SSB 1068 (LSB 1457XC (3) 85)

SENATE FILE _____

BY  (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON DANIELSON)

A BILL FOR

An Act authorizing licensees authorized to operate gambling games on an excursion boat, gambling structure, or racetrack enclosure to operate internet wagering on poker and making penalties applicable.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 99F.1, subsection 1, Code 2013, is amended to read as follows:
   1.  “Adjusted gross receipts” means the gross receipts less winnings paid to wagerers.

For internet wagering, “adjusted gross receipts” means the gross receipts for internet wagering on poker from rake and tournament fees less winnings and player incentives paid to wagerers.
    Sec. 2.  Section 99F.1, Code 2013, is amended by adding the following new subsections:
   NEW SUBSECTION.  16A.  “Internet wagering” means a method of wagering by which a person may establish an account, deposit money into the account, and use the account balance for wagering by utilizing electronic communication. 
   NEW SUBSECTION.  16B.  “Internet wagering service provider” means a person who has entered into an agreement with an internet wagering licensee or licensees to provide internet wagering for an internet wagering licensee as authorized by this chapter.
   NEW SUBSECTION.  19A.  “Player incentives” means, for internet wagering, any bonuses, rewards, prizes, or other types of promotional items provided to a person engaging in internet wagering by an internet wagering licensee as an incentive to engage in internet wagering.
   NEW SUBSECTION.  22.  “Rake” means a set fee or percentage of the pot assessed by an internet wagering licensee for providing the internet wagering services to a person engaging in internet wagering for the right to participate in internet wagering.
   NEW SUBSECTION.  23.  “Tournament fee” means a set fee assessed to a person engaging in internet wagering by the internet wagering licensee for providing internet wagering tournament services.
    Sec. 3.  Section 99F.3, Code 2013, is amended to read as follows:
   99F.3  Gambling games authorized.
   The system of wagering on a gambling game as provided by this chapter is legal, when conducted on an excursion gambling boat, gambling structure, or racetrack enclosure at authorized locations by a licensee, or, for internet wagering, when conducted by an internet wagering licensee pursuant to requirements established by the commission, as provided in this chapter.
    Sec. 4.  Section 99F.4, subsections 14 and 22, Code 2013, are amended to read as follows:
   14.  To require, except for internet wagering, all licensees of gambling game operations to utilize a cashless wagering system whereby all players’ money is converted to tokens, electronic cards, or chips which only can be used for wagering on the excursion gambling boat.
   22.  To require licensees to establish a process to allow a person to be voluntarily excluded for life from an excursion gambling boat and all other licensed facilities under this chapter and chapter 99D, or from engaging in internet wagering conducted by an internet wagering licensee under this chapter. For internet wagering licensees, the process shall allow players to limit the maximum amount of money that may be transferred by that player into an internet wagering account in a twenty-four-hour period. The process established shall require that a licensee disseminate information regarding persons voluntarily excluded to all licensees under this chapter and chapter 99D. The state and any licensee under this chapter or chapter 99D shall not be liable to any person for any claim which may arise from this process. In addition to any other penalty provided by law, any money or thing of value that has been obtained by, or is owed to, a voluntarily excluded person by a licensee as a result of wagers made by the person after the person has been voluntarily excluded shall not be paid to the person but shall be credited to the general fund of the state.
    Sec. 5.  Section 99F.4, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  27.  To establish requirements for internet wagering licensees and internet wagering service providers to conduct internet wagering on poker as provided in this chapter. At a minimum, the requirements shall include security measures to insure the integrity of internet wagering and technical standards governing the technology used to conduct internet wagering. In addition, the requirements shall, subject to reasonable conditions established by the commission, allow persons who have registered with an internet wagering licensee to engage in internet wagering with other persons, regardless of location, to the extent permissible by law.
    Sec. 6.  NEW SECTION.  99F.4E  Internet wagering on poker —— licensing —— requirements.
   1.  Upon payment of the applicable internet wagering license fee as determined by the commission and application by a licensee authorized to operate gambling games under this chapter, the commission shall issue an internet wagering license to the licensee, following a review of the applicant and internet wagering service provider in the manner provided in this section and section 99F.6, subject to the provisions of this chapter and rules adopted pursuant to this chapter relating to gambling and internet wagering. A single joint license to conduct internet wagering may be issued to more than one licensee authorized to operate gambling games under this chapter as determined by the commission. The issuance of a license to conduct internet wagering under this chapter shall not be considered the issuance of a new license under this chapter.
   2.  An internet wagering licensee shall comply with the following requirements:
   a.  Internet wagering shall be limited to wagering on poker and all of its variations, including but not limited to Texas hold ’em, Omaha hold ’em, draw poker, and stud poker.
   b.  Internet wagering shall be conducted by the licensee as determined by the commission. 

   c.  Internet wagering shall be limited to only those persons who have registered with the licensee to engage in internet wagering. To register, a person shall provide sufficient information to the licensee to verify that the person is at least twenty-one years of age and is otherwise authorized to engage in internet wagering in this state.
   d.
  (1)  If an internet wagering license is issued to one licensee authorized to operate gambling games under this chapter, adjusted gross receipts received by the gambling games licensee under this chapter from internet wagering each fiscal year shall be added to the adjusted gross receipts received by the licensee from gambling games other than from internet wagering for purposes of imposing a tax on the adjusted gross receipts received by the licensee as provided in section 99F.11.
   (2)  If a joint internet wagering license is issued to more than one licensee authorized to operate gambling games under this chapter, the tax rate imposed on adjusted gross receipts from internet wagering on poker each fiscal year pursuant to section 99F.11 shall be twenty-two percent or, if a majority of participating licensees on the joint license are otherwise subject to a tax rate of twenty-four percent on adjusted gross receipts from gambling games over three million dollars under section 99F.11, twenty-four percent. 
   e.  An internet wagering licensee shall make distributions of the receipts from internet wagering on poker in the same manner as provided in section 99F.6, subsection 4, paragraph “a”, subparagraph (2), or in the operating agreement entered into with a qualified sponsoring organization as provided in section 99F.5, whichever is applicable.
   f.  Any other requirements as the commission establishes to ensure the legality and integrity of conducting internet wagering in this state. 
   3.  A person holding a valid license pursuant to chapter 99D or section 99F.7 is exempt from further investigation and examination for licensing to operate internet wagering pursuant to this chapter. However, the commission may order future investigations or examinations as the commission finds appropriate.
    Sec. 7.  Section 99F.6, subsection 1, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   A person shall not be issued a license to conduct gambling games on an excursion gambling boat or a license to operate an excursion gambling boat under this chapter,
 
an internet wagering license, an internet wagering service provider license, an occupational license, a distributor license, or a manufacturer license unless the person has completed and signed an application on the form prescribed and published by the commission. The application shall include the full name, residence, date of birth and other personal identifying information of the applicant that the commission deems necessary. The application shall also indicate whether the applicant has any of the following:
    Sec. 8.  Section 99F.6, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  5A.  Before a license is granted to an internet wagering service provider, the commission shall, in addition to the requirements of this section, conduct a comprehensive investigation of the service provider to determine whether the service provider has accepted or assisted in the acceptance of any wagers or other consideration related to internet wagering. The commission shall not issue a license to an internet wagering service provider if the commission determines that the service provider has accepted or assisted in the acceptance of any wagers or other consideration related to internet wagering in violation of the laws of any jurisdiction where the service provider has operated.
    Sec. 9.  Section 99F.7, subsection 1, Code 2013, is amended to read as follows:
   1.  If the commission is satisfied that this chapter and its rules adopted under this chapter applicable to licensees have been or will be complied with, the commission shall issue a license for a period of not more than three years to an applicant to own a gambling game operation, to an applicant to operate a gambling structure, and to an applicant to operate an excursion gambling boat, and to an applicant to conduct internet wagering. The commission shall decide which of the gambling games authorized under this chapter the commission will permit. The commission shall decide the number, location, and type of gambling structures and excursion gambling boats licensed under this chapter. The commission shall allow the operation of an excursion boat or moored barge on or within one thousand feet of the high water marks of the rivers, lakes, and reservoirs of this state as established by the commission in consultation with the United States army corps of engineers, the department of natural resources, or other appropriate regulatory agency. The license shall set forth, as applicable, the name of the licensee, the type of license granted, the location of the gambling structure or the place where the excursion gambling boats will operate and dock, and the time and number of days during the excursion season and the off season when gambling may be conducted by the licensee.
    Sec. 10.  Section 99F.9, subsections 3 and 5, Code 2013, are amended to read as follows:
   3.  The licensee may receive wagers only from a person present on a licensed excursion gambling boat, licensed gambling structure, or in a licensed racetrack enclosure, or from a person engaging in internet wagering.

An internet wager may be placed from any location within this state or from any other location where authorized by law, subject to any requirements adopted by the commission.
   5.  A person under the age of twenty-one years shall not
 
engage in internet wagering or make or attempt to make a wager on an excursion gambling boat, gambling structure, or in a racetrack enclosure and shall not be allowed on the gaming floor of an excursion gambling boat or gambling structure or in the wagering area, as defined in section 99D.2, or on the gaming floor of a racetrack enclosure. However, a person eighteen years of age or older may be employed to work on the gaming floor of an excursion gambling boat or gambling structure or in the wagering area or on the gaming floor of a racetrack enclosure. A person who violates this subsection with respect to
 
engaging in internet wagering or making or attempting to make a wager commits a scheduled violation under section 805.8C, subsection 5, paragraph “a”.
    Sec. 11.  Section 99F.12, subsection 2, Code 2013, is amended to read as follows:
   2.  The licensee shall furnish to the commission reports and information as the commission may require with respect to the licensee’s activities. The gross receipts and adjusted gross receipts from gambling shall be separately handled and accounted for from all other moneys received from operation of an excursion gambling boat or from operation of a racetrack enclosure or gambling structure licensed to conduct gambling games.

For an internet wagering licensee, the gross receipts and adjusted gross receipts from internet wagering shall be separately handled and accounted for from all other moneys received from other licensed activities of the licensee. The commission may designate a representative to board a licensed excursion gambling boat or to enter a racetrack enclosure or gambling structure licensed to conduct gambling games. The representative shall have full access to all places within the enclosure of the boat, the gambling structure, or the racetrack enclosure and shall directly supervise the handling and accounting of all gross receipts and adjusted gross receipts from gambling. The representative shall supervise and check the admissions. The compensation of a representative shall be fixed by the commission but shall be paid by the licensee.
    Sec. 12.  Section 99F.12, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  2A.
  a.  An internet wagering licensee shall, in addition to the books and records otherwise required by this section, make the following information available to the commission upon request:
   (1)  Monthly auditable and aggregate financial statements of internet wagering transactions.
   (2)  Calculation of all fees payable to government.
   (3)  The identity of registered players.
   (4)  The balance on a registered player’s account at the start of a session of play.
   (5)  The wagers placed on each game time stamped by the games server.
   (6)  The result of each game time stamped by the games server.
   (7)  The amount won or lost by a registered player.
   (8)  The balance on a registered player’s account at the end of the game.
   b.  Information described in paragraph “a”, subparagraphs (3) through (8), shall be confidential.
    Sec. 13.  Section 99F.15, subsection 3, Code 2013, is amended to read as follows:
   3.  A
 
Except for internet wagering conducted as authorized by this chapter, a person wagering or accepting a wager at any location outside an excursion gambling boat, gambling structure, or a racetrack enclosure is in violation of section 725.7.
    Sec. 14.  Section 99F.15, subsection 4, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   A person commits a class “D” felony and, in addition, shall be barred for life from
 
internet wagering, excursion gambling boats, and gambling structures under the jurisdiction of the commission, if the person does any of the following:
EXPLANATION
   This bill permits licensees authorized to conduct gambling games under Code chapter 99F to apply for and receive a license to conduct internet wagering on poker.
   Code section 99F.1, concerning definitions, is amended. The bill defines “internet wagering” as a method of wagering by which a person may establish an account, deposit money into the account, and use the account balance for wagering by utilizing electronic communication. The bill also defines “internet wagering service provider” as a person who has entered into an agreement to conduct internet wagering for an internet wagering licensee. The definition of “adjusted gross receipts” is amended to mean, for internet wagering, the gross receipts for internet wagering on poker from rake and tournament fees less winnings and player incentives paid to wagerers. The terms “player incentives”, “rake”, and “tournament fees”, for purposes of internet wagering, are also defined.
   Code section 99F.4, concerning the powers of the state racing and gaming commission, is amended to provide that the commission shall establish requirements for internet wagering and internet wagering licensees and service providers. The Code section is also amended to provide that the current process that allows a person to be voluntarily excluded from a gambling facility shall also apply to internet wagering.
   New Code section 99F.4E establishes the process for licensing and conducting internet wagering. The bill authorizes current gambling games licensees, upon payment of a fee as determined by the racing and gaming commission, to apply for an internet wagering license and allows more than one existing licensee to jointly apply for an internet wagering license. The bill provides that internet wagering licensees shall make distributions of the adjusted gross receipts from internet wagering for charitable purposes in the same manner as other gambling game licensees. The bill provides that internet wagering shall be limited to poker, shall be conducted as determined by the commission, and shall be limited to persons who have registered with the licensee to conduct internet wagering. The bill provides that if a single gambling games licensee is issued an internet wagering license, the adjusted gross receipts from internet wagering shall be included as part of the licensee’s adjusted gross receipts for purposes of applying the wagering tax pursuant to Code section 99F.11. The bill further provides that if a joint internet wagering license is issued to more than one gambling games licensee, the wagering tax imposed on adjusted gross receipts from internet wagering pursuant to Code section 99F.11 shall be 22 percent or, if the majority of participating licensees are otherwise subject to a wagering tax of 24 percent under Code section 99F.11, 24 percent.
   Code section 99F.6, concerning requirements for applications for a license under Code chapter 99F, is amended to provide that the requirements also apply to internet wagering service providers and applicants for an internet wagering license. The Code section is further amended to provide that the commission shall not issue a license to an internet wagering service provider if the commission determines that the provider has accepted or assisted in the acceptance of wagers related to internet wagering in violation of the laws of any jurisdiction in which the provider has operated.
   Code section 99F.9, concerning wagering, is amended to provide that wagers through internet wagering are authorized and can be made from any location within this state or as authorized by law subject to any requirements adopted by the commission. The Code section is also amended to provide that limits on wagering for persons under the age of 21 at an excursion gambling boat, gambling structure, or racetrack enclosure also apply to internet wagering.
   Code section 99F.12, concerning licensee reporting requirements, is amended to provide that an internet wagering licensee shall separately account for the gross receipts and adjusted gross receipts from internet wagering. The bill also provides that an internet wagering licensee shall make available to the racing and gaming commission information concerning the identity and account balances of persons engaging in internet wagering with the licensee as well as information relative to individual poker games. The bill provides that this information is confidential.
   Code section 99F.15, concerning prohibited activities and penalties, is amended to provide that a person who commits a class “D” felony relative to certain activities relating to gambling shall also be barred for life from internet wagering in the same manner as the person would be barred from excursion gambling boats and gambling structures.