribed by the commission. The ADW
provider must pay the fee to the commission no more than deleted text begin seven deleted text end new text begin 15 new text end days after the end of
the month in which the wager was made. Fees collected under this paragraph must be
deposited in the state treasury and credited to a racing and card-playing regulation account
in the special revenue fund and are appropriated to the commission to offset the cost of
administering the breeders fund and promote horse breeding in Minnesota.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 9.

Minnesota Statutes 2018, section 240.135, is amended to read:

240.135 CARD CLUB REVENUE.

(a) From the amounts received from charges authorized under section 240.30, subdivision
4, the licensee shall set aside the amounts specified in this section to be used for purse
payments. These amounts are in addition to the breeders fund and purse requirements set
forth elsewhere in this chapter.

(1) For amounts between zero and $6,000,000, the licensee shall set aside not less than
ten percent to be used as purses.

(2) For amounts in excess of $6,000,000, the licensee shall set aside not less than 14
percent to be used as purses.

(b) From all amounts set aside under paragraph (a), the licensee shall set aside ten percent
to be deposited in the breeders fund.

(c) It is the intent of the legislature that the proceeds of the card playing activities
authorized by this chapter be used to improve the horse racing industry by improving purses.
The licensee and the horseperson's organization representing the majority of horsepersons
who have raced at the racetrack during the preceding 12 months may negotiate percentages
that exceed those stated in this section if the agreement is in writing and deleted text begin filed with deleted text end new text begin reviewed
by new text end the commission new text begin for compliance with this section new text end . The commission shall annually review
the financial details of card playing activities and determine if the present use of card playing
proceeds is consistent with the policy established by this paragraph. If the commission
determines that the use of the proceeds does not comply with the policy set forth herein,
then the commission shall direct the parties to make the changes necessary to ensure
compliance. If these changes require legislation, the commission shall make the appropriate
recommendations to the legislature.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 10.

Minnesota Statutes 2018, section 240.16, subdivision 1, is amended to read:

Subdivision 1.

Powers and duties.

All horse races run at a licensed racetrack must be
presided over by a board of three stewards, who must be appointees of the commission or
persons approved by it. The commission shall designate one steward as chair. At least two
stewards for all races either shall be employees of the commission who shall serve in the
unclassified service, or shall be under contract with the commission to serve as stewards.
The commission may delegate the following duties and powers to a board of stewards:

(1) to ensure that races are run in accordance with the commission's rules;

(2) to supervise the conduct of racing to ensure the integrity of the sport;

(3) to settle disputes arising from the running of horse races, and to certify official results;

(4) to impose on licensees, for violation of law or commission rules, fines deleted text begin not exceeding
$5,000 and license suspensions not exceeding 90 days deleted text end new text begin of up to $10,000, suspensions of up
to one year, and other sanctions as delegated by the commission or permitted under its rules new text end ;

(5) to recommend to the commission where warranted penalties in excess of those in
clause (4);

(6) to otherwise enforce the laws and rules of racing; and

(7) to perform other duties and have other powers assigned by the commission.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2018, section 240.16, subdivision 2, is amended to read:

Subd. 2.

Appeals; hearings.

new text begin Except as provided by section 240.08, subdivision 5, new text end a
ruling of a board of stewards may be appealed to the commission deleted text begin or be reviewed by it deleted text end new text begin . The
commission may review any ruling by the board of stewards new text end on its own initiative. The
commission may provide for appeals to be heard by less than a quorum of the commission.
A hearing on a penalty imposed by a board of stewards must be granted on request.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 12.

Minnesota Statutes 2018, section 240.18, subdivision 2, is amended to read:

Subd. 2.

Thoroughbred and quarterhorse categories.

(a) With respect to available
money apportioned in the thoroughbred and quarterhorse categories, 20 percent must be
expended as follows:

(1) at least one-half in the form of grants, contracts, or expenditures for equine research
and related education at deleted text begin the University of Minnesota School of Veterinary Medicine deleted text end new text begin public
institutions of postsecondary learning in the state new text end ; and

(2) the balance in the form of grants, contracts, or expenditures for one or more of the
following:

(i) additional equine research and related education;

(ii) substance abuse programs for licensed personnel at racetracks in this state; and

(iii) promotion and public information regarding industry and commission activities;
racehorse breeding, ownership, and management; and development and expansion of
economic benefits from racing.

(b) As a condition of a grant, contract, or expenditure under paragraph (a), the commission
shall require an annual report from the recipient on the use of the funds deleted text begin to the commission,
the chair of the house of representatives Committee on General Legislation, Veterans Affairs,
and Gaming, and the chair of the senate committee on Gaming Regulation deleted text end .

(c) The commission shall include in its deleted text begin annual deleted text end new text begin biennial new text end report a summary of each grant,
contract, or expenditure under paragraph (a), clause (2), and a description of how the
commission has coordinated activities among recipients to ensure the most efficient and
effective use of funds.

(d) After deducting the amount for paragraph (a), the balance of the available proceeds
in each category may be expended by the commission to:

(1) supplement purses for races held exclusively for Minnesota-bred or Minnesota-foaled
horses, and supplement purses for Minnesota-bred or Minnesota-foaled horses racing in
nonrestricted races in that category;

(2) pay breeders' or owners' awards to the breeders or owners of Minnesota-bred horses
in that category which win money at deleted text begin licensed deleted text end new text begin pari-mutuel new text end racetracks deleted text begin in the state deleted text end new text begin licensed
by any state or province new text end ; and

(3) provide other financial incentives to encourage the horse breeding industry in
Minnesota.

Sec. 13.

Minnesota Statutes 2018, section 240.18, subdivision 3, is amended to read:

Subd. 3.

Standardbred category.

(a) With respect to the available money apportioned
in the standardbred category, 20 percent must be expended as follows:

(1) one-half of that amount to supplement purses for standardbreds at non-pari-mutuel
racetracks in the state; new text begin and
new text end

deleted text begin (2) one-fourth of that amount for the development of non-pari-mutuel standardbred
tracks in the state; and
deleted text end

deleted text begin (3) one-fourth deleted text end new text begin (2) one-half new text end of that amount as grants for equine research and related
education at public institutions of postsecondary learning in the state.

(b) After deducting the amount for paragraph (a), the balance of the available proceeds
in the standardbred category must be expended by the commission to:

(1) supplement purses for races held exclusively for Minnesota-bred and Minnesota-foaled
standardbreds;

(2) pay breeders or owners awards to the breeders or owners of Minnesota-bred
standardbreds which win money at licensed racetracks in the state; and

(3) provide other financial incentives to encourage the horse breeding industry in
Minnesota.

Sec. 14.

Minnesota Statutes 2018, section 240.22, is amended to read:

240.22 FINES.

(a) The commission shall by rule establish a schedule of civil fines new text begin of up to $50,000 for
a class C licensee and up to $200,000 for a class A, B, or D licensee new text end for violations of laws
related to horse racing or of the commission's rules. The schedule must be based on and
reflect the culpability, frequency and severity of the violator's actions. The commission may
impose a fine from this schedule on a licensee for a violation of those rules or laws relating
to horse racing. The fine is in addition to any criminal penalty imposed for the same violation. new text begin
Except as provided in paragraph (b), fines may be appealed to the commission according
to its rules. new text end Fines imposed by the commission must be paid to the commission and except
as provided in paragraph (c), forwarded to the commissioner of management and budget
for deposit in the state treasury and credited to a racing and card-playing regulation account
in the special revenue fund and appropriated to the commission to new text begin distribute in the form of
grants, contracts, or expenditures to new text end support racehorse adoption, retirement, and repurposing.

(b) If the commission issues a fine in excess of deleted text begin $5,000 deleted text end new text begin $10,000 new text end , the license holder has
the right to request a contested case hearing under chapter 14, to be held as set forth in
Minnesota Rules, chapter 1400. The appeal of a fine must be made in writing to the
commission by certified mail or personal service. An appeal sent by certified mail must be
postmarked within ten days after the license holder receives the fine order from the
commission. An appeal sent by personal service must be received by the commission within
ten days after the license holder receives the fine order from the commission.

(c) If the commission is the prevailing party in a contested case proceeding, the
commission may recover, from amounts to be forwarded under paragraph (a), reasonable
attorney fees and costs associated with the contested case.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 15.

Minnesota Statutes 2018, section 240.27, is amended to read:

240.27 EXCLUSION OF CERTAIN PERSONS.

Subdivision 1.

Persons excluded.

The commission may exclude from any and all licensed
racetracks in the state a person who:

(1) has been convicted of a felony under the laws of any state or the United States;

(2) has had a license suspended, revoked, or denied by the commission or by the racing
authority of any other jurisdiction; or

(3) is determined by the commission, on the basis of evidence presented to it, to be a
threat to new text begin the public safety or new text end the integrity of racing new text begin or card playing new text end in Minnesota.

Subd. 2.

Hearing; appeal.

An order to exclude deleted text begin a deleted text end new text begin an unlicensed new text end person from any or all
licensed racetracks in the state must be made by the commission deleted text begin at deleted text end new text begin following new text end a public
hearing of which the person to be excluded must have new text begin had new text end at least five days' notice. If present
at the hearing, the person must be permitted to show cause why the exclusion should not
be ordered. An appeal of the order may be made in the same manner as other appeals under
section 240.20.

Subd. 3.

Notice to racetracks.

Upon issuing an order excluding a person from any or
all licensed racetracks, the commission shall send a copy of the order to the excluded person
and to all racetracks or teleracing facilities named in it, along with other information as it
deems necessary to permit compliance with the order.

Subd. 4.

Prohibitions.

It is a gross misdemeanor for a person named in an exclusion
order to enter, attempt to enter, or be on the premises of a racetrack named in the order
while it is in effect, and for a person licensed to conduct racing or operate a racetrack
knowingly to permit an excluded person to enter or be on the premises.

Subd. 5.

Exclusions by racetrack.

deleted text begin The holder of a license to conduct racing may eject
and exclude from its premises any licensee or any other person who is in violation of any
state law or commission rule or order or who is a threat to racing integrity or the public
safety. A person so excluded from racetrack premises may appeal the exclusion to the
commission and must be given a public hearing on the appeal upon request. At the hearing
the person must be given the opportunity to show cause why the exclusion should not have
been ordered. If the commission after the hearing finds that the integrity of racing and the
public safety do not justify the exclusion, it shall order the racetrack making the exclusion
to reinstate or readmit the person. An appeal of a commission order upholding the exclusion
is governed by section 240.20. deleted text end new text begin A licensed racetrack may eject and exclude from its premises
any person for any lawful reason. If a licensed racetrack excludes a person for a suspected
or potential violation of law or rule, or if a licensed racetrack excludes any person for more
than five days, the licensed racetrack shall provide the person's name and reason for the
exclusion to the commission within 72 hours.
new text end