S.F. 2275 Section 1. Section 99F.1, subsection 1, Code 2011, is 1 amended to read as follows: 2 1. “Adjusted gross receipts” means the gross receipts less 3 winnings paid to wagerers. For internet wagering, “adjusted 4 gross receipts” means the gross receipts for internet wagering 5 on poker from rake and tournament fees less winnings and player 6 incentives paid to wagerers. 7 Sec. 2. Section 99F.1, Code 2011, is amended by adding the 8 following new subsections: 9 NEW SUBSECTION . 16A. “Internet wagering” means a method of 10 wagering by which a person may establish an account, deposit 11 money into the account, and use the account balance for 12 wagering by utilizing electronic communication. 13 NEW SUBSECTION . 16B. “Internet wagering operator” means 14 a person who has entered into an operating agreement with a 15 licensee or licensees to conduct internet wagering for an 16 internet wagering licensee as authorized by this chapter. 17 NEW SUBSECTION . 19A. “Player incentives” means, for 18 internet wagering, any bonuses, rewards, prizes, or other types 19 of promotional items provided to a person engaging in internet 20 wagering by an internet wagering licensee as an incentive to 21 engage in internet wagering. 22 NEW SUBSECTION . 22. “Rake” means a set fee or percentage of 23 the pot assessed by an internet wagering licensee for providing 24 the internet wagering services to a person engaging in internet 25 wagering for the right to participate in internet wagering. 26 NEW SUBSECTION . 23. “Tournament fee” means a set fee 27 assessed to a person engaging in internet wagering by the 28 internet wagering licensee for providing internet wagering 29 tournament services. 30 Sec. 3. Section 99F.3, Code 2011, is amended to read as 31 follows: 32 99F.3 Gambling games authorized. 33 The system of wagering on a gambling game as provided 34 by this chapter is legal, when conducted on an excursion 35 -1- LSB 6026SV (2) 84 ec/nh 1/ 10

S.F. 2275 gambling boat, gambling structure, or racetrack enclosure at 1 authorized locations by a licensee , or, for internet wagering, 2 when conducted by an internet wagering licensee pursuant to 3 requirements established by the commission, as provided in this 4 chapter . 5 Sec. 4. Section 99F.4, subsections 14 and 22, Code 2011, are 6 amended to read as follows: 7 14. To require , except for internet wagering, all licensees 8 of gambling game operations to utilize a cashless wagering 9 system whereby all players’ money is converted to tokens, 10 electronic cards, or chips which only can be used for wagering 11 on the excursion gambling boat. 12 22. To require licensees to establish a process to allow a 13 person to be voluntarily excluded for life from an excursion 14 gambling boat and all other licensed facilities under this 15 chapter and chapter 99D , or from engaging in internet wagering 16 conducted by an internet wagering licensee under this chapter. 17 For internet wagering licensees, the process shall allow 18 players to limit the maximum amount of money that may be 19 transferred by that player into an internet wagering account 20 in a twenty-four-hour period . The process established shall 21 require that a licensee disseminate information regarding 22 persons voluntarily excluded to all licensees under this 23 chapter and chapter 99D . The state and any licensee under 24 this chapter or chapter 99D shall not be liable to any person 25 for any claim which may arise from this process. In addition 26 to any other penalty provided by law, any money or thing of 27 value that has been obtained by, or is owed to, a voluntarily 28 excluded person by a licensee as a result of wagers made by the 29 person after the person has been voluntarily excluded shall not 30 be paid to the person but shall be credited to the general fund 31 of the state. 32 Sec. 5. Section 99F.4, Code 2011, is amended by adding the 33 following new subsection: 34 NEW SUBSECTION . 27. To establish requirements for internet 35 -2- LSB 6026SV (2) 84 ec/nh 2/ 10

S.F. 2275 wagering licensees and internet wagering operators to conduct 1 internet wagering on poker as provided in this chapter. At 2 a minimum, the requirements shall include security measures 3 to insure the integrity of internet wagering and technical 4 standards governing the technology used to conduct internet 5 wagering. In addition, the requirements shall, subject to 6 reasonable conditions established by the commission, allow 7 persons who have registered with an internet wagering licensee 8 to engage in internet wagering with other persons, regardless 9 of location, to the extent permissible by law. 10 Sec. 6. NEW SECTION . 99F.4E Internet wagering on poker —— 11 licensing —— requirements. 12 1. Upon payment of the applicable internet wagering 13 license fee as determined by the commission and application 14 by a licensee authorized to conduct gambling games under this 15 chapter, the commission shall issue an internet wagering 16 license to the licensee, following a review of the applicant 17 and internet wagering operator in the manner provided in 18 section 99F.6, subject to the provisions of this chapter and 19 rules adopted pursuant to this chapter relating to gambling and 20 internet wagering. A single joint license to conduct internet 21 wagering may be issued to more than one licensee authorized to 22 conduct gambling games under this chapter if the application 23 includes an agreement delineating how each licensee subject to 24 the agreement shall distribute at least three percent of the 25 adjusted gross receipts from internet wagering on poker from 26 the joint license for each license year for educational, civic, 27 public, charitable, patriotic, or religious uses as defined 28 in section 99B.7, subsection 3, paragraph “b” , as otherwise 29 required by this chapter. The issuance of a joint license to 30 conduct internet wagering by more than one licensee under this 31 chapter shall not be considered the issuance of a new license 32 under this chapter. 33 2. An internet wagering licensee shall comply with the 34 following requirements: 35 -3- LSB 6026SV (2) 84 ec/nh 3/ 10

S.F. 2275 a. Internet wagering shall be limited to wagering on poker 1 and all of its variations, including but not limited to Texas 2 hold ’em, Omaha hold ’em, draw poker, and stud poker. 3 b. Internet wagering shall be conducted by the licensee 4 through a single internet site. 5 c. Internet wagering shall be limited to only those persons 6 who have registered with the licensee to engage in internet 7 wagering. To register, a person shall provide sufficient 8 information to the licensee to verify that the person is at 9 least twenty-one years of age and is otherwise authorized to 10 engage in internet wagering in this state. 11 d. (1) If an internet wagering license is issued to one 12 licensee authorized to conduct gambling games under this 13 chapter, adjusted gross receipts received by the gambling games 14 licensee under this chapter from internet wagering each fiscal 15 year shall be added to the adjusted gross receipts received 16 by the licensee from gambling games other than from internet 17 wagering for purposes of imposing a tax on the adjusted gross 18 receipts received by the licensee as provided in section 19 99F.11. 20 (2) If a joint internet wagering license is issued to more 21 than one licensee authorized to conduct gambling games under 22 this chapter, the tax rate imposed on adjusted gross receipts 23 from internet wagering on poker each fiscal year pursuant to 24 section 99F.11 shall be twenty-two percent or, if a majority 25 of participating licensees on the joint license are otherwise 26 subject to a tax rate of twenty-four percent on adjusted gross 27 receipts from gambling games over three million dollars under 28 section 99F.11, twenty-four percent. 29 e. Any other requirements as the commission establishes 30 to ensure the legality and integrity of conducting internet 31 wagering in this state. 32 Sec. 7. Section 99F.6, subsection 1, unnumbered paragraph 33 1, Code Supplement 2011, is amended to read as follows: 34 A person shall not be issued a license to conduct gambling 35 -4- LSB 6026SV (2) 84 ec/nh 4/ 10

S.F. 2275 games on an excursion gambling boat or a license to operate 1 an excursion gambling boat under this chapter , an internet 2 wagering license, an occupational license, a distributor 3 license, or a manufacturer license unless the person has 4 completed and signed an application on the form prescribed and 5 published by the commission. The application shall include 6 the full name, residence, date of birth and other personal 7 identifying information of the applicant , and internet wagering 8 operator if applicable, that the commission deems necessary. 9 The application shall also indicate whether the applicant , 10 or internet wagering operator if applicable, has any of the 11 following: 12 Sec. 8. Section 99F.7, subsection 1, Code Supplement 2011, 13 is amended to read as follows: 14 1. If the commission is satisfied that this chapter and 15 its rules adopted under this chapter applicable to licensees 16 have been or will be complied with, the commission shall issue 17 a license for a period of not more than three years to an 18 applicant to own a gambling game operation, to an applicant to 19 operate a gambling structure, and to an applicant to operate 20 an excursion gambling boat , and to a gambling games licensee 21 who submits an application to conduct internet wagering . The 22 commission shall decide which of the gambling games authorized 23 under this chapter the commission will permit. The commission 24 shall decide the number, location, and type of gambling 25 structures and excursion gambling boats licensed under this 26 chapter . The commission shall allow the operation of an 27 excursion boat or moored barge on or within one thousand feet 28 of the high water marks of the rivers, lakes, and reservoirs 29 of this state as established by the commission in consultation 30 with the United States army corps of engineers, the department 31 of natural resources, or other appropriate regulatory agency. 32 The license shall set forth, as applicable, the name of the 33 licensee, the type of license granted, the location of the 34 gambling structure or the place where the excursion gambling 35 -5- LSB 6026SV (2) 84 ec/nh 5/ 10

S.F. 2275 boats will operate and dock, and the time and number of days 1 during the excursion season and the off season when gambling 2 may be conducted by the licensee. 3 Sec. 9. Section 99F.9, subsections 3 and 5, Code 2011, are 4 amended to read as follows: 5 3. The licensee may receive wagers only from a person 6 present on a licensed excursion gambling boat, licensed 7 gambling structure, or in a licensed racetrack enclosure , or 8 from a person engaging in internet wagering . An internet wager 9 may be placed from any location within this state or from 10 any other location where authorized by law, subject to any 11 requirements adopted by the commission. 12 5. A person under the age of twenty-one years shall not 13 engage in internet wagering or make or attempt to make a wager 14 on an excursion gambling boat, gambling structure, or in a 15 racetrack enclosure and shall not be allowed on the gaming 16 floor of an excursion gambling boat or gambling structure or 17 in the wagering area, as defined in section 99D.2 , or on the 18 gaming floor of a racetrack enclosure. However, a person 19 eighteen years of age or older may be employed to work on 20 the gaming floor of an excursion gambling boat or gambling 21 structure or in the wagering area or on the gaming floor of a 22 racetrack enclosure. A person who violates this subsection 23 with respect to engaging in internet wagering or making or 24 attempting to make a wager commits a scheduled violation under 25 section 805.8C, subsection 5 , paragraph “a” . 26 Sec. 10. Section 99F.12, subsection 2, Code 2011, is amended 27 to read as follows: 28 2. The licensee shall furnish to the commission reports 29 and information as the commission may require with respect to 30 the licensee’s activities. The gross receipts and adjusted 31 gross receipts from gambling shall be separately handled and 32 accounted for from all other moneys received from operation of 33 an excursion gambling boat or from operation of a racetrack 34 enclosure or gambling structure licensed to conduct gambling 35 -6- LSB 6026SV (2) 84 ec/nh 6/ 10

S.F. 2275 games. For an internet wagering licensee, the gross receipts 1 and adjusted gross receipts from internet wagering shall be 2 separately handled and accounted for from all other moneys 3 received from other licensed activities of the licensee. The 4 commission may designate a representative to board a licensed 5 excursion gambling boat or to enter a racetrack enclosure or 6 gambling structure licensed to conduct gambling games. The 7 representative shall have full access to all places within the 8 enclosure of the boat, the gambling structure, or the racetrack 9 enclosure and shall directly supervise the handling and 10 accounting of all gross receipts and adjusted gross receipts 11 from gambling. The representative shall supervise and check 12 the admissions. The compensation of a representative shall be 13 fixed by the commission but shall be paid by the licensee. 14 Sec. 11. Section 99F.12, Code 2011, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION . 2A. a. An internet wagering licensee 17 shall, in addition to the books and records otherwise required 18 by this section, make the following information available to 19 the commission upon request: 20 (1) Monthly auditable and aggregate financial statements of 21 internet wagering transactions. 22 (2) Calculation of all fees payable to government. 23 (3) The identity of registered players. 24 (4) The balance on a registered player’s account at the 25 start of a session of play. 26 (5) The wagers placed on each game time stamped by the games 27 server. 28 (6) The result of each game time stamped by the games 29 server. 30 (7) The amount won or lost by a registered player. 31 (8) The balance on a registered player’s account at the end 32 of the game. 33 b. Information described in paragraph “a” , subparagraphs (3) 34 through (8), shall be confidential. 35 -7- LSB 6026SV (2) 84 ec/nh 7/ 10

S.F. 2275 Sec. 12. Section 99F.15, subsection 3, Code 2011, is amended 1 to read as follows: 2 3. A Except for internet wagering conducted as authorized 3 by this chapter, a person wagering or accepting a wager at 4 any location outside an excursion gambling boat, gambling 5 structure, or a racetrack enclosure is in violation of section 6 725.7 . 7 Sec. 13. Section 99F.15, subsection 4, unnumbered paragraph 8 1, Code 2011, is amended to read as follows: 9 A person commits a class “D” felony and, in addition, shall 10 be barred for life from internet wagering, excursion gambling 11 boats , and gambling structures under the jurisdiction of the 12 commission, if the person does any of the following: 13 EXPLANATION 14 This bill permits licensees authorized to conduct gambling 15 games under Code chapter 99F to apply for and receive a license 16 to conduct internet wagering on poker. 17 Code section 99F.1, concerning definitions, is amended. 18 The bill defines “internet wagering” as a method of wagering 19 by which a person may establish an account, deposit money 20 into the account, and use the account balance for wagering by 21 utilizing electronic communication. The bill also defines 22 “internet wagering operator” as a person who has entered into 23 an agreement to conduct internet wagering for an internet 24 wagering licensee. The definition of “adjusted gross receipts” 25 is amended to mean, for internet wagering, the gross receipts 26 for internet wagering on poker from rake and tournament fees 27 less winnings and player incentives paid to wagerers. The 28 terms “player incentives”, “rake”, and “tournament fees”, for 29 purposes of internet wagering, are also defined. 30 Code section 99F.4, concerning the powers of the state 31 racing and gaming commission, is amended to provide that the 32 commission shall establish requirements for internet wagering 33 and internet wagering licensees and operators. The Code 34 section is also amended to provide that the current process 35 -8- LSB 6026SV (2) 84 ec/nh 8/ 10

S.F. 2275 that allows a person to be voluntarily excluded from a gambling 1 facility shall also apply to internet wagering. 2 New Code section 99F.4E establishes the process for 3 licensing and conducting internet wagering. The bill 4 authorizes current gambling games licensees, upon payment of 5 a fee as determined by the racing and gaming commission, to 6 apply for an internet wagering license and allows more than one 7 existing licensee to jointly apply for an internet wagering 8 license. The bill provides that if more than one licensee 9 applies for a joint license, the licensees shall indicate 10 how the licensees shall distribute at least 3 percent of the 11 adjusted gross receipts from internet wagering on charitable 12 purposes. The bill provides that internet wagering shall be 13 limited to poker, shall be conducted through a single internet 14 site, and shall be limited to persons who have registered with 15 the licensee to conduct internet wagering. The bill provides 16 that if a single gambling games licensee is issued an internet 17 wagering license, the adjusted gross receipts from internet 18 wagering shall be included as part of the licensee’s adjusted 19 gross receipts for purposes of applying the wagering tax 20 pursuant to Code section 99F.11. The bill further provides 21 that if a joint internet wagering license is issued to more 22 than one gambling games licensee, the wagering tax imposed on 23 adjusted gross receipts from internet wagering pursuant to 24 Code section 99F.11 shall be 22 percent or, if the majority of 25 participating licensees are otherwise subject to a wagering tax 26 of 24 percent under Code section 99F.11, 24 percent. 27 Code section 99F.6, concerning requirements for applications 28 for a license under Code chapter 99F, is amended to provide 29 that the requirements also apply to internet wagering operators 30 and applicants for an internet wagering license. 31 Code section 99F.9, concerning wagering, is amended to 32 provide that wagers through internet wagering are authorized 33 and can be made from any location within this state or as 34 authorized by law subject to any requirements adopted by the 35 -9- LSB 6026SV (2) 84 ec/nh 9/ 10

S.F. 2275 commission. The Code section is also amended to provide 1 that limits on wagering for persons under the age of 21 at 2 an excursion gambling boat, gambling structure, or racetrack 3 enclosure also apply to internet wagering. 4 Code section 99F.12, concerning licensee reporting 5 requirements, is amended to provide that an internet wagering 6 licensee shall separately account for the gross receipts and 7 adjusted gross receipts from internet wagering. The bill 8 also provides that an internet wagering licensee shall make 9 available to the racing and gaming commission information 10 concerning the identity and account balances of persons 11 engaging in internet wagering with the licensee as well as 12 information relative to individual poker games. The bill 13 provides that this information is confidential. 14 Code section 99F.15, concerning prohibited activities and 15 penalties, is amended to provide that a person who commits a 16 class “D” felony relative to certain activities relating to 17 gambling shall also be barred for life from internet wagering 18 in the same manner as the person would be barred from excursion 19 gambling boats and gambling structures. 20 -10- LSB 6026SV (2) 84 ec/nh 10/ 10