S.F. _____ 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 . 19A. “Player incentives” means, for 14 internet wagering, any bonuses, rewards, prizes, or other types 15 of promotional items provided to a person engaging in internet 16 wagering by an internet wagering licensee as an incentive to 17 engage in internet wagering. 18 NEW SUBSECTION . 22. “Rake” means a set fee or percentage of 19 the pot assessed by an internet wagering licensee for providing 20 the internet wagering services to a person engaging in internet 21 wagering for the right to participate in internet wagering. 22 NEW SUBSECTION . 23. “Tournament fee” means a set fee 23 assessed to a person engaging in internet wagering by the 24 internet wagering licensee for providing internet wagering 25 tournament services. 26 Sec. 3. Section 99F.3, Code 2011, is amended to read as 27 follows: 28 99F.3 Gambling games authorized. 29 The system of wagering on a gambling game as provided 30 by this chapter is legal, when conducted on an excursion 31 gambling boat, gambling structure, or racetrack enclosure at 32 authorized locations by a licensee , or, for internet wagering, 33 when conducted by an internet wagering licensee pursuant to 34 requirements established by the commission, as provided in this 35 -1- LSB 6026SC (6) 84 ec/nh 1/ 9

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

S.F. _____ to conduct internet wagering. 1 Sec. 6. NEW SECTION . 99F.4E Internet wagering on poker —— 2 licensing —— requirements. 3 1. Upon application by a licensee authorized to conduct 4 gambling games under this chapter, the commission shall issue 5 an internet wagering license to the licensee subject to the 6 provisions of this chapter and rules adopted pursuant to this 7 chapter relating to gambling and internet wagering. A single 8 joint license to conduct internet wagering may be issued to 9 more than one licensee authorized to conduct gambling games 10 under this chapter if the application includes an agreement 11 delineating how each licensee subject to the agreement shall 12 distribute at least three percent of the adjusted gross 13 receipts from internet wagering on poker from the joint 14 license for each license year for educational, civic, public, 15 charitable, patriotic, or religious uses as defined in section 16 99B.7, subsection 3, paragraph “b” , as otherwise required by 17 this chapter. The issuance of a joint license to conduct 18 internet wagering by more than one licensee under this chapter 19 shall not be considered the issuance of a new license under 20 this chapter. 21 2. An internet wagering licensee shall comply with the 22 following requirements: 23 a. Internet wagering shall be limited to wagering on poker 24 and all of its variations, including but not limited to Texas 25 hold ’em, Omaha hold ’em, draw poker, and stud poker. 26 b. Internet wagering shall be conducted by the licensee 27 through a single internet site. 28 c. Internet wagering shall be limited to only those persons 29 who have registered with the licensee to engage in internet 30 wagering. To register, a person shall provide sufficient 31 information to the licensee to verify that the person is at 32 least twenty-one years of age and is otherwise authorized to 33 engage in internet wagering in this state. 34 d. (1) If an internet wagering license is issued to one 35 -3- LSB 6026SC (6) 84 ec/nh 3/ 9

S.F. _____ licensee authorized to conduct gambling games under this 1 chapter, adjusted gross receipts received by the gambling games 2 licensee under this chapter from internet wagering each fiscal 3 year shall be added to the adjusted gross receipts received 4 by the licensee from gambling games other than from internet 5 wagering for purposes of imposing a tax on the adjusted gross 6 receipts received by the licensee as provided in section 7 99F.11. 8 (2) If a joint internet wagering license is issued to more 9 than one licensee authorized to conduct gambling games under 10 this chapter, the tax rate imposed on adjusted gross receipts 11 from internet wagering on poker each fiscal year pursuant to 12 section 99F.11 shall be twenty-two percent or, if a majority 13 of participating licensees on the joint license are otherwise 14 subject to a tax rate of twenty-four percent on adjusted gross 15 receipts from gambling games over three million dollars under 16 section 99F.11, twenty-four percent. 17 e. Any other requirements as the commission establishes 18 to ensure the legality and integrity of conducting internet 19 wagering in this state. 20 Sec. 7. Section 99F.6, subsection 1, unnumbered paragraph 21 1, Code Supplement 2011, is amended to read as follows: 22 A person shall not be issued a license to conduct gambling 23 games on an excursion gambling boat or a license to operate 24 an excursion gambling boat under this chapter , an internet 25 wagering license, an occupational license, a distributor 26 license, or a manufacturer license unless the person has 27 completed and signed an application on the form prescribed and 28 published by the commission. The application shall include 29 the full name, residence, date of birth and other personal 30 identifying information of the applicant that the commission 31 deems necessary. The application shall also indicate whether 32 the applicant has any of the following: 33 Sec. 8. Section 99F.7, subsection 1, Code Supplement 2011, 34 is amended to read as follows: 35 -4- LSB 6026SC (6) 84 ec/nh 4/ 9

S.F. _____ 1. If the commission is satisfied that this chapter and 1 its rules adopted under this chapter applicable to licensees 2 have been or will be complied with, the commission shall issue 3 a license for a period of not more than three years to an 4 applicant to own a gambling game operation, to an applicant to 5 operate a gambling structure, and to an applicant to operate 6 an excursion gambling boat , and to a gambling games licensee 7 who submits an application to conduct internet wagering . The 8 commission shall decide which of the gambling games authorized 9 under this chapter the commission will permit. The commission 10 shall decide the number, location, and type of gambling 11 structures and excursion gambling boats licensed under this 12 chapter . The commission shall allow the operation of an 13 excursion boat or moored barge on or within one thousand feet 14 of the high water marks of the rivers, lakes, and reservoirs 15 of this state as established by the commission in consultation 16 with the United States army corps of engineers, the department 17 of natural resources, or other appropriate regulatory agency. 18 The license shall set forth, as applicable, the name of the 19 licensee, the type of license granted, the location of the 20 gambling structure or the place where the excursion gambling 21 boats will operate and dock, and the time and number of days 22 during the excursion season and the off season when gambling 23 may be conducted by the licensee. 24 Sec. 9. Section 99F.9, subsections 3 and 5, Code 2011, are 25 amended to read as follows: 26 3. The licensee may receive wagers only from a person 27 present on a licensed excursion gambling boat, licensed 28 gambling structure, or in a licensed racetrack enclosure , or 29 from a person engaging in internet wagering . An internet wager 30 may be placed from any location within this state or from 31 any other location where authorized by law, subject to any 32 requirements adopted by the commission. 33 5. A person under the age of twenty-one years shall not 34 engage in internet wagering or make or attempt to make a wager 35 -5- LSB 6026SC (6) 84 ec/nh 5/ 9

S.F. _____ on an excursion gambling boat, gambling structure, or in a 1 racetrack enclosure and shall not be allowed on the gaming 2 floor of an excursion gambling boat or gambling structure or 3 in the wagering area, as defined in section 99D.2 , or on the 4 gaming floor of a racetrack enclosure. However, a person 5 eighteen years of age or older may be employed to work on 6 the gaming floor of an excursion gambling boat or gambling 7 structure or in the wagering area or on the gaming floor of a 8 racetrack enclosure. A person who violates this subsection 9 with respect to engaging in internet wagering or making or 10 attempting to make a wager commits a scheduled violation under 11 section 805.8C, subsection 5 , paragraph “a” . 12 Sec. 10. Section 99F.12, subsection 2, Code 2011, is amended 13 to read as follows: 14 2. The licensee shall furnish to the commission reports 15 and information as the commission may require with respect to 16 the licensee’s activities. The gross receipts and adjusted 17 gross receipts from gambling shall be separately handled and 18 accounted for from all other moneys received from operation of 19 an excursion gambling boat or from operation of a racetrack 20 enclosure or gambling structure licensed to conduct gambling 21 games. For an internet wagering licensee, the gross receipts 22 and adjusted gross receipts from internet wagering shall be 23 separately handled and accounted for from all other moneys 24 received from other licensed activities of the licensee. The 25 commission may designate a representative to board a licensed 26 excursion gambling boat or to enter a racetrack enclosure or 27 gambling structure licensed to conduct gambling games. The 28 representative shall have full access to all places within the 29 enclosure of the boat, the gambling structure, or the racetrack 30 enclosure and shall directly supervise the handling and 31 accounting of all gross receipts and adjusted gross receipts 32 from gambling. The representative shall supervise and check 33 the admissions. The compensation of a representative shall be 34 fixed by the commission but shall be paid by the licensee. 35 -6- LSB 6026SC (6) 84 ec/nh 6/ 9

S.F. _____ Sec. 11. Section 99F.12, Code 2011, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 2A. a. An internet wagering licensee 3 shall, in addition to the books and records otherwise required 4 by this section, make the following information available to 5 the commission upon request: 6 (1) Monthly auditable and aggregate financial statements of 7 internet wagering transactions. 8 (2) Calculation of all fees payable to government. 9 (3) The identity of registered players. 10 (4) The balance on a registered player’s account at the 11 start of a session of play. 12 (5) The wagers placed on each game time stamped by the games 13 server. 14 (6) The result of each game time stamped by the games 15 server. 16 (7) The amount won or lost by a registered player. 17 (8) The balance on a registered player’s account at the end 18 of the game. 19 b. Information described in paragraph “a” , subparagraphs (3) 20 through (8), shall be confidential. 21 Sec. 12. Section 99F.15, subsection 3, Code 2011, is amended 22 to read as follows: 23 3. A Except for internet wagering conducted as authorized 24 by this chapter, a person wagering or accepting a wager at 25 any location outside an excursion gambling boat, gambling 26 structure, or a racetrack enclosure is in violation of section 27 725.7 . 28 Sec. 13. Section 99F.15, subsection 4, unnumbered paragraph 29 1, Code 2011, is amended to read as follows: 30 A person commits a class “D” felony and, in addition, shall 31 be barred for life from internet wagering, excursion gambling 32 boats , and gambling structures under the jurisdiction of the 33 commission, if the person does any of the following: 34 EXPLANATION 35 -7- LSB 6026SC (6) 84 ec/nh 7/ 9

S.F. _____ This bill permits licensees authorized to conduct gambling 1 games under Code chapter 99F to apply for and receive a license 2 to conduct internet wagering on poker. 3 Code section 99F.1, concerning definitions, is amended. The 4 bill defines “internet wagering” as a method of wagering by 5 which a person may establish an account, deposit money into the 6 account, and use the account balance for wagering by utilizing 7 electronic communication. The definition of “adjusted gross 8 receipts” is amended to mean, for internet wagering, the 9 gross receipts for internet wagering on poker from rake and 10 tournament fees less winnings and player incentives paid 11 to wagerers. The terms “player incentives”, “rake”, and 12 “tournament fees”, for purposes of internet wagering, are also 13 defined. 14 Code section 99F.4, concerning the powers of the state 15 racing and gaming commission, is amended to provide that the 16 commission shall establish requirements for internet wagering. 17 The Code section is also amended to provide that the current 18 process that allows a person to be voluntarily excluded from a 19 gambling facility shall also apply to internet wagering. 20 New Code section 99F.4E establishes the process for 21 licensing and conducting internet wagering. The bill 22 authorizes current gambling games licensees to apply for an 23 internet wagering license and allows more than one existing 24 licensee to jointly apply for an internet wagering license. 25 The bill provides that if more than one licensee applies for a 26 joint license, the licensees shall indicate how the licensees 27 shall distribute at least 3 percent of the adjusted gross 28 receipts from internet wagering on charitable purposes. The 29 bill provides that internet wagering shall be limited to poker, 30 shall be conducted through a single internet site, and shall 31 be limited to persons who have registered with the licensee to 32 conduct internet wagering. The bill provides that if a single 33 gambling games licensee is issued an internet wagering license, 34 the adjusted gross receipts from internet wagering shall be 35 -8- LSB 6026SC (6) 84 ec/nh 8/ 9

S.F. _____ included as part of the licensee’s adjusted gross receipts for 1 purposes of applying the wagering tax pursuant to Code section 2 99F.11. The bill further provides that if a joint internet 3 wagering license is issued to more than one gambling games 4 licensee, the wagering tax imposed on adjusted gross receipts 5 from internet wagering pursuant to Code section 99F.11 shall be 6 22 percent or, if the majority of participating licensees are 7 otherwise subject to a wagering tax of 24 percent under Code 8 section 99F.11, 24 percent. 9 Code section 99F.9, concerning wagering, is amended to 10 provide that wagers through internet wagering are authorized 11 and can be made from any location within this state or as 12 authorized by law subject to any requirements adopted by the 13 commission. The Code section is also amended to provide 14 that limits on wagering for persons under the age of 21 at 15 an excursion gambling boat, gambling structure, or racetrack 16 enclosure also apply to internet wagering. 17 Code section 99F.12, concerning licensee reporting 18 requirements, is amended to provide that an internet wagering 19 licensee shall separately account for the gross receipts and 20 adjusted gross receipts from internet wagering. The bill 21 also provides that an internet wagering licensee shall make 22 available to the racing and gaming commission information 23 concerning the identity and account balances of persons 24 engaging in internet wagering with the licensee as well as 25 information relative to individual poker games. The bill 26 provides that this information is confidential. 27 Code section 99F.15, concerning prohibited activities and 28 penalties, is amended to provide that a person who commits a 29 class “D” felony relative to certain activities relating to 30 gambling shall also be barred for life from internet wagering 31 in the same manner as the person would be barred from excursion 32 gambling boats and gambling structures. 33 -9- LSB 6026SC (6) 84 ec/nh 9/ 9