House File 636 - Introduced HOUSE FILE 636 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 110) A BILL FOR An Act excluding certain wagers from the definition of adjusted 1 gross receipts for purposes of the wagering tax on gambling 2 games, providing for a wagering tax on promotional play 3 receipts, and providing for the prospective reduction and 4 repeal of the tax on promotional play receipts. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1391HV (2) 86 ec/nh

H.F. 636 Section 1. Section 99F.1, Code 2015, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 19A. “Promotional play receipts” means 3 the total sums wagered on gambling games with tokens, chips, 4 electronic credits, or other forms of cashless wagering 5 provided by the licensee without an exchange of money as 6 described in section 99F.9, subsection 3. 7 NEW SUBSECTION . 22. “Taxable gross receipts” means the 8 adjusted gross receipts less promotional play receipts. 9 Sec. 2. Section 99F.4A, subsection 6, Code 2015, is amended 10 to read as follows: 11 6. The adjusted taxable gross receipts received from 12 gambling games shall be taxed at the same rates and the 13 proceeds distributed in the same manner as provided in section 14 99F.11 . 15 Sec. 3. Section 99F.11, subsection 1, Code 2015, is amended 16 to read as follows: 17 1. A tax is imposed on the adjusted taxable gross receipts 18 received each fiscal year from gambling games authorized under 19 this chapter at the rate of five percent on the first one 20 million dollars of adjusted taxable gross receipts and at the 21 rate of ten percent on the next two million dollars of adjusted 22 taxable gross receipts. 23 Sec. 4. Section 99F.11, subsection 2, unnumbered paragraph 24 1, Code 2015, is amended to read as follows: 25 The tax rate imposed each fiscal year on any amount of 26 adjusted taxable gross receipts over three million dollars 27 shall be as follows: 28 Sec. 5. Section 99F.11, subsection 2, paragraph b, 29 subparagraph (2), Code 2015, is amended to read as follows: 30 (2) If the licensee of the racetrack enclosure has been 31 issued a table games license during the fiscal year or prior 32 fiscal year and the adjusted gross receipts from gambling games 33 of the licensee in the prior fiscal year were one hundred 34 million dollars or more, twenty-two percent on adjusted taxable 35 -1- LSB 1391HV (2) 86 ec/nh 1/ 6

H.F. 636 gross receipts received prior to the operational date and 1 twenty-four percent on adjusted taxable gross receipts received 2 on or after the operational date. For purposes of this 3 subparagraph, the operational date is the date the commission 4 determines table games became operational at the racetrack 5 enclosure. 6 Sec. 6. Section 99F.11, subsection 3, paragraphs a, b, and 7 c, Code 2015, are amended to read as follows: 8 a. If the gambling excursion originated at a dock located 9 in a city, one-half of one percent of the adjusted taxable 10 gross receipts shall be remitted to the treasurer of the city 11 in which the dock is located and shall be deposited in the 12 general fund of the city. Another one-half of one percent of 13 the adjusted taxable gross receipts shall be remitted to the 14 treasurer of the county in which the dock is located and shall 15 be deposited in the general fund of the county. 16 b. If the gambling excursion originated at a dock located 17 in a part of the county outside a city, one-half of one percent 18 of the adjusted taxable gross receipts shall be remitted to 19 the treasurer of the county in which the dock is located and 20 shall be deposited in the general fund of the county. Another 21 one-half of one percent of the adjusted taxable gross receipts 22 shall be remitted to the treasurer of the Iowa city nearest to 23 where the dock is located and shall be deposited in the general 24 fund of the city. 25 c. Eight-tenths of one percent of the adjusted taxable gross 26 receipts tax shall be deposited in the county endowment fund 27 created in section 15E.311 . 28 Sec. 7. Section 99F.11, subsection 3, paragraph d, 29 unnumbered paragraph 1, Code 2015, is amended to read as 30 follows: 31 Two-tenths of one percent of the adjusted taxable gross 32 receipts tax shall be allocated each fiscal year as follows: 33 Sec. 8. Section 99F.11, subsection 3, paragraph e, Code 34 2015, is amended to read as follows: 35 -2- LSB 1391HV (2) 86 ec/nh 2/ 6

H.F. 636 e. The remaining amount of the adjusted taxable gross 1 receipts tax shall be credited as provided in section 8.57, 2 subsection 5 . 3 Sec. 9. NEW SECTION . 99F.11A Promotional play receipts tax 4 —— repeal. 5 1. A qualified sponsoring organization conducting gambling 6 games at a pari-mutuel racetrack enclosure licensed under 7 section 99F.4A, or on an excursion gambling boat or gambling 8 structure licensed under section 99F.7, shall pay a tax on 9 promotional play receipts each fiscal year as provided in this 10 section. 11 2. The tax rate imposed each fiscal year on any amount of 12 promotional play receipts of a licensee subject to tax shall 13 be at the rate specified for that licensee on taxable gross 14 receipts as provided in section 99F.11, subsection 2, subject 15 to the limitation provided in subsection 3 of this section. 16 3. The total taxes paid in a fiscal year by all licensees 17 on promotional play receipts shall not exceed the following 18 amounts for the following fiscal years: 19 a. For the fiscal year beginning July 1, 2015, and ending 20 June 30, 2016, twenty-seven million dollars. 21 b. For the fiscal year beginning July 1, 2016, and ending 22 June 30, 2017, twenty-two million dollars. 23 c. For the fiscal year beginning July 1, 2017, and ending 24 June 30, 2018, seventeen million dollars. 25 d. For the fiscal year beginning July 1, 2018, and ending 26 June 30, 2019, twelve million dollars. 27 e. For the fiscal year beginning July 1, 2019, and ending 28 June 30, 2020, seven million dollars. 29 f. For the fiscal year beginning July 1, 2020, and ending 30 June 30, 2021, two million dollars. 31 4. The taxes imposed by this section shall be paid by 32 the licensee to the treasurer of state within ten days after 33 the close of the day when the wagers were made and shall be 34 distributed as follows: 35 -3- LSB 1391HV (2) 86 ec/nh 3/ 6

H.F. 636 a. If the excursion gambling boat, gambling structure, or 1 racetrack enclosure is located in a city, an amount equal to 2 two percent of the promotional play receipts tax paid shall be 3 remitted to the treasurer of the city in which the excursion 4 gambling boat, gambling structure, or racetrack enclosure is 5 located and shall be deposited in the general fund of the 6 city. Another two percent of the promotional play receipts tax 7 paid shall be remitted to the treasurer of the county in which 8 the excursion gambling boat, gambling structure, or racetrack 9 enclosure is located and shall be deposited in the general fund 10 of the county. 11 b. If the excursion gambling boat, gambling structure, or 12 racetrack enclosure is located in a part of the county outside 13 a city, two percent of the promotional play receipts tax paid 14 shall be remitted to the treasurer of the county in which the 15 excursion gambling boat, gambling structure, or racetrack 16 enclosure is located and shall be deposited in the general 17 fund of the county. Another two percent of the promotional 18 play receipts tax paid shall be remitted to the treasurer of 19 the Iowa city nearest to where the excursion gambling boat, 20 gambling structure, or racetrack enclosure is located and shall 21 be deposited in the general fund of the city. 22 c. Four percent of the promotional play receipts tax paid 23 shall be deposited in the county endowment fund created in 24 section 15E.311. 25 d. One percent of the promotional play receipts tax paid 26 is appropriated to the community development division of the 27 economic development authority for the purposes of regional 28 tourism marketing. The moneys appropriated in this paragraph 29 shall be disbursed to the authority in quarterly allotments. 30 However, moneys appropriated under this paragraph shall not be 31 used for administrative purposes. 32 e. The remaining amount of the promotional play receipts tax 33 paid shall be credited to the rebuild Iowa infrastructure fund 34 created in section 8.57. 35 -4- LSB 1391HV (2) 86 ec/nh 4/ 6

H.F. 636 5. The commission shall adopt rules pursuant to chapter 17A 1 to administer this section, to include the manner of ensuring 2 that the total taxes paid by licensees under this section do 3 not exceed the limitations provided in subsection 3 and the 4 manner of refunding any taxes paid in excess of the limitations 5 provided in subsection 3. 6 6. This section is repealed July 1, 2021. 7 EXPLANATION 8 The inclusion of this explanation does not constitute agreement with 9 the explanation’s substance by the members of the general assembly. 10 This bill concerns wagering taxes on gambling game receipts 11 as provided in Code chapter 99F. 12 Code section 99F.1 is amended by adding two new definitions. 13 “Promotional play receipts” is defined as the total sums 14 wagered on gambling games with tokens, chips, electronic 15 credits, or other forms of cashless wagering provided by 16 a licensee without an exchange of money. “Taxable gross 17 receipts” is defined as adjusted gross receipts less 18 promotional play receipts. 19 Code section 99F.11, providing for the wagering tax, is 20 amended to provide that the wagering tax is calculated on the 21 taxable gross receipts of a gambling game licensee instead of 22 the adjusted gross receipts. 23 New Code section 99F.11A provides for a wagering tax on 24 promotional play receipts. The Code section provides for the 25 tax rate on promotional play receipts and provides for the 26 distribution of taxes received from promotional play receipts. 27 The bill specifies the tax rate as the rate applied to taxable 28 gross receipts over $3 million and specifies that the tax 29 receipts from promotional play are to be distributed to cities 30 and counties where the gambling structures are located, the 31 county endowment fund, the community development division of 32 the economic development authority, and to the rebuild Iowa 33 infrastructure fund created in Code section 8.57, in a manner 34 based on the distribution of wagering taxes in Code section 35 -5- LSB 1391HV (2) 86 ec/nh 5/ 6

H.F. 636 99F.11. The bill then provides that the total taxes paid by 1 all gambling game licensees on promotional play receipts shall 2 not exceed a certain dollar amount for designated fiscal years. 3 For the fiscal year beginning July 1, 2015, total taxes paid 4 shall not exceed $27 million. For each successive fiscal year, 5 the maximum of total taxes paid by all licensees is reduced 6 by $5 million until the total taxes paid for the fiscal year 7 beginning July 1, 2020, shall not exceed $2 million. The new 8 Code section is repealed July 1, 2021. 9 -6- LSB 1391HV (2) 86 ec/nh 6/ 6