House Engrossed

 

 

 

State of Arizona

House of Representatives

Fifty-third Legislature

Second Regular Session

2018

 

 

HOUSE BILL 2589

 

 

 

AN ACT

 

amending sections 5‑101, 5‑103, 5‑104 and 5‑104.01, Arizona Revised Statutes; repealing section 5‑104.02, Arizona Revised Statutes; amending sections 5‑105, 5‑106, 5‑107, 5‑107.01, 5‑107.02, 5‑107.03, 5‑108, 5‑108.01, 5‑108.02, 5‑108.05, 5‑109, 5‑109.01, 5‑110, 5‑111.04, 5‑112, 5‑113, 5‑113.01, 5‑114, 5‑115, 5‑131 and 5‑224, Arizona Revised Statutes; amending title 5, chapter 2, article 2, Arizona Revised Statutes, by adding section 5‑226; amending sections 5‑227, 5‑229 and 5‑238, Arizona Revised Statutes; appropriating monies; relating to gaming.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 


Be it enacted by the Legislature of the State of Arizona:

Section 1.  Section 5-101, Arizona Revised Statutes, is amended to read:

START_STATUTE5-101.  Definitions

In this article, unless the context otherwise requires:

1.  "Additional wagering facility" means a facility that is not the enclosure in which authorized racing takes place but that meets the requirements of section 5‑111, subsection A and is used by a permittee for handling pari‑mutuel wagering.

2.  "Advance deposit wagering" means a form of pari-mutuel wagering that allows a person to deposit monies in advance in an account with an advance deposit provider and use the monies to pay for pari‑mutuel wagering on live or simulcast racing that the advance deposit pari‑mutuel wagering permittee accepts or makes.

3.  "Advance deposit wagering provider" means a betting system or multijurisdictional wagering provider that is authorized to conduct advance deposit wagering pursuant to this article.

4.  "Applicant" means a person, partnership, association or corporation placing before the department division an application for a permit or license.

5.  "Association" means a body of persons, corporations, partnerships or associations, united and acting together without a charter from the state for the prosecution of some common enterprise.

6.  "Commercial horse racing" means horse racing conducted other than by a county fair association.

7.  "Commission" means the Arizona racing commission.

8.  "Concessionaire" means a person, partnership, association or corporation that offers goods or services for sale to the public, a permittee or a licensee at an enclosure in which authorized racing takes place or an additional wagering facility.

9.  "County fair facility" means any place, enclosure or track constructed in accordance with a permit issued by the commission for the purpose of running county fair horse racing dates as well as any commercial dates for horse racing that may be awarded by the commission in reference to the location.

10.  "County fair racing association" means an association duly authorized by the board of supervisors to conduct a county fair racing meeting for the benefit of the county.

11.  "Dark day simulcast" means a simulcast received on a day when there are no posted races conducted at the enclosure in which authorized racing takes place.

12.  "Department" means the department of gaming.

13.  "Desensitized" means that a horse's legs on arrival at the receiving barn or saddling paddock do not respond appropriately to tests for feeling administered by an official veterinarian.

14.  "Director" means the director of the department of gaming division of racing within the department of gaming.

15.  "Division" means the division of racing within the department of gaming.

15.  16.  "Dog racing" means racing in which greyhound dogs chase a mechanical lure.

16.  17.  "Entered" means that a horse or dog has been registered with an authorized racing official as a participant in a specified race and has not been withdrawn prior to presentation of the horse or dog for inspection and testing as provided in section 5‑105.

17.  18.  "Financial interest" means any direct pecuniary interest.

18.  19.  "Firm" means a business unit or enterprise that transacts business.

19.  20.  "Handle" means the total amount of money contributed to all pari‑mutuel pools by bettors.

20.  21.  "Harness racing" means horse racing in which the horses are harnessed to a sulky, carriage or similar vehicle and driven by a driver.

21.  22.  "Horse racing" means racing in which horses are mounted and ridden by jockeys.  For purposes of county fair racing meetings, "horse racing" means racing in which horses or mules are mounted and ridden by jockeys.

22.  23.  "License" means the license issued by the department DIVISION to each employee or other person participating in any capacity in a racing meeting, including officials and employees of the pari‑mutuel department.

23.  24.  "Pari‑mutuel wagering" means a system of betting that provides for the distribution among the winning patrons of at least the total amount wagered less the amount withheld under state law.

24.  25.  "Permit" means a permit for a racing meeting issued under the provisions of this article.

25.  26.  "Racing meeting" means a number of days of racing allotted by the commission in one permit.

26.  27.  "Simulcast" means the telecast shown within this state of live audio and visual signals of horse, harness or dog races conducted at an out‑of‑state track or the telecast shown outside this state of live audio and visual signals of horse or harness races originating within this state for the purpose of pari‑mutuel wagering.

27.  28.  "Source market fee" means the fee that an advance deposit wagering provider pays to a commercial permittee in the state where the advance deposit wagering customer resides.

28.  29.  "Telephone" means any device that a person uses for voice communications in connection with the services of a telephone company.

29.  30.  "Undesirable" includes known bookmakers, touts, persons convicted of a violation of any provision of this article or of any law prohibiting bookmaking or any other illegal forms of wagering, or any other person whose presence would, in the opinion of the director, be inimical to the interests of the state.

30.  31.  "Week" means seven consecutive days beginning on Monday and ending on Sunday, mountain standard time. END_STATUTE

Sec. 2.  Section 5-103, Arizona Revised Statutes, is amended to read:

START_STATUTE5-103.  Commissioners; qualifications; oath; interest in racing prohibited; exception; annual report

A.  A member of the commission shall have been a resident of this state and a qualified elector for not less than at least five years next preceding appointment before the governor appoints the member.

B.  Before entering upon on the discharge of the appointee's duties, each appointee shall take the official oath.

C.  A person who has a financial interest, either directly or indirectly, in a racetrack, or the operation of licensed wagering on the results of races, is not qualified for membership on the commission or appointment or employment by the commission, but this subsection shall not be construed to does not affect the entrance into a race outside this state of a horse or dog belonging to a member, or the winning of a purse or award by such a member's horse or dog.

D.  A commissioner or member or a relative of the commissioner or member to the first degree of consanguinity may not have a financial interest in a licensee or permittee regulated by the department division.

E.  Of the five members appointed to the commission,

1.  One but not more than one two shall have a financial interest or substantial experience in the horse or harness racing industry.

2.  One but not more than one shall have a financial interest or substantial experience in the dog racing industry.

F.  Members of the commission are eligible to receive compensation pursuant to section 38‑611 for each day spent in the discharge of their duties and reimbursement for all expenses necessarily and properly incurred in attending meetings of or for the commission.

G.  The governor shall remove any commissioner who ceases to meet the qualifications prescribed by this section. END_STATUTE

Sec. 3.  Section 5-104, Arizona Revised Statutes, is amended to read:

START_STATUTE5-104.  Arizona racing commission; director; division; powers and duties

A.  The commission shall:

1.  Issue racing dates.

2.  Prepare and adopt complete rules to govern the racing meetings as may be that are required to protect and promote the safety and welfare of the animals participating in racing meetings, to protect and promote public health, safety and the proper conduct of racing and pari‑mutuel wagering and any other matter pertaining to the proper conduct of racing within this state.

3.  Conduct hearings on applications for permits and approve permits and shall conduct rehearings on licensing and regulatory decisions made by the director as required pursuant to rules adopted by the commission.

4.  Conduct all reviews of applications to construct capital improvements at racetracks as provided in this chapter.

5.  Adopt rules governing the proper and humane methods for the disposition and transportation of dogs by breeders, kennels or others.

B.  The director shall license personnel and shall regulate and supervise all racing meetings held and pari‑mutuel wagering conducted in this state and cause the various places where racing meetings are held and wagering is conducted to be visited and inspected on a regular basis.  The director may delegate to stewards any of the director's powers and duties as that are necessary to fully carry out and effectuate the purposes of this chapter.  The director shall exercise immediate supervision over the department division.  The director is subject to ongoing supervision by the commission, and the commission may approve or reject decisions of the director in accordance with rules established by the commission.

C.  The commission or the department division is authorized to allow stewards, with the written approval of the director, to require a jockey, apprentice jockey, sulky driver, groom, horseshoer, outrider, trainer, assistant trainer, exercise rider, pony rider, starter, assistant starter, jockey's agent, veterinarian, assistant veterinarian, cool‑out, security or maintenance worker, official or individual licensed in an occupational category whose role requires direct hands‑on contact with horses, while on the grounds of a permittee, to submit to a test if the stewards have reason to believe the licensee is under the influence of or unlawfully in possession of any prohibited substance regulated by title 13, chapter 34.

D.  The department division shall employ the services of the office of administrative hearings to conduct hearings on matters requested to be heard by the director or the commission for the department division except for those rehearings that are required by the terms of this chapter to be conducted by the commission.  Any person adversely affected by a decision of a steward or by any other decision of the department division may request a hearing on the decision.  The decision of the administrative law judge becomes the decision of the director unless rejected or modified by the director within thirty days.  The commission may hear any appeal of a decision of the director in accordance with title 41, chapter 6, article 10.

E.  The department division may visit and investigate the offices, tracks or places of business of any permittee and place in those offices, tracks or places of business expert accountants and other persons as it the division deems necessary for the purpose of ascertaining that the permittee or any licensee is in compliance with the rules adopted pursuant to this article.

F.  The department division shall establish and collect the following licensing fees and regulatory assessments, which shall not be reduced for capital improvements pursuant to section 5‑111.02:

1.  For each racing license issued, a license fee.

2.  From the purse accounts provided for in section 5-111, a regulatory assessment to pay for racing animal medication testing, animal safety and welfare.

3.  From each permittee, a regulatory assessment for each day of dark day simulcasting conducted in excess of the number of live racing days conducted by the permittee.

4.  From each commercial racing permittee, a regulatory assessment payable from amounts deducted from pari-mutuel pools by the permittee, in addition to the amounts the permittee is authorized to deduct pursuant to section 5‑111, subsection B from amounts wagered on live and simulcast races from in‑state and out‑of‑state wagering handled by the permittee.

G.  The commission shall establish financial assistance procedures for promoting adoption of retired racehorses.  The provision of financial assistance to nonprofit enterprises for the purpose of promoting adoption of retired racehorses is contingent on a finding by the commission that the program presented by the enterprise is in the best interest of the racing industry and this state.  On a finding by the commission, the commission is authorized to make grants to nonprofit enterprises whose programs promote adoption of retired racehorses.  The commission shall develop an application process.  The commission shall require an enterprise to report to the commission on the use of grants under this subsection.  Financial assistance for nonprofit enterprises that promote adoption of retired racehorses under this subsection shall not exceed the amount of retired racehorse adoption surcharges collected pursuant to this subsection.  The commission shall collect a retired racehorse adoption surcharge in addition to each civil penalty assessed in connection with horse or harness racing pursuant to this article.  The amount of the retired racehorse adoption surcharge shall be five percent of the amount collected for each applicable civil penalty.

H.  A license is valid for the period established by the commission, but not to exceed three more than five years, except for a temporary license issued pursuant to section 5‑107.01, subsection F.  The licensing period shall begin July 1.

I.  A person may submit an application in writing that objects to any decision of track stewards within three days after the official notification of the decision.  On application in writing by an objector to any decision of track stewards, made within three days after the official notification to the objector of the decision complained of, the department division or administrative law judge shall review the objection.  In the case of a suspension of a license by the track stewards, the suspension shall run for a period of not more than six months.  Before the end of this suspension period, filing an application for review is not cause for reinstatement.  If at the end of this suspension period the department division or administrative law judge has not held a hearing to review the decision of the stewards, the suspended license shall be reinstated until the department division or administrative law judge holds a hearing to review the objection.  Except as provided in section 41‑1092.08, subsection H, a final decision of the commission is subject to judicial review pursuant to title 12, chapter 7, article 6.

J.  The commission or the director may issue subpoenas for the attendance of witnesses and the production of books, records and documents relevant and material to a particular matter before the commission or department division and the subpoenas shall be served and enforced in accordance with title 41, chapter 6, article 10.

K.  Any member of the commission, the administrative law judge or the director or the director's designee may administer oaths, and the oaths shall be administered to any person who appears before the commission to give testimony or information pertaining to matters before the commission.

L.  The commission shall adopt rules that require permittees to retain for three months all official race photographs and videotapes.  The department division shall retain all photographs and videotapes that are used as evidence in an administrative proceeding until the conclusion of the proceeding and any subsequent judicial proceeding.  All photographs and videotapes must be available to the public on request, including photographs and videotapes of races concerning which an objection is made, regardless of whether the objection is allowed or disallowed.

M.  The director may establish a management review section for the development, implementation and operation of a system of management reports and controls in major areas of department division operations, including licensing, work load workload management and staffing, and enforcement of this article and the rules of the commission.

N.  In cooperation with the department of public safety, the director shall establish a cooperative fingerprint registration system.  Each applicant for a license or permit under this article or any other person who has a financial interest in the business or corporation making the application shall submit to fingerprint registration as part of the background investigation conducted pursuant to section 5‑108.  The cooperative fingerprint registration system shall be maintained in an updated form using information from available law enforcement sources and shall provide current information to the director on request as to the fitness of each racing permittee and each racing licensee to engage in the racing industry in this state.

O.  The director shall develop and require department division staff to use uniform procedural manuals in the issuance of any license or permit under this article and in the enforcement of this article and the rules adopted under this article.

P.  The director shall submit an annual report containing operational and economic performance information as is necessary to evaluate the department's budget request for the forthcoming next fiscal year to the governor, the speaker of the house of representatives, the president of the senate and the Arizona state library, archives and public records no secretary of state not later than September 30 each year.  The annual report shall be for the preceding fiscal year and shall contain performance information as follows:

1.  The total state revenues for the previous fiscal year from the overall pari‑mutuel handle with an itemization for each horse racing meeting, each harness racing meeting, each advanced deposit wagering permittee and each additional wagering facility.

2.  The total state revenues for the previous fiscal year from the regulation of racing, including licensing fees assessed pursuant to subsection F of this section and monetary penalties assessed pursuant to section 5‑108.02.

3.  The amount and use of capital improvement funds pursuant to section 5‑111.02 that would otherwise be state revenues.

4.  The number of licenses and permits issued, renewed, pending and revoked during the previous fiscal year.

5.  The investigations conducted during the previous fiscal year and any action taken as a result of the investigations.

6.  The department division budget for the immediately preceding three fiscal years, including the number of full‑time, part‑time, temporary and contract employees, a statement of budget needs for the forthcoming fiscal year and a statement of the minimum staff necessary to accomplish these objectives.

7.  Revenues generated for this state for the preceding fiscal year by persons holding racing meeting and advanced deposit wagering permits.

8.  Recommendations for increasing state revenues from the regulation of the racing industry while maintaining the financial health of the industry and protecting the public interest.

Q.  The commission may certify animals as Arizona bred or as Arizona stallions.  The commission may delegate this authority to a breeders' association it contracts with for these purposes.  The commission may authorize the association, racing organization or department division to charge and collect a reasonable fee to cover the cost of breeding or ownership certification or transfer of ownership for racing purposes.

R.  The department has responsibility for the collection and accounting of revenues for the state boxing and mixed martial arts commission, including licensing fees required by section 5‑230, the levy of the tax on gross receipts imposed by section 5‑104.02 and cash deposited pursuant to section 5‑229.  All revenues collected pursuant to this subsection, from whatever source, shall be reported and deposited pursuant to section 5‑104.02, subsection C, except that licensing fees required by section 5‑230 shall be deposited in the racing regulation fund established by section 5‑113.01.  The director shall adopt rules as necessary to accomplish the purposes of this subsection and chapter 2, article 2 of this title.

S.  R.  The commission may obtain the services of the office of administrative hearings on any matter that the commission is empowered to hear.

T.  S.  The department division may adopt rules pursuant to title 41, chapter 6 to carry out the purposes of this article, ensure the safety and integrity of racing in this state and protect the public interest. END_STATUTE

Sec. 4.  Section 5-104.01, Arizona Revised Statutes, is amended to read:

START_STATUTE5-104.01.  Audits and special investigations; exemption

A.  The department division shall require that an annual financial audit be conducted of each permittee licensed under this chapter.  The department division may also require a financial audit from any concessionaire licensed under this article.  The department may division, for any audit required by this section, may require a permittee or concessionaire to supply a certified audit to the department division.  The commission shall adopt rules that require each permittee to select an accounting firm approved by the auditor general to conduct the annual financial audit when a certified audit is required.  Audits performed pursuant to this section shall be conducted in accordance with auditing standards established by the auditor general.

B.  All permittees and licensees subject to the financial audit as prescribed by this section shall afford reasonable and needed facilities and make returns and exhibits to the department division or audit firm in the form and at the time prescribed by the department division.  The auditor representing that represents the department division shall have access to all information, records, pari‑mutuel betting devices and equipment necessary to conduct electronic data processing and other audits and reviews.  The computer software and other proprietary information and records obtained by the auditor are not subject to disclosure and are exempt from title 39, chapter 1.

C.  The commission may reduce the number of racing days of a permittee or revoke the permit or license of a person who knowingly fails or refuses to make the prescribed returns or exhibits or give information as required.

D.  The department division may expend monies for the purpose of special investigations of permittees or licensees to determine compliance with this chapter or the rules issued pursuant to this chapter.

E.  The department division may require that the audit and investigation of a permittee and licensee include any person who has a substantial interest, as defined in section 38‑502, in the permittee or licensee.

F.  This section does not apply to a racing meeting operated by a county fair association. END_STATUTE

Sec. 5.  Repeal

Section 5-104.02, Arizona Revised Statutes, is repealed.

Sec. 6.  Section 5-105, Arizona Revised Statutes, is amended to read:

START_STATUTE5-105.  Appointment of personnel; tests; reports; detention of animals; testing facilities

A.  For purposes of detecting violations of this article, the department division shall appoint qualified veterinarians, biochemists and such other personnel subject to title 41, chapter 4, article 4 as the department division considers necessary or may contract with a duly qualified chemical laboratory located either within or outside this state. The testing personnel may, in accordance with such procedures as the commission by regulation prescribes by regulation, may:

1.  Examine horses entered in a race within six hours before the start of the race to determine if the horse has been desensitized or drugged.  For the purposes of the examination a horse does not have to be held in a retaining barn.

2.  Perform such other tests and inspections as the department division considers necessary to carry out this article, including the random splitting of samples.

3.  Store blood, urine and saliva samples in a frozen state or in any other appropriate manner by which they the samples may be preserved for future analysis.

4.  Perform tests on horses that die while on property under the jurisdiction of the department division.

5.  Analyze samples of urine, blood or saliva taken immediately after a race from the horse that won the race to determine if the horse has been drugged.  The department division may additionally analyze samples of any other animal entered in a race.

B.  The veterinarian authorized by the department division may order the taking and analysis of samples from a losing favorite or from any other horse when the veterinarian, based on the performance of the horse in the race, has probable cause to believe that the horse has been drugged or desensitized.  If a blood sample is required, the veterinarian shall take the sample.

C.  The identity of any horse determined under this section to be drugged or desensitized shall, in accordance with such procedures as the commission prescribes by regulation, shall be reported to a steward and the appropriate county attorney.  If any horse is not made available in accordance with such the regulations as the commission prescribes for any test or inspection required under this section, the identity of such the horse shall be reported to a steward.

D.  A permittee shall, in accordance with regulations prescribed by the commission, shall provide the testing personnel with adequate space and facilities so that the inspections, tests and other procedures described in subsection A of this section may be performed.  Access to such space and facilities shall be restricted in accordance with regulations prescribed by the commission.

E.  Testing personnel may detain for a period of not to exceed more than twenty‑four hours for examination, testing or the taking of evidence any horse at a race that is drugged or desensitized or that such person the personnel, based on the results of an inspection, test or other procedure conducted under this section, has probable cause to believe is drugged or desensitized.  Any horse that is detained may not be moved during such the detention from the place where the horse is detained except as authorized by testing personnel pursuant to rule and regulation of the commission.

F.  The department division shall retain for three years copies of all post‑mortem reports on animals.  The department division shall retain all such reports that are used as evidence in a judicial proceeding at least until the conclusion of the proceeding. END_STATUTE

Sec. 7.  Section 5-106, Arizona Revised Statutes, is amended to read:

START_STATUTE5-106.  Supervisor of mutuels; pari‑mutuel auditors; other employees; stewards

A.  The director shall appoint a supervisor of mutuels, security personnel and as many other employees as may be necessary for the enforcement of the laws of this state and the rules relating to racing.

B.  The director shall determine which employees shall give bond to the state for the faithful performance of their respective duties in an amount as the shall prescribe division prescribes.  The cost of providing the bonds shall be a charge against the state.

C.  The compensation of employees shall be as determined pursuant to section 38‑611.

D.  The director shall keep a record of all proceedings and preserve all books, documents and papers of the commission and department division.

E.  The supervisor of mutuels shall monitor the wagering and the pari‑mutuel departments at all racing meetings and additional wagering facilities and shall may not enter into no other employment or contracts of employment involving racing or pari‑mutuel wagering either within or without the state during days of racing in the state.

F.  The security personnel appointed by the director shall assist in keeping the peace at all racing meetings and additional wagering facilities, shall enforce all laws of the state relating to racing and all rules of the commission and shall perform other duties as the commission or director shall prescribe prescribes and in the discharge of their duties shall have the authority of peace officers.

G.  The director shall establish a security section charged with the responsibility for investigative matters relating to the proper conduct of racing and pari‑mutuel wagering including barring undesirables from racing, undercover investigations, fingerprinting persons licensed by the department division and reviewing license applications.  The person in charge of the security section shall have at least five years of experience in law enforcement or in conducting or supervising investigations in some aspect of racing law enforcement.

H.  If on investigation by the department division there is substantial evidence indicating that the security at any track or additional wagering facility is not satisfactory, the director may order the permittee to remedy the deficiency.  If after ten days following the order the permittee has not remedied the deficiency, the department division may institute its own security personnel program until the deficiency in security is remedied and may charge the permittee the actual costs incurred therefor for the security personnel program.  The permittee may petition the department division for a hearing at any time to review the necessity of the department division further maintaining its own security personnel.

I.  Persons employed by the department within the division as investigators must have training in a general investigation course, including instruction in appropriate Arizona law, conducted or approved by the director.

J.  For each horse or harness racing meeting, the director, with the approval of the commission, shall employ two persons qualified as stewards.  For each horse or harness racing meeting, the permittee, with the approval of the commission, shall employ one person qualified and licensed by the department as a steward.  An applicant who wishes to be licensed or employed as a steward by the department for a commercial horse or harness racing meeting must be certified as a steward by a national organization approved by the department division.  The director shall designate one of the two stewards employed by the department within the division pursuant to this section as chief steward for each horse or harness racing meeting.  The director shall designate the remaining stewards as assistant stewards.  For each horse or harness racing meeting conducted by a county fair racing association, the director, with the approval of the commission, shall employ three persons qualified as stewards.  The director shall designate one of the three stewards as chief steward for each horse or harness racing meeting conducted by a county fair racing association, and shall designate the remaining stewards as assistant stewards. END_STATUTE

Sec. 8.  Section 5-107, Arizona Revised Statutes, is amended to read:

START_STATUTE5-107.  Nature of racing meeting permits; application for permit; cash deposit; return; bond; conditions and priorities for satisfaction of bond

A.  Permits to conduct racing meetings are deemed to be personal in nature, are nontransferable and shall terminate on a substantial change of ownership of the permittee.  The sale or transfer of twenty‑five percent or more of the equity of a permittee shall be is considered a substantial change of ownership.  Nothing in This subsection shall be construed so as to does not cause the termination of a permit on the death of the permittee, or if a corporation, the death of a shareholder thereof of the corporation, during the period for which such the permit was granted.

B.  Every applicant making application that applies for a permit to hold a racing meeting shall file an application with the commission.  The commission shall promulgate rules and regulations regarding application procedures.  The application shall include:

1.  The full name and address of the applicant, and if a corporation, the name of the state under which it is incorporated.  If such the applicant is an association or corporation, the residence addresses of the members of the association and the names of all directors of the corporation shall be included, and the stock certificate records of such the applicant shall be made available to the department division on request of the director.  The department division shall be notified within ten days of the election of any new officer or director of a permittee, and the identity of every person who acquires ten percent or more of a permittee's equity or interest.  Each new officer, director or substantial owner shall furnish all information requested by the department division to facilitate approval of his participation in racing in this state.

2.  The exact location where it is desired to conduct or hold a racing meeting.

3.  A statement as to whether or not the racing plant is owned or leased, and if leased, the name and residence of the fee owner, or if a corporation, the names and addresses of the directors of the corporation.

4.  A complete financial statement and balance sheet of the person, corporation or other business entity making such the application, completed and certified by a certified public accountant.  In the case of For applications for renewal of dog racing meeting permits that were in existence before May 5, 1972, such the financial statement and balance sheet shall be on a calendar year basis.  In the case of For applications for renewal of horse or harness racing meeting permits that were in existence before May 5, 1972, such the financial statement and balance sheet shall be on a fiscal year basis.  In the case of For all new permit applications made from and after May 5, 1972, and renewal applications of such the permits, such the financial statement and balance sheet shall be on either a calendar year or fiscal year basis, at the discretion of the department division.  In addition, the application shall identify any guarantors or any indebtedness of the applicant, and the division shall be provided, on request, with a statement from a certified public accountant certifying that the net worth of any guarantor or guarantors is at least equal to the amount of the unpaid indebtedness so guaranteed.  Applications for racing meetings operated by county fair racing associations are exempt from this paragraph.

5.  A complete list of all management and concession contracts in effect at the time of the application, copies of which shall be furnished to the department division on request.  If the applicant is granted a permit he the applicant shall further be required, on the request of the department division, to submit a complete list of all subsequent management and concession contracts, and copies of such the contracts shall be submitted to the department division on request.

6.  Such Any other relevant and material information pertaining to the application as the department may require division requires.

C.  Not less than At least ten days before the commencement of a commercial racing meeting, the permittee shall submit to the department division a cash deposit in such an amount, but not to exceed more than five thousand dollars, as the director deems necessary to insure payment of fees and the amount due the state as the percentage of pari‑mutuel receipts payable to the state as prescribed by law.  On termination of the racing meeting, the deposit shall be returned to the applicant, less any fees or pari‑mutuel receipts remaining unpaid.

D.  In addition to the cash deposit and before the issuance of a racing meeting permit, the applicant shall deposit with the department division a bond payable to the state for the benefit of the state and any person covered by this section, in such an amount, but not to exceed more than three hundred thousand dollars in the case of horse or harness racing meeting permittees, as the director deems necessary, with a surety or sureties to be approved by the department division and the attorney general and conditioned in accordance with the following order of priorities:

1.  That the permittee shall first faithfully pay to the state the percentage of the pari‑mutuel receipts, as applicable, prescribed by law and all taxes due to the state.

2.  That thereafter the permittee shall pay to the owner thereof all funds held by the permittee for the account of such the owner, including purses won, if such the owner is or has been licensed by the department division.

3.  That thereafter the permittee shall pay all salaries and wages due to the employees of such the permittee in connection with the conduct of the racing meeting.

4.  That thereafter the permittee shall pay all amounts due to the breeder of any horse for a breeder's award.

E.  Any person, including the state, claiming against the bond may maintain an action at law against the permittee and the surety or sureties, and the surety or sureties may be sued on the bond in successive actions until the penal sum thereof is exhausted.  If it appears that there is more than one claim on such the bond or if it appears that the state may have an interest therein in the bond, the state or any other claimant may move the court in which such actions are filed to intervene or to consolidate such the actions to determine the priority order of claims in accordance with subsection D of this section.  No suit may be commenced on the bond after the expiration of one year following the day of the closing of the racing meeting during which any act or failure to act giving rise to a claim against the bond shall arise.

F.  The bond prescribed by this section shall be is effective for the period of the racing permit granted by the commission, and the liability of the surety for all claims shall be is limited to the face amount of the bond.  If the surety desires to make payment without awaiting court action, the amount of any bond filed in compliance with this chapter shall be reduced to the extent of any payments made by such the surety in good faith thereunder.  Any such payment shall be based first on the priority of claim order as established by subsection D of this section and thereafter on the priority of the date the written claims are received by the surety before court action. END_STATUTE

Sec. 9.  Section 5-107.01, Arizona Revised Statutes, is amended to read:

START_STATUTE5-107.01.  Necessity for permits for racing meetings; licenses for officials and other persons

A.  A person, association or corporation shall not hold any racing meeting without having first obtained and having in full force and effect a permit that is issued by the department division.

B.  A trainer, driver, jockey, apprentice jockey, horse owner, exercise rider, agent, jockey's agent, stable foreman, groom, valet, veterinarian, horseshoer, steward, stable watchman, starter, timer, judge, food and beverage concessionaire, manager or other person acting as a participant or official at any racing meeting including all employees of the pari‑mutuel department and any other person or official the department division deems proper shall not participate in racing meetings without having first obtained and having in full force and effect a license or credentials that are issued by the department division, pursuant to such rules as the commission shall make commission rule.  The department division shall not revoke a license except for cause and after a hearing. 

C.  Each person, association or corporation that holds a permit or a license under this chapter shall comply with all rules and orders of the commission or department division.

D.  Any credential or license that is issued by the department division to a licensee shall be used only as prescribed by commission rule or order of the director.  Use for purposes other than those prescribed is grounds for suspension or revocation or imposition of a civil penalty as provided in section 5‑108.02, subsection E.

E.  All applicants for a permit or license shall submit to the department division a full set of fingerprints, background information and the fees that are required pursuant to section 41‑1750.  The department of gaming division shall submit the fingerprints to the department of public safety for the purpose of obtaining a state and federal criminal records check pursuant to section 41‑1750 and Public Law 92‑544.  The department of public safety may exchange this fingerprint data with the federal bureau of investigation.  The applicant shall pay the fingerprint fee and costs of the background investigation in an amount that is determined by the department division.  For such this purpose the department of gaming division and the department of public safety may enter into an intergovernmental agreement pursuant to title 11, chapter 7, article 3. The fees shall be credited pursuant to section 35‑148.

F.  The director may issue a temporary license to an owner, trainer, driver or jockey who is duly licensed in another jurisdiction for special races or special circumstances for a period of not to exceed more than thirty days.  The director may allow a trainer so licensed to complete an application for a temporary license for an owner if the owner is not immediately available to personally submit the application.

G.  A licensed owner, lessee or trainer of a qualified horse who has applied to a permittee to be stabled at a track and who has not been granted a stall shall not be is not prohibited from bringing the horse on the race grounds for the purpose of entering the animal in races that are held by the permittee or for the purposes of qualifying to race solely for the reason that the animal is not being stabled at the track if the owner, lessee or trainer is in compliance with rules adopted by the commission.   END_STATUTEEND_STATUTE

Sec. 10.  Section 5-107.02, Arizona Revised Statutes, is amended to read:

START_STATUTE5-107.02.  Qualification for eligibility of racing meeting operator

No A person, association or corporation is not eligible to operate a racing meeting with a permit issued under this chapter unless he the person, association or corporation is an owner or the lessee of the track named in the permit.  A permit shall not be issued to any corporation or association unless the corporation or association in its application for the permit has specifically named the manager who will operate the racing meeting, has supplied the department division with all relevant information concerning this manager including his relationship with the corporation or association, any previous experience in the racing field and any other relevant and material information the commission may have requested requests, and has obtained obtains the commission's approval of the manager so named in the application. END_STATUTE

Sec. 11.  Section 5-107.03, Arizona Revised Statutes, is amended to read:

START_STATUTE5-107.03.  Separate financial records of permittee and concessionaire; violations

A.  Each permittee and each concessionaire who has a proprietary interest in a permit shall keep separate financial books, statements and records with respect to the operations conducted by him the permittee or concessionaire at each particular place, track, additional wagering facility  or enclosure.  A commercial racing permittee and concessionaire shall keep and maintain the financial books, statements and records in accordance with generally accepted accounting principles so as to reflect accurately the operations conducted by each permittee and concessionaire who has a proprietary interest in a permit.  A county fair racing association may keep and maintain the financial books, statements and records on a cash basis on approval of the department division.  Such Financial books, statements and records shall be open for examination by the director or his the director's designated representative.

B.  All financial information that is given by a commercial racing permittee or concessionaire to any state agency, body or department shall accurately reflect the total income of each permittee and concessionaire who has a proprietary interest in a permit from each particular place, track or enclosure.

C.  Any violation of this section by any permittee is a ground for refusal to renew or for the revocation of a permit only after written notice to the permittee and a full hearing thereon on the violation.

Sec. 12.  Section 5-108, Arizona Revised Statutes, is amended to read:

START_STATUTE5-108.  Issuance of permit or license; grounds for refusal to issue; nontransferable; renewal

A.  The department division shall conduct a thorough investigation concerning the application for a permit or a license and:

1.  The department division may refuse to issue or renew a license or the commission may refuse to approve or renew a permit for any applicant if there is substantial evidence to find that the applicant:

(a)  Has been suspended or ruled off a recognized course in another jurisdiction by the racing board or commission thereof of that course.

(b)  Is not of good repute and moral character.

(c)  Has, when previously licensed or granted a permit, violated the racing laws of this state or of any other state or the regulations of the commission.

(d)  Is a corporation, firm or association not duly qualified and authorized to conduct business within in this state.

(e)  If an individual, has been convicted of a felony or any crime involving moral turpitude, or, if a corporation, firm or association, is controlled or operated directly or indirectly by a person or persons who have been convicted of a felony or any crime involving moral turpitude.

(f)  If an individual, is engaged in or has been convicted of wagering by other than the mutuel method or in pool selling or bookmaking in any state of the United States or foreign country where such the other method, pool selling or bookmaking is illegal or, if a corporation, firm or association, is controlled or operated directly or indirectly by a person who is engaged in or has been convicted of wagering by other than the mutuel method or in pool selling or bookmaking in any state of the United States or foreign country where such the other method, pool selling or bookmaking is illegal.

(g)  Has wilfully violated any provision of this chapter or any of the rules and regulations of the commission.

(h)  Should not, in the best interest of the safety, welfare, economy, health and peace of the people of the state, be granted a license or permit.

(i)  Has entered into any contract or contracts that will not further the best interests of racing or be in the public interest or, in the case of for permittees or applicants for permits to conduct racing meetings, has failed to file with the department division a contract, as an addendum to an application for a permit to conduct a racing meeting, providing for food and beverage concession rights, if any, at that racing meeting.  A food and beverage concessionaire contract filed with the department division pursuant to this section shall be available to the public on request.

(j)  Has failed to inform the department division on or before May 15 of each year in writing of any material change, occurring during the immediately preceding year of the license or permit term, in the information supplied by the applicant in the application, for a license or permit.  If a licensee or permittee fails to file such information, the department division shall notify the licensee or permittee of the failure to file and the licensee or permittee shall have an additional fifteen days, after the notice is mailed to the last known address of the licensee or permittee, to file the information.

2.  The commission may refuse to approve or renew a permit to conduct a racing meeting or a food and beverage concessionaire license for any ground set forth in paragraph 1 of this subsection or if there is substantial evidence to find that:

(a)  The applicant is not possessed of does not possess or has not demonstrated financial responsibility sufficient to meet adequately the requirements of the enterprise proposed to be authorized.

(b)  The applicant is not the true owner of the enterprise proposed to be granted a permit, that other persons have ownership in the enterprise which fact has not been disclosed or, if the applicant is a corporation, that ten per cent percent of the stock of the corporation is subject to a contract or option to purchase at any time during the period for which the permit is issued unless the contract or option was disclosed to the department division and the department division approved the sale or transfer during the period of the permit.

(c)  The granting of a permit or license in the locality set out in the application is not in the public interest or convenience.

(d)  The applicant, if a corporation or any holder of more than ten per cent percent of the outstanding stock of any class, transferred, pledged or in any other way collateralized any of its stock after an application for a permit or license was filed with the department division, without prior department division approval.  The provisions of subdivision (b) of this paragraph and this subdivision shall do not apply to day‑to‑day transfers of stock of a publicly held corporation unless the transfer, or a combination of transfers, involves a controlling interest in or affects the operational control of the corporation, or involves ten per cent percent or more of any class of stock of the corporation owned by the controlling shareholders or the manager of any racing meeting.

(e)  The applicant has, or if the applicant is a corporation, its officers, managerial employees, directors or substantial stockholders have, committed acts of moral turpitude in this state or have wilfully violated a material racing statute of this state or a material rule or regulation of the commission. If the commission makes such a finding, with respect to an officer, managerial employee, director or substantial stockholder, the applicant may be denied a permit only on the failure to remove the officer, managerial employee or director or the failure of the substantial stockholder to sell its stock interest.  For the purposes of this subdivision, a substantial stockholder is one who owns ten per cent percent of the issued and outstanding stock of the applicant.

3.  The department division may deny or refuse to renew a license or the commission may refuse to approve or renew a permit for any person who has made a knowingly false statement of a material fact to the department.

4.  The department division may deny or refuse to renew a license or the commission may refuse to approve or renew a permit to any applicant if the applicant has failed to meet any monetary obligation in connection with any racing meeting held in this state.

5.  The department division shall refuse to issue or renew a license or the commission shall refuse to approve or renew a permit for any applicant if there is substantial evidence to find that the applicant, if an individual, has been convicted within the last five years of a felony or any crime involving moral turpitude or, if a corporation, firm or association, is controlled or operated directly or indirectly by a person or persons who have been convicted within the last five years of a felony or any crime involving moral turpitude.

B.  The department division in conducting the investigation referred to in this section shall have the full cooperation of all state agencies and departments, including the department of public safety, and the agencies and departments shall make their personnel available to the department division, on request.

C.  If the commission determines that the applicant for a permit, whether such the applicant is a lessee or an individual or corporate owner of the tracksite, meets the requirements prescribed by this article and the rules and regulations of the commission, it shall approve the permit.  The permit shall be approved for a period of not to exceed more than three years.  Any renewal of a permit shall be pursuant to subsection D of this section.

D.  Except as provided by subsection C of this section, permits shall be renewed for successive periods of not more than three years unless the commission revokes the permit or refuses to renew the permit for any of the grounds enumerated in this section or section 5‑108.03.  The renewal of a permit shall be denied only after a full hearing and a finding of good cause for refusing renewal has been made by the commission.

E.  The director shall suspend or revoke a license or the commission shall deny or revoke a permit of a person who intentionally provides false information to the department division or any other governmental agency concerning the person's criminal history background.  The director may suspend or revoke a license or the commission may deny or revoke a permit of a person who negligently or recklessly provides false information to the department division or any other governmental agency concerning the person's criminal history background.

F.  Except as provided by this subsection, the director may grant a license or the commission may approve a permit to engage in the racing industry in this state only after all necessary investigation of the background of the applicant required by this article has been completed.  A temporary permit approved by the commission or a temporary license valid for a period of not to exceed more than ninety days may be issued by the director before the time the investigation of the background of the applicant for the license or permit has been completed.  After a temporary license or permit has been issued, the director may suspend or revoke a temporary license or the commission may revoke a temporary permit for any reason that would be grounds to refuse to issue, approve or renew a license or permit under the provisions of subsection A of this section. END_STATUTE

Sec. 13.  Section 5-108.01, Arizona Revised Statutes, is amended to read:

START_STATUTE5-108.01.  Hearing on application for or renewal of original permit; notice of hearing; decisions of commission and director; appeal; transfer of permit

A.  The commission shall hold a public hearing on an original application for a racing permit or renewal of a current racing permit under this article.  At least fifteen days' notice shall be given to all permittees holding a permit, and they may appear and be heard as parties in interest upon the hearing of an application.

B.  The commission may provide by rule for rehearings of any final decision of the department division in accordance with section 5‑104, subsection D.  Except as provided in section 41‑1092.08, subsection H, the parties to the proceeding before the commission or department division may commence an action in the superior court in Maricopa county after a decision of the commission or director has become final to review the decision pursuant to title 12, chapter 7, article 6.  Pending determination of the appeal, the decision and order shall remain in full force and effect, and may not be superseded.

C.  The commission shall not approve an original permit to conduct a horse racing, harness racing or dog racing meeting at any place, enclosure or track not used for racing purposes pursuant to permits actually issued as authorized by law prior to before February 1, 1971, unless before the beginning of construction or preparation of the place, enclosure or track the commission determines that each of the following applies:

1.  The conducting of horse, harness or dog racing meetings at such place will serve the public interest, convenience or necessity.

2.  The plan of racing is economically feasible.

3.  The issuance of a permit is in the best interest of racing and this state generally.

D.  No place, enclosure or track used for horse, harness or dog racing on or before February 1, 1971 may be used for any other type of animal racing, except that in counties with a population of less than seven hundred thousand persons as shown by the last United States census, a place, enclosure or track used for one type of animal racing may be used for any other type of animal racing.  In considering an application for a permit under this section, the commission shall give consideration to consider the number and location of existing tracks, the number of permits already granted and the economic effect the granting of a new permit may have on existing tracks and permittees and the revenues of this state.

E.  If the owner or lessee of any place, enclosure or track used for racing purposes pursuant to permits issued as authorized by law on or before February 1, 1971 is obligated for any reason to abandon the use of the place, enclosure or track, the owner or lessee may transfer the use and rights to use the premises for racing purposes to any other location in the same county. END_STATUTE

Sec. 14.  Section 5-108.02, Arizona Revised Statutes, is amended to read:

START_STATUTE5-108.02.  Revocation of permits; penalties

A.  The commission may revoke the permit of any permittee upon on any of the grounds upon on which the commission could refuse to approve a permit in section 5‑108 or who has failed to pay the department division all sums required under this chapter.

B.  The commission may revoke the permit to hold a racing meeting of any corporate permittee which transfers ten per cent percent of its stock after a permit to hold a racing meeting is issued, and before the termination of the permit period, except as authorized in section 5‑108, subsection A, paragraph 2, subdivision (d).

C.  Revocation shall be made only after a hearing before the commission for which ten days' notice in writing by certified mail has been given to the permittee specifying the grounds for the proposed revocation.

D.  At the hearing, the permittee shall be given an opportunity to be heard and present evidence in opposition to the proposed revocation.

E.  When the If grounds exist for the imposition of a civil penalty or revocation of a permit issued pursuant to this chapter, the department division may impose a civil penalty, of not to exceed more than five thousand dollars per day nor or more than a total of twenty‑five thousand dollars, on the permittee in lieu of or in addition to revocation of the permit by the commission.  The department division, in addition to any criminal penalties provided in this chapter, may levy a civil penalty as to a permittee in an amount not to exceed of not more than five hundred dollars for violation of any provision of this chapter or rule or regulation adopted pursuant to this chapter which that does not constitute grounds for revocation of a permit.  All sums paid to the department division pursuant to this subsection shall be deposited in the general fund. END_STATUTE

Sec. 15.  Section 5-108.05, Arizona Revised Statutes, is amended to read:

START_STATUTE5-108.05.  Revocation and suspension of licenses; probation; civil penalties; exception

A.  Except as provided by subsections C and D of this section, the department division may revoke or suspend the license of a licensee or impose probation requirements or a civil penalty, or any combination of these sanctions, based on any of the grounds for which the department could refuse to issue a license pursuant to section 5‑108 or for a violation of any provision of this article or the rules of the commission or department division.

B.  The department division shall suspend or revoke a license only after a hearing before the department division pursuant to rules adopted by the commission.

C.  Except as provided in subsection E of this section, the department division shall revoke for a period of not to exceed more than one year the license of any person who commits an initial violation of any provision of section 5‑115.  If the licensee is a corporation, the department division shall revoke the license if the corporation is controlled or operated directly or indirectly by such a person.

D.  Except as provided in subsection E of this section, the department division shall revoke permanently the license of any person who commits a subsequent violation of any provision of section 5‑115.

E.  The department division may impose a lesser penalty or sanction authorized by this article for a violation of a rule with respect to medication if the department division finds by clear and convincing evidence that the permitted medication or medication which that reduces exercise induced exercise-induced pulmonary hemorrhage, which is revealed in a sample or test, was administered to the animal in a lawful manner. END_STATUTE

Sec. 16.  Section 5-109, Arizona Revised Statutes, is amended to read:

START_STATUTE5-109.  Identification of animals; exemptions

A horse shall not take part in any race conducted under this article unless satisfactorily identified and registered by an association recognized by the department division.  A horse shall not be allowed to leave the racetrack premises unless it is accompanied by the certificate required by section 3‑1335 unless:

1.  An emergency situation requires immediate removal of the animal from the premises.

2.  The director of the Arizona department of agriculture issues special permission in situations he the director determines to be in the best interest of the animal. END_STATUTE

Sec. 17.  Section 5-109.01, Arizona Revised Statutes, is amended to read:

START_STATUTE5-109.01.  Requirements of permittee regarding Arizona bred horses; powers of commission

A.  A permittee, in addition to all other requirements, shall:

1.  Admit to qualifying any horse that is foaled in this state or any dog that is whelped at a facility licensed by the department division and that is:

(a)  Of suitable racing age.

(b)  Physically qualified and registered pursuant to department division requirements.

(c)  Owned by a resident of this state, who has been engaged for at least two consecutive years, in this state, in the business of breeding, racing, raising or training horses for racing purposes.

2.  Adopt no rule that discriminates in any way against a resident of this state who is engaged in this state in the business of breeding, racing, raising or training horses for racing purposes.

B.  Failure of a permittee to comply with subsection A of this section constitutes grounds for revocation of or refusal to renew any permit.

C.  The commission may adopt rules to further the purposes of this section. END_STATUTE

Sec. 18.  Section 5-110, Arizona Revised Statutes, is amended to read:

START_STATUTE5-110.  Racing days, times and allocations; emergency transfer; county fairs; charity days

A.  Permits for horse or harness racing meetings shall be approved and issued for substantially the same dates allotted to permittees for the same type of racing during the preceding year or for other dates that permittees request, provided that, in the event if there is a conflict in dates requested between two or more permittees in the same county for the same kind of racing, the permittee whose application is for substantially the same dates as were allotted to the permittee in the preceding year shall be entitled to have has preference over other permittees.  In the event two or more permittees have agreed that the dates to be allotted to each of them each year shall be alternated from one year to the next, the commission shall recognize their agreement and those permittees may be accorded preference over any other permittee as to those dates to be allotted to those permittees on an alternating basis.  Except as otherwise provided, the commission shall allot dates to the respective permittees after giving due consideration to considering all of the factors involved and the interests of permittees, the public and this state.

B.  The commission may require by the terms of any permit that the permittee offer such the number of races during any racing meeting as the commission shall determine, provided that determines, but the permittee shall be permitted to may offer at least the same number of races each day as offered in the prior year.  The commission shall require each horse racing permittee to conduct for a period of thirty days a number of races equal to an average of at least two races for each day of racing exclusively for quarter horses.  If, in the opinion of the commission, the permittee is offering acceptable quarter horse races but an honest effort is not being put forth to fill these races by the horsemen, the commission may rescind the two race per day quarter horse requirement.

C.  Live racing and wagering on simulcast races shall be permissible in either daytime or nighttime.  Unless otherwise agreed by written contract that is submitted to the department division between all the permittees in the same county, there shall be no wagering on simulcast dog races before 4:15 p.m., mountain standard time, on the same day that there is live daytime horse or harness racing in any county in which commercial horse or harness racing has been conducted before February 1, 1971.  The commission shall determine the hours during which any other harness or horse racing is to be conducted shall be determined by the commission.  The application for a permit shall state the exact days on which racing will be held and the time of day during which racing will be conducted.

D.  If the commission determines that an emergency has obligated or may obligate a permittee to discontinue racing at a location, the commission may authorize the permittee to transfer racing for the number of days lost to any other location.

E.  The limit on days of racing in this section does not apply to a racing meeting, when operated by a county fair racing association or under lease during the county fair to any individual, corporation or association, shall not come under the limitation placed on days of racing in this section.

F.  The department shall be division is the judge of whether a county fair racing meeting is being operated pursuant to this section.  A county fair racing meeting conducted by an individual, corporation or association, other than the properly authorized county fair racing association, shall come under the general provisions of this article the same as a commercial meeting. Notwithstanding this subsection, a county fair racing meeting, whether conducted by a county fair racing association or by an individual, corporation or association other than a county fair racing association, is exempt from the requirement prescribed in section 5‑111 to pay to the state a percentage of the pari‑mutuel pool collected at the meeting.

G.  The commission may allow a permittee, in addition to the days specified in this permit, to operate up to three racing days during any one meeting as charity days.  From the amount deducted from the total handled in the pari‑mutuel pool on charity days, the permittee shall deduct an amount equal to the purses and the cost of conducting racing on these days, and shall donate the balance to nonprofit organizations and corporations that benefit the general public, that are engaged in charitable, benevolent and other like work and that are selected by the permittee and approved by the department division.  In no event shall The amount given to charity from charity racing days shall not be less than the amount that otherwise would have gone to this state as the state's share on a noncharity racing day.

H.  Notwithstanding any other law, live dog racing shall not be conducted in this state after December 31, 2016.  This subsection does not apply to nonprofit organizations that host lure coursing or similar events that test a dog's ability, stamina and breeding or training for such events.  Notwithstanding any other provision of this article, any dog racing permittee that offered live dog racing in 2016 or that has offered live dog racing in eight out of ten calendar years from 1980 to 1990 in counties that have a population of less than five hundred thousand persons shall be considered as operating a racetrack enclosure for all purposes under this article and shall not be authorized or required to conduct live racing as a condition of that permittee's racing permit.  Any permittee qualified under this subsection may conduct advance deposit wagering, wagering at additional wagering facilities that are owned or leased by that permittee and wagering on telecasts of races conducted at racetrack enclosures within this state or at racetrack enclosures outside this state without offering live racing at that permittee's racetrack enclosure. END_STATUTE

Sec. 19.  Section 5-111.04, Arizona Revised Statutes, is amended to read:

START_STATUTE5-111.04.  Repayment of nonapproved expenditures of capital monies; judicial review

A.  If it is determined by the commission determines, through the findings of the commission or through information provided to the commission by the department division or the auditor general, that a permittee has retained monies for approved capital improvements pursuant to section 5‑111.02 in excess of the amount approved for such capital improvements, the permittee shall repay the excess amount to this state within one year after notification of the determination by the commission. The commission shall determine the repayment method, and the repayment may be made directly by the permittee or through reductions in future entitlements for capital improvements which that have been approved by the commission.  This section shall does not prohibit the use of capital expenditure monies received pursuant to section 5‑111.02 for repayment of obligations of the permittee which that directly relate to approved capital improvements.

B.  Except as provided in section 41‑1092.08, subsection H, final decisions of the commission are subject to judicial review pursuant to title 12, chapter 7, article 6. END_STATUTE

Sec. 20.  Section 5-112, Arizona Revised Statutes, is amended to read:

START_STATUTE5-112.  Wagering legalized; simulcasting of races; unauthorized wagering prohibited; violation; classification; report

A.  Except as provided in subsection J of this section, section 5‑101.01, subsection F and title 13, chapter 33, any person within the enclosure of a racing meeting held pursuant to this article may wager on the results of a race held at the meeting or televised to the racetrack enclosure by simulcasting pursuant to this section by contributing money to a pari‑mutuel pool operated by the permittee as provided by this article.

B.  The department division, on request by a permittee, may grant permission for electronically televised simulcasts of horse, harness or dog races to be received by the permittee.  In counties having with a population of one million five hundred thousand persons or more, the simulcasts shall be received at the racetrack enclosure where a horse or harness racing meeting is being conducted, provided that the simulcast may only be received during, immediately before or immediately after a minimum of nine posted races for that racing day.  In counties having with a population of five hundred thousand persons or more but less than one million five hundred thousand persons, the simulcasts shall be received at the racetrack enclosure where a horse or harness racing meeting is being conducted provided that the simulcast may only be received during, immediately before or immediately after a minimum of four posted races for that racing day.  In all other counties, the simulcasts shall be received at a racetrack enclosure at which authorized racing has been conducted, whether or not posted races have been offered for the day the simulcast is received.  The simulcasts shall be are limited to horse, harness or dog races.  The simulcasts shall be are limited to the same type of racing as authorized in the permit for live racing conducted by the permittee.  The department division, on request by a permittee, may grant permission for the permittee to transmit the live race from the racetrack enclosure where a horse or harness racing meeting is being conducted to a facility or facilities in another state.  All simulcasts of horse or harness races shall comply with the interstate horseracing act of 1978 (P.L. 95‑515; 92 Stat. 1811; 15 United States Code chapter 57).  All forms of pari‑mutuel wagering shall be are allowed on horse, harness or dog races, whether or not televised by simulcasting.  All monies wagered by patrons on these horse, harness or dog races shall be computed in the amount of money wagered each racing day for purposes of section 5‑111.

C.  Notwithstanding subsection B of this section, in counties having with a population of one million five hundred thousand persons or more, simulcasts may be received at the racetrack enclosure, and the permittee may offer pari‑mutuel wagering on the simulcast racing at any additional wagering facility used by a permittee for handling wagering as provided in section 5‑111, subsection A during a permittee's racing meeting as approved by the commission, whether or not the simulcasts are televised to the additional wagering facilities and whether or not posted races have been conducted on the day the simulcast is received, if the permittee's racing permit requires the permittee to conduct a minimum of one hundred fifty‑six days of live racing with an average of nine posted races on an average of five racing days each week at the permittee's racetrack enclosure during the period beginning on October 1 and ending on the first full week in May, unless otherwise agreed in writing by the permittee and the recognized horsemen's organization that represents the horsemen participating in the race meet at the racetrack enclosure, subject to approval by the department division

D.  Notwithstanding subsection B of this section, in counties having with a population of seven hundred thousand persons or more but less than one million five hundred thousand persons, simulcasts may be received at the racetrack enclosure, and the permittee may offer pari‑mutuel wagering on the simulcast racing at any additional wagering facility used by a permittee for handling wagering as provided in section 5‑111, subsection A during a permittee's racing meeting as approved by the commission, whether or not the simulcasts are televised to the additional wagering facilities and whether or not posted races have been conducted on the day the simulcast is received.  The permittee may conduct wagering on dark day simulcasts for twenty days, provided the permittee conducts a minimum of seven posted races on each of the racing days mandated in the permittee's commercial racing permit.  In order to conduct wagering on dark day simulcasts for more than twenty days, the permittee is required to conduct a minimum of seven posted races on one hundred forty racing days at the permittee's racetrack enclosure.

E.  In an emergency and on a showing of good cause by a permittee, the commission may grant an exception to the minimum racing day requirements of subsections C and D of this section.

F.  The minimum racing day requirements of subsections C and D of this section shall be computed by adding all racing days, including any county fair racing days operated in accordance with section 5‑110, subsection F, allotted to the permittee's racetrack enclosure in one or more racing permits.

G.  Simulcast signals or teletracking of simulcast signals does not prohibit live racing or teletracking of that live racing in any county at any time.

H.  Except as provided in subsection J of this section, section 5‑101.01, subsection F and title 13, chapter 33, any person within a racetrack enclosure or an additional facility authorized for wagering pursuant to section 5‑111, subsection A may wager on the results of a race televised to the facility pursuant to section 5‑111, subsection A by contributing to a pari‑mutuel pool operated as provided by this article.

I.  Except as provided in this article and in title 13, chapter 33, all forms of wagering or betting on the results of a race, including buying, selling, cashing, exchanging or acquiring a financial interest in pari‑mutuel tickets, except by operation of law, whether the race is conducted in this state or elsewhere, are illegal.

J.  A permittee shall not knowingly permit a person who is under twenty‑one years of age to be a patron of the pari‑mutuel system of wagering.

K.  Except as provided in title 13, chapter 33, any person who violates this article with respect to any wagering or betting, whether the race is conducted in or outside this state, is guilty of a class 6 felony.

L.  Simulcasting may only be authorized for the same type of racing authorized by a permittee's live racing permit.

M.  In addition to pari‑mutuel wagering otherwise authorized by this chapter, a commercial live-racing permittee or a commercial dog racing permittee that conducted live dog racing in 2016 may conduct advance deposit wagering as approved by the commission.  The commission also may allow advance deposit wagering by an advance deposit wagering provider if a racing authority in the state where the advance deposit wagering provider is located approves the advance deposit wagering provider and, for horse racing, if the advance deposit wagering provider annually secures the approval of the commercial live horse racing permittees in a county where the advance deposit wagering provider or commercial live‑racing permittee accepts advance deposit wagers for horse racing and of the organization that represents the majority of owners and trainers at each of the commercial live horse racing enclosures in each county.  An advance deposit wagering provider that the commission approves shall pay source market fees on wagers placed on horse racing from this state to commercial live horse racing permittees in this state.  The advance deposit wagering provider shall divide the source market fees on horse racing wagers on the basis of the proportion of the permittees' total live and simulcast handle during the previous year and the advance deposit wagering provider shall pay source market fees on wagers on dog racing from the county in which the live or simulcast racing is conducted to the commercial live racing permittee in that county.  The advance deposit wagering provider shall divide the source market fees on dog racing from wagering in any other county as provided in a written agreement that is submitted to the department division between all commercial dog racing permittees.

N.  The commission may issue a permit to authorize an advance deposit wagering provider to accept advance deposit wagering on racing from persons in this state.  The procedures for the approval of the permit must be similar to the procedures for the approval of racing permits under this article, subject to the following requirements:

1.  The commission shall issue an advance deposit wagering permit only if the state agency that regulates racing in the state where the advance deposit wagering provider is located approves the permittee or provider to conduct advance deposit wagering.

2.  An advance deposit wagering provider may accept advance deposit pari-mutuel wagers from natural persons in this state on racing conducted by a commercial live-racing permittee in this state or on racing conducted outside this state if the commercial live-racing permittee in this state at a racetrack enclosure in a county where live horse or live dog racing has been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure on which advance deposit wagering is accepted or that conducts a racing program with the same type of racing on which the advance deposit wagering is accepted enters into an agreement with the advance deposit wagering provider providing for the payment of a source market fee that is agreed to by the commercial live-racing permittee on all advance deposit wagering.

3.  An advance deposit wagering provider shall pay source market fees in an amount that is agreed to by the commercial live-racing permittee on all advance deposit wagering by persons in this state on the same type of racing the commercial live-racing permittee conducts.  Source market fees from wagers by persons in this state through an advance deposit wagering provider shall be allocated as provided in paragraph 7 of this subsection to a commercial live horse racing permittee at a racetrack enclosure in a county where live horse racing has been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure during the period of time that the commercial live-racing permittee conducts a racing program.  Source market fees for dog racing from wagering through the advance deposit wagering provider from persons wagering in a county shall be allocated as provided in paragraph 7 of this subsection to a commercial dog racing permittee at a racetrack enclosure in a county where live dog racing had been conducted in 2016 or had been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure.  Source market fees from wagers by persons in this state in all other counties for pari‑mutuel wagering on dog racing through an advance deposit wagering provider shall be allocated as provided in paragraph 7 of this subsection.

4.  Advance deposit wagering agreements that are executed between permittees in this state must contain the same or substantially equivalent terms and conditions, including provisions for revenue sharing, as the terms and conditions contained in simulcasting agreements that are executed between those same permittees in order to accept advance deposit wagering on horse racing from a county with a commercial dog racing permittee.

5.  The advance wagering provider shall transmit daily a percentage determined by the department division of the gross revenues generated by advance deposit wagers to the department division for deposit in the racing regulation fund established by section 5‑113.01.

6.  The advance deposit wagering provider shall file the consent provided for in this subsection with the commission, and the consent is valid for a period of at least one year.

7.  The source market fees are allocated, after deductions, as provided for in section 5‑111, subsection C for horse racing for any fees or payments to the state, county and city for taxes or other fees, in the same manner as the proceeds of simulcast pari-mutuel wagering as provided in section 5‑111, subsection C for horse racing.  From the source market fees from advance deposit wagering on horse racing allocated for purses as provided in section 5‑111, subsection C, five percent is paid to the department division for deposit in the Arizona breeders' award fund account for distributions for Arizona bred horses as provided in section 5‑114.

O.  The owner of the advance deposit wagering account may make an advance deposit pari-mutuel wager only by telephone.

P.  Only the advance deposit wagering provider may make an advance deposit wager, pursuant to wagering instructions the owner of the monies issues by telephone.  The advance deposit wagering provider shall ensure the identification of the owner of the account by using methods and technologies approved by the commission.  Any advance deposit wagering provider that accepts wagering instructions on races that are conducted in this state, or accepts wagering instructions originating in this state, shall provide a daily report that contains a full accounting and verification of the source of the wagers made, including the postal zip code of the source of the wagers and all pari-mutuel data, in a form and manner that is approved by the commission.  All reasonable costs associated with the creation, provision and transfer of the data is the responsibility of the advance deposit wagering provider.

Q.  Any person other than a permittee or any advance deposit wagering provider who is approved by the commission under this article and who accepts a wager or who bets on the results of a race, whether the race is conducted in or outside this state, including buying, selling, cashing, exchanging or acquiring a financial interest in a pari‑mutuel ticket from a person in this state outside of a racing enclosure or an additional wagering facility that is approved by the commission and that is located in this state is guilty of a class 6 felony.

R.  Pursuant to section 13‑108, a pari‑mutuel wager or a bet placed or made by a person in this state is deemed for all purposes to occur in this state.

S.  The department division and the attorney general shall enforce subsections Q and R of this section and shall submit an annual report that summarizes these enforcement activities to the governor, the speaker of the house of representatives and the president of the senate.  The department division and the attorney general shall provide a copy of this report to the secretary of state. END_STATUTE

Sec. 21.  Section 5-113, Arizona Revised Statutes, is amended to read:

START_STATUTE5-113.  Disposition of revenues and monies; funds; committee

A.  All revenues derived from permittees, permits and licenses as provided by this article shall be deposited, pursuant to sections 35‑146 and 35‑147, in the racing regulation fund established by section 5‑113.01.  The commission shall further allocate all monies deposited in the Arizona breeders' award fund pursuant to this subsection to support incentives as authorized by subsection F of this section for thoroughbred and quarter horse breeds only.

B.  The Arizona county fairs racing betterment fund is established under the jurisdiction of the department division.  The department division shall distribute monies from the fund to the county fair association or county fair racing association of each county conducting a county fair racing meeting in a proportion that the department division deems necessary for the promotion and betterment of county fair racing meetings.  All expenditures from the fund shall be made on claims approved by the department division.  In order to be eligible for distributions from the fund, a county fair association must provide the department division with an annual certification in the form required by the department division supporting expenditures made from the fund.  Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.

C.  The county fairs livestock and agriculture promotion fund is established under the control of the governor and shall be used for the purpose of promoting the livestock and agricultural resources of the state and for the purpose of conducting an annual Arizona national livestock fair by the Arizona exposition and state fair board to further promote livestock resources.  The direct expenses less receipts of the livestock fair shall be paid from this fund, but this payment shall not exceed thirty percent of the receipts of the fund for the preceding fiscal year.  Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.  All expenditures from the fund shall be made on claims approved by the governor, as recommended by the livestock and agriculture committee, for the promotion and betterment of the livestock and agricultural resources of this state.  The livestock and agriculture committee is established and shall be composed of the following members, at least three of whom are from counties that have a population of less than five hundred thousand persons, appointed by the governor:

1.  Three members representing county fairs.

2.  One member representing Arizona livestock fairs.

3.  One member representing the university of Arizona college of agriculture.

4.  One member representing the livestock industry.

5.  One member representing the farming industry.

6.  One member representing the governor's office.

7.  One member representing the Arizona state fair conducted by the Arizona exposition and state fair board.

8.  One member representing the general public.

D.  The governor shall appoint a chairman from the members.  Terms of members shall be four years.

E.  Members of the committee are not eligible to receive compensation but are eligible to receive reimbursement for expenses pursuant to title 38, chapter 4, article 2.

F.  The Arizona breeders' award fund is established under the jurisdiction of the department division.  The department division shall distribute monies from the fund to the breeder, or the breeder's heirs, devisees or successors, of every winning horse or greyhound foaled or whelped in this state, as defined by section 5‑114, in a manner and in an amount established by rules of the commission to protect the integrity of the racing industry and promote, improve and advance the quality of race horse and greyhound breeding within this state.  The department division may contract with a breeders' association to provide data, statistics and other information necessary to enable the department division to carry out the purposes of this subsection.  Persons who are not eligible to be licensed under section 5‑107.01 or persons who have been refused licenses under section 5‑108 are not eligible to participate in the Arizona greyhound breeders' award fund.  Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.  For the purposes of this subsection, "breeder" means the owner or lessee of the dam of the animal at the time the animal was foaled or whelped.

G.  The Arizona stallion award fund is established under the jurisdiction of the department division to promote, improve and advance the quality of stallions in this state.  The department division shall distribute monies from the fund to the owner or lessee, or the owner's or lessee's heirs, devisees or successors, of every Arizona stallion whose certified Arizona bred offspring, as prescribed in section 5‑114, finishes first, second or third in an eligible race in this state.  The department division may contract with a breeders' association to provide data, statistics and other information necessary to enable the department division to carry out the purposes of this subsection.  Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.  The commission shall adopt rules pursuant to title 41, chapter 6 to carry out the purposes of this subsection.  The rules shall prescribe at a minimum:

1.  The manner and procedure for distribution from the fund, including eligibility requirements for owners and lessees.

2.  Subject to availability of monies in the fund, the amount to be awarded.

3.  The requirements for a stallion registered with the jockey club, Lexington, Kentucky or with the American quarter horse association, Amarillo, Texas to be certified as an Arizona stallion.

4.  The types and requirements of races for which an award may be made.

H.  The retired racehorse adoption fund is established.  The division shall administer the fund.  All revenues derived from retired racehorse adoption surcharges collected pursuant to section 5‑104, subsection G shall be deposited, pursuant to sections 35‑146 and 35‑147, in the fund.  The department division shall distribute monies from the fund to provide financial assistance to nonprofit enterprises approved by the commission to promote the adoption of retired racehorses pursuant to section 5‑104, subsection G in a manner and in an amount established by rules of the commission.  Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.

I.  The county fair racing fund is established.  The department division shall administer the fund.  Monies in the fund are continuously appropriated.  The department division shall use fund monies for the administration of county fair racing.  Any monies remaining unspent in the fund at the end of the fiscal year in excess of seventy‑five thousand dollars shall revert to the state general fund.

J.  The agricultural consulting and training trust fund is established for the exclusive purpose of implementing, continuing and supporting the agricultural consulting and training program established by section 3‑109.01.  The director of the Arizona department of agriculture shall administer the trust fund as trustee.  The state treasurer shall accept, separately account for and hold in trust any monies deposited in the state treasury, which are considered to be trust monies as defined in section 35‑310 and which shall not be commingled with any other monies in the state treasury except for investment purposes.  On notice from the director, the state treasurer shall invest and divest any trust fund monies deposited in the state treasury as provided by sections 35‑313 and 35‑314.03, and monies earned from investment shall be credited to the trust fund.  The beneficiary of the trust is the agricultural consulting and training program established by section 3‑109.01.  Surplus monies, including balances remaining in the trust fund at the end of a fiscal year, do not revert to the state general fund. END_STATUTE

Sec. 22.  Section 5-113.01, Arizona Revised Statutes, is amended to read:

START_STATUTE5-113.01.  Racing regulation fund; exemption; assessment

The racing regulation fund is established.  All revenues derived from permittees, permits and licenses pursuant to this article and section 5‑230 and any grants or donations received by the department shall be deposited, pursuant to sections 35‑146 and 35‑147, in the racing regulation fund.  The department division shall administer the racing regulation fund.  Monies in the racing regulation fund are subject to legislative appropriation and are to be used by the department division to support the mission of the department division.  The racing regulation fund is exempt from the provisions of section 35‑190 relating to lapsing of appropriations, except that by the end of each fiscal year The division may retain up to twenty percent of The unexpended and unencumbered balance of monies, if any, remaining in the fund at the end of each fiscal year, not including the balance of the fund at the end of fiscal year 2017‑2018.  the remaining unexpended and unencumbered balance of monies in the fund at the end of a fiscal year shall be used to reduce the regulatory wagering assessment prescribed in paragraph 2 of this section. END_STATUTE

Sec. 23.  Section 5-114, Arizona Revised Statutes, is amended to read:

START_STATUTE5-114.  Races exclusively for Arizona bred horses; breeders' awards; certification; fee

A.  For the purpose of promoting and encouraging the breeding of Arizona bred horses, each meeting shall offer not less than one race each day of racing which shall be exclusively for Arizona bred horses.  In the event such race does not fill, it shall be offered as an open race in which Arizona bred horses have a preference of entry.

B.  To promote and improve the breeding of horses within this state, a sum of money equal to ten percent of the first money of every purse won by a horse bred in this state shall be paid by the permittee to the owner or lessee, or his heirs, devisees or successors, of the dam of the animal at the time the animal was foaled.  Such The amount shall be paid within thirty days after the close of the racing meeting.  All claims or disputes as to the dam of a horse bred in this state shall be determined by the permittee, subject to review by the commission, and the decision of the commission shall be final and conclusive.  A horse bred in this state means a horse foaled in this state and certified by the commission.  To be eligible for Arizona bred certification, the horse must be physically present within this state for not less than six months during the period from the date he is foaled to the first anniversary date of his having been foaled. 

C.  The commission may contract with a breeders' association to certify that an animal is Arizona bred or is an Arizona stallion.  The commission may authorize the association, racing organization or department division to charge and collect a reasonable fee from a stallion owner to cover the cost of certification or transfer and verification that the animal is Arizona bred or an Arizona stallion.END_STATUTE

Sec. 24.  Section 5-115, Arizona Revised Statutes, is amended to read:

START_STATUTE5-115.  Violation; classification; civil penalties

A.  At any racing meeting conducted under this article, a person is guilty of a class 4 felony if the person:

1.  Knowingly influences or has any understanding or connivance with any official, owner, jockey, trainer, groom, starter, assistant starter or other person associated with a stable, kennel or race in which any horse or dog participates to predetermine the result of a race.

2.  Knowingly gives or offers a bribe in any form to any official, owner, trainer, jockey, driver or groom, starter or assistant starter or any other person licensed by the department division or accepts or solicits a bribe in any form.

3.  Knowingly has in the person's possession or in use, while riding or driving in any horse race, any mechanical or electric device capable of affecting a horse's performance other than an ordinary whip.

4.  Knowingly commits any other corrupt or fraudulent practice in relation to racing that affects or may affect the result of a race.

5.  For the purpose of selling or offering to sell predictions on horse races, harness races or dog races, advertises that he has predicted the outcome of any race that has been run in this state, unless the person has notified in writing the department division or a representative of the department division of his predictions at least three hours before the race involved on forms prescribed by the department division.  A person shall not advertise the fact that he has notified the department division or use the name of the department division in any way whatsoever to promote the activities described in this section.  For the purposes of this paragraph, "advertise" means the use of any newspaper, magazine or other publication, book, notice, circular, pamphlet, letter, handbill, tip sheet, poster, bill, sign, placard, card, label, tag window display, store sign, radio or television announcement, or other means or methods now or hereafter employed to bring to the attention of the public information concerning the outcome of horse or dog races.  Nothing contained in this paragraph applies to any daily newspaper of general circulation that is regularly entered in the United States mail, or any other daily publication carrying complete past performances of horses or dogs entered in races, or to any regularly published magazine or periodical devoted to racing news, that has been published for at least two years.

B.  It is a class 4 felony for:

1.  A trainer or owner to enter a horse in a race if the trainer or owner knows that the horse is drugged or desensitized and that the racing performance of the animal is affected.

2.  A person to perform the drugging or desensitizing of a horse if the person knows that the horse will compete in a race while so drugged or desensitized and knows that the racing performance of the animal is affected.

3.  A person to intentionally fail to notify a steward as soon as reasonably possible that a horse entered in a race is drugged or desensitized or that a horse was not properly made available for the required tests or inspections and knows that the racing performance of the animal may be affected.

4.  A person to intentionally impair or alter the normal performance of a pari‑mutuel wagering system with the intent to defraud or injure the state or a permittee.  Alteration of the normal performance of a pari‑mutuel system includes:

(a)  Altering, changing or interfering with any equipment or device used in connection with pari‑mutuel wagering.

(b)  Causing any false, inaccurate, delayed or unauthorized data, impulse or signal to be fed into, transmitted over, registered in or displayed on any equipment or device used in connection with pari‑mutuel wagering.

5.  A person to impair or alter the normal operation of simulcast broadcasts by intentionally doing any of the following with the intent to defraud or injure the state or a permittee:

(a)  Intercepting or decoding a transmission of a simulcast signal, either in whole or in part, which that has been authorized in writing for the use of pari‑mutuel wagering and that the director has not provided written authorization for the person to receive or decode.

(b)  Without written authorization from the director, manufacturing, distributing or selling a device, a plan or a kit for a device capable of intercepting or decoding a transmission of a simulcast signal with the intent that the device, plan or kit be used for interception or decoding.

(c)  Without written authorization from the director, possessing a device, a plan or a kit for a device capable of intercepting or decoding a transmission of a simulcast signal with the intent that the device, plan or kit be used for the interception or decoding.

C.  The department division, in addition to any criminal penalties provided in this chapter and in addition to suspension or revocation of a credential or a license, may levy a civil penalty as to on a licensee or a holder of a credential as follows:

1.  In an amount of not more than five thousand dollars for each violation of any provision of subsection A of this section.

2.  In an amount of not more than two thousand five hundred dollars for each violation of any provision of this chapter that constitutes grounds for suspension or revocation of a credential or license, except for a violation of those provisions contained in subsection A of this section.  All sums paid to the department division pursuant to this subsection shall be deposited, pursuant to sections 35‑146 and 35‑147, in the state general fund.

D.  Any person who holds or conducts any racing meeting or operates an additional wagering facility without first complying with the provisions of this article, or any person who fails to submit to a drug test as directed by stewards or who violates any other provision of this article for which no other penalty is prescribed, is guilty of a class 2 misdemeanor.

E.  A member of the commission or an employee of the department who at any time, directly or indirectly, knowingly receives any money, bribe, tip or other thing of value or service from any person connected with racing given with an intent to influence the member's or employee's official action, or any person connected with racing who, directly or indirectly, knowingly gives money, a bribe, a tip or any other thing of value or service to a member of the commission or an employee of the department with intent to influence the member's or employee's official action, is guilty of a class 4 felony.

F.  A person who knowingly removes or alters, either directly or indirectly, any tattoo, other marking, device, coloration or special characteristic that is required by the department division for the purpose of identifying a greyhound used or bred for racing purposes or a person who knowingly subjects a greyhound used or bred for racing purposes regulated under this chapter to grossly inhumane conditions or severe mistreatment is guilty of a class 6 felony.  For the purposes of this subsection:

1.  "Grossly inhumane conditions" means conditions arising from a person's reckless indifference to the consequences of an act or omission if the person, without any actual intent to injure, is aware from the person's knowledge of existing circumstances and conditions that the person's conduct will inevitably or probably result in injury to a greyhound used or bred for racing purposes.

2.  "Severe mistreatment" means the infliction of physical pain, suffering or death on a greyhound used or bred for racing purposes in a manner that is either wanton or with reckless indifference to pain or suffering. END_STATUTE

Sec. 25.  Section 5-131, Arizona Revised Statutes, is amended to read:

START_STATUTE5-131.  Compact; authority to join; definitions

The racing division within the department of gaming and the Arizona racing commission may join with other states in an interstate compact on licensure of participants in live racing with pari‑mutuel wagering as follows:

Article I

Rights and Responsibilities of Each Party State

Section 1.  Rights and responsibilities of each party state.

A.  By enacting this compact, each party state:

1.  Agrees to accept the decisions of the compact committee regarding the issuance of compact committee licenses to participants in live racing pursuant to the committee's licensure requirements.

2.  Agrees not to treat a notification to an applicant by the compact committee that the compact committee will not be able to process the application further as the denial of a license, or to penalize such an applicant in any other way based solely on such a decision by the compact committee.

3.  Reserves the right:

(a)  To charge a fee for the use of a compact committee license in that state.

(b)  To apply its own standards in determining whether, on the facts of a particular case, a compact committee license should be suspended or revoked.

(c)  To apply its own standards in determining licensure eligibility, under the laws of that party state, for categories of participants in live racing that the compact committee determines not to license and for individual participants in live racing who do not meet the licensure requirements of the compact committee.

(d)  To establish its own licensure standards for the licensure of nonracing employees at pari‑mutuel racetracks and employees at separate satellite wagering facilities.

B.  Any party state that suspends or revokes a compact committee license, through its racing commission or its equivalent or otherwise, shall promptly notify the compact committee of that suspension or revocation.

C.  A party state shall not be held liable for the debts or other financial obligations incurred by the compact committee.

D.  The department of gaming may adopt rules to carry out the purposes of this section.

Article II

Construction and Severability

Section 2.  Construction and severability.

This compact shall be liberally construed so as to effectuate its purposes.  The provisions of this compact shall be severable, and, if any phrase, clause, sentence or provision of this compact is declared to be contrary to the Constitution of the United States or of any party state, or the applicability of this compact to any government, agency, person or circumstance is held invalid, the validity of the remainder of this compact and its applicability to any government, agency, person or circumstance shall not be affected thereby.  If all or some portion of this compact is held to be contrary to the constitution of any party state, the compact shall remain in full force and effect as to the remaining party states and in full force and effect as to the state affected as to all severable matters.

Article III

Definitions

For the purposes of this compact:

1.  "Compact committee" means the organization of officials from the party states that is authorized and empowered by the compact to carry out the purposes of this compact.

2.  "Official" means the appointed, elected, designated or otherwise duly elected representative of a racing commission or the equivalent thereof in a party state who represents that party as a member of the compact committee.

3.  "Participants in live racing" means participants in live racing with pari‑mutuel wagering in the party states.

4.  "Party state" means each state that has enacted this compact.

5.  "State" means each of the several states of the United States, the District of Columbia, the Commonwealth of Puerto Rico and each territory or possession of the United States.END_STATUTE

Sec. 26.  Section 5-224, Arizona Revised Statutes, is amended to read:

START_STATUTE5-224.  Division of boxing and mixed martial arts regulation; powers and duties

A.  A division of boxing and mixed martial arts regulation is established in the department to provide staff support for the Arizona state boxing and mixed martial arts commission.  Subject to title 41, chapter 4, article 4, the director of the department shall appoint an executive director to perform the duties prescribed in this article.  The resources for the Arizona state boxing and mixed martial arts commission shall come from monies appropriated to the department from the racing regulation fund established by section 5‑113.01 or from other sources prescribed in section 5‑225, subsection D.

B.  The commission shall obtain from a physician licensed to practice in this state rules and standards for the physical examination of boxers and referees.  A schedule of fees to be paid physicians by the promoter or matchmaker for the examination shall be set by the commission.

C.  The commission may adopt and issue rules pursuant to title 41, chapter 6 to carry out the purposes of this chapter.

D.  The commission shall hold regular meetings at least quarterly and in addition may hold special meetings.  Except as provided in section 5‑223, subsection B, all meetings of the commission shall be open to the public and reasonable notice of the meetings shall be given pursuant to title 38, chapter 3, article 3.1.

E.  The commission shall:

1.  Make and maintain a record of the acts of the division, including the issuance, denial, renewal, suspension or revocation of licenses.

2.  Keep records of the commission open to public inspection at all reasonable times.

3.  Assist the director in the development of rules to be implemented pursuant to section 5‑104, subsection T.

4.  Conform to the rules adopted pursuant to section 5‑104, subsection T.

F.  The commission may enter into intergovernmental agreements with Indian tribes, tribal councils or tribal organizations to provide for the regulation of boxing and mixed martial arts contests on Indian reservations.  Nothing in This chapter shall be construed to does not diminish the authority of the department. END_STATUTE

Sec. 27.  Title 5, chapter 2, article 2, Arizona Revised Statutes, is amended by adding section 5-226, to read:

START_STATUTE5-226.  Levy of tax on gross receipts; disposition; verification and financial audit; definition

A.  Any person who promotes a boxing contest in this state pursuant to this article shall comply with rules adopted pursuant to this article and shall within ten days after the contest pay to the department four percent of the gross receipts, after the deduction of city, state and federal taxes, of the match or exhibition.

B.  The department shall verify the gross receipts of a contest.  The director may require a person licensed under this article to supply a certified financial audit to the department.  The director shall adopt rules that require each person licensed under this article to select a certified public accountant to conduct the financial audit.  The financial statements prepared pursuant to this section shall be prepared in accordance with generally accepted accounting principles and shall include any additional schedules the director requires.  A person subject to a financial audit under this section shall afford reasonable and needed facilities and make returns and exhibits to the department in the form and at the time prescribed by the director.

C.  At the end of each month the director shall report to the department of administration the total amount received under this chapter from all sources, including license fees, and shall deposit that amount, excluding license fees, pursuant to sections 35‑146 and 35‑147, in the state general fund.

D.  A promoter may issue complimentary tickets that are exempt from taxation pursuant to this title.  If a promoter issues complimentary tickets, the exemption from taxation applies to two percent of the total number of tickets issued for the event or seventy-five tickets, whichever is greater.

E.  The department shall collect and account for revenues for the commission, including license fees required by section 5‑230, the levy of the tax on gross receipts imposed by this section and the cash bond or surety bond deposited pursuant to section 5‑229.  The director shall report and deposit all revenues collected pursuant to this subsection, from whatever source, pursuant to subsection C of this section, except that license fees required by section 5‑230 shall be deposited in the racing regulation fund established by section 5‑113.01.  The director shall adopt rules as necessary to accomplish the purposes of this section.

F.  For the purposes of this section, "gross receipts" means all receipts from the face value of tickets sold.  END_STATUTE

Sec. 28.  Section 5-227, Arizona Revised Statutes, is amended to read:

START_STATUTE5-227.  Jurisdiction of commission

A.  The commission shall:

1.  Except for the financial and accounting functions delegated to the director pursuant to section 5‑104 5‑226, have sole direction, management, control and jurisdiction over all boxing and mixed martial arts contests held within this state unless exempt from the application of this chapter by section 5‑222.

2.  Have sole control, authority and jurisdiction over all licenses required by this chapter.

B.  The commission shall grant a license to an applicant if in the judgment of the commission the financial responsibility, experience, character and general fitness of the applicant are such that his the applicant's participation is consistent with the public interest, convenience or necessity and the best interests of boxing and in conformity with the purposes of this chapter.  The commission may delegate the commission's licensing authority to the commission's executive director. END_STATUTE

Sec. 29.  Section 5-229, Arizona Revised Statutes, is amended to read:

START_STATUTE5-229.  Promoters; licenses; bond; proof of financial responsibility

A.  The commission may in its discretion withhold the granting of a license to a promoter until the applicant furnishes proof of his financial responsibility to promote contests in accordance with section 5‑104.02 5‑226, subsection B and the rules adopted by the director.  The commission may issue a license to conduct, hold or give boxing contests to any qualified person or to a corporation duly authorized to do business under the laws of this state.

B.  In addition to the cash bond or surety bond required pursuant to section 5‑228, subsection E, the commission may require a promoter to deposit with the department prior to each contest a cash bond or surety bond in an amount set by the commission as a guarantee for the fulfillment of the promoter's contract obligations for that contest, the payment of licenses and taxes on gross receipts of that contest and reimbursement to ticket purchasers if the contest is not held as advertised. END_STATUTE

Sec. 30.  Section 5-238, Arizona Revised Statutes, is amended to read:

START_STATUTE5-238.  Sham boxing; withholding a purse

A.  The commission may withhold all or part of a purse or other monies payable to any contestant, manager or second if in the judgment of the commission a boxing contestant is participating in a sham or fake boxing contest or is otherwise not competing honestly or to the best of his the contestant's ability.

B.  If the commission withholds a purse or part of a purse or other monies the commission shall give notice to all interested parties and hold a hearing upon the matter within ten days.

C.  If the commission determines that a contestant, manager or second is not entitled to a purse, part of a purse or other monies the promoter shall turn such monies over to the director to be applied pursuant to section 5‑104.02 5‑226, subsection C. END_STATUTE

Sec. 31.  Retention of members

Notwithstanding section 5‑103, Arizona Revised Statutes, as amended by this act, all persons serving as members of the Arizona racing commission on the effective date of this act may continue to serve until the expiration of their normal terms.  The governor shall make all subsequent appointments as prescribed by statute.

Sec. 32.  Exemption from rulemaking

The department of gaming is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, for one year after the effective date of this act for the purposes of adopting rules to include a unique pari‑mutuel wager to be known as the cactus pick 6.

Sec. 33. Regulatory wagering assessment; fiscal year 2018-2019

The regulatory wagering assessment for pari-mutuel pools for fiscal year 2018-2019 may not exceed one-half of one percent.

Sec. 34.  Rural county fair racing fund; delayed repeal

A.  The rural county fair racing fund is established. The department of gaming shall administer the fund.  Monies in the fund are continuously appropriated.  The department shall transfer two hundred thousand dollars of surplus monies in fiscal year 2018‑2019 from the racing regulation fund established by section 5‑113.01, Arizona Revised Statutes, as amended by this act, into the rural county fair racing fund.  The department shall distribute matching grants from the rural county fair racing fund to counties with a population of less than eight hundred thousand persons and that operate county fair racing.  The Arizona racing commission shall establish application procedures for counties to apply for grants from the rural county fair racing fund.  The Arizona racing commission shall review the applications submitted by counties and distribute grant monies from the rural county fair racing fund on a first‑come, first‑served basis.  A county is not eligible for a grant from the rural county fair racing fund unless the county agrees to contribute county revenues for county fair racing in an amount that is equal to at least fifty percent of the amount of the grant from the rural county fair racing fund.  A county may not receive a grant of more than forty thousand dollars from the rural county fair racing fund during any fiscal year. 

B.  This section is repealed from and after June 30, 2020.  Any monies remaining in the rural county fair racing fund that are unspent and unencumbered on July 1, 2020 revert to the department of gaming and shall be deposited in the racing regulation fund established by section 5‑113.01, Arizona Revised Statutes, as amended by this act.