S.F. 458 DIVISION I 1 HORSE RACING 2 Section 1. Section 99D.7, Code 2011, is amended by adding 3 the following new subsection: 4 NEW SUBSECTION . 2A. To adopt standards regarding the 5 duration of thoroughbred and quarter horse racing seasons, 6 so that a thoroughbred racing season shall not be less than 7 sixty-seven days, and so that a quarter horse racing season 8 shall not be less than twenty-six days. 9 Sec. 2. Section 99D.7, subsection 4, Code 2011, is amended 10 to read as follows: 11 4. a. To regulate the purse structure for race meetings 12 including establishing a minimum purse. 13 b. The commission shall, beginning July 1, 2012, regulate 14 the purse structure for all horse racing so that seventy-six 15 percent is designated for thoroughbred racing, fifteen and 16 one-quarter percent is designated for quarter horse racing, and 17 eight and three-quarter percent is designated for standardbred 18 racing. The purse moneys designated for standardbred racing 19 may only be used to support standardbred harness racing purses 20 at county fairs or for the maintenance or repair of harness 21 racing tracks at the fairgrounds for such county fairs. The 22 horse racetrack in Polk county shall not provide funding to 23 support standardbred racing at such county fairs that is not 24 otherwise provided for in this paragraph. 25 Sec. 3. Section 99D.11, subsection 2, Code 2011, is amended 26 to read as follows: 27 2. Licensees shall only permit the pari-mutuel or 28 certificate method of wagering , or the advanced deposit method 29 of wagering, as defined in this section . 30 Sec. 4. Section 99D.11, subsection 3, Code 2011, is amended 31 to read as follows: 32 3. The licensee may receive wagers of money only from a 33 person present in a licensed racetrack enclosure on a horse 34 or dog in the race selected by the person making the wager 35 -1- LSB 2322SV (1) 84 aw/rj 1/ 40

S.F. 458 to finish first in the race or from a person engaging in 1 advanced deposit wagering as defined in this section . The 2 person wagering shall acquire an interest in the total money 3 wagered on all horses or dogs in the race as first winners in 4 proportion to the amount of money wagered by the person. 5 Sec. 5. Section 99D.11, subsection 6, paragraph a, Code 6 2011, is amended to read as follows: 7 a. All wagering shall be conducted within the racetrack 8 enclosure where the licensed race is held, except as provided 9 in paragraph paragraphs “b” and “c” . 10 Sec. 6. Section 99D.11, subsection 6, Code 2011, is amended 11 by adding the following new paragraph: 12 NEW PARAGRAPH . c. (1) The commission shall authorize the 13 licensee to conduct advanced deposit wagering. An advanced 14 deposit wager may be placed in person at a licensed racetrack 15 enclosure, or from any other location via a telephone-type 16 device or any other electronic means. 17 (2) For the purposes of this section, “advanced deposit 18 wagering” means a method of pari-mutuel wagering in which an 19 individual may establish an account, deposit money into the 20 account, and use the account balance to pay for pari-mutuel 21 wagering. Of the net revenue received through advanced deposit 22 wagering, fifty percent shall be directed to horse purses 23 created pursuant to section 99D.7, subsection 4, and fifty 24 percent shall be directed to the licensee for the pari-mutuel 25 horse racetrack located in Polk county. 26 Sec. 7. Section 99D.22, subsection 1, Code 2011, is amended 27 to read as follows: 28 1. a. A licensee shall hold at least one race on each 29 racing day limited to Iowa-foaled horses or Iowa-whelped 30 dogs as defined by the department of agriculture and land 31 stewardship using standards consistent with this section . 32 However, if sufficient competition cannot be had among that 33 class of horses or dogs on any day, another race for the day may 34 be substituted. 35 -2- LSB 2322SV (1) 84 aw/rj 2/ 40

S.F. 458 b. A sum equal to twelve percent of the purse won by 1 an Iowa-foaled horse or Iowa-whelped dog shall be used to 2 promote the horse and dog breeding industries. The twelve 3 percent shall be withheld by the licensee from the breakage 4 and shall be paid at the end of the race meeting to the state 5 department of agriculture and land stewardship which in turn 6 shall deposit it in a special fund to be known as the Iowa horse 7 and dog breeders fund. The department shall pay the amount 8 deposited in the fund that is withheld from the purse won by 9 an Iowa-foaled horse to the breeder of the winning Iowa-foaled 10 horse by December 31 of each calendar year. The department 11 shall pay the amount deposited in the fund that is withheld 12 from the purse won by an Iowa-whelped dog to the breeder of the 13 winning Iowa-whelped dog by March 31 of each calendar year. 14 For the purposes of this section , the breeder of a horse shall 15 be considered to be the owner of the brood mare at the time the 16 foal is dropped. 17 c. No less than twenty percent of all net purse moneys 18 distributed to each breed, as described in section 99D.7, 19 subsection 4, paragraph “b” , shall be designated for registered 20 Iowa-bred foals in the form of breeder’s awards or purse 21 supplement awards to enhance and foster the growth of the horse 22 breeding industry. 23 Sec. 8. Section 99F.6, subsection 4, paragraph a, Code 2011, 24 is amended to read as follows: 25 a. (1) Before a license is granted, the division of 26 criminal investigation of the department of public safety 27 shall conduct a thorough background investigation of the 28 applicant for a license to operate a gambling game operation 29 on an excursion gambling boat. The applicant shall provide 30 information on a form as required by the division of criminal 31 investigation. 32 (2) A qualified sponsoring organization licensed to operate 33 gambling games under this chapter shall distribute the receipts 34 of all gambling games, less reasonable expenses, charges, 35 -3- LSB 2322SV (1) 84 aw/rj 3/ 40

S.F. 458 taxes, fees, and deductions allowed under this chapter , as 1 winnings to players or participants or shall distribute the 2 receipts for educational, civic, public, charitable, patriotic, 3 or religious uses as defined in section 99B.7, subsection 3 , 4 paragraph “b” . However, a licensee to conduct gambling games 5 under this chapter shall, unless an operating agreement for an 6 excursion gambling boat otherwise provides, distribute at least 7 three percent of the adjusted gross receipts for each license 8 year for educational, civic, public, charitable, patriotic, 9 or religious uses as defined in section 99B.7, subsection 3 , 10 paragraph “b” . However, if a licensee who is also licensed to 11 conduct pari-mutuel wagering at a horse racetrack has unpaid 12 debt from the pari-mutuel racetrack operations, the first 13 receipts of the gambling games operated within the racetrack 14 enclosure less reasonable operating expenses, taxes, and fees 15 allowed under this chapter shall be first used to pay the 16 annual indebtedness. 17 (3) The commission shall authorize, subject to the debt 18 payments for horse racetracks and the provisions of paragraph 19 “b” for dog racetracks, a licensee who is also licensed to 20 conduct pari-mutuel dog or horse racing to use receipts from 21 gambling games within the racetrack enclosure to supplement 22 purses for races particularly for Iowa-bred horses pursuant to 23 an agreement which shall be negotiated between the licensee and 24 representatives of the dog or horse owners. For agreements 25 subject to commission approval concerning purses for horse 26 racing beginning on or after January 1, 2006 , and ending 27 before January 1, 2021, the agreements shall provide that 28 total annual purses for all horse racing shall be no less than 29 eleven percent of the first two hundred million dollars of net 30 receipts, and six percent of net receipts above two hundred 31 million dollars. In addition, live standardbred horse racing 32 shall not be featured at the horse racetrack in Polk county. 33 Agreements that are subject to commission approval concerning 34 horse purses for a particular period of time beginning on or 35 -4- LSB 2322SV (1) 84 aw/rj 4/ 40

S.F. 458 after January 1, 2006, and ending before January 1, 2021, shall 1 be jointly submitted to the commission for approval. 2 (4) A qualified sponsoring organization shall not make a 3 contribution to a candidate, political committee, candidate’s 4 committee, state statutory political committee, county 5 statutory political committee, national political party, or 6 fund-raising event as these terms are defined in section 7 68A.102 . The membership of the board of directors of a 8 qualified sponsoring organization shall represent a broad 9 interest of the communities. 10 (5) For purposes of this paragraph, “net receipts” means the 11 annual adjusted gross receipts from all gambling games less the 12 annual amount of money pledged by the owner of the facility to 13 fund a project approved to receive vision Iowa funds as of July 14 1, 2004. 15 DIVISION II 16 COUNTY REFERENDUMS AND 17 GAMBLING GAME LICENSING 18 Sec. 9. Section 99F.4A, subsection 8, paragraph a, Code 19 2011, is amended to read as follows: 20 a. The commission shall, upon the immediate payment 21 of the applicable table games license fee and submission 22 to the commission by June 1, 2005, of an application by a 23 licensee of a pari-mutuel dog or horse racetrack licensed to 24 conduct gambling games at a pari-mutuel racetrack enclosure, 25 issue a license to the licensee to conduct table games of 26 chance, including video machines that simulate table games 27 of chance, at the pari-mutuel racetrack enclosure subject to 28 the requirements of this subsection . However, a table games 29 license may only be issued to a licensee required to pay a 30 table games license fee of three million dollars under this 31 subsection if the licensee, and all other licensees of an 32 excursion gambling boat in that county, file an agreement 33 with the commission authorizing the granting of a table games 34 license under this subsection and permitting all licensees 35 -5- LSB 2322SV (1) 84 aw/rj 5/ 40

S.F. 458 of an excursion gambling boat to operate a moored barge as 1 of a specific date. The licensee shall be granted a table 2 games license by the commission without conducting a separate 3 referendum authorizing table games upon payment of the 4 applicable license fee to the commission which table games 5 license fee may be offset by the licensee against taxes imposed 6 on the licensee by section 99F.11 , to the extent of twenty 7 percent of the table games license fee paid pursuant to this 8 subsection for each of five consecutive fiscal years beginning 9 with the fiscal year beginning July 1, 2008. Fees paid 10 pursuant to this subsection are not refundable to the licensee. 11 A licensee shall not be required to pay a fee to renew a table 12 games license issued pursuant to this subsection . Moneys 13 collected by the commission from a table games license fee paid 14 under this subsection shall be deposited in the rebuild Iowa 15 infrastructure fund created in section 8.57 . 16 Sec. 10. Section 99F.7, subsection 11, Code 2011, is amended 17 by striking the subsection. 18 Sec. 11. Section 99F.7, subsection 15, Code 2011, is amended 19 to read as follows: 20 15. If a licensed excursion boat stops at more than one 21 harbor and travels past a county without stopping at any port 22 in that county, the commission shall require the excursion boat 23 operator to develop a schedule for ports of call in which a 24 county referendum has been approved, and the port of call has 25 that have the necessary facilities to handle the boat. The 26 commission may limit the schedule to only one port of call per 27 county. 28 DIVISION III 29 INTERNET POKER 30 Sec. 12. NEW SECTION . 99H.1 Internet poker —— purpose. 31 1. This chapter may be cited as the “Iowa Internet Poker 32 Consumer Protection and Revenue Generation Act of 2011” . 33 2. It is the purpose of this chapter to create a framework 34 for the state to regulate intrastate internet poker in order to 35 -6- LSB 2322SV (1) 84 aw/rj 6/ 40

S.F. 458 ensure consumer protections and provide to the state additional 1 revenue that otherwise escapes Iowa taxation, by authorizing, 2 creating, and implementing a licensing and regulatory structure 3 and system of intrastate internet poker to do all of the 4 following: 5 a. Provide that intrastate internet poker is only offered 6 for play in a manner that is lawful under the federal Unlawful 7 Internet Gambling Enforcement Act of the federal Security and 8 Accountability for Every Port Act of 2006, Pub. L. No. 109-347, 9 which authorizes a state to regulate and conduct intrastate 10 internet gambling, such as poker. 11 b. Provide a new source of revenue that will generate 12 economic benefits to the state through the authorization of 13 lawful and regulated intrastate internet poker in Iowa instead 14 of allowing economic benefits to flow to unregulated foreign 15 operators and markets. 16 c. Create a contractual relationship between licensed 17 affiliates and an internet poker hub operator with the 18 technical expertise to ensure that wagering authorized by this 19 chapter is only offered to registered players who are at least 20 twenty-one years of age and physically present within the 21 borders of this state at the time of play. 22 d. Ensure that the internet poker hub operator is qualified 23 to be licensed by the state and to meet all statutory, 24 regulatory, and contractual requirements of the state while 25 protecting registered poker players. 26 e. Allow a licensee authorized to conduct gambling games 27 on or in an excursion gambling boat, gambling structure, or 28 racetrack enclosure to become an affiliate of the internet 29 poker hub operator. 30 f. Ensure that the state is able to collect all taxes and 31 fees from the play of intrastate internet poker. 32 g. Create a system to protect each registered player’s 33 private information and prevent fraud and identity theft and 34 ensure that the registered player’s financial transactions are 35 -7- LSB 2322SV (1) 84 aw/rj 7/ 40

S.F. 458 processed in a secure and transparent fashion. 1 h. Ensure that the regulatory agency has unlimited access 2 to the premises and records of the internet poker hub operator 3 and affiliates to ensure strict compliance with its regulations 4 concerning credit authorization, account access, and other 5 security provisions. 6 i. Require the internet poker hub operator to provide 7 accessible customer service to registered players. 8 j. Require the internet poker hub operator’s internet site 9 to contain information relating to problem gambling, including 10 a telephone number that an individual may call to seek 11 information and assistance for a potential gambling addiction. 12 Sec. 13. NEW SECTION . 99H.2 Definitions. 13 As used in this chapter, unless otherwise required by the 14 context: 15 1. “Adjusted gross receipts” means the total amount of 16 money received by the internet poker affiliates from registered 17 players for participation in authorized games less winnings 18 paid to registered players. 19 2. “Affiliate” means an operator licensed under chapter 99D 20 or 99F that maintains an internet site as a portal into the 21 state internet poker network. 22 3. “Authorized game” means a game or series of games of 23 poker which are played as a nonbanking game on the state 24 internet poker network. 25 4. “Commission” means the Iowa racing and gaming commission. 26 5. “Convicted” means having been found guilty, regardless of 27 adjudication, as a result of a jury verdict, nonjury trial, or 28 entry of a plea of guilty or nolo contendere. 29 6. “Internet poker hub operator” or “poker hub operator” 30 means a computer system operator that is licensed by the state 31 and contracts with the state to operate the state internet 32 poker network. 33 7. “Intrastate internet poker” means authorized games of 34 poker played over the internet by registered players who are 35 -8- LSB 2322SV (1) 84 aw/rj 8/ 40

S.F. 458 physically present within the borders of this state at the time 1 of play. 2 8. “Nonbanking game” means an authorized game in which an 3 internet poker hub operator or affiliate is not a participant 4 and has no financial stake in the outcome of the authorized 5 game. 6 9. “Player incentives” means any bonuses, rewards, prizes, 7 or other types of promotional items provided to a registered 8 player by an internet poker hub operator or affiliate as an 9 incentive to begin or continue playing on the state internet 10 poker network. 11 10. “Rake” means a set fee or percentage of the pot 12 assessed by an internet poker hub operator for providing the 13 internet poker services to registered players for the right to 14 participate in an authorized game conducted by the internet 15 poker hub operator or affiliates. 16 11. “Registered player” means a person who is registered 17 with an affiliate to participate in an authorized game 18 conducted on the state internet poker network. 19 12. “State internet poker network” means the computer system 20 operated by the internet poker hub operator and affiliates that 21 authorizes the playing of and wagering on intrastate internet 22 poker by registered players through the internet site portals 23 of affiliates. 24 13. “Tournament fee” means a set fee assessed to registered 25 players by the internet poker hub operator for providing the 26 internet poker tournament services. 27 Sec. 14. NEW SECTION . 99H.3 Intrastate internet poker 28 authorized. 29 1. Under the federal Unlawful Internet Gambling Enforcement 30 Act of the federal Security and Accountability for Every Port 31 Act of 2006, Pub. L. No. 109-347, a state is authorized to 32 regulate and conduct intrastate internet poker as long as all 33 players and the internet wagering activities are located within 34 the state. 35 -9- LSB 2322SV (1) 84 aw/rj 9/ 40

S.F. 458 2. Notwithstanding any other provision of law, a person may 1 operate a state internet poker network as an internet poker hub 2 operator and a person may participate as a registered player in 3 an authorized game or tournament provided on the state internet 4 poker network by an affiliate if such game or tournament and 5 poker operations are conducted strictly in accordance with the 6 provisions of this chapter and federal law. 7 Sec. 15. NEW SECTION . 99H.4 Authority of the commission. 8 The commission shall regulate the operation of the state 9 internet poker network, the internet poker hub operator, the 10 affiliates, and the play of intrastate internet poker under 11 this chapter and rules adopted pursuant to this chapter. The 12 commission may do all of the following: 13 1. Adopt rules related to intrastate internet poker, 14 including but not limited to rules governing all of the 15 following: 16 a. The issuance of operator and individual occupational 17 licenses to an internet poker hub operator, affiliates, and 18 their employees. 19 b. The operation of the state internet poker network and 20 technical system requirements. 21 c. Security of the financial information of registered 22 players and registered player accounts. 23 d. Bonuses, awards, promotions, and other incentives to 24 registered players. 25 e. Recordkeeping and reporting requirements. 26 f. The distribution of intrastate internet poker income. 27 g. The imposition and collection of all fees and taxes 28 imposed by this chapter. 29 2. Conduct investigations and monitor operation of the 30 state internet poker network and the playing of authorized 31 games on the state internet poker network. 32 3. Review the books, accounts, and records of any current or 33 former internet poker hub operator or affiliate. 34 4. Suspend or revoke any license or permit, after hearing, 35 -10- LSB 2322SV (1) 84 aw/rj 10/ 40

S.F. 458 for any violation of this chapter or the rules adopted pursuant 1 to this chapter. 2 5. Take testimony, issue summons and subpoenas for any 3 witness, and issue subpoenas duces tecum in connection with any 4 matter within its jurisdiction. 5 6. Monitor and ensure proper collection of taxes and fees 6 imposed by this chapter. 7 7. Require the internet poker hub operator to adopt internal 8 controls to ensure no compromise of revenue to the state. 9 8. Monitor, audit, and verify the cash flow and accounting 10 of state internet poker network revenue for any given operating 11 day. 12 9. Monitor and ensure that the playing of intrastate 13 internet poker is conducted fairly and that all personal 14 and financial information provided by registered players is 15 protected by the internet poker hub operator. 16 Sec. 16. NEW SECTION . 99H.5 Internet poker hub operator —— 17 license required. 18 1. A person shall not operate as the internet poker hub 19 operator in this state unless the person holds a valid internet 20 poker hub operator license issued under this section. 21 2. Only a person holding a valid intrastate internet 22 poker license issued by the commission may provide intrastate 23 internet poker for play to registered players. 24 3. An internet poker hub operator must be an entity 25 authorized to conduct business in this state. 26 4. A person seeking a license or renewal of a license 27 to operate as the internet poker hub operator shall 28 make application on forms prescribed by the commission. 29 Applications for an internet poker hub operator license 30 shall contain all of the information the commission, by 31 rule, determines is required to ensure eligibility under this 32 section. 33 5. As a condition of licensure and to maintain continued 34 authority to conduct intrastate internet poker, an internet 35 -11- LSB 2322SV (1) 84 aw/rj 11/ 40

S.F. 458 poker hub operator licensee must provide the documentation 1 required under this section on a timely basis to the commission 2 and the documentation must be appropriate, current, and 3 accurate. 4 Sec. 17. NEW SECTION . 99H.6 Selection of an internet poker 5 hub operator —— negotiated agreement. 6 The commission shall, subject to agreement by a majority of 7 licensed affiliates, select an internet poker hub operator that 8 meets the licensure and technical requirements and expertise 9 to provide services for lawful intrastate internet poker and 10 authorized games in Iowa. The applicant must demonstrate 11 the ability to ensure that intrastate internet poker is only 12 offered to registered players who are at least twenty-one years 13 of age and who are physically present within the borders of 14 this state at the time of play. 15 Sec. 18. NEW SECTION . 99H.7 Internet poker hub operator 16 —— qualifications. 17 For the purposes of this chapter, the commission shall 18 consider all of the following as minimum qualifications to 19 determine whether an internet poker hub operator applicant 20 together with an applicant’s proposed subcontractor is legally, 21 technically, and financially qualified to become the state’s 22 internet poker hub operator: 23 1. The applicant, and any subcontractor, is an entity 24 authorized to conduct business in this state. 25 2. The applicant, and any subcontractor, has not in the 26 past accepted any wagers of moneys or other consideration on 27 any internet gambling activity, including poker, from any Iowa 28 resident. However, this subsection does not disqualify an 29 applicant or subcontractor who accepts internet pari-mutuel 30 wagers from any Iowa resident through a legal internet 31 pari-mutuel wagering entity authorized in another state. 32 3. The applicant’s, and any subcontractor’s, executives 33 and key employees meet the requirements to obtain intrastate 34 internet poker occupational licenses from the commission, as 35 -12- LSB 2322SV (1) 84 aw/rj 12/ 40

S.F. 458 set forth in section 99H.11. 1 4. The applicant, any subcontractors, and all entities with 2 an ownership interest in the applicant or any subcontractors 3 have demonstrated compliance with all federal and state laws in 4 the jurisdictions in which they provide services. 5 5. The applicant has provided all necessary documentation 6 and information relating to all proposed subcontractors of the 7 applicant. 8 6. The applicant has provided a description of the manner in 9 which the applicant will facilitate compliance with all of the 10 standards set forth in this chapter, including but not limited 11 to all of the following: 12 a. Registered player processes and requirements relating 13 to intrastate play, age verification, and exclusion of problem 14 gamblers. 15 b. Network system requirements, including but not limited 16 to connectivity, hardware, software, anti-fraud systems, virus 17 prevention, data protection, access controls, firewalls, 18 disaster recovery, and redundancy. 19 c. Gaming systems, including but not limited to hardware 20 and software that ensures that games are legal, games are 21 independent and fair, game and betting rules are available to 22 all registered players, and all data used for the conduct of 23 each game is randomly generated and unpredictable. 24 d. Ongoing auditing by the commission and accounting 25 systems, including but not limited to those for registered 26 player accounts, participation fees, distribution of funds to 27 registered players, and distribution of revenue to the state. 28 7. The applicant has provided all other documentation or 29 information that the commission, by rule, has determined is 30 required to ensure that the applicant is legally, technically, 31 and financially qualified to enter into a contract to become 32 the state’s internet poker hub operator. 33 Sec. 19. NEW SECTION . 99H.8 Annual bond required. 34 The holder of a license to be the internet poker hub operator 35 -13- LSB 2322SV (1) 84 aw/rj 13/ 40

S.F. 458 in this state shall be financially and otherwise responsible 1 for the operation of the state internet poker network and 2 for the conduct of any employee involved in the operation of 3 the state internet poker network. Before the issuance of an 4 internet poker hub operator license, a qualified applicant for 5 such a license must provide evidence of a surety bond in the 6 amount of one million dollars, payable to the state, for each 7 year that the licensee is licensed to be the internet poker hub 8 operator in this state. The bond shall be issued by a surety or 9 sureties authorized to do business in this state and approved 10 by the commission. The bond shall guarantee that the internet 11 poker hub operator fulfills all financial requirements of the 12 contract. Such bond shall be kept in full force and effect by 13 an internet poker hub operator during the term of the license. 14 Sec. 20. NEW SECTION . 99H.9 Internet poker hub operator 15 —— obligations. 16 An internet poker hub operator shall comply with the terms of 17 its contract with the state and with all of the following: 18 1. The accepted proposal agreed to by the affiliates 19 and an internet poker hub operator applicant shall govern 20 the interpretation of the contract creating a contractual 21 relationship entered into between the affiliates and the 22 internet poker hub operator. 23 2. The contract between the affiliates and the internet 24 poker hub operator is for a five-year period and may be renewed 25 for a period equal to the original contract, if agreed to by 26 both parties. 27 3. The contract between the affiliates and the internet 28 poker hub operator may be amended by mutual written agreement 29 of the affiliates and the internet poker hub operator. 30 4. If this chapter is amended, the internet poker hub 31 operator may declare the contract null and void within sixty 32 days after the effective date of the amendment and must provide 33 at least ninety days’ prior written notice to the affiliates of 34 such intent; otherwise, the internet poker hub operator agrees 35 -14- LSB 2322SV (1) 84 aw/rj 14/ 40

S.F. 458 to be bound by the amendments to this chapter enacted after the 1 terms of the contract are established. 2 5. In the event of commercial infeasibility due to a change 3 in federal law rendering the provision of intrastate internet 4 poker services illegal, the internet poker hub operator may 5 abandon the contract after providing the affiliates with at 6 least ninety days’ prior written notice of its intent to end 7 the contract and a statement explaining its interpretation 8 that continuing to provide services under the contract is 9 commercially infeasible. 10 6. If a dispute arises between the parties to the contract, 11 the affiliates or the internet poker hub operator may pursue an 12 administrative law or district court remedy interpreting the 13 contract and the rights and responsibilities in the contract. 14 Sec. 21. NEW SECTION . 99H.10 Excursion gambling boat, 15 gambling structure, or racetrack enclosure affiliate license 16 required —— application —— fees. 17 An affiliate license may only be issued to an excursion 18 gambling boat or gambling structure operator licensed under 19 section 99F.5, or to a racetrack enclosure operator licensed 20 under section 99F.4A, who actively operates an excursion 21 gambling boat, gambling structure, or racetrack enclosure with 22 a minimum of ten tables, complies with all the requirements of 23 chapter 99F and the rules adopted pursuant to that chapter, and 24 complies with the following requirements: 25 1. The affiliate may only provide intrastate internet poker 26 for play to registered players through the state internet poker 27 network. 28 2. After the initial affiliate license is granted, the 29 affiliate’s application for the renewal of that license shall 30 be made in conjunction with the affiliate’s renewal application 31 for its license issued under section 99F.4A or 99F.5. 32 3. A person seeking a license or renewal of a license to 33 operate as an affiliate shall make the application on forms 34 prescribed by the commission. An application for an affiliate 35 -15- LSB 2322SV (1) 84 aw/rj 15/ 40

S.F. 458 license shall contain all of the information the commission, by 1 rule, determines is required to ensure eligibility. 2 4. As a condition of licensure and to maintain continued 3 authority for the conduct of intrastate internet poker, the 4 affiliate licensee must provide the documentation required 5 under this section on a timely basis to the commission and the 6 documentation must be appropriate, current, and accurate. 7 5. An affiliate licensee shall not sell or lease all or any 8 portion of its excursion gambling boat, gambling structure, or 9 racetrack enclosure licensed under chapter 99F to any person or 10 entity, or contract with any person or entity to operate its 11 internet site, conduct marketing or promotional activities, or 12 conduct any other aspects of business associated with the play 13 of poker under chapter 99F or the play of intrastate internet 14 poker under this chapter, that does not meet and comply with 15 all requirements and provisions of this chapter and chapter 16 99F. 17 6. The annual affiliate license fee shall be two hundred 18 fifty thousand dollars, payable to the commission. 19 7. The commission shall adopt rules regarding affiliate 20 licenses and renewals. 21 Sec. 22. NEW SECTION . 99H.11 Business and employee 22 occupational license required —— applications —— fees. 23 1. A person employed by or otherwise working for the 24 internet poker hub operator or an affiliate in any capacity 25 related to and while conducting intrastate internet poker 26 operations must hold a valid employee occupational license 27 issued by the commission. 28 2. The internet poker hub operator or an affiliate shall 29 not employ or allow to be employed any person in any capacity 30 related to the operation of intrastate internet poker unless 31 the person holds a valid employee occupational license. 32 3. The internet poker hub operator or affiliate shall 33 not contract with, or otherwise do business with, a business 34 required to hold a valid intrastate internet poker business 35 -16- LSB 2322SV (1) 84 aw/rj 16/ 40

S.F. 458 occupational license, unless the business holds such a valid 1 license. 2 4. A proprietorship, partnership, corporation, 3 subcontractor, or other entity must obtain a valid intrastate 4 internet poker business occupational license issued by the 5 commission to partner with, contract with, be associated 6 with, or participate in the conduct of intrastate internet 7 poker operations with the internet poker hub operator or an 8 affiliate. 9 5. The commission shall establish, by rule, a schedule for 10 the annual renewal of internet poker hub operator and affiliate 11 occupational licenses. Intrastate internet poker occupational 12 licenses are not transferable. 13 6. A person seeking an intrastate internet poker 14 occupational license, or renewal of such a license, shall 15 make the application on forms prescribed by the commission 16 and include payment of the appropriate application fee. An 17 application for an intrastate internet poker occupational 18 license shall contain all of the information the commission, by 19 rule, determines is required to ensure eligibility under this 20 section. 21 7. The commission shall adopt rules regarding intrastate 22 internet poker occupational licenses and renewals. 23 8. Pursuant to rules adopted by the commission, any person 24 may apply for and, if qualified, be issued an intrastate 25 internet poker occupational license valid for a period of three 26 years upon payment of the full occupational license fee for 27 each of the three years for which the license is issued. The 28 intrastate internet poker occupational license is valid during 29 its specified term at the internet poker hub operator or an 30 affiliate where intrastate internet poker is authorized to be 31 conducted. 32 9. The intrastate internet poker occupational license fee 33 for initial application and annual renewal shall be determined 34 by rule of the commission but shall not exceed fifty dollars 35 -17- LSB 2322SV (1) 84 aw/rj 17/ 40

S.F. 458 for an occupational license for an employee of the internet 1 poker hub operator or an affiliate licensee or one thousand 2 dollars for a business occupational license for nonemployees 3 of the licensee providing goods or services to an internet 4 poker hub operator or an affiliate licensee. Failure to pay 5 the required fee constitutes grounds for disciplinary action 6 by the commission against the internet poker hub operator or 7 an affiliate licensee. 8 10. A person holding a valid individual occupational 9 license issued by the commission under section 99F.6 is not 10 required to obtain an individual employee occupational license 11 under this section. 12 Sec. 23. NEW SECTION . 99H.12 Business and employee 13 occupational license denial, revocation, suspension, limitation, 14 or nonrenewal. 15 The commission may do all of the following: 16 1. Deny an application for, or revoke, suspend, or place 17 conditions or restrictions on, a license of an employee or 18 business that has been refused a license by any other state 19 gaming commission, governmental department, agency, or other 20 authority exercising regulatory jurisdiction over gaming in 21 another state or jurisdiction. 22 2. Deny an application for, or suspend or place conditions 23 or restrictions on, a license of any employee or business that 24 is under suspension or has unpaid fines in another state or 25 jurisdiction. 26 3. Deny, suspend, revoke, or refuse to renew any internet 27 poker hub operator or affiliate occupational license if the 28 applicant for the license or the licensee has violated this 29 chapter or the rules of the commission governing the conduct of 30 persons connected with the play of intrastate internet poker. 31 4. Deny, suspend, revoke, or refuse to renew any internet 32 poker hub operator or affiliate occupational license if the 33 applicant for the license or the licensee has been convicted 34 in this state, in any other state, or under the laws of the 35 -18- LSB 2322SV (1) 84 aw/rj 18/ 40

S.F. 458 United States of a capital felony, a felony, or an offense in 1 any other state that would be a felony under the laws of this 2 state involving arson; trafficking in, conspiracy to traffic 3 in, smuggling, importing, conspiracy to smuggle or import, or 4 delivery, sale, or distribution of a controlled substance; 5 racketeering; or a crime involving a lack of good moral 6 character; or the applicant has had a gaming license revoked 7 by this state or any other jurisdiction for any gaming-related 8 offense. 9 5. Deny, revoke, or refuse to renew any internet poker hub 10 operator or affiliate occupational license if the applicant 11 for the license or the licensee has been convicted of a felony 12 or misdemeanor in this state, in any other state, or under the 13 laws of the United States if such felony or misdemeanor is 14 related to gambling or bookmaking as described in chapter 725. 15 Sec. 24. NEW SECTION . 99H.13 Registered players —— 16 eligibility. 17 1. All registered players must be located within this state 18 at the time of play of intrastate internet poker. 19 2. A person who has not attained twenty-one years of age 20 shall not be a registered player or play intrastate internet 21 poker. 22 3. The internet poker hub operator and affiliates shall 23 exclude from play any person who has submitted a completed 24 internet poker self-exclusion form. 25 a. The internet poker hub operator and affiliates shall have 26 an internet poker self-exclusion form available and accessible 27 on the internet site page that is displayed when either of the 28 following occur: 29 (1) A person opens the internet site page to register as a 30 registered player. 31 (2) A registered player accesses the first internet site 32 page prior to playing. 33 b. Upon receipt of a completed internet poker self-exclusion 34 form, the affiliate shall immediately provide a copy of 35 -19- LSB 2322SV (1) 84 aw/rj 19/ 40

S.F. 458 the completed form to the internet poker hub operator, each 1 affiliate, and the commission. The commission shall ensure 2 that all other affiliates exclude the person from the play of 3 intrastate internet poker. 4 c. The internet poker hub operator and affiliate shall 5 retain the original form to identify persons who request to be 6 excluded from play. 7 d. The internet poker hub operator and affiliate shall 8 prominently display a link to the internet site of a 9 responsible gaming organization as identified by the commission 10 for services related to the prevention of compulsive and 11 addictive gambling. 12 e. A person shall not bring any action against the internet 13 poker hub operator or an affiliate for negligence or any 14 other claim if a person who has filled out an internet poker 15 self-exclusion form gains access and plays intrastate internet 16 poker despite the request to be excluded. 17 Sec. 25. NEW SECTION . 99H.14 Intrastate internet poker —— 18 authorized games. 19 1. In order to offer a specific game of poker for play, the 20 internet poker hub operator shall provide the commission with 21 all of the following: 22 a. A description of any game of poker and the betting rules 23 it proposes to offer to registered players. 24 b. Documentation relating to development and testing of the 25 game’s software. 26 2. Upon submission of the information required in 27 subsection 1, the internet poker hub operator may begin 28 offering the game. If the commission does not object to the 29 proposed game of poker within thirty days after receipt of 30 the submission, the game shall be considered authorized and 31 the internet poker hub operator submitting the proposal may 32 continue to offer the game to registered players. 33 3. Games and betting events shall be operated strictly in 34 accordance with the specified game and betting rules. 35 -20- LSB 2322SV (1) 84 aw/rj 20/ 40

S.F. 458 4. The internet poker hub operator shall ensure that the 1 authorized games of poker are fair. For each proposed or 2 authorized game offered for play, the gaming system shall 3 display all of the following information: 4 a. The name of the game. 5 b. Any restrictions on play. 6 c. The rules of the game. 7 d. All instructions on how to play. 8 e. The unit and total bets permitted. 9 f. The registered player’s current account balance, which 10 shall be updated in real time. 11 g. Any other information that the internet poker hub 12 operator determines is necessary for the registered player 13 to have in real time to compete fairly in the proposed or 14 authorized game. 15 5. All proposed and authorized game results shall be 16 conducted in such a fashion so that data used to create results 17 shall be unpredictable such that it is infeasible to predict 18 the next occurrence in a game, given complete knowledge of 19 the algorithm and hardware generating the sequence, and all 20 previously generated numbers. 21 6. The internet poker hub operator shall deploy controls and 22 technology to ensure the ability to minimize fraud or cheating 23 through collusion, such as external exchange of information 24 between different players, or any other means. 25 a. If the internet poker hub operator becomes aware that 26 fraud or cheating is taking place or has taken place, the 27 internet poker hub operator shall immediately take steps to 28 stop such activities and inform the commission of all relevant 29 facts. 30 b. The internet poker hub operator shall immediately inform 31 the commission of any complaints and investigate whether the 32 complaints are true and shall expeditiously act to prevent 33 further fraud or collusion from taking place on the state 34 internet poker network. The internet poker hub operator shall 35 -21- LSB 2322SV (1) 84 aw/rj 21/ 40

S.F. 458 report the results of the investigation in writing to the 1 commission within twenty-four hours after the complaint and 2 shall continue to report every twenty-four hours until its 3 investigation is concluded. This paragraph does not prevent 4 the commission from conducting an independent investigation 5 or initiating an administrative action to protect registered 6 players from fraud and collusion on the state internet poker 7 network and does not prohibit a registered player, the internet 8 poker hub operator, an affiliate, or the commission from 9 reporting suspected criminal activities to law enforcement 10 officials. 11 c. A registered player shall not bring an action for damages 12 against the internet poker hub operator for attempting to 13 prevent fraud or cheating if the internet poker hub operator 14 can demonstrate that the internet poker hub operator acted to 15 prevent such actions as soon as it became aware of them. 16 7. If the gaming server or software does not allow a game to 17 be completed, the hand shall be voided and all funds relating 18 to the incomplete hand shall be returned to the registered 19 player’s account. 20 Sec. 26. NEW SECTION . 99H.15 Registered players accounts. 21 1. The internet poker hub operator shall register players 22 and establish registered player accounts prior to play and 23 shall ensure that personally identifiable information is 24 accessible to an individual registered player and to regulators 25 but is otherwise secure. 26 2. A person shall not participate in any game on the state 27 internet poker network unless the person is registered as a 28 player and holds an account. 29 3. Accounts may be established in person or by mail, 30 telephone, or any electronic means. 31 4. To register and establish an account, a person must 32 provide all of the following registration information: 33 a. First name and surname. 34 b. Principal residence address. 35 -22- LSB 2322SV (1) 84 aw/rj 22/ 40

S.F. 458 c. Telephone number. 1 d. Social security number. 2 e. Legal identification or certification to prove that the 3 person is at least twenty-one years of age. 4 f. Valid electronic mail address. 5 g. The source of funds to be used to establish the account 6 after the registration process is complete. 7 5. An individual shall not register for more than three 8 registered player accounts per calendar year. A registered 9 player shall not have more than three registered player 10 accounts at any time. 11 6. Prior to completing the registration process, the 12 internet poker hub operator shall explain to the person in a 13 conspicuous fashion the privacy policies of the state internet 14 poker network, and the person must assent to all of the 15 following policies: 16 a. Personal identifying information shall not be shared 17 with any nongovernment third parties except for licensed 18 subcontractors of an internet poker hub operator for the sole 19 purpose of permitting registered players to participate in 20 games on the state internet poker network or upon receipt of 21 a court order to subpoena such information from the internet 22 poker hub operator. 23 b. All personally identifiable information about registered 24 players shall be shared with the commission, and any other 25 governmental agency that receives a court order to subpoena 26 such information. 27 7. The internet poker hub operator shall also require that 28 a person agree to the terms of a use agreement applying to 29 registered players. 30 8. The internet poker hub operator shall provide a 31 registered player with the means to update the information 32 provided in subsection 4. 33 9. The internet poker hub operator may revoke the accounts 34 of a registered player for any of the following reasons: 35 -23- LSB 2322SV (1) 84 aw/rj 23/ 40

S.F. 458 a. The registered player provided false information in the 1 registration process. 2 b. The registered player has not updated registration 3 information to keep it current. 4 c. The registered player has violated the internet poker hub 5 operator’s terms of use agreement. 6 10. The internet poker hub operator may suspend or revoke 7 the account of a registered player if the internet poker hub 8 operator suspects the registered player has participated in 9 illegal activity on the state internet poker network. 10 11. The internet poker hub operator shall establish and 11 maintain an account for each registered player. The internet 12 poker hub operator shall do all of the following: 13 a. Provide a means for a registered player to put funds into 14 an account; however, a registered player shall not increase the 15 amount in an account after a game has started and before the 16 game has been completed. 17 b. Maintain records on the balance of each registered 18 player’s account. 19 c. Prohibit a registered player from placing a wager unless 20 the registered player’s account has sufficient funds to cover 21 the amount of the wager. 22 d. Not provide credit to a registered player’s account 23 or act as an agent for a credit provider to facilitate the 24 provision of funds. 25 e. Provide a means for a registered player to transfer money 26 out of the registered player’s account. 27 12. The internet poker hub operator shall put in place 28 other systems that provide registered players with the ability 29 to control aspects of their play. Upon registration and at 30 each time when a registered player logs onto the state internet 31 poker network, the internet poker hub operator shall permit 32 the registered player to adjust the registered player’s play 33 settings to do any of the following: 34 a. Set a limit on the deposits that can be made per day. 35 -24- LSB 2322SV (1) 84 aw/rj 24/ 40

S.F. 458 b. Set a limit on the amount that can be wagered within a 1 specified period of time. 2 c. Set a limit on the losses that may incur within a 3 specified period of time. 4 d. Set a limit on the amount of time that can be played 5 after logging on to the state internet poker network. 6 e. Prevent the state internet poker network from allowing 7 the registered player to play for a definite or indefinite 8 period of time. 9 13. During play, in order to assist a registered player to 10 decide whether to suspend play, the registered player’s screen 11 shall do all of the following: 12 a. Indicate how long the registered player has been playing. 13 b. Indicate the registered player’s winnings or losses since 14 the time of last logging in. 15 c. Give an option to the registered player to end the 16 session or return to the game. 17 d. Require the registered player to confirm that the 18 registered player has read the message. 19 Sec. 27. NEW SECTION . 99H.16 Registered players accounts 20 —— records and reports. 21 1. The internet poker hub operator shall establish a book 22 of accounts, regularly audit, and make all financial records 23 available to the commission. The internet poker hub operator 24 shall demonstrate that it has a system of maintaining records 25 and reports that is readily available to the commission. The 26 records and reports shall include all of the following: 27 a. Monthly auditable and aggregate financial statements of 28 gaming transactions. 29 b. Calculation of all fees payable to government. 30 c. The identity of registered players. 31 d. The balance on a registered player’s account at the start 32 of a session of play. 33 e. The wagers placed on each game time stamped by the games 34 server. 35 -25- LSB 2322SV (1) 84 aw/rj 25/ 40

S.F. 458 f. The result of each game time stamped by the games server. 1 g. The amount won or lost by a registered player. 2 h. The balance on a registered player’s account at the end 3 of the game. 4 2. The internet poker hub operator shall reconcile all 5 data log files regarding the registered players’ accounts on a 6 monthly basis. 7 Sec. 28. NEW SECTION . 99H.17 Internet poker hub operator —— 8 technical systems. 9 1. An internet poker hub operator shall put in place 10 technical systems that materially aid the commission 11 in fulfilling its regulatory, consumer protection, and 12 revenue-raising functions and allow the commission unrestricted 13 access to and the right to inspect the technical systems. 14 2. The internet poker hub operator shall ensure that the 15 state internet poker network is protected from manipulation or 16 tampering to affect the random probabilities of winning plays. 17 3. The internet poker hub operator shall define and document 18 its methodology for all of the following: 19 a. The development, implementation, and maintenance of 20 gaming software in a manner representative of industry best 21 practice standards. 22 b. Server connectivity requirements that include all of the 23 following: 24 (1) Minimum game server connectivity requirements that 25 ensure players are protected from losses due to connectivity 26 problems. 27 (2) The system’s ability to recover all transactions 28 involving player funds in the event of a failure or 29 malfunction. 30 (3) Aborted game procedures. 31 c. Ability of the system to recover all information required 32 for viewing a game interrupted due to loss of connectivity. 33 d. Consumer protection requirements. 34 e. Responsible advertising, marketing, and promotion 35 -26- LSB 2322SV (1) 84 aw/rj 26/ 40

S.F. 458 that ensure that registered players are not misled through 1 advertising or promotional activities, and ensure that the 2 terms and conditions of promotions are followed. 3 f. Anti-money-laundering controls. 4 g. Preventive and detective controls addressing money 5 laundering and fraud risks which shall be documented and 6 implemented. 7 4. The internet poker hub operator shall retain all such 8 documentation for at least twelve months. 9 Sec. 29. NEW SECTION . 99H.18 Participation fee. 10 The internet poker hub operator shall charge a fee or 11 a tournament fee to registered players for the right to 12 participate in authorized games or tournaments conducted on the 13 state internet poker network. The participation fee may be a 14 per-hand charge, a flat fee, an hourly rate, or a rake subject 15 to the posted maximum amount but shall not be based on the 16 amount won by registered players. The fee shall be designated 17 and conspicuously posted on the registered player’s screen 18 prior to the start of each proposed or authorized game. 19 Sec. 30. NEW SECTION . 99H.19 Prohibited relationships. 20 1. A proprietorship, partnership, corporation, 21 subcontractor, or other entity must obtain a valid intrastate 22 internet poker business occupational license issued by the 23 commission to partner with, contract with, be associated 24 with, or participate in the conduct of intrastate internet 25 poker operations with the internet poker hub operator or an 26 affiliate. 27 2. A person employed by or performing any function on behalf 28 of the commission shall not do any of the following: 29 a. Be an officer, director, owner, or employee of any person 30 or entity licensed by the commission. 31 b. Have or hold any interest, direct or indirect, in or 32 engage in any commerce or business relationship with any person 33 licensed by the commission. 34 3. An employee of the commission or a relative living in the 35 -27- LSB 2322SV (1) 84 aw/rj 27/ 40

S.F. 458 same household as the employee shall not play at any time on 1 the state internet poker network. 2 4. An occupational licensee of the internet poker hub 3 operator or a relative living in the same household as the 4 occupational licensee shall not play at any time on the state 5 internet poker network. This subsection does not apply to an 6 occupational licensee of an affiliate. 7 Sec. 31. NEW SECTION . 99H.20 Prohibited acts —— penalties. 8 1. The internet poker hub operator may conduct any proposed 9 or authorized game under section 99H.14 unless specifically 10 prohibited by the commission or by this chapter. 11 2. A person who has not attained twenty-one years of age 12 shall not hold an intrastate internet poker occupational 13 license or engage in any game conducted on the state internet 14 poker network. 15 3. An entity shall not offer intrastate internet poker for 16 free or for money or any other consideration to individuals 17 present in this state unless the entity can demonstrate that 18 it is in compliance with the laws and tax regulations of the 19 United States and of this state. 20 4. An entity that has accepted any wager of money or other 21 consideration on any internet gambling activity, including 22 poker, from any Iowa resident is not eligible to apply for 23 licensure and participate in intrastate internet poker in this 24 state. 25 5. Except as otherwise provided by law and in addition to 26 any other penalty, a person who knowingly makes or causes to be 27 made, or aids, assists, or procures another to make, a false 28 statement in any report, disclosure, application, or any other 29 document required under this chapter or any rule adopted under 30 this chapter is subject to an administrative penalty of up to 31 ten thousand dollars. 32 6. A person who manipulates or attempts to manipulate 33 the outcome, payoff, or operation of the play of intrastate 34 internet poker by tampering, collusion, or fraud, or by the use 35 -28- LSB 2322SV (1) 84 aw/rj 28/ 40

S.F. 458 of any object, instrument, or device, by any means, commits a 1 class “C” felony. 2 Sec. 32. NEW SECTION . 99H.21 License fees. 3 1. Upon the submission of the initial application for an 4 internet poker hub operator license and annually thereafter, 5 on the anniversary date of the issuance of the initial 6 license, the internet poker hub operator licensee shall pay a 7 nonrefundable license fee of two hundred fifty thousand dollars 8 for the succeeding twelve months of licensure. 9 2. Upon submission of the initial application for an 10 affiliate license and annually thereafter, as prescribed by 11 the commission, the licensee shall pay to the commission a 12 nonrefundable license fee of one thousand dollars for the 13 succeeding twelve months of licensure. 14 3. The license fees required under this section shall 15 be considered repayment receipts as defined in section 8.2 16 and shall be used by the commission for the regulation, 17 investigation, and enforcement of the intrastate internet poker 18 provisions under this chapter. These fees shall be accounted 19 for separately from taxes or fees paid pursuant to chapters 99D 20 and 99F. 21 Sec. 33. NEW SECTION . 99H.22 Internet poker hub operator 22 —— advance payment. 23 Upon the awarding of a contract to be the internet poker 24 hub operator by the affiliates pursuant to its selection under 25 section 99H.6, the internet poker hub operator licensee shall 26 pay to the commission a nonrefundable payment of three million 27 dollars. This payment shall be treated as an advance payment 28 to the state by the internet poker hub operator and shall be 29 credited against the tax on adjusted gross receipts derived 30 from the play of intrastate internet poker. 31 Sec. 34. NEW SECTION . 99H.23 Wagering tax on adjusted gross 32 receipts. 33 For the purposes of this chapter, a tax is imposed on the 34 adjusted gross receipts received each fiscal year, applicable 35 -29- LSB 2322SV (1) 84 aw/rj 29/ 40

S.F. 458 to the affiliate as a licensee, in the same manner and at the 1 rate described in section 99F.11. 2 Sec. 35. NEW SECTION . 99H.24 Rulemaking —— more than one 3 internet hub operator. 4 The commission shall adopt rules pursuant to chapter 17A 5 relating to the operation and administration of intrastate 6 internet poker under this chapter. The commission may also 7 adopt rules to allow for the operation and licensing of more 8 than one internet hub operator. 9 Sec. 36. NEW SECTION . 99H.25 Legislative authority —— 10 administration of chapter. 11 The general assembly finds and declares that it has 12 exclusive authority over the conduct of intrastate internet 13 poker in this state. Only the commission and other authorized 14 state agencies shall administer this chapter and regulate 15 the intrastate internet poker industry in this state, 16 including operation of the internet poker hub operator, play 17 of authorized games, and the state internet poker network 18 authorized in this chapter, as provided by law and as provided 19 in rules adopted by the commission. 20 EXPLANATION 21 This bill relates to gambling establishments within the 22 state. 23 The bill would allow for gambling games at pari-mutuel 24 facilities to be used to supplement racing purses in 25 perpetuity. Current law requires that such supplements end 26 before 2021. 27 The bill requires that the Iowa racing and gaming commission 28 adopt standards for the length of the thoroughbred and quarter 29 horse racing seasons, so that the thoroughbred racing season 30 be not less than 67 days in duration and so that the quarter 31 horse racing season be not less than 26 days in duration. 32 The bill requires that no less than 20 percent of all net 33 purse moneys distributed to each breed must be designated 34 for certain purposes to foster the growth of the Iowa horse 35 -30- LSB 2322SV (1) 84 aw/rj 30/ 40

S.F. 458 breeding industry. The bill also sets requirements for the 1 proportionate use of horse purses, so that 76 percent of purse 2 funds are designated for thoroughbred races, 15.25 percent of 3 purse funds are designated for quarter horse races, and 8.75 4 percent of purse funds are designated for standardbred races. 5 The bill states that moneys designated for standardbred racing 6 can only be used to support harness racing at county fairs. 7 The bill also prohibits the horse racetrack in Polk county 8 from contributing other funding for such racing that is not 9 otherwise provided for under the purse structure designations 10 of the bill. 11 The bill permits advanced deposit wagering for pari-mutuel 12 licensees. The bill would allow for an advanced deposit wager 13 to be placed in person at a licensed racetrack enclosure or 14 from any other location by telephone or other electronic 15 means. In this form of wagering an individual creates an 16 account, deposits money into that account, and can use the 17 balance within the account for pari-mutuel wagering. The bill 18 specifies that 50 percent of the revenue from advanced deposit 19 wagering be distributed to certain race purses and the other 50 20 percent be directed to the licensee for the pari-mutuel horse 21 racetrack in Polk county. 22 The bill would prohibit live standardbred horse racing 23 by the licensee for the pari-mutuel horse racetrack in Polk 24 county. 25 The bill eliminates the requirement that county referenda be 26 conducted to approve the continued licensing of gambling games 27 on excursion boats, in gambling structures, and in racetrack 28 enclosures, and makes conforming amendments. 29 The bill authorizes the creation of an intrastate internet 30 poker network and provides a regulatory structure for its 31 implementation, operation, and taxation. 32 The bill provides that it may be cited as the “Internet Poker 33 Consumer Protection and Revenue Generation Act of 2011”. The 34 bill states that its purpose is to provide intrastate internet 35 -31- LSB 2322SV (1) 84 aw/rj 31/ 40

S.F. 458 poker play only in accordance with federal law, provide a 1 new source of revenue for the state, create a contractual 2 relationship with an internet poker hub operator with certain 3 technical expertise, provide for a negotiated agreement between 4 the internet poker hub operator and affiliate licensees, allow 5 physical gambling facilities to operate affiliate internet 6 sites, ensure taxability, protect player information, ensure 7 regulatory access to data and information, ensure customer 8 service, and provide information on problem gambling. 9 The bill defines certain terms used in new Code chapter 99H. 10 The bill provides authority over intrastate internet 11 poker to the Iowa racing and gaming commission. The bill 12 provides that the commission may adopt certain rules, conduct 13 investigations, monitor operations, review books and accounts, 14 suspend or revoke licenses upon a hearing, take testimony, 15 issue summons and certain subpoenas, monitor and ensure 16 collection of taxes, monitor and ensure fairness of games 17 conducted, and ensure the protection of player information. 18 The bill provides for the licensing of an internet poker 19 hub operator by the commission. The bill provides that only a 20 person holding the internet poker hub operator license issued 21 by the commission and certain affiliates can provide intrastate 22 internet poker to registered players. The hub operator must 23 be authorized to conduct business in the state, must complete 24 an application, and must provide all documentation as required 25 by the commission. 26 The bill provides that the selection of an internet poker hub 27 operator must be by a negotiated agreement with the affiliates, 28 and requires that the successful applicant demonstrate the 29 ability to ensure that players are at least 21 years of age and 30 present within the state at the time of play. 31 The bill includes other selection qualifications of 32 the internet poker hub operator. The applicant and any 33 subcontractor must be authorized to conduct business in Iowa 34 and must not have accepted certain types of wagers previously. 35 -32- LSB 2322SV (1) 84 aw/rj 32/ 40

S.F. 458 Certain executives or employees of the applicant, and any 1 subcontractor, must meet the requirements to obtain an 2 intrastate internet poker occupational or business license 3 from the commission. The bill does not require here that 4 these officers actually obtain such licenses. The applicant, 5 subcontractor, and all entities with an ownership interest in 6 either must have demonstrated compliance with all federal and 7 state laws under which they provide services. The applicant 8 must provide certain information on subcontractors and provide 9 certain descriptions of how the applicant will comply with the 10 standards set under this new Code chapter. The commission may 11 by rule require and an applicant must provide any additional 12 documentation or information to ensure that an applicant is 13 legally, technically, and financially qualified to become the 14 state’s internet poker hub operator. 15 The bill provides for an internet poker hub operator 16 license, along with a corresponding application and fees. 17 The licensing application requires disclosure of certain 18 information related to the applicant and its direct or indirect 19 owners. This information includes authorization to conduct 20 business in the state, current and historical financial 21 information, documents related to legal and regulatory 22 proceedings, documents related to business history including 23 state and federal tax filings, documents related to the 24 nature and sources of financing, documentation of financial 25 qualification, and any other information required by the 26 commission by rule in order to ensure eligibility. 27 The bill requires that internet poker hub operator license 28 applicants provide subcontractor information including 29 all necessary documentation and information related to 30 subcontractors of the internet poker hub operator. This 31 information includes but is not limited to a description of 32 subcontractor services to be provided, additional subcontractor 33 information, and any other information required by the 34 commission by rule in order to ensure eligibility. 35 -33- LSB 2322SV (1) 84 aw/rj 33/ 40

S.F. 458 The bill requires that an internet poker hub operator 1 license applicant provide a description of how it will 2 facilitate compliance with the requirements of the chapter 3 related to but not limited to registered player requirements 4 including intrastate play, age verification, and exclusion of 5 problem gamblers; system requirements including connectivity, 6 hardware, software, anti-fraud systems, virus prevention, data 7 protection, access controls, firewalls, disaster recovery, and 8 redundancy; gaming systems requirements including legality, 9 independence and fairness, availability of rules, randomness, 10 and unpredictability; and accounting systems requirements 11 including player accounts, participation fees, transparency and 12 reporting, distribution of revenue, and ongoing auditing. 13 The bill requires that before the commission issues an 14 internet poker hub operator license, that each qualified 15 applicant provide evidence of a surety bond of $1 million 16 payable to the state for each year that the licensee is so 17 licensed. The bond shall be held in full force and effect 18 during the term of the license. 19 The internet poker hub operator must comply with the 20 contract between the affiliates and the operator. The contract 21 will be for five years and may be renewed for additional 22 five-year periods. The contract may be amended by written 23 agreement of the affiliates and the operator. If this new 24 Code chapter is amended, the operator may declare the contract 25 null and void within 60 days after the effective date of the 26 amendment. If the operator fails to make such a declaration, 27 the operator shall be bound to the requirements of the new Code 28 chapter as amended. In the event that a change in federal law 29 renders the provisions of intrastate internet poker illegal, 30 the operator may abandon the contract after providing the 31 affiliates at least 90 days prior written notice explaining its 32 interpretation that continuing to provide services under the 33 contract is commercially infeasible. 34 The bill provides that only those holding a valid excursion 35 -34- LSB 2322SV (1) 84 aw/rj 34/ 40

S.F. 458 gambling boat, gambling structure, or racetrack enclosure 1 affiliate license, also referred to as an affiliate license, 2 may provide intrastate internet poker for play to registered 3 players through the state internet poker network. The bill 4 provides that after an affiliate license is issued that it 5 must be renewed in conjunction with its excursion gambling 6 boat, gambling structure, or racetrack enclosure license 7 respectively. The bill requires that any affiliate application 8 be made on forms prescribed by the commission and contain all 9 information required by the commission by rule. The applicant 10 must provide all documentation required, and shall not sell or 11 lease licensed property, or contract with any person or entity 12 to operate its internet site unless the individual or entity 13 purchasing leasing or contracting with the licensee meets and 14 complies with all the requirement of Code chapter 99F and this 15 new Code chapter. The annual affiliate license fee shall be 16 $250,000 payable to the commission and the commission shall 17 adopt rules related to affiliate licenses. 18 The bill requires business and employee occupational 19 licenses. The bill requires that any person employed or 20 otherwise working for the internet poker hub operator or an 21 affiliate must hold a valid occupational license issued by the 22 commission. The bill requires that the internet hub operator 23 and any affiliate not employ any individual in any capacity 24 related to the operation of intrastate internet poker who does 25 not hold a valid occupational license. The bill requires that 26 an internet hub operator and any affiliate not contract with 27 or employ a business required to hold a business occupational 28 license which does not hold such a license. The bill 29 requires that any proprietorship, partnership, corporation, 30 subcontractor, or other entity must obtain a business 31 occupational license issued by the commission to conduct 32 business with the internet poker hub operator or any affiliate. 33 The bill requires the commission to adopt a schedule 34 for occupational license renewals and requires that all 35 -35- LSB 2322SV (1) 84 aw/rj 35/ 40

S.F. 458 occupational licenses be nontransferable. The bill requires 1 that one apply for an occupational license or renewal, pay 2 an appropriate fee and provide all required information or 3 documentation. The commission must adopt rules regarding 4 license applications and renewals. Licenses will be valid for 5 three years upon payment of a full occupational license fee for 6 the three years. The initial employee occupational license 7 fee shall not exceed $50 annually. The initial business 8 occupational license fee shall not exceed $1,000 annually. An 9 individual holding a valid individual occupational license 10 issued by the commission under Code section 99F.6 is not 11 required to obtain a license under this new Code section 12 99H.11. 13 The bill provides that the commission may deny an 14 application for, or revoke, suspend, or place restrictions on, 15 a license of any person or entity that was refused a similar 16 license elsewhere, that is under suspension or has unpaid fines 17 elsewhere, that has violated this new Code chapter or the 18 rules adopted by the commission, or that has been convicted of 19 certain offenses. 20 The bill sets eligibility requirements for registered 21 players. The bill requires that a registered player be located 22 within the state, be at least 21 years of age, and must not have 23 submitted a completed internet poker self-exclusion form. The 24 bill provides certain requirements for the creation and use of 25 an internet poker self-exclusion form. The bill provides that 26 a person shall not bring any action of negligence or any other 27 claim resulting from a self-excluded individual gaining access 28 to play despite their request to be excluded. 29 The bill requires that in order for an internet poker hub 30 operator to offer a specific game, the hub operator must 31 provide the commission with certain information, including 32 a description of the game and documentation related to the 33 development and testing of the game. After submission of this 34 information, the internet poker hub operator may begin offering 35 -36- LSB 2322SV (1) 84 aw/rj 36/ 40

S.F. 458 the game and the game shall be considered authorized if not 1 disapproved by the commission within 30 days. All games must 2 be conducted in accordance with game and betting rules. The 3 internet poker hub operator must ensure the fairness of all 4 games and must ensure the display of the game’s name, any 5 restrictions on play, the rules of the game, play instructions, 6 unit and total bets permitted, the player’s current account 7 balance, and any other information deemed necessary by the 8 internet poker hub operator. 9 The bill requires that all proposed and authorized game 10 results be unpredictable even given complete knowledge of 11 algorithms and hardware generating sequence, and all previously 12 generated numbers. The bill requires the internet poker hub 13 operator to take steps to minimize fraud and cheating through 14 collusion. The bill requires that if the operator becomes 15 aware of fraud or cheating actually taking place, the operator 16 must attempt to end those activities and report relevant facts 17 to the commission. The operator is required to inform the 18 commission of complaints and investigate such complaints. The 19 bill limits legal actions against the operator in the event 20 that the operator can demonstrate taking action upon becoming 21 aware of fraud or cheating. The bill requires that if a server 22 or software does not allow a game to be completed, that the 23 hand be voided and all funds relating to the incomplete hand 24 shall be returned to the registered player’s account. 25 The bill provides for the creation of registered player 26 accounts by the internet poker hub operator. The operator 27 must ensure that personally identifiable information is secure 28 but accessible to individual players and regulators. The 29 bill requires that an individual be a registered player to 30 participate in any game on the state internet poker network. 31 The bill allows for accounts to be established in person, 32 by mail, by telephone, or by electronic means. The bill 33 requires that an individual establishing an account provide 34 the individual’s first name and surname, the address of the 35 -37- LSB 2322SV (1) 84 aw/rj 37/ 40

S.F. 458 individual’s principal residence, telephone number, social 1 security number, proof of age, a valid e-mail address, and the 2 source of funds used to establish the account. An individual 3 may register up to three registered player accounts per year 4 and shall not have more than three registered player accounts 5 at any time. The hub operator must conspicuously present its 6 privacy policies before such registration may be completed. 7 The bill requires that personally identifiable information 8 not be shared with any nongovernmental individual or entity 9 not acting as a subcontractor. All information will be shared 10 with the commission. The hub operator must require that an 11 individual agree with the terms of use before the individual 12 may become a registered player. The hub operator must provide 13 registered players with the means to update their information, 14 and may suspend or revoke the accounts of registered players 15 for certain reasons. The hub operator must establish and 16 maintain and account for each registered player with means of 17 placing funds into the account. The bill requires the hub 18 operator to maintain certain records, to prohibit certain 19 wagers, not provide credit for a player’s account, and to 20 provide a registered player with the means to transfer money 21 out of the player’s account. The bill requires the hub 22 operator to provide registered players with certain functional 23 controls related to their wagering and to provide them with 24 certain information related to their play. 25 The bill requires the internet poker hub operator to 26 establish a book of accounts and make all financial records 27 available to the commission. The hub operator must demonstrate 28 its system of maintaining records and reports readily available 29 to the commission. The records and reports must include 30 certain monthly statements, a calculation of fees payable to 31 government, the identity of registered players, certain player 32 account balances, wagers, and results of each game with time 33 stamps. The hub operator must reconcile registered players’ 34 accounts monthly. 35 -38- LSB 2322SV (1) 84 aw/rj 38/ 40

S.F. 458 The bill provides technical requirements. An internet poker 1 hub operator must put in place certain technical systems to 2 aid the commission in its regulatory, consumer protection, 3 and revenue-raising functions. The operator must ensure 4 against tampering or manipulation with relevant systems, and 5 both define and document certain methodologies related to 6 gaming software, server connectivity, certain game procedures, 7 consumer protections, advertising, money-laundering, and 8 certain preventive and detective controls. 9 The bill provides that the internet hub operator must charge 10 certain fees. The bill explicitly prohibits certain employees 11 of the commission and employees’ relatives living in the same 12 household from playing on the state internet poker network. 13 The same limitation applies to occupational licensees and their 14 relatives. The bill provides additional limits for commission 15 employees. 16 The bill enumerates certain prohibited acts and provides 17 penalties. The bill provides that the internet poker hub 18 operator may conduct any proposed game unless prohibited by the 19 commission or the new Code chapter. The bill provides that 20 a person under the age of 21 shall not hold an occupational 21 license or participate in any of these games. 22 The bill provides that it is a violation of state law for 23 any entity to offer internet poker for free, for money, or 24 for any other consideration to individuals within this state 25 unless that entity can demonstrate compliance with the laws 26 and tax regulations of this state and the United States. The 27 bill prohibits any entity that has accepted any wager of money 28 or other consideration on any internet gambling activity from 29 being eligible to apply for licensure in intrastate internet 30 poker in this state. 31 The bill provides for an administrative penalty of up to 32 $10,000 to be assessed on any individual who knowingly makes, 33 causes to be made, aids, assists, or procures another to make a 34 false statement in any report, disclosure, application, or any 35 -39- LSB 2322SV (1) 84 aw/rj 39/ 40

S.F. 458 other document required in this new Code chapter in addition to 1 any other penalty, and except as otherwise provided by law. 2 The bill creates a class “C” felony for manipulating or 3 attempting to manipulate the outcome, payoff, or operation of 4 intrastate internet poker by tampering, collusion, fraud, or by 5 the use of any object, instrument, or device. 6 The bill provides for license fees for the internet poker hub 7 operator and affiliates. The hub operator licensee is required 8 to pay an annual fee of $250,000 and the affiliates licensees 9 are required to pay an annual fee of $1,000 each. These fees 10 are nonrefundable. The commission is required to use these 11 fees to cover costs related to regulating, investigating, and 12 enforcing this new Code chapter. The bill further requires 13 that these fees be accounted for separately from taxes or fees 14 paid pursuant to Code chapters 99D and 99F. 15 The bill requires that the selected internet poker hub 16 operator licensee pay the commission a nonrefundable $3 million 17 upon being awarded such license. This payment shall be treated 18 as an advance payment to the state by the hub operator and this 19 payment will be credited against the tax on adjusted gross 20 receipts derived from the play of intrastate internet poker. 21 For the purposes of the new Code chapter, a tax is imposed 22 on the adjusted gross receipts received each fiscal year in 23 the same manner and at the rate described in section 99F.11, 24 applicable to affiliates as licensees. 25 The bill provides the commission with rulemaking authority 26 and allows for the operation and licensing of more than one 27 internet hub operator. The bill also provides a legislative 28 finding that the general assembly has exclusive authority 29 over intrastate internet poker. The bill provides that the 30 commission and other authorized state agencies must administer 31 this new Code chapter and regulate the industry as provided by 32 law and by rules adopted by the commission. 33 -40- LSB 2322SV (1) 84 aw/rj 40/ 40