Chapter 0318 - 532R - S Ver of HB2589

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

Section 1. 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. 2. 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. 3. Repeal

Section 5-104.02, Arizona Revised Statutes, is repealed.

Sec. 4. 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. 5. 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. The department shall establish an unarmed combat subaccount within the racing regulation fund established by section 5-113.01. 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 unarmed combat subaccount of the racing regulation 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. 6. 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. 7. 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. 8. 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. 9. 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. 10. 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.

Sec. 11. 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.