HB-4611, As Passed House, May 23, 2017

SUBSTITUTE FOR

HOUSE BILL NO. 4611

A bill to amend 1995 PA 279, entitled

"Horse racing law of 1995,"

by amending sections 8, 17, 20, and 22 (MCL 431.308, 431.317,

431.320, and 431.322), as amended by 2016 PA 271.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 8. (1) The racing commissioner may issue the following

general classes of licenses:

(a) Occupational licenses issued to individuals participating

in, involved in, or otherwise having to do with horse racing, pari-

mutuel wagering, or simulcasting at a licensed race meeting in this

state.

(b) Race meeting licenses issued annually for the succeeding

year to persons to conduct live horse racing, simulcasting, and

pari-mutuel wagering on the results of live and simulcast horse

races at a licensed race meeting in this state under this act.

racetrack at which 1 or more race meeting licensees may conduct

licensed race meetings in this state.

(d) Third party facilitator licenses issued to persons

contracted by race meeting licensees to facilitate wagering on live

and simulcast racing. The racing commissioner shall establish the

terms and conditions and the appropriate fee for a third party

facilitator license subject to the following:

(i) The third party facilitator must comply with consumer

protections, as determined by the racing commissioner, to protect

the public.

(ii) The third party facilitator must cooperate in any audit

necessary to comply with section 23.

(iii) The third party facilitator must comply with the

conditions and suitability standards under section 10(1)(e) to (f)

and rules promulgated under this act.

(iv) A license issued to a third party facilitator under this

subdivision is terminated if any of the following occur:

(A) On the date and at the time set by the racing commissioner

in the license.

(B) The contract with the race meeting licensee to facilitate

live and simulcast wagering expires.

commissioner.

(2) The racing commissioner shall not issue a race meeting

license to a person if the person is licensed to conduct a licensed

race meeting at another licensed racetrack in this state and the

person has a controlling interest in or co-ownership of the other

licensed racetrack.

Sec. 17. (1) The pari-mutuel system of wagering upon the

results of horse races as permitted by this act shall not be held

or construed to be unlawful. All forms of pari-mutuel wagering must

be conducted ~~at a licensed~~ under a race meeting ~~shall be~~ license

preapproved by the racing commissioner ~~under~~ by rule or written

order of the commissioner.

(2) ~~A holder of a race meeting license may provide a place in~~

~~the race meeting grounds or enclosure at which he or she may~~

~~conduct and supervise pari-mutuel wagering on the results of horse~~

~~races as permitted by this act.~~ If pari-mutuel wagering is used at

a race meeting, a totalisator or other device that is equal in

accuracy and clearness to a totalisator and approved by the racing

commissioner must be used. The odds display of the totalisator or

other device must be placed in full view of the patrons.

(3) Subject to section 18(3), each holder of a race meeting

license shall retain as his or her commission on all forms of

straight wagering 17% of all money wagered involving straight

wagers on the results of live and simulcast horse races conducted

at the licensee's race meetings. Subject to section 18(3), each

holder of a race meeting license shall retain as his or her

commission on all forms of multiple wagering, without the written

permission of the racing commissioner not more than 28% and with

the written permission of the racing commissioner not more than 35%

of all money wagered involving any form of multiple wager on the

results of live and simulcast horse races conducted at the

licensee's race meeting. Except as otherwise provided by contract,

50% of all commissions from wagering on the results of live racing

at the racetrack where the live racing was conducted shall be paid

to the horsemen's purse pool at the racetrack where the live racing

was conducted. As used in this subsection:

(a) "Straight wagering" means a wager made on the finishing

position of a single specified horse in a single specified race.

(b) "Multiple wagering" means a wager made on the finishing

positions of more than 1 horse in a specified race or the finishing

positions of 1 or more horses in more than 1 specified race.

(4) All breaks shall be retained by the race meeting licensee

and paid directly to the city or township in which the racetrack is

located as a fee for services provided under section 21.

(5) Payoff prices of tickets of a higher denomination must be

calculated as even multiples of the payoff price for a $1.00 wager.

Each holder of a race meeting license shall distribute to the

persons holding winning tickets, as a minimum, a sum not less than

$1.10 calculated on the basis of each $1.00 deposited in a pool,

except that each race meeting licensee may distribute a sum of not

less than $1.05 to persons holding winning tickets for each $1.00

deposited in a minus pool. As used in this subsection, "minus pool"

means any win, place, or show pool in which the payout would exceed

the total value of the pool.

(6) A holder of a race meeting license shall not knowingly

permit a person less than 18 years of age to be a patron of the

pari-mutuel wagering conducted or supervised by the holder.

(7) Any act or transaction relative to pari-mutuel wagering on

the results of live or simulcast horse races may be conducted by a

race meeting licensee under this act for the race meeting licensee

to comply with the auditing requirements of section 23. A person

shall not provide messenger service for the placing of a bet for

another person who is not a patron. However, this subsection does

not prevent simulcasting or intertrack or interstate common pool

wagering inside or outside this state as permitted by this act or

the rules promulgated under this act.

(8) Any form of pari-mutuel wagering on the results of live or

simulcast horse races ~~must only occur or be permitted to occur at a~~

~~licensed race meeting. A person shall not participate or be a party~~

~~to any act or transaction relative to placing a wager or carrying a~~

~~wager for placement outside of a race meeting ground. A person~~

~~shall not provide messenger service for the placing of a bet for~~

~~another person who is not a patron. However, this subsection does~~

~~not prevent simulcasting or intrastate or interstate common pool~~

~~wagering inside or outside this state as permitted by this act or~~

~~the rules promulgated under this act.~~may only be conducted or

operated by a race meeting licensee or its contracted licensed

third party facilitators, as determined and approved by the racing

commissioner. All wagers placed by persons within this state may be

placed only in person at a licensed race meeting or electronically

through a licensed third party facilitator.

(9) A person that does not hold a race meeting license or a

third party facilitator license that solicits or accepts wagers on

the results of live or simulcast horse races from individuals in

this state is guilty of a felony punishable by imprisonment for not

more than 5 years or a fine of not more than $10,000.00, or both.

Each act of solicitation or wager that is accepted in violation of

this section is a separate offense.

(10) Only a race meeting licensee or its contracted licensed

third party facilitator may process, accept, or solicit wagers on

the results of live or simulcast horse races as determined and

approved by the racing commissioner.

(11) ~~(10)~~ As used in this section, "act or transaction

relative to pari-mutuel wagering on the results of live or

simulcast horse races" means those steps taken by a race meeting

licensee to accept a wager and process it within the ordinary

course of its business and in accordance with this act.

Sec. 20. (1) It is the policy of this state to encourage the

breeding of horses of all breeds in this state and the ownership of

such horses by residents of this state to provide for sufficient

numbers of high quality race horses of all breeds to participate in

licensed race meetings in this state; to promote the positive

growth and development of high quality horse racing and other

equine competitions in this state as a business and entertainment

activity for residents of this state; and to establish and preserve

the substantial agricultural and commercial benefits of the horse

racing and breeding industry to this state. It is the intent of the

legislature to further this policy by the provisions of this act

and annual appropriations to administer this act and adequately

fund the agriculture and equine industry programs established by

this section.

(2) Money received by the racing commissioner and the state

treasurer under this act shall be paid promptly into the state

treasury and placed in the Michigan agriculture equine industry

development fund created in subsection (3).

(3) The Michigan agriculture equine industry development fund

is created in the department of treasury. The Michigan agriculture

equine industry development fund shall be administered by the

director of the department of agriculture and rural development

with the assistance and advice of the racing commissioner.

(4) Money shall not be expended from the Michigan agriculture

equine industry development fund except as appropriated by the

legislature. Money appropriated by the legislature ~~for~~ from the

Michigan agriculture equine industry development fund shall be

expended by the director of the department of agriculture and rural

development with the advice and assistance of the racing

commissioner to provide funding for agriculture and equine industry

development programs as provided in subsections (5) to (11).

(5) The following amounts shall be paid to standardbred and

fair programs:

(a) A sum not to exceed 75% of the purses for standardbred

harness horse races offered by fairs and races at licensed pari-

mutuel racetracks. Purse supplements paid under this subdivision

for overnight races at fairs for which Michigan sired, Michigan

bred, or Michigan owned harness horses are eligible must be

$1,000.00. However, if the average purse offered for maiden

overnight races of the same breed at any licensed race meeting in

this state during the previous year as calculated by the department

of agriculture and rural development was less than $1,000.00, purse

supplements for overnight races at fairs paid under this

subdivision shall not exceed that average purse.

(b) A sum to be allotted on a matching basis, but not to

exceed $15,000.00 each year to a single fair, for the purpose of

equipment rental during fairs; ground improvement; constructing,

maintaining, and repairing buildings; and making the racetrack more

suitable and safe for racing at fairs.

2-year-old and 3-year-old standardbred harness horses conceived

after January 1, 1992, that is Michigan bred, or that is sired by a

standardbred stallion registered with the department of agriculture

and rural development, that was leased or owned by a resident or

residents of this state, and that did not serve a mare at a

location outside of this state from February 1 through July 31 of

the calendar year in which the conception occurred. A foal that is

born on or after January 1, 2002 of a mare owned by a nonresident

of this state and that is conceived outside of this state from

transported semen of a stallion registered with the department of

agriculture and rural development is eligible for Michigan tax-

supported races only if, in the year that the foal is conceived,

the department of agriculture and rural development's agent for

receiving funds as the holding agent for stakes and futurities is

paid a transport fee as determined by the department of agriculture

and rural development and administered by the Michigan ~~harness~~

~~horsemen's association.~~Harness Horsemen's Association.

(d) A sum to pay not more than 75% of an eligible cash premium

paid by a fair or exposition. The commission of agriculture and

rural development shall promulgate rules establishing which

premiums are eligible for payment and a dollar limit for all

eligible payments.

(e) A sum to pay breeders' awards in an amount not to exceed

10% of the gross purse to breeders of Michigan bred standardbred

harness horses for each time the horse wins a race at a licensed

race meeting or fair in this state. As used in this subdivision,

"Michigan bred standardbred harness horse" means a horse from a

mare owned by a resident or residents of this state at the time of

conception, that was conceived after January 1, 1992, and sired by

a standardbred stallion registered with the department of

agriculture and rural development that was leased or owned by a

resident or residents of this state and that did not serve a mare

at a location outside of this state from February 1 through July 31

of the calendar year in which the conception occurred. To be

eligible, each mare must be registered with the department of

agriculture and rural development. A foal that is born on or after

January 1, 2002 of a mare owned by a nonresident of this state and

that is conceived outside of this state from transported semen of a

stallion registered with the department of agriculture and rural

development is eligible for Michigan tax-supported races only if,

in the year that the foal is conceived, the department of

agriculture and rural development's agent for receiving funds as

the holding agent for stakes and futurities is paid a transport fee

as determined by the department of agriculture and rural

development and administered by the Michigan ~~harness horsemen's~~

~~association.~~Harness Horsemen's Association.

(f) A sum not to exceed $4,000.00 each year to be allotted to

fairs to provide training and stabling facilities for standardbred

harness horses.

(g) A sum to be allotted to pay the presiding judges and

clerks of the course at fairs. Presiding judges and clerks of the

course shall be hired by the fair's administrative body with the

advice and approval of the racing commissioner. The director of the

department of agriculture and rural development may allot funds for

a photo finish system and a mobile starting gate. The director of

the department of agriculture and rural development shall allot

funds for the conducting of tests, the collection and laboratory

analysis of urine, saliva, blood, and other samples from horses,

and the taking of blood alcohol tests on drivers, jockeys, and

starting gate employees, for those races described in this

subdivision. The department may require a driver, jockey, or

starting gate employee to submit to a breathalyzer test, urine

test, or other noninvasive fluid test to detect the presence of

alcohol or a controlled substance. If the results of a test show

that a person has more than .05% of alcohol in his or her blood, or

has present in his or her body a controlled substance, the person

shall not be permitted to continue in his or her duties on that

race day and until he or she can produce, at his or her own

expense, a negative test result.

(h) A sum to pay purse supplements to licensed pari-mutuel

harness race meetings for special 4-year-old filly and colt horse

races.

(i) A sum not to exceed 0.25% of all money wagered on live and

simulcast horse races in this state shall be placed in a special

standardbred sire stakes fund each year, 100% of which shall be

used to provide purses for races run exclusively for 2-year-old and

3-year-old Michigan sired standardbred horses at licensed harness

race meetings in this state. As used in this subdivision, "Michigan

sired standardbred horses" means standardbred horses conceived

after January 1, 1992 and sired by a standardbred stallion

registered with the department of agriculture and rural development

that was leased or owned by a resident or residents of this state

and that did not serve a mare at a location outside of this state

from February 1 through July 31 of the calendar year in which the

conception occurred. A foal that is born on or after January 1,

2002 of a mare owned by a nonresident of this state and that is

conceived outside of this state from transported semen of a

stallion registered with the department of agriculture and rural

development is eligible for Michigan tax-supported races only if,

in the year that the foal is conceived, the department of

agriculture and rural development's agent for receiving funds as

the holding agent for stakes and futurities is paid a transport fee

as determined by the department of agriculture and rural

development and administered by the Michigan ~~harness horsemen's~~

~~association.~~Harness Horsemen's Association.

(6) The following amounts shall be paid to thoroughbred

programs:

(a) A sum to be allotted thoroughbred race meeting licensees

to supplement the purses for races to be conducted exclusively for

Michigan bred horses.

(b) A sum to pay awards to owners of Michigan bred horses that

finish first, second, or third in races open to non-Michigan bred

horses.

10% of the gross purse to the breeders of Michigan bred

thoroughbred horses for each time Michigan bred thoroughbred horses

win at a licensed race meeting in this state.

(d) A sum to pay purse supplements to licensed thoroughbred

race meetings for special 4-year-old and older filly and colt horse

races.

(e) A sum not to exceed 0.25% of all money wagered on live and

simulcast horse races in Michigan shall be placed in a special

thoroughbred sire stakes fund each year, 100% of which shall be

used to provide purses for races run exclusively for 2-year-old and

3-year-old and older Michigan sired thoroughbred horses at licensed

thoroughbred race meetings in this state and awards for owners of

Michigan sired horses or stallions. As used in this subdivision,

"Michigan sired thoroughbred horses" means thoroughbred horses

sired by a stallion registered with the department of agriculture

and rural development that was leased or owned exclusively by a

resident or residents of this state and that did not serve a mare

at a location outside of this state during the calendar year in

which the service occurred.

(7) The following amounts shall be paid for quarter horse

programs:

(a) A sum to supplement the purses for races to be conducted

exclusively for Michigan bred quarter horses.

(b) A sum to pay not more than 75% of the purses for

registered quarter horse races offered by fairs.

10% of a gross purse to breeders of Michigan bred quarter horses

for each time a Michigan bred quarter horse wins at a county fair

or licensed race meeting in this state.

(d) As used in this subsection, "Michigan bred quarter horse"

means that term as defined in R 285.817.1 of the Michigan

Administrative Code. Each mare and stallion shall be registered

with the director of the department of agriculture and rural

development.

(8) The following amounts shall be paid for Appaloosa

programs:

(a) A sum to supplement the purses for races to be conducted

exclusively for Michigan bred Appaloosa horses.

(b) A sum to pay not more than 75% of the purses for

registered Appaloosa horse races offered by fairs.

10% of the gross purse to the breeders of Michigan bred Appaloosa

horses for each time Michigan bred horses win at a fair or licensed

race meeting in this state.

(d) As used in this subsection, "Michigan bred Appaloosa

horse" means that term as defined in R 285.819.1 of the Michigan

Administrative Code. Each mare and stallion shall be registered

with the director of the department of agriculture and rural

development.

(9) The following amounts shall be paid for Arabian programs:

(a) A sum to supplement the purses for races to be conducted

exclusively for Michigan bred Arabian horses.

(b) A sum to pay not more than 75% of the purses for

registered Arabian horse races offered by fairs.

10% of the gross purse to the breeders of Michigan bred Arabian

horses for each time Michigan bred horses win at a fair or licensed

racetrack in this state.

(d) As used in this subsection, "Michigan bred Arabian horse"

means a Michigan-bred horse as that term is defined in R

285.822.1(i) of the Michigan Administrative Code. Each mare and

stallion shall be registered with the director of the department of

agriculture and rural development.

(10) The following sums shall be paid for American paint horse

programs:

(a) A sum to supplement the purses for races to be conducted

exclusively for Michigan bred American paint horses.

(b) A sum to pay not more than 75% of the purses for

registered American paint horse races offered by fairs.

10% of the gross purse to the breeders of Michigan bred American

paint horses for each time a Michigan bred American paint horse

wins at a county fair or licensed race meeting in this state.

(d) As used in this subsection, "Michigan bred American paint

horse" means a Michigan-bred paint horse as that term is defined in

R 285.823.1 of the Michigan Administrative Code.

(11) The following amounts shall be paid for the equine

industry research, planning, and development grant fund program:

(a) A sum to fund grants for research projects conducted by

persons affiliated with a university or governmental research

agency or institution or other private research entity approved by

the racing commissioner, which are beneficial to the horse racing

and breeding industry in this state.

(b) A sum to fund the development, implementation, and

administration of new programs that promote the proper growth and

development of the horse racing and breeding industry in this state

and other valuable equine-related commercial and recreational

activities in this state.

(12) As used in subsection (11), "equine industry research"

means the study, discovery and generation of accurate and reliable

information, findings, conclusions, and recommendations that are

useful or beneficial to the horse racing and breeding industry in

this state through improvement of the health of horses; prevention

of equine illness and disease, and performance-related accidents

and injuries; improvement of breeding technique and racing

performance; and compilation and study of valuable and reliable

statistical data regarding the size, organization, and economics of

the industry in this state; and strategic planning for the

effective promotion, growth, and development of the industry in

this state.

(13) An amount shall be allotted annually to the racing

commissioner that is sufficient to pay for the collection and

laboratory analysis of urine, saliva, blood, and other samples from

House Bill No. 4611 as amended May 23, 2017

horses and licensed individuals involved in horse racing on which

pari-mutuel wagers are made and for the conducting of tests

described in section 16(4).

(14) Money appropriated and allotted to the Michigan

agriculture equine industry development fund shall not revert to

the general fund and shall be carried forward from year to year

until disbursed to fund grants for research projects beneficial to

the industry.

(15) A percentage of the Michigan agriculture equine industry

development fund that is equal to [~~1/100~~1/15] of 1% of the gross

wagers

made each year in each of the racetracks licensed under this act

shall be deposited in the compulsive gaming prevention fund created

in section 3 of the compulsive gaming prevention act, 1997 PA 70,

MCL 432.253.

(16) The director of the department of agriculture and rural

development shall promulgate rules pursuant to the administrative

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, to

implement this section. The rules promulgated under this subsection

shall do all of the following:

(a) Prescribe the conditions under which the Michigan

agriculture equine industry development fund and related programs

described in subsections (1) to (14) shall be funded.

(b) Establish conditions and penalties regarding the programs

described in subsections (5) to (12).

this section.

(17) Funds under the control of the department of agriculture

and rural development in this section shall be disbursed under the

rules promulgated pursuant to subsection (16). All funds under the

control of the department of agriculture and rural development

approved for purse supplements and breeders' awards shall be paid

by the state treasurer not later than 45 days from the date of the

race.

Sec. 22. (1) A licensed racetrack shall pay a license fee to

the racing commissioner of $1,000.00 annually.

(2) Each holder of a race meeting license shall pay to the

state treasurer, from the holder's commission, including any wagers

received by licensed third party facilitators operating pursuant to

this act, a tax in the amount of 3.5% of money wagered on

interstate and intertrack simulcast races conducted at the holder's

licensed race meetings.

(3) By eliminating the pari-mutuel wagering tax on live racing

programs and altering the calculation of the tax on simulcast horse

racing, it is not the intent of the legislature to diminish the

funding and appropriations for the Michigan agriculture equine

industry development fund and related programs described in section

20. The pari-mutuel tax alteration effected by this section is

intended to generally allow for the improvement of the pari-mutuel

horse racing and breeding industry in this state by increasing

purses at licensed race meetings and making additional pari-mutuel

revenues available for capital improvements at licensed racetracks

in this state.