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Texas Racing Commission

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Texas Racing Act

Article 6. Racetrack Licenses

Sec. 6.01. License Required.
A person may not conduct wagering on a greyhound race or a horse race meeting without first obtaining a racetrack license from the commission. A person who violates this section commits an offense.

Sec. 6.02. Classification of Horse-Racing Tracks.
  (a) Horse-racing tracks are classified as class 1 racetracks, class 2 racetracks, class 3 racetracks, and class 4 racetracks.
  (b) A class 1 racetrack is a racetrack on which live racing is conducted for a number of days in a calendar year, the number of days and the actual dates to be determined by the commission under Article 8 of this Act. A class 1 racetrack may operate only in a county with a population of not less than 1.3 million, according to the most recent federal census, or in a county adjacent to a county with such a population. Not more than three class 1 racetracks may be licensed and operated in this state.
  (c) A class 2 racetrack is a racetrack on which live racing is conducted for a number of days to be determined by the commission under Article 8 of this Act. A class 2 racetrack is entitled to conduct 60 days of live racing in a calendar year. An association may request additional or fewer days of live racing. If after receipt of a request from an association the commission determines additional or fewer days to be economically feasible and in the best interest of the state and the racing industry, the commission shall grant the additional or fewer days. The commission may permit an association that hold a class 2 racetrack license and that is located in a national historic district to conduct horse races for more than 60 days in a calendar year.
  (d) A class 3 racetrack is a racetrack operated by a county or a nonprofit fair under Article 12 of this Act. An association that holds a class 3 racetrack license and that conducted horse races in 1986 may conduct live races for a number of days not to exceed 16 days in a calendar year on the dates selected by the association.
  (e) For purposes of this section live race dates are counted separately from the dates on which the association presents simulcast races.
  (f) The number of race dates allowed under this section relates only to live race dates. A racetrack may present simulcast races on other dates as approved by the commission.
  (g) A class 4 racetrack is a racetrack operated by a county fair under Section 12.03 of this Act. An association that holds a class 4 racetrack license may conduct live races for a number of days not to exceed five days in a calendar year on dates selected by the association and approved by the commission.

Sec. 6.03. Application.
  (a) The commission shall require each applicant for an original racetrack license to pay the required application fee and to submit an application, on a form prescribed by the commission, containing the following information:
(1) if the applicant is an individual, the full name of the applicant, the applicant's date of birth, a physical description of the applicant, the applicant's current address and telephone number, and a statement by the applicant disclosing any arrest or conviction for a felony or for a misdemeanor, except a misdemeanor under the Uniform Act Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil Statutes) or a similar misdemeanor traffic offense;
(2) if the applicant is a corporation:
(A) the state in which it is incorporated, the names and addresses of the corporation's agents for service of process in this state, the names and addresses of its officers and directors, the names and addresses of its stockholders, and, for each individual named under this subdivision, the individual's date of birth, current address and telephone number, and physical description, and a statement disclosing any arrest or conviction for a felony or for a misdemeanor, except a misdemeanor under the Uniform Act Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil Statutes) or a similar misdemeanor traffic offense; and
(B) identification of any other beneficial owner of shares in the applicant that bear voting rights, absolute or contingent, any other person that directly or indirectly exercises any participation in the applicant, and any other ownership interest in the applicant that the applicant making its best effort is able to identify;
(3) if the applicant is an unincorporated business association:
(A) the names and addresses of each of its members and, for each individual named under this subdivision, the individual's date of birth, current address and telephone number, and physical description, and a statement disclosing any arrest or conviction for a felony or for a misdemeanor, except a misdemeanor under the Uniform Act Regulating Traffic on Highways (Article 6701d, Vernon's Texas Civil Statutes) or a similar misdemeanor traffic offense; and
(B) identification of any other person that exercises voting rights in the applicant or that directly or indirectly exercises any participation in the applicant and any other ownership interest in the applicant that the applicant making its best effort is able to identify;
(4) the exact location at which a race meeting is to be conducted;
(5) if the racing facility is in existence, whether it is owned by the applicant and, if leased to the applicant, the name and address of the owner and, if the owner is a corporation or unincorporated business association, the names and addresses of its officers and directors, its stockholders and members, if any, and its agents for service of process in this state;
(6) if construction of the racing facility has not been initiated, whether it is to be owned by the applicant and, if it is to be leased to the applicant, the name and address of the prospective owner and, if the owner is a corporation or unincorporated business association, the names and addresses of its officers and directors, the names and addresses of its stockholders, the names and addresses of its members, if any, and the names and addresses of its agents for service of process in this state;
(7) identification of any other beneficial owner of shares that bear voting rights, absolute or contingent, in the owner or prospective owner of the racing facility, or any other person that directly or indirectly exercises any participation in the owner or prospective owner and all other ownership interest in the owner or prospective owner that the applicant making its best effort is able to identify;
(8) a detailed statement of the assets and liabilities of the applicant;
(9) the kind of racing to be conducted and the dates requested;
(10) proof of residency as required by Section 6.06 of this Act;
(11) a copy of each management, concession, and totalisator contract dealing with the proposed license at the proposed location in which the applicant has an interest for inspection and review by the commission; the applicant or licensee shall advise the commission of any change in any management, concession, or totalisator contract; all management, concession, and totalisator contracts must have prior approval of the commission; the same fingerprint, criminal records history, and other information required of license applicants pursuant to Sections 5.03 and 5.04 and Subdivisions (1) through (3) of this subsection shall be required of proposed totalisator firms, concessionaires, and managers and management firms; and
(12) any other information required by the commission.
  (b) When the commission receives a plan for the security of a racetrack facility, or a copy of a management, concession, or totalisator contract for review under Subdivision (11) of Subsection (a) of this section, the commission shall review the contract or security plan in an executive session. Documents submitted to the commission under this section by an applicant are subject to discovery in a suit brought under this Act but are not public records and are not subject to Chapter 424, Acts of the 63rd Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes). In reviewing and approving contracts under this subsection, the commission shall attempt to ensure the involvement of minority owned businesses whenever possible.
  (c) The applicant must be sworn to by the applicant or, if a corporation or association, by its chief executive officer.
  (d) The application for an original racetrack license must be accompanied by an application fee in the form of a cashier's check or certified check.
  (e) The minimum application fee for a horse racing track is $15,000 for a class 1 racetrack, $7,500 for a class 2 racetrack, $2,500 for a class 3 racetrack, and $1,500 for a class 4 racetrack. The minimum application fee for a greyhound racing track is $20,000. Using the minimum fees, the commission by rule shall establish a schedule of application fees for the various types and sizes of racing facilities. The commission shall set the application fees in amounts that are reasonable and necessary to cover the costs of administering this Act.
  (f) If the applicant is a nonprofit corporation, only directors and officers of the corporation must disclose the information required under Subdivision (2) of Subsection (a) of this section.
  (g) The burden of proof is on the applicant to show compliance with this Act and with the rules of the commission. An applicant who does not show the necessary compliance is not eligible for a license under this article.
  (h) In considering an application for a horse racetrack license under this section, the commission shall give additional weight to evidence concerning an applicant who has experience operating a horse racetrack licensed under this Act.
  (i) Notwithstanding this section, if a licensed track petitions for an upgrade in the classification of the track, the fees and charges imposed shall be the difference between the fees and charges previously paid and the fees and charges for the upgraded facility classification.

Sec. 6.031. Background Check.
The commission shall require a complete personal, financial, and business background check of the applicant or any person owning an interest in or exercising control over an applicant for a racetrack license, the partners, stockholders, concessionaires, management personnel, management firms, and creditors and shall refuse to issue or renew a license or approve a concession or management contract if, in the sole discretion of the commission, the background checks reveal anything which might be detrimental to the public interest or the racing industry. The commission may not hold a hearing on the application, or any part of the application, of an applicant for a racetrack license before the completed background check of the applicant has been on file with the commission for at least 14 days.

Sec. 6.032. Bond.
  (a) The commission at any time may require a holder of a racetrack license or an applicant for a racetrack license to post security in an amount reasonably necessary, as provided by commission rule, to adequately ensure the license holder's or applicant's compliance with substantive requirements of this Act and commission rules.
  (b) Cash, cashier's checks, surety bonds, irrevocable bank letters of credit, United States Treasury bonds that are readily convertible to cash, or irrevocable assignments of federally insured deposits in banks, savings and loan institutions, and credit unions are acceptable as security for purposes of this section. The security must be:
(1) conditioned on compliance with this Act and commission rules adopted under this Act; and
(2) returned after the conditions of the security are met.

Sec. 6.04. Issuance of License.
  (a) The commission may issue a racetrack license to a qualified person if it finds that the conduct of race meetings at the proposed track and location will be in the public interest, complies with all zoning laws, and complies with this Act and the rules adopted by the commission and if the commission finds by clear and convincing evidence that the applicant will comply with all criminal laws of this state. In determining whether to grant or deny an application for any class of racetrack license, the commission may consider the following factors:
(1) the applicant's financial stability;
(2) the applicant's resources for supplementing the purses for races for various breeds;
(3) the location of the proposed track;
(4) the effect of the proposed track on traffic flow;
(5) facilities for patrons and occupational licensees;
(6) facilities for race animals;
(7) availability to the track of support services and emergency services;
(8) the experience of the applicant's employees;
(9) the potential for conflict with other licensed race meetings;
(10) the anticipated effect of the race meeting on the greyhound or horse breeding industry in this state; and
(11) the anticipated effect of the race meeting on the state and local economy from tourism, increased employment, and other sources.
  (a-1) When all of the requirements of licensure for the applicant described in this article have been satisfied, the commission shall notify the applicant that the application is complete.
  (a-2) The commission shall make a determination with respect to a pending application not later than the 120th day after the date on which the commission provided to the applicant the notice required under Subsection (a-1) of this section.
  (b) Repealed by Acts 2011, 82nd Legislature, HB 2271, Section 26, eff. Sept. 1, 2011.
  (c) The commission shall not issue licenses for more than three greyhound racetracks in this state. Those racetracks must be located in counties that border the Gulf of Mexico.
  (d) In considering an application for a class 4 racetrack license, the commission may waive or defer compliance with the commission's standards regarding the physical facilities or operations of a horse racetrack. The commission may not waive or defer compliance with standards that relate to the testing of horses or licensees for the presence of a prohibited drug, chemical, or other substance. If the commission defers compliance, the commission shall, when granting the application, establish a schedule under which the licensee must comply with the standards.

Sec. 6.05.
Repealed by Acts 1991, 72nd Leg., Ch. 386, §74(a), eff. Aug. 26, 1991.

Sec. 6.06. Racetrack Licenses; Grounds for Denial, Revocation, and Suspension.
  (a) To preserve and protect the public health, welfare, and safety, the commission shall adopt rules relating to license applications, the financial responsibility, moral character, and ability of applicants, and all matters relating to the planning, construction, and operation of racetracks. The commission may refuse to issue a racetrack license or may revoke or suspend a license if, after notice and hearing, it has reasonable grounds to believe and finds that:
(1) the applicant has been convicted in a court of competent jurisdiction of a violation of this Act or any rules adopted by the commission or that the applicant has aided, abetted, or conspired with any person to commit such a violation;
(2) the applicant has been convicted of a felony or of any crime involving moral turpitude, including convictions for which the punishment received was a suspended sentence, probation, or a nonadjudicated conviction, that is reasonably related to the applicant's present fitness to hold a license under this Act;
(3) the applicant has violated or has caused to be violated this Act or a rule of the commission in a manner that involves moral turpitude, as distinguished from a technical violation of this Act or of a rule;
(4) the applicant is unqualified, by experience or otherwise, to perform the duties required of a licensee under this Act;
(5) the applicant failed to answer or falsely or incorrectly answered a question in an application;
(6) the applicant fails to disclose the true ownership or interest in a greyhound or horse as required by the rules of the commission;
(7) the applicant is indebted to the state for any fees or for the payment of a penalty imposed by this Act or by a rule of the commission;
(8) the applicant is not of good moral character or the applicant's reputation as a peaceable, law-abiding citizen in the community where the applicant resides is bad;
(9) the applicant has not yet attained the minimum age necessary to purchase alcoholic beverages in this state;
(10) the applicant is in the habit of using alcoholic beverages to an excess or uses a controlled substance as defined in Chapter 481, Health and Safety Code, or a dangerous drug as defined in Chapter 483, Health and Safety Code, or is mentally incapacitated;
(11) the applicant may be excluded from a track enclosure under this Act;
(12) the applicant has not been a United States citizen residing in this state for the period of 10 consecutive years immediately preceding the filing of the application;
(13) the applicant has improperly used a license certificate, credential, or identification card issued under this Act;
(14) the applicant is residentially domiciled with a person whose license has been revoked for cause within the 12 months immediately preceding the date of the present application;
(15) the applicant has failed or refused to furnish a true copy of the application to the commission's district office in the district in which the premises for which the permit is sought are located;
(16) the applicant is engaged or has engaged in activities or practices that the commission finds are detrimental to the best interests of the public and the sport of greyhound racing or horse racing; or
(17)  the applicant fails to fully disclose the true owners of all interests, beneficial or otherwise, in a proposed racetrack facility.
  (b) Subsection (a) of this section applies to a corporation, partnership, limited partnership, or any other organization or group whose application is comprised of more than one person if a shareholder, partner, limited partner, director, or officer is disqualified under Subsection (a) of this section.
  (c) A license for operation of a class 1 or class 2 racetrack or a greyhound racetrack may not be issued to a corporation unless the corporation is incorporated under the laws of this state and a majority of the stock, if any, of the corporation is owned at all times by individuals who meet the residency qualifications prescribed by this section for individual applicants.
  (d) The majority ownership of a partnership, firm, or association applying for or holding a license must be held by citizens who meet the residency qualifications enumerated in this section for individual applicants. A corporation holding a license to operate a racetrack under this Act that violates this subsection is subject to forfeiture of its charter, and the attorney general, on receipt of information relating to such a violation, shall file suit in a district court of Travis County for cancellation of the charter and revocation of the license issued under this Act. Subterfuge in the ownership and operation of a racetrack shall be prevented, and this Act shall be liberally construed to carry out this intent.
  (e) The commission may condition the issuance of a license under this article on the observance of its rules. The commission may amend the rules at any time and may condition the continued holding of the license on compliance with the rules as amended.
  (f) The commission may refuse to issue a license or may suspend or revoke a license of a licensee under this article who knowingly or intentionally allows access to an enclosure where greyhound races or horse races are conducted to a person who has engaged in bookmaking, touting, or illegal wagering, whose income is from illegal activities or enterprises, or who has been convicted of a violation of this Act.
  (g) A person awarded a management contract to operate a racetrack must meet all of the requirements of this section.
  (h) A person may not own more than a five percent interest in more than three racetracks licensed under this Act.
  (i) Subsections (a)(12), (c), and (d) of this section do not apply to an applicant for or the holder of a racetrack license if the applicant, the license holder, or the license holder's parent company is a publicly traded company.
  (j) Notwithstanding any other law, a person who owns an interest in two or more racetracks licensed under this Act and who also owns an interest in a license issued under Subtitle B, Title 3, Alcoholic Beverage Code, may own an interest in the premises of another holder of a license or permit under Title 3, Alcoholic Beverage Code, if the premises of that other license or permit holder are part of the premises of a racetrack licensed under this Act.
  (k) The commission shall review the ownership and managment of an active license issued under this article every five years beginning on the fifth anniversary of the issuance of the license. In performing the review, the commission may require the license holder to provide any information that would be required to be provided in connection with an orginal license application under Article 5 of this Act or this article. The commission shall charge fees for the review in amounts sufficient to implement this subsection.

Sec. 6.0601. Designation Of Active And Inactive Racetrack Licenses
  (a) The commission shall designate each racetrack license as an active license or an inactive license. The commission may change the designation of a racetrack license as appropriate.
  (b) The commission shall designate a racetrack license as an active license if the license holder:
(1) holds live racing events at the racetrack; or
(2) makes good faith efforts to conduct live racing.
  (c) The commission by rule shall provide guidance on what actions constitute, for purposes of this Act, good faith efforts to conduct live racing.
  (d) Before the first anniversary of the date a new racetrack license is issued, the commission shall conduct an evaluation of the license to determine whether the license is an active or inactive license.
  (e) An active license is effective until the license is designated as an inactive license or is surrendered, suspended, or revoked under this Act.

Sec. 6.0602. Renewal of Inactive Racetrack License; Fees
  (a) The commission by rule shall establish an annual renewal process for inactive licenses and may require the license holder to provide any information required for an original license application under this Act. An inactive license holder must complete the annual renewal process established under this section until the commission:
(1) designates the license as an active license; or
(2) refuses to renew the license.
  (b) In determining whether to renew an inactive license, the commission shall consider:
(1) the inactive license holder's:
(A) financial stability;
(B) ability to conduct live racing;
(C) ability to construct and maintain a racetrack facility; and
(D) other good faith efforts to conduct live racing; and
(2) other necessary factors considered in the issuance of the original license.
  (c) The commission may refuse to renew an inactive license if, after notice and a hearing, the commission determines that:
(1) renewal of the license is not in the best interests of the racing industry or the public; or
(2) the license holder has failed to make a good faith effort to conduct live racing.
  (d) The commission shall consult with members of the racing industry and other key stakeholders in developing the license renewal process under this section.
  (e) The commission shall set and collect renewal fees in amounts reasonable and necessary to cover the costs of administering and enforcing this section.
  (f) The commission by rule shall establish criteria to make the determinations under Subsections (c)(1) and (2).

Sec. 6.0603. Disciplinary Action
  (a) The commission by rule shall establish procedures for disciplinary action against a racetrack license holder.
  (b) If, after notice and hearing, the commission finds that a racetrack license holder or a person employed by the racetrack has violated this Act or a commission rule or if the commission finds during a review or renewal that the racetrack is ineligible for a license under this article, the commission may:
(1) revoke, suspend, or refuse to renew the racetrack license;
(2) impose an administrative penalty as provided under Section 15.03 of this Act; or
(3) take any other action as provided by commission rule.
  (c) The commission may not revoke an active license unless the commission reasonably determines that other disciplinary actions are inadequate to remedy the violation.

Sec. 6.061. Regulation of Inappropriate or Unsafe Conditions.
  (a) The commission shall adopt rules implementing this section, including rules:
(1) requiring the report of and correction of:
(A) an inappropriate condition on the premises of a racetrack facility, including a failure to properly maintain the facility, that interferes with the administration of this Act; or
(B) a condition on the premises of a racetrack facility that makes the facility unsafe for a race participant, patron, or animal; and
(2) determining the methods and manner in which the executive secretary may determine and remedy inappropriate conditions or unsafe facilities on the premises of a racetrack facility, including the methods and manner in which the executive secretary may conduct inspections of the racetrack facility and remedy emergency situations.
  (b) The executive secretary shall issue a notice of violation to a racetrack facility on a finding that an inappropriate or unsafe condition exists.
  (c) If the executive secretary determines that an inappropriate or unsafe condition exists at the racetrack facility, the executive secretary shall order the racetrack facility to take action within a specified period to remedy the inappropriate condition or unsafe condition. In determining the period for compliance, the executive secretary shall consider the nature and severity of the problem and the threat to the health, safety, and welfare of the race participants, patrons, or animals.
  (d) The commission shall adopt rules requiring the reporting of any corrective action taken by a racetrack facility in response to an order of the executive secretary under Subsection (c) of this section.
  (e) If a racetrack facility fails to take any action as required under Subsection (c) of this section, the executive secretary shall initiate an enforcement action against the racetrack facility. The executive secretary may rescind any live or simulcast race date of any racetrack association that does not take corrective action within the period set by the executive secretary.
  (f) The commission shall adopt rules relating to the commission's review of an action taken under this section by the executive secretary. A review procedure adopted under this subsection must be consistent with Chapter 2001, Government Code.

Sec. 6.062. Supervision of Changes to Premises.
  (a) The commission shall adopt a method of supervising and approving the construction, renovation, or maintenance of any building or improvement on the premises of a racetrack facility.
  (b) The commission shall adopt rules relating to:
(1) the approval of plans and specifications;
(2) the contents of plans and specifications;
(3) the maintenance of records to ensure compliance with approved plans and specifications;
(4) the content and filing of construction progress reports by the racetrack facility to the commission;
(5) the inspection by the commission or others;
(6) the method for making a change or amendment to an approved plan or specification; and
(7) any other method of supervision or oversight necessary.
  (c) If the commission has grounds to believe that an association has failed to comply with the requirements of this section, a representative of the association shall appear before the commission to consider the issue of compliance with the rules adopted under this section.
  (d) Before a building or improvement may be used by the association, the commission shall determine whether the construction, renovation, or maintenance of the building or improvement was completed in accordance with the approved plans and specifications and whether other requirements of the commission were met.
  (e) If the commission determines that the association failed to comply with a requirement of this section or rule adopted under this section, the commission shall initiate an enforcement action against the association. In addition to any other authorized enforcement action, the commission may rescind any live or simulcast race date of any association that has failed to comply with the requirement of this section.

Sec. 6.063. Summary Suspension.
  (a) The commission may summarily suspend a racetrack license if the commission determines that a racetrack at which races or pari-mutuel wagering are conducted under the license is being operated in a manner that constitutes an immediate threat to the health, safety, or welfare of the participants in racing or the patrons.
  (b) After issuing a summary suspension order, the executive secretary shall serve on the association by personal delivery or registered or certified mail, return receipt requested, to the licensee's last known address, an order stating the specific charges and requiring the licensee immediately to cease and desist from all conduct permitted by the license. The order must contain a notice that a request for hearing may be filed under this section.
  (c) An association that is the subject of a summary suspension order may request a hearing. The request must be filed with the executive secretary not later than the 10th day after the date the order was received or delivered. A request for a hearing must be in writing and directed to the executive secretary and must state the grounds for the request to set aside or modify the order. Unless a licensee who is the subject of the order requests a hearing in writing before the 11th day after the date the order is received or delivered, the order is final and nonappealable as to that licensee.
  (d) On receiving a request for a hearing, the executive secretary shall serve notice of the time and place of the hearing by personal delivery or registered or certified mail, return receipt requested. The hearing must be held not later than the 10th day after the date the executive secretary receives the request for a hearing unless the parties agree to a later hearing date. At the hearing, the commission has the burden of proof and must present evidence in support of the order. The licensee requesting the hearing may cross examine witnesses and show cause why the order should not be affirmed. Section 2003.021(b), Government Code, does not apply to hearings conducted under this section.
  (e) A summary suspension order continues in effect unless the order is stayed by the executive secretary. The executive secretary may impose any condition before granting a stay of the order.
  (f) After the hearing, the executive secretary shall affirm, modify, or set aside in whole or part the summary suspension order. An order affirming or modifying the summary suspension order is final for purposes of enforcement and appeal.

Sec. 6.07. Lease.
  (a) The commission may adopt rules to authorize an association, as lessee, to contract for the lease of a racetrack and the surrounding structures.
  (b) The commission may not approve a lease if:
(1) it appears that the lease is a subterfuge to evade compliance with Section 6.05 or 6.06 of this Act;
(2) the racetrack and surrounding structures do not conform to the rules adopted under this Act; or
(3) the lessee, prospective lessee, or lessor is disqualified from holding a racetrack license.
  (c) Each lessor and lessee under this section must comply with the disclosure requirements of Subdivision (1) of Subsection (a) of Section 6.03 of this Act. The commission may not approve a lease if the lessor and lessee do not provide the required information.

Sec. 6.08. Special Provisions Relating to Horse Racing: Deductions from Pool; Allocations of Shares and Breakage.
  (a) An amount shall be deducted from each wagering pool to be distributed as provided by Subsections (b) through (e) of this section. The total maximum deduction from a regular wagering pool is 18 percent. The total maximum deduction from a multiple two wagering pool is 21 percent. The total maximum deduction from a multiple three wagering pool is 25 percent.
  (b) (1) A horse racing association shall set aside for purses an amount not less than seven percent of a live regular wagering pool or live multiple two wagering pool and not less than 8.5 percent of a live multiple three wagering pool.
(2) A horse racing association, after January 1, 1999, shall set aside from simulcast pools for purses not less than the following amounts from the takeout of the sending racetrack:
(A) 38.8 percent of the regular wagering pool;
(B) 33.3 percent of the multiple two wagering pool; and
(C) 34 percent of the multiple three wagering pool. If the cost of the simulcast signal exceeds five percent of the simulcast handle, the receiving horse racing association shall split the cost of the signal in excess of five percent evenly with the horsemen's organization by allocating the cost against the purse money derived from that simulcast signal.
(3) The horse racing association shall transfer the amount set aside for purses from any live and simulcast pools and shall deposit the amounts in purse accounts maintained by breed by the horsemen's organization in one or more federally insured depositories. Legal title to purse accounts is vested in the horsemen's organization. The horsemen's organization may contract with an association to manage and control the purse accounts and to make disbursements from the purse accounts:
(A) to an owner whose horse won a purse;
(B) to the horsemen's organization for its expenses; or
(C) for other disbursements as provided by contract between the horsemen's organization and the association.
(4) An association, after January 1, 1999, may pay a portion of the revenue set aside under this subsection to an organization recognized under Section 3.13 of this Act, as provided by a contract approved by the commission.
  (c) Repealed by Acts 1997, 75th Legislature, Ch. 1275, §54, eff. September 1, 1997.
  (d) A horse racing association shall set aside for the Texas-bred program as provided by Subsection (f) of this section an amount equal to one percent of a live multiple two wagering pool and a live multiple three wagering pool.
  (e) The remainder of the amount deducted under Subsection (a) of this section from a regular wagering pool, a multiple two wagering pool, or a multiple three wagering pool, after allocation of the amounts specified in Subsections (b), (c), and (d) of this section, shall be retained by the association as its commission.
  (f) The amount of a multiple two wagering pool or a multiple three wagering pool set aside under Subsection (d) of this section for the Texas-bred program is in addition to any money received from the breakage. Of the amount set aside under Subsection (d) of this section, two percent shall be set aside for deposit in the equine research account under Subchapter F, Chapter 88, Education Code, and, of the remaining 98 percent, 10 percent may be used by the appropriate breed registry for administration and the remaining 90 percent shall be used for awards.
  (g) The commission shall adopt rules relating to the accounting, audit, and distribution of all amounts set aside for the Texas-bred program under this section.
  (h) Two percent of the breakage shall be allocated to the equine research account under Subchapter F, Chapter 88, Education Code. The remaining 98 percent of the breakage shall constitute "total breakage" and shall be allocated pursuant to Subsections (i) and (j) of this section.
  (i) Ten percent of the total breakage from a live pari-mutuel pool or a simulcast pari-mutuel pool is to be paid to the commission for use by the appropriate state horse breed registry, subject to rules promulgated by the commission. The appropriate breed registry for Thoroughbred horses is the Texas Thoroughbred Breeders Association, for quarter horses is the Texas Quarter Horse Association, for Appaloosa horses is the Texas Appaloosa Horse Club, for Arabian horses is the Texas Arabian Breeders Association, and for paint horses is the Texas Paint Horse Breeders Association.
  (j) Ten percent of the total breakage from a live pari-mutuel pool or a simulcast pari-mutuel pool is to be retained by the association to be used in stakes races restricted to accredited Texas-bred horses. The appropriate state horse breed registry shall pay out the remaining 80 percent of the total breakage as follows:
(1) 40 percent of the remaining breakage is allocated to the owners of the accredited Texas-bred horses that finish first, second, or third;
(2) 40 percent is allocated to the breeders of the accredited Texas-bred horses that finish first, second, or third; and
(3) 20 percent is allocated to the owner of the stallion standing in this state at the time of conception whose Texas-bred get finish first, second, or third.
  (k) For purposes of this section:
(1) "Horse owner" means a person who is owner of record of an accredited Texas-bred horse at the time of a race;
(2) "Breeder" means a person who, according to the rules of the appropriate state horse breed registry, is the breeder of the accredited Texas-bred horse; and
(3) "Stallion owner" means a person who is owner of record, at the time of conception, of the stallion that sired the accredited Texas-bred horse.
  (l) An association may not make a deduction or withhold any percentage of a purse from the account into which the purse paid to a horse owner is deposited for membership payments, dues, assessments, or any other payments to an organization except an organization of the horse owner's choice.
  (m) If a share of the breakage cannot be distributed to the person who is entitled to a share, the appropriate breed registry shall retain that share.
  (n) An accredited Texas-bred Thoroughbred or Arabian horse described by Section 1.03(21)(C) of this Act is eligible for only one-half of the incentives awarded under Subsections (f) and (j)(2) of this section. The remaining portion shall be retained by the appropriate state horse breed registry for general distribution at the the same meeting in accordance with Subsections (f) and (j) of this section.

Sec. 6.09. Disposition of Pari-mutuel Pools at Greyhound Races.
  (a) Every association authorized under this Act to conduct pari-mutuel wagering at a greyhound race meeting on races run shall distribute all sums deposited in any pari-mutuel pool to the holders of the winning tickets if those tickets are presented for payment within 60 days after the closing day of the race meeting at which the pool was formed, less an amount paid as a commission of 18 percent of the total deposits in pools resulting from regular win, place, and show wagering, and an amount not to exceed 21 percent of the total deposits in pools resulting from multiple two wagering and an amount not to exceed 25 percent of the total deposits in pools resulting from multiple three wagering.
  (b) Repealed by Acts 1997, 75th Legislature, Ch. 1275, §54, eff. September 1, 1997.
  (c) On each racing day, the association shall pay the fee due the state to the comptroller.
  (d) Fifty percent of the breakage is to be paid to the appropriate state greyhound breeding registry. Of that portion of the breakage 25 percent of that breakage is to be used in stakes races and 25 percent of that total breakage from a live pari-mutuel pool or a simulcast pari-mutuel pool is to be paid to the commission for the use by the state greyhound breed registry, subject to rules promulgated by the commission.
  (e) The deductions and allocations made pursuant to this section are applicable to live pari-mutuel pools.
  (f) The commission in adopting rules relating to money paid to the commission for use by the state greyhound breed registry under Subsection (d) of this section shall require the award of a grant in an amount equal to two percent of the amount paid to the commission for use by the state greyhound breed registry to a person for the rehabilitation of greyhounds or to locate homes for greyhounds.

Sec. 6.091. Distribution of Deductions from Simulcast Pari-mutuel Pool.
  (a) An association shall distribute from the total amount deducted as provided by Sections 6.08(a) and 6.09(a) of this Act from each simulcast pari-mutuel pool and each simulcast cross-species pool the following shares:
(1) an amount equal to one percent of each simulcast pool as the amount set aside for the state;
(2) an amount equal to 1.25 percent of each simulcast cross-species pool as the amount set aside for the state;
(3) if the association is a horse racing association, an amount equal to one percent of a multiple two wagering pool or multiple three wagering pool as the amount set aside for the Texas-bred program to be used as provided by Section 6.08(f) of this Act;
(4) if the association is a greyhound association, an amount equal to one percent of a multiple two wagering pool or a multiple three wagering pool as the amount set aside for the Texas-bred program for greyhound races, to be distributed and used in accordance with rules of the commission adopted to promote greyhound breeding in this state; and
(5) the remainder as the amount set aside for purses, expenses, the sending association, and the receiving location pursuant to a contract approved by the commission between the sending association and the receiving location.
  (b) Section 6.09(b)(1) of this Act does not apply to amounts deducted from a simulcast pari-mutuel pool in a greyhound race.
  (c) A greyhound racetrack association that receives an interstate cross-species simulcast signal shall distribute the following amounts from the total amount deducted as provided by Subsection (a) of this section from each pool wagered on the signal at the facility:
(1) a fee of 1.5 percent to be paid to the racetrack facility in this state sending the signal;
(2) a purse in the amount of 0.75 percent to be paid to the official state breed registry for thoroughbred horses for use as purses at racetracks in this state;
(3) a purse in the amount of 0.75 percent to be paid to the official state breed registry for quarter horses for use as purses at racetracks in this state; and
(4) a purse of 4.5 percent to be escrowed with the commission for purses in the manner set forth in Subsection (e) of this section.
  (d) A horse racetrack association receiving an interstate cross-species simulcast signal shall distribute the following amounts from the total amount deducted as provided by Subsection (a) of this section from each pool wagered on the signal at the facility:
(1) a fee of 1.5 percent to be paid to the racetrack facility in this state sending the signal; and
(2) a purse in the amount of 5.5 percent to be paid to the official state breed registry for greyhounds for use at racetracks in this state. The breed registry may use not more than 20 percent of this amount to administer this subdivision.
  (e) The purse set aside under Subsection (c)(4) of this section shall be deposited into an escrow account in the registry of the commission. Any horse racetrack association in this state may apply to the commission for receipt of all or part of the escrowed purse account for use as purses. The commission shall determine to which horse racetracks the escrowed purse account shall be allocated and in what percentages, taking into consideration purse levels, racing opportunities, and the financial status of the requesting racetrack. The first distribution of the escrowed purse account allocated to a racetrack under this section may not be made before October 1, 1998.
  (f) After October 15, 1998, a horse racetrack association that is located not more than 75 miles from a greyhound racetrack facility that offers wagering on a cross-species simulcast signal may apply to the commission for an additional allocation of up to 20 percent of the funds in the escrowed purse account that is attributable to the wagering on a cross-species simulcast signal at the greyhound racetrack facility, if the horse racetrack facility sends the cross-species simulcast signal to the greyhound racetrack. If the applying horse racetrack can prove to the commission's satisfaction that a decrease in the racetrack's handle has occurred that is directly due to wagering on an interstate cross-species simulcast signal at a greyhound racetrack facility that is located not more than 75 miles from the applying racetrack, the commission shall allocate the amounts from the escrowed purse account as the commission considers appropriate to compensate the racetrack for the decrease, but the amount allocated may not exceed 20 percent of the funds in the escrowed purse account that are attributable to the wagering on the interstate cross-species simulcast signal at the greyhound racetrack facility. Any amount allocated by the commission under this subsection may be used by the racetrack facility for any purpose.
  (g) If a racing association purchases an interstate simulcast signal and the cost of the signal is more than five percent of the pari-mutuel pool, the commission shall reimburse the racing association an amount equal to one-half of the signal cost that is more than five percent of the pari-mutuel pool from the escrowed purse account under Subsection (c)(4) of this section.
  (h) A racetrack facility offering wagering on an intrastate cross-species simulcast signal shall send the purse amount specified under Subsection (c)(4) or (d)(2) of this section, as appropriate, to the racetrack facility conducting the live race that is being simulcast.
  (i) A racing facility conducting a live race that is being simulcast may charge the receiving racetrack facility a host fee in addition to the amounts described in this section.
  (j) The commission shall adopt rules relating to this section and the oversight of amounts allocated under Subsections (c) and (d) of this section.

Sec. 6.092. Oversight of Use of Funds Generated by Pari-Mutuel Racing.
  (a) The commission shall adopt reporting, monitoring, and auditing requirements or other appropriate performance measures for any funds distributed to or used by or any function or service provided by the expenditure of any funds distributed to or used by any organization that receives funds generated by live or simulcast parimutuel racing.
  (b) The commission shall adopt the requirements or performance measures after consultation with the affected organization. In adopting the rules, the commission shall give consideration to the concerns of the affected organization.
  (c) An organization receiving funds generated by live or simulcast parimutuel racing shall annually file with the commission a copy of an audit report prepared by an independent certified public accountant. The audit shall include a verification of any performance report sent to or required by the commission.
  (d) The commission may review any records or books of an organization that submits an independent audit to the commission as the commission determines necessary to confirm or further investigate the findings of an audit or report.
  (e) The commission by rule may suspend or withhold funds from an organization that:
(1) it determines has failed to comply with the requirements or performance measures adopted under Subsection (a) of this section; or
(2) has, following an independent audit or other report to the commission, material questions raised on the use of funds by the organization.

Sec. 6.093. Deductions from Live Pari-Mutuel Pool.
  (a) (1) A horse racing association, until January 1, 1999, shall set aside for the state:
(A) an amount equal to one percent of each live pari-mutuel pool from the first $100 million of the total amount of all live pari-mutuel pools of the association in a calendar year;
(B) an amount equal to two percent of each live pari-mutuel pool from the next $100 million of the total amount of all live pari-mutuel pools of the association in a calendar year;
(C) an amount equal to three percent of the next $100 million of the total amount of all live pari-mutuel pools of the association in a calendar year;
(D) an amount equal to four percent of the next $100 million of the total amount of all live pari-mutuel pools of the association in a calendar year; and
(E) an amount equal to five percent of each live pari-mutuel pool from the amount of all live pari-mutuel pools of the association in a calendar year not covered by Paragraphs (A) through (D) of this subdivision.
(2) A greyhound racing association, until January 1, 1999, shall set aside for the state:
(A) an amount equal to two percent of each live pari-mutuel pool from the first $100 million of the total amount of all live pari-mutuel pools of the association in a calendar year;
(B) an amount equal to three percent of each live pari-mutuel pool from the next $100 million of the total amount of all live pari-mutuel pools of the association in a calendar year;
(C) an amount equal to four percent of each live pari-mutuel pool from the next $100 million of the total amount of all live pari-mutuel pools of the association in a calendar year;
(D) an amount equal to five percent of each live pari-mutuel pool from the total amount of all live pari-mutuel pools of the association in a calendar year not covered by Paragraphs (A) through (C) of this subdivision; and
(E) 50 percent of the breakage.
(3) All amounts set aside by the association for the state in Subdivisions (1) and (2) of this subsection shall be applied to the reimbursement of all amounts of general revenue appropriated for the administration and enforcement of this Act in excess of the cumulative amount deposited to the Texas Racing Commission fund until the earlier of:
(A) the excesses together with interest thereon are reimbursed in full; or
(B) January 1, 1999.
  (b) On or after January 1, 1999, a horse or greyhound racing association shall set aside for the state from the live pari-mutuel pool at the association:
(1) an amount equal to one percent of each live pari-mutuel pool from the total amount of all live pari-mutuel pools of the association in a calendar year in excess of $100 million but less than $200 million;
(2) an amount equal to two percent of each live pari-mutuel pool from the total amount of all live pari-mutuel pools of the association in a calendar year in excess of $200 million but less than $300 million;
(3) an amount equal to three percent of each live pari-mutuel pool from the total amount of all live pari-mutuel pools of the association in a calendar year in excess of $300 million but less than $400 million;
(4) an amount equal to four percent of each live pari-mutuel pool from the total amount of all live pari-mutuel pools of the association in a calendar year in excess of $400 million but less than $500 million; and
(5) an amount equal to five percent of each live pari-mutuel pool from the total amount of all live pari-mutuel pools of the association in a calendar year in excess of $500 million.

Sec. 6.094. National Event Incentives.
  (a) In this section:
(1) "Breeders' Cup costs" means all costs for capital improvements and extraordinary expenses reasonably incurred for the operation of the Breeders' Cup races, including purses offered on other days in excess of the purses that the host association is required to pay by this Act.
(2) "Breeders' Cup races" means a series of thoroughbred races known as the Breeders' Cup Championship races conducted annually by Breeders' Cup Limited on a day known as Breeders' Cup Championship day.
(3) "Development organization" means an organization whose primary purpose is the marketing, promotion, or economic development of a city, county, or region of the state, including chambers of commerce, convention and visitors bureaus, and sports commissions.
(4) "Political subdivision" means a city, county, or other political subdivision of the state and includes any entity created by a political subdivision.
  (b) An association conducting the Breeders' Cup races may apply to the reimbursement of Breeders' Cup costs amounts that would otherwise be set aside by the association for the state under Sections 6.091(a)(1) and 6.093 of this Act during the year in which the association hosts the Breeders' Cup races, limited to an amount equal to the lesser of the aggregate amount contributed to pay Breeders' Cup costs by political subdivisions and development organizations or $2 million. Beginning on January 1 of the year for which the association has been officially designated to host the Breeders' Cup races, amounts that would otherwise be set aside by the association for the state during that year under Sections 6.091(a)(1) and 6.093 of this Act shall be set aside, in accordance with procedures prescribed by the comptroller, for deposit into the Breeders' Cup Developmental Account. The Breeders' Cup Developmental Account is an account in the general revenue fund. The commission shall administer the account. Money in the account may be appropriated only to the commission and may be used only for the purposes specified in this section. The account is exempt from the application of Section 403.095, Government Code.
  (c) The commission shall make disbursements from the Breeders' Cup Developmental Account to reimburse Breeders' Cup costs actually incurred and paid by the association, after the association files a request for reimbursement. Disbursements from the account may not at any time exceed the aggregate amount actually paid for Breeders' Cup costs by political subdivisions and development organizations, as certified by the commission to the comptroller, or $2 million, whichever is less.
  (d) Not later than January 31 of the year following the year in which the association hosts the Breeders' Cup races, the association shall submit to the commission a report that shows:
(1) the total amount of Breeders' Cup costs incurred and paid by the association;
(2) the total payments made by political subdivisions and development organizations for Breeders' Cup costs; and
(3) any other information requested by the commission.
  (e) Following receipt of the report required by Subsection (d) of this section, the commission shall take any steps it considers appropriate to verify the report. Not later than March 31 of the year following the event, the commission shall transfer to the credit of the general revenue fund any balance remaining in the Breeders' Cup Developmental Account after reimbursement of any remaining Breeders' Cup costs authorized under this section.
  (f) In addition to the authority otherwise granted in this Act, the commission and the comptroller may adopt rules for the administration of this section as follows:
(1) the commission may adopt rules relating to:
(A) auditing or other verification of Breeders' Cup costs and amounts paid or set aside by political subdivisions and development organizations; and
(B) the disbursement of funds from the Breeders'Cup Developmental Account; and
(2) the comptroller may adopt rules relating to:
(A) procedures and requirements for transmitting or otherwise delivering to the treasury the money set aside under this section; and
(B) depositing funds into the Breeders' Cup Developmental Account.
  (g) The commission may adopt rules to facilitate the conduct of the Breeders' Cup races, including the adoption of rules or waiver of existing rules relating to the overall conduct of racing during the Breeders' Cup races in order to assure the integrity of the races, licensing for all participants, special stabling and training requirements for foreign horses, and commingling of pari-mutuel pools.
  (h) The provisions of this section prevail over any conflicting provisions of this Act.

Sec. 6.10. Application of Tax Code.
Unless inconsistent with the provisions of this Act, Chapters 111 through 113, Tax Code, including without limitation provisions relating to the assessment of penalty and interest, apply to the collection of the state's share under this Act. In applying those provisions of the Tax Code for purposes of this section, the state's share under this Act is treated as if it were a tax. For purposes of collecting the state's share under this Act, the comptroller may use any procedure authorized under Title 2, Tax Code.

Sec. 6.11. Allocation of Purse.
  (a) In no event shall the purse in a greyhound race be less than a minimum of 4.7 percent of the total deposited in each pool.
  (b) Thirty-five percent of the portion of a purse allocated to a greyhound shall be paid directly to its owner. The balance shall be paid to its contract kennel as provided by the rules of the commission.

Sec. 6.12. Not Transferable.
  (a) A racetrack license is not transferable.
  (b) In the event of the death of any person whose death causes a violation of the licensing provisions of this Act, the commission may issue a temporary license for a period of one year under rules adopted by the commission.

Sec. 6.13. Financial Disclosure.
  (a) The commission by rule shall require that each association holding a license for a class 1 racetrack, class 2 racetrack, or greyhound racetrack must annually file with the commission a detailed financial statement that:
(1) contains the names and addresses of all stockholders, members and owners of any interest in the racetrack facility;
(2) indicates compliance during the filing period with Section 6.06 of this Act; and
(3) includes any other information required by the commission.
  (b) Each transaction that involves an acquisition or a transfer of a pecuniary interest in the association must receive prior approval from the commission. A transaction that changes the ownership of the association requires submission of updated information of the type required to be disclosed under Subsection (a) of Section 6.03 of this Act and payment of a fee to recover the costs of the criminal background check.

Sec. 6.14. Racing Restricted to Designated Place.
  (a) An association may not conduct greyhound or horse racing at any place other than the place designated in the license except as provided by this section or by Section 6.15 of this Act. However, if the racetrack or enclosure designated in the license becomes unsuitable for racing because of fire, flood, or other catastrophe, the affected association, with the prior approval of the commission, may conduct a race meeting or any remaining portion of a meeting temporarily at any other racetrack licensed by the commission to conduct the same type of racing as may be conducted by the affected association if the licensee of the other racetrack also consents to the usage.
  (b) The commission shall not issue more than three racetrack licenses for greyhound racing.
  (c) Each greyhound racetrack licensed under this Act must be located in a county that has a population of more than 190,000, according to the most recent federal census, and that includes all or part of an island that borders the Gulf of Mexico.
  (d) On request of an association, the commission shall amend a racetrack license to change the location of the racetrack if the commission finds that:
(1) the conduct of race meetings at the proposed track at the new location will be in the public interest;
(2) there was not a competing applicant for the original license; and
(3) the association's desire to change location is not the result of a subterfuge in the original licensing proceeding.

Sec. 6.15. Racing at Temporary Location.
After an association has been granted a license to operate a racetrack and before the completion of construction at the designated place for which the license was issued, the commission may, on application by the association, issue a temporary license that permits the association to conduct races at a location in the same county for a period expiring two years after the date of issuance of the temporary license or on the completion of the permanent facility, whichever occurs first. The commission may set the conditions and standards for issuance of a temporary license and allocation of appropriate race days. An applicant for a temporary license must pay the application fees and must post the bonds required of other licensees before the issuance of a temporary license. After a temporary license has expired, no individual, corporation, or association, nor any individual belonging to a corporation or association which has been granted a temporary license, may get an extension of the temporary license or a new temporary license.

Sec. 6.16. Employment of Former Commission Members or Employees.
  (a) An association may not employ any person who has been a member of the commission, the executive secretary of the commission, or an employee employed by the commission in a position in the state employment classification plan of grade 12 or above, or any person related within the second degree by affinity or the third degree by consanguinity, as determined under Chapter 573, Government Code, to such a member or employee, during the one-year period immediately preceding the employment by the association.
  (b) A person may not seek or accept employment with an association if the association would violate this section by employing the person.
  (c) An association or person who violates this section commits an offense.

Sec. 6.17. City and County Fees.
  (a) A commissioners court may collect a fee not to exceed 15 cents as an admission fee to a licensed racetrack located within the county. If the racetrack is located within an incorporated city or town, the governing body of the city or town may collect a fee not to exceed 15 cents as an admission fee to a licensed racetrack located within the city or town. If the racetrack is not located within an incorporated city or town, the court may collect an additional fee not to exceed 15 cents as an admission fee to a licensed racetrack located within the county for allocation among the incorporated cities or towns in the county. If the racetrack is not located in an incorporated city or town, the court shall collect the additional fee if requested to do so by the governing bodies of a majority of the incorporated cities and towns in the county. Allocation of the fees shall be based on the population within the county of the cities or towns.
  (b) If the racetrack is a class 1 racetrack, the commissioners court of each county with a population of not less than 1.3 million adjacent to the county in which the racetrack is located may each collect fees equal to the fees authorized by Subsection (a) of this section.
  (c) The commissioners court by order may establish procedures for the collection of the fees under Subsection (a) of this section. The procedures may require a person holding a racetrack license to keep records and file reports as considered necessary by the commissioners court.
  (d) A county or municipality may not assess or collect any other license fee, privilege tax, excise tax, or racing fee on admissions to, or wagers placed at, a licensed racetrack.

Sec. 6.18. Annual Fee for Racetrack License.
  (a) Repealed by Acts 2011, 82nd Legislature, HB 2271, Section 26, eff. Sept. 1, 2011.
  (b) The commission may prescribe a reasonable annual fee to be paid by each racetrack licensee. The fee must be in an amount sufficient to provide that the total amount of fees imposed under this section, together with the license fees prescribed under Section 5.01(b) of this Act and the renewal fees prescribed under Section 6.0602(e) of this Act, is sufficient to pay the costs of administering and enforcing this Act.

Sec. 6.19. Repealed by Acts 2007, 80th Legislature, (HB2701) eff. September 1, 2007.
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