HF 2089 (LSB 5579YH (6) 91)

HOUSE FILE 2089

BY  LAWLER

A BILL FOR

An Act relating to the distribution of gambling games and sports wagering receipts in this state for nonprofit purposes, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 99F.6, subsection 4, paragraph a, subparagraph (2), Code 2026, is amended to read as follows:
   (2)  (a)  A qualified sponsoring organization licensed to operate gambling games under this chapter shall distribute the receipts of all gambling games, less reasonable expenses, charges, taxes, fees, and deductions allowed under this chapter, as winnings to players or participants or shall distribute the receipts for educational, civic, public, charitable, patriotic, or religious uses as defined in section 99B.1. A qualified sponsoring organization shall provide that any organization exempt from federal income taxes under section 501(c)(19) of the Internal Revenue Code, as defined in section 422.3, shall be eligible for a distribution of adjusted gross receipts for educational, civic, public, charitable, patriotic, or religious uses as required by this subparagraph. However, a licensee to conduct gambling games under this chapter shall, unless an operating agreement for an excursion gambling boat otherwise provides, distribute at least three percent of the adjusted gross receipts and, if applicable, three-quarters of one percent of sports wagering net receipts for each license year for educational, civic, public, charitable, patriotic, or religious uses as defined in section 99B.1, as provided in subparagraph division (b). However, if a licensee who is also licensed to conduct pari-mutuel wagering at a horse racetrack has unpaid debt from the pari-mutuel racetrack operations, the first receipts of the gambling games operated within the racetrack enclosure less reasonable operating expenses, taxes, and fees allowed under this chapter shall be first used to pay the annual indebtedness.
   (b)  (i)  A licensee making a required distribution for educational, civic, public, charitable, patriotic, or religious uses pursuant to subparagraph division (a) shall distribute at least seventy-five percent of the moneys on a pro rata basis, as provided in subparagraph subdivision (ii), for use in each Iowa county whose residents contributed to the gambling games or sports wagering receipts of the licensee.
   (ii)  The licensee shall collect and maintain records to determine the county of residence of all players or participants who contributed to the gambling games or sports wagering receipts of the licensee and the amount of receipts attributable to each player or participant. The distribution to be made for use in each Iowa county shall be based on the gross receipts generated by players or participants from a given Iowa county in comparison to the total such gross receipts generated by players or participants from all Iowa counties. Receipts generated by persons who are not residents of Iowa or whose county of residence cannot be verified shall be distributed proportionally in each Iowa county based on the distribution calculated for gross receipts generated by players or participants from Iowa counties.
   (iii)  This subparagraph division (b) does not restrict the distribution of gambling games or sports wagering receipts of a licensee in excess of seventy-five percent of the moneys distributed. Such receipts shall be distributed as otherwise authorized or required by law.
   (iv)  A licensee shall file an annual report with the commission that includes all of the following, which the commission shall post publicly on the commission’s internet site:
   (A)  The total amount of the licensee’s gambling games and sports wagering receipts generated by residents of each Iowa county.
   (B)  The total amount of the licensee’s gambling games and sports wagering receipts generated by persons who are not residents of Iowa or whose county of residence cannot be verified.
   (C)  The total amount of moneys distributed by the licensee under this subparagraph (2).
   (D)  The amount of moneys distributed to each Iowa county by the licensee under this subparagraph (2).
   (v)  (A)  A licensee who fails to comply with this subparagraph division (b) shall be subject to a civil penalty not to exceed five percent of the total amount of moneys required to be distributed by the licensee under this subparagraph (2), to be imposed and collected by the commission and deposited in the general fund of the state.
   (B)  The commission may order a licensee that fails to comply with this subparagraph division (b) to redistribute the moneys as required by law.
   (C)  A licensee that willfully or repeatedly fails to comply with this subparagraph division (b) shall be subject to additional discipline by the commission, which may include suspension of the licensee’s license.
    Sec. 2.  APPLICABILITY.  This Act applies to gambling games and sports wagering receipts collected in a fiscal year beginning on or after the effective date of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the allocation of required nonprofit distributions of gambling games and sports wagering receipts. Under current law, most licensees are required to distribute at least 3 percent of the licensee’s adjusted gross receipts from gambling games and three-quarters of 1 percent of net receipts from sports wagering to organizations dedicated to civic, public, charitable, patriotic, or religious uses. The bill requires 75 percent of these distributions to be made on a pro rata basis for use in Iowa counties whose residents are known to the licensee to have contributed to the gambling games and sports wagering receipts of the licensee.
   To calculate the percentage of a distribution that will be made for use in each Iowa county, the bill requires the licensee to collect and maintain records to determine the county of residence of all players and participants who contributed to the gambling games or sports wagering receipts of the licensee and the amount each player or participant contributed to such receipts. The distribution to be made for use in each Iowa county is based on the gross receipts generated by players or participants from a given Iowa county in comparison to the total such gross receipts generated by players or participants from all Iowa counties. The bill requires receipts generated by persons who are not residents of Iowa or whose county of residence cannot be verified to be distributed proportionally among Iowa counties based on the same calculation. The bill does not restrict the distribution of gambling games or sports wagering receipts in excess of 75 percent of the moneys distributed. The bill requires each licensee to file an annual report with the state racing and gaming commission (commission) regarding distributions made by the licensee, which the commission shall post on the commission’s internet site.
   A licensee who fails to make distributions as required by the bill shall be subject to a civil penalty not to exceed 5 percent of the total amount of moneys required to be distributed by the licensee, to be collected by the commission and deposited in the general fund of the state. The bill allows the commission to order the redistribution of moneys that are not distributed as required by the bill. The bill also allows the commission to impose additional discipline on a licensee that willfully or repeatedly fails to comply with the bill, which may include suspension of the licensee’s license.
   The bill applies to gambling games and sports wagering receipts collected in a fiscal year beginning on or after the effective date of the bill.