GAMING

SENATE FILE 2149 - Bingo and Raffles
HOUSE FILE 2133 - Lottery Authority Budget Information - Reports to Legislature
HOUSE FILE 2302 - Gambling - Miscellaneous Changes
HOUSE FILE 2562 - Electrical and Mechanical Amusement Devices

RELATED LEGISLATION

HOUSE FILE 2207 - Substantive Code Corrections

SEE STATE GOVERNMENT. This Act contains statutory corrections that adjust language to reflect current practices, insert earlier omissions, delete redundancies and inaccuracies, delete temporary language, resolve inconsistencies and conflicts, update ongoing provisions, or remove ambiguities. Changes made include changes to provisions relating to the Iowa Lottery Authority.

HOUSE FILE 2538 - Cash Reserve, Infrastructure, and Environment First Funds - Transfers

SEE APPROPRIATIONS. This Act makes a transfer from the Cash Reserve Fund to the Rebuild Iowa Infrastructure Fund (RIIF) for FY 2003 2004. The transferred moneys are to be used for the standing appropriation from RIIF to the Environment First Fund. Contingent language provides for repayment of the transfer in the event a temporary tax on gambling games is enacted. The Act takes effect April 2, 2004.

GAMING

SENATE FILE 2149 - Bingo and Raffles (full text of bill)

BY COMMITTEE ON STATE GOVERNMENT. This Act makes changes concerning bingo and raffles.

Concerning bingo, the Act permits bingo games that allow for a trade-in of a card for not more than 50 cents per trade-in. In addition, the Act permits two jackpot bingo games during a 24-hour period and authorizes a maximum prize of $1,000 for the first jackpot bingo game and $2,500 for the second jackpot bingo game. Previous law only permitted one jackpot bingo game during a 24-hour period with a maximum prize of $800. The Act also increases, from $100 to $200, the amount a jackpot can increase after each bingo occasion. The Act also provides that for a person issued a limited license to conduct all games and raffles during a specified 14-day period, bingo may only be conducted once per each seven consecutive days during the specified period.

For raffles, the Act allows a person with the appropriate license to award a cash prize of up to $200,000 at an annual raffle or a raffle conducted by a statewide raffle licensee. Prior law only permitted the award of a cash prize at a raffle in an amount not in excess of $10,000. The Act also directs the Department of Inspections and Appeals to conduct an audit to verify compliance with the requirements governing raffles if the cash prize awarded at a raffle exceeds $100,000.

The Act takes effect April 12, 2004.

HOUSE FILE 2133 - Lottery Authority Budget Information - Reports to Legislature (full text of bill)

BY COMMITTEE ON GOVERNMENT OVERSIGHT. This Act directs the Chief Executive Officer of the Iowa Lottery Authority to submit copies of the budget information currently required to be submitted to the Department of Management by October 1 to the Legislative Government Oversight Committees and the Legislative Services Agency by the same date.

HOUSE FILE 2302 - Gambling - Miscellaneous Changes (full text of bill)

BY COMMITTEE ON STATE GOVERNMENT. This Act makes several changes to provisions governing gambling in Iowa, including the operation, licensure, regulation, fee assessment, and taxation of racetracks, excursion gambling boats, and gambling games. In addition, the Act makes changes related to the Racing and Gaming Commission, gambling by minors and others, and provides for the distribution of certain revenues generated by gaming to the Gambling Treatment Fund and a County Endowment Fund.

Taxation and Fee Assessments

The Act makes changes to the taxation of adjusted gross receipts received by racetracks and excursion gambling boats from gambling games. The tax on adjusted gross receipts from gambling games shall be imposed on a fiscal year, and not a calendar year, basis. The Act then changes the rate of tax on adjusted gross receipts received over $3 million. For excursion gambling boats, the rate on receipts over $3 million is 22 percent. For a racetrack with no other licensee located in the same county, the rate is 24 percent. If the racetrack is located in the same county as another licensee, and the racetrack does not have a table games license or had adjusted gross receipts from gambling games in the prior fiscal year of less than $100 million, the rate is 22 percent. If the racetrack is located in the same county as another licensee, and the racetrack has a table games license and had adjusted gross receipts from gambling games in the prior fiscal year of $100 million or more, the rate is 22 percent until the racetrack's table games operation becomes operational, at which point the rate will be 24 percent. Of the revenues received, the Act provides that an amount equal to one-half of 1 percent, and not the previous three-tenths of 1 percent, of adjusted gross receipts shall be deposited in the Gambling Treatment Fund. In addition, an amount of tax received equal to one-half of 1 percent of adjusted gross receipts shall be deposited in a County Endowment Fund created by the Act.

The Act also creates additional assessments and taxes on adjusted gross receipts from excursion gambling boats and racetracks. For racetracks, a 2002-2004 racetrack enclosure gambling games tax is imposed on adjusted gross receipts received over $3 million for the fiscal year beginning July 1, 2002, and for the fiscal year beginning July 1, 2003. The current effective 20 percent rate is modified to provide for a rate for both fiscal years of 22 percent for a racetrack with adjusted gross receipts from gambling games of less than $100 million, and a rate for both fiscal years of 24 percent for a racetrack with adjusted gross receipts of $100 million or more. Revenues generated by this tax are deposited in the Rebuild Iowa Infrastructure Fund (RIIF).

For excursion gambling boats licensed as of January 1, 2004, a 2005 and 2006 rebuild Iowa infrastructure assessment is imposed at the rate of 2.152 percent each year on estimated adjusted gross receipts of each boat for the fiscal year beginning July 1, 2004, as determined prior to May 6, 2004. The assessed rate will generate about $15 million each year. The assessment is to be paid by June 1, 2005, and June 1, 2006, with moneys received deposited in RIIF. The assessments paid by each excursion gambling boat shall be a credit on taxes required to be paid to the extent of 20 percent for each of five fiscal years beginning July 1, 2010.

New Table Games and Gambling Game Licenses

The Act provides for the issuance of a table games license to racetracks currently authorized to conduct gambling games. Previously, racetracks could only offer slot machines and not table games of chance, such as blackjack and poker. The Act requires the Racing and Gaming Commission to issue the table games license to a racetrack upon immediate payment of the applicable license fee and submission of an application to the commission by June 1, 2005. The Act establishes the applicable license fee at $3 million for a racetrack with adjusted gross receipts from gambling games of less than $100 million, and at $10 million for a racetrack with adjusted gross receipts of $100 million or more. Fees paid for this license are to be deposited in RIIF. However, a table games license shall not be issued to a racetrack required to pay the $3 million fee unless every licensee within the same county files an agreement with the commission authorizing table games and permitting each excursion gambling boat licensee to operate a moored barge. The license fees paid shall be a credit on taxes required to be paid to the extent of 20 percent for each of five fiscal years beginning July 1, 2008. The provisions of this Act providing for the issuance of a table games license take effect May 6, 2004.

Except for the establishment of an area in the downtown Des Moines vicinity in which no gambling games may be conducted, the Act does not specifically establish a moratorium on or provide for the granting of additional licenses to conduct gambling games on excursion gambling boats. However, the Act does provide for fees to be paid if a new license to conduct gambling games is granted. The Act provides for a license fee of $5 million for a licensee to be located in a county with a population of 15,000 or less, $10 million for a licensee to be located in a county with a population of more than 15,000 and less than 100,000, and $20 million for a licensee to be located in a county with a population of 100,000 or more. Fees paid are to be deposited in RIIF, with 20 percent of the fee payable upon filing an application for a license and 20 percent payable each of the next four years thereafter.

Changes Impacting Racetracks and Excursion Gambling Boats

Each racetrack and excursion gambling boat licensee must establish a process to allow persons to voluntarily exclude themselves for life from all facilities licensed under Code Chapters 99D and 99F. The change provides that the state and any licensee shall not be liable for any claim arising out of this process and that any item of value owed to a voluntarily excluded person as a result of wagers made by that person shall be forfeited and shall be deposited in the Gambling Treatment Fund.

The Act also limits the dispensing of cash and credit at a racetrack or excursion gambling boat. A licensee shall prohibit the location of an electronic and mechanical device, including satellite terminals, that dispenses cash or credit in the wagering or gaming area of the licensed premises. The Act permits these devices outside the wagering and gaming area, but requires licensees to ensure that persons can voluntarily bar their ability to access cash or credit from these devices.

Racetrack and excursion gambling boat licensees shall use a substantial amount of goods and resources that emanate from and are made in Iowa.

Required audits of racetrack and gambling game operations must be conducted of the licensee's total racetrack and gambling game operations by an auditor selected by the applicable county board of supervisors.

Information gathered during the pendency of an investigation conducted by the Racing and Gaming Commission is confidential.

Licensees of racetracks and excursion gambling boats conducting gambling games shall provide for a minimum distribution of at least 3 percent of adjusted gross receipts received from gambling games by the licensee for charitable uses.

A person under the age of 21 making or attempting to make a wager at a racetrack or excursion gambling boat commits a scheduled violation subject to a fine of $500.

The Act eliminates the specific imposition of an admission fee for racetracks and excursion gambling boats and amends language to reflect that the fees charged boats and racetracks with gambling games for enforcement costs are a regulatory fee. For racetracks specifically, the current 50 cents per person admission fee is eliminated and instead a regulatory fee in an amount that includes the cost of two special agents for each racetrack if the racetrack does not have a table games license, or three special agents if the racetrack has a table games license, plus the direct and indirect support costs of the Division of Criminal Investigation's activities concerning racetracks, is imposed.

A referendum on a proposal to conduct gambling games at a racetrack or on an excursion gambling boat cannot be held for at least eight years after a referendum has been defeated. This provision applies retroactively to votes on referendums held on or after January 1, 2002.

The Act allows gambling games or implements previously installed at a gambling location licensed in another jurisdiction or within the state to be permitted by a manufacturer or distributor of such items that is not licensed in Iowa. Previously, the licensure exception applied only to items previously installed on an excursion gambling boat.

Changes Impacting Excursion Gambling Boats

The Act eliminates the requirement that an excursion gambling boat be a self-propelled vessel that is required to cruise. A valid excursion gambling boat can be a moored barge or an excursion boat that is or has been certified for operation as a vessel that may or may not cruise. If the boat does cruise, current cruising requirements established by the Racing and Gaming Commission apply. However, an existing licensee of an excursion gambling boat located in a county that has a racetrack licensee may not be allowed to operate a moored barge. If the boat licensee is located in a county in which the racetrack licensee had adjusted gross receipts from gambling games of less than $100,000 for the fiscal year beginning July 1, 2003, (i.e., Dubuque County), the boat licensee can operate a moored barge only if all licensees in the county agree and also permit the racetrack licensee to obtain a table games license. If the boat licensee is located in a county in which the racetrack licensee had adjusted gross receipts from gambling games of $100,000 or more for the fiscal year beginning July 1, 2003, (i.e., Pottawattamie County), the boat licensee can operate a moored barge the earlier of July 1, 2007, or the date a gambling game facility is operational in any state contiguous to that county (i.e., Nebraska).

An excursion gambling boat can be located on a natural or man-made lake or reservoir that can accommodate recreational activity or on water that is within 1,000 feet of the high water mark of a river.

The Act also eliminates the requirement that excursion gambling boats include a section on the boat for activities for persons under age 21.

The Act amends a provision requiring excursion gambling boats operating on the inland waters to comply with the water navigation requirements of Code Chapter 462A to provide that excursion boats removed from navigation be subject to these requirements and that boats subject to this provision be under the exclusive jurisdiction of the Department of Natural Resources.

Changes Impacting Racetracks

Agreements for horse purses at racetracks for agreements beginning on or after January 1, 2006, and ending before January 1, 2021, shall provide that the total annual horse purses shall be no less than 11 percent on the first $200 million of net receipts and 6 percent on net receipts over $200 million. Agreements for horse purses shall be jointly submitted to the Racing and Gaming Commission for approval. The Act defines "net receipts" as the annual adjusted gross receipts from gambling games, less the annual amount pledged for a current Vision Iowa project.

One-half of 1 percent of the gross sum wagered by the pari-mutuel method, excluding simulcast wagering, shall be deposited in the Gambling Treatment Fund.

The Act also makes changes relating to racetracks recommended by the Racing and Gaming Commission. The Act changes the term "lasix" to "furosemide" wherever it occurs in Code Chapter 99D; provides, effective April 1, 2004, that employees of the Racing and Gaming Commission in the positions of equine veterinarian, canine veterinarian, and equine steward are excluded from the merit system provisions of Code Chapter 8A and shall not be covered by a collective bargaining agreement; permits the Racing and Gaming Commission to adopt, by reference, any nationally recognized standard relating to chemical testing; and makes changes, effective April 1, 2004, concerning the conducting of a postmortem examination of a horse that dies at a racetrack to include providing that the postmortem be conducted by a veterinarian or veterinary pathologist with the owner of the horse required to pay the costs associated with the postmortem and any laboratory testing. The Act also eliminates the requirement to randomly drug test horses both before and after a race while keeping the requirement to randomly drug test horses on the day of a race and allows a trainer's designee the ability to provide information on the entry blank relating to a horse's use of phenylbutazone, and provides that the current civil penalty amounts the commission can impose for a first or second offense violation of this Code section are minimum amounts.

Miscellaneous Provisions

New Code Section 15E.311 creates a County Endowment Fund within the Department of Revenue. The new Code section provides that at the end of each fiscal year, moneys in the fund shall be transferred, on an equal basis, to accounts representing each county that does not have a licensee in that county conducting gambling games. The Act provides that the Endow Iowa Board shall select an eligible community foundation or affiliate organization for each eligible county for receipt of the moneys transferred to that county. Of the moneys received by an eligible community foundation or affiliate organization, 75 percent shall be used for grants to recipients in that county and 25 percent shall be retained by the foundation or organization as an endowment. If no eligible foundation or organization exists for a county, moneys shall remain in the account for that county until an eligible foundation or organization is created.

The Act requires the Legislative Council to expend up to $100,000 to have an independent entity conduct a socioeconomic study on gambling and have a report issued by July 1, 2005. In addition, the Racing and Gaming Commission is required to conduct a socioeconomic study on gambling every eight years beginning in calendar year 2008.

The Act provides that one-half of 1 percent, and not three-tenths of 1 percent, of gross revenue of the Lottery Authority shall be deposited in the Gambling Treatment Fund.

New Code Section 135.150 establishes a Gambling Treatment Fund under the control of the Iowa Department of Public Health. The fund consists of moneys appropriated to the fund, but moneys appropriated to the fund in excess of $6 million in a fiscal year shall be transferred to the General Fund of the State. Moneys in the fund shall be used by the department for purposes of creating a gambling treatment program which shall provide programs for persons affected by problem gambling, rehabilitation and residential treatment programs, information and referral services, crisis call access, education and preventative services, and financial management and credit counseling services.

New Code Section 725.19, concerning gambling by minors, is created by the Act. The new Code section provides that it is a scheduled violation for a person under age 21 to make or attempt to make a gambling wager, except as permitted under Code Chapter 99B. The scheduled fine for this violation is $500. The new Code section also establishes that a person who knowingly permits a person under age 21 to make or attempt to make a gambling wager, except as permitted under Code Chapter 99B, commits a simple misdemeanor.

HOUSE FILE 2562 - Electrical and Mechanical Amusement Devices (full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This Act concerns electrical and mechanical amusement devices that award prizes not based upon any skill. These devices were required to be registered with the Department of Inspections and Appeals pursuant to legislation passed during the 2003 Legislative Session (H.F. 594). That Act provided for the registration of these devices, limited the number per certain locations, established fees for registering these devices, and provided that the fees collected between July 2003 and July 2005 be deposited in a fund and used by the Department of Public Safety and Department of Inspections and Appeals to enforce requirements governing these devices. This Act modifies several provisions of that Act, concerning who may offer these devices to the public, providing for limits on the total number of machines allowed to be registered, modifying the fees required for registering the devices, and establishing penalties applicable for underage use of the machines and for other improper uses of the devices. The Act does not involve or impact most children's arcade-type games that award prizes based upon some skill of the operator.

The Act provides that electrical and mechanical amusement devices that are required to be registered can be located only at a location which has been issued a class "A," "B," "C," or "D" liquor control license or a class "B" or "C" beer permit. The current requirement that no more than two devices can be located at a nonprofit location and no more than four devices in any other location is maintained. Persons who have registered an amusement device as of April 28, 2004, that is not located at one of these liquor control or beer permit locations may offer the devices only until July 1, 2005.

The Act further provides that the total number of amusement devices registered by the Department of Inspections and Appeals cannot exceed the number registered as of April 28, 2004. In addition, a person locating the device at a location for which only a class "B" or "C" beer permit has been issued cannot register any additional devices after April 28, 2004, and cannot relocate devices properly registered prior to April 28, 2004, to a different location.

The Act also provides that amusement devices required to be registered shall include, by January 1, 2006, a counting mechanism to determine business volume and shall, by July 1, 2004, for devices located where a class "B" or "C" beer permit has been issued, include a security device which prevents operation of the device without action by the owner.

The Act also provides that a person owning or leasing an electrical and mechanical amusement device required to be registered shall not advertise the availability of the device as other than an electrical and mechanical amusement device pursuant to rules adopted by the Department of Inspections and Appeals.

The Act provides that the current $2,500 annual registration fee applies to manufacturers, manufacturer's representatives, and for-profit owners of two or fewer amusement devices. The Act provides that the annual registration fee for distributors shall be $5,000. A distributor is a person that owns registered amusement devices that are offered for use by the public at more than a single location.

The Act provides that for awarding a cash prize in violation of the statute, the department shall revoke the registration of a person for 10 years, the person's liquor control license or beer permit shall be suspended for a period of 14 days, and, if the person has only a beer permit, the person's sales tax permit shall also be suspended for 14 days.

The Act provides that a person under the age of 21 cannot operate an electrical and mechanical amusement device required to be registered and a person owning or leasing a device cannot knowingly allow a person under age 21 to operate such a device. The Act provides that a person under age 21 who operates a device in violation of this provision commits a scheduled violation with a scheduled fine of $250.

The Act takes effect April 28, 2004.