House File 696 HOUSE FILE BY GIPP and MYERS Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the payment of taxes and payment of financial 2 consideration on a contractual basis to the state from 3 adjusted gross receipts from gambling games at racetrack 4 enclosures and providing an effective date. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 3537HH 80 7 ec/cf/24 PAG LIN 1 1 Section 1. NEW SECTION. 99F.4C GAMBLING GAMES AT PARI= 1 2 MUTUEL RACETRACKS == OPERATING AGREEMENT. 1 3 1. The commission shall offer each licensee authorized to 1 4 conduct, and conducting, gambling games at a pari=mutuel 1 5 racetrack enclosure the opportunity to enter into an operating 1 6 agreement pursuant to the requirements of this section which 1 7 offer shall be extended to each licensee for a period of time 1 8 no longer than ten days from the effective date of this Act. 1 9 2. The operating agreement offered to each licensee shall 1 10 provide for all of the following: 1 11 a. The agreement shall be binding on any successors and 1 12 assigns of a licensee entering into an agreement pursuant to 1 13 this section. 1 14 b. The agreement shall provide that the licensee shall 1 15 comply with all statutory and administrative requirements 1 16 otherwise applicable to licensees who are authorized to 1 17 conduct gambling games at a pari=mutuel racetrack enclosure. 1 18 c. The term of the agreement shall be for a period of five 1 19 years with an option, at the discretion of the licensee, to 1 20 renew the agreement for an additional five years, subject to 1 21 earlier termination of the agreement if a referendum required 1 22 pursuant to section 99F.7, subsection 10, does not approve 1 23 continued operation of gambling games. 1 24 d. The agreement shall provide for payment by the licensee 1 25 of operating agreement consideration to the commission on a 1 26 weekly basis based upon the adjusted gross receipts from 1 27 gambling games at the licensee's racetrack enclosure to be 1 28 calculated as provided in section 99F.4D. In addition, the 1 29 agreement shall provide for the payment, by June 30, 2003, of 1 30 an initial operating agreement consideration to the commission 1 31 by a licensee of an amount equal to ten percent on any amount 1 32 of adjusted gross receipts received by the licensee for the 1 33 fiscal year beginning July 1, 2002, over three million 1 34 dollars. 1 35 e. If the licensee breaches the agreement, the agreement 2 1 shall be terminated following written notice mailed to the 2 2 licensee by the commission and opportunity to cure the breach 2 3 within a reasonable period of time. 2 4 f. (1) The licensee shall agree to waive any right to a 2 5 refund of any taxes collected pursuant to section 99F.11 if 2 6 such refund is ultimately deemed owing pursuant to the final 2 7 decision in the litigation entitled Racing Association of 2 8 Central Iowa v. Fitzgerald, and which is cited at 648 N.W.2d 2 9 555 (Iowa 2002). 2 10 (2) The payment of an initial operating agreement 2 11 consideration by June 30, 2003, by a licensee shall be deemed 2 12 in full satisfaction of any additional tax owed by such 2 13 licensee pursuant to section 99F.11 if such additional tax is 2 14 ultimately deemed owing pursuant to the final decision in the 2 15 litigation entitled Racing Association of Central Iowa v. 2 16 Fitzgerald, and which is cited at 648 N.W.2d 555 (Iowa 2002). 2 17 g. The consideration received by the commission pursuant 2 18 to the agreement shall be in lieu of all taxes imposed on the 2 19 licensee under section 99F.11 on account of adjusted gross 2 20 receipts from gambling games at the licensee's racetrack 2 21 enclosure and the provisions of section 99F.4A, subsection 6, 2 22 and section 99F.11 are not applicable to the licensee. 2 23 Consideration received by the commission shall be immediately 2 24 paid by the commission to the treasurer of state and 2 25 distributed in the same manner as taxes collected pursuant to 2 26 section 99F.11, including the applicable provisions of section 2 27 8.57 and section 99E.10, subsection 3. 2 28 h. The operating agreement as to a licensee shall not 2 29 become effective until each licensee receiving an offer to 2 30 enter into an agreement pursuant to this section has entered 2 31 into such an agreement. 2 32 3. Except as specifically provided by this section, an 2 33 operating agreement entered into with a licensee pursuant to 2 34 the requirements of this section shall not supersede or modify 2 35 any other provision of law governing licensees of gambling 3 1 games at a pari=mutuel racetrack enclosure, including, but not 3 2 limited to, any provision of law restricting the types of 3 3 gambling games that can be conducted by licensees. 3 4 Sec. 2. NEW SECTION. 99F.4D GAMBLING GAMES AT PARI= 3 5 MUTUEL RACETRACKS == OPERATING AGREEMENT CONSIDERATION. 3 6 1. For purposes of this section: 3 7 a. "Adjusted receipts amount" means the total amount of 3 8 the adjusted gross receipts tax collected by the treasurer of 3 9 state pursuant to section 99F.11 and operating agreement 3 10 consideration that would be collected by the commission on 3 11 adjusted gross receipts over three million dollars from 3 12 gambling games without consideration of any racetrack 3 13 enclosure credit that is credited during that fiscal year. 3 14 b. "Base receipts amount" means the total amount of the 3 15 adjusted gross receipts tax collected by the treasurer of 3 16 state pursuant to section 99F.11 and operating agreement 3 17 consideration collected by the commission for the fiscal year 3 18 beginning July 1, 2002, from taxes imposed and operating 3 19 agreement consideration collected on adjusted gross receipts 3 20 over three million dollars from gambling games. 3 21 c. "Operating agreement consideration" means the 3 22 consideration required to be paid pursuant to an operating 3 23 agreement entered into pursuant to section 99F.4C and 3 24 calculated as provided by this section on adjusted gross 3 25 receipts from gambling games by a licensee authorized to 3 26 conduct gambling games at a racetrack enclosure. 3 27 d. "Racetrack percentage" means, for a racetrack 3 28 enclosure, the percentage calculated by dividing the operating 3 29 agreement consideration amount of the racetrack enclosure by 3 30 the total operating agreement consideration amount for all 3 31 racetrack enclosures. 3 32 2. a. Operating agreement consideration shall be 3 33 calculated based upon adjusted gross receipts received each 3 34 fiscal year from gambling games at racetrack enclosures to 3 35 include an amount equal to five percent on the first one 4 1 million dollars of adjusted gross receipts, an amount equal to 4 2 ten percent on the next two million dollars of adjusted gross 4 3 receipts, and an amount, based on the following percentages 4 4 and credits, on any amount of adjusted gross receipts over 4 5 three million dollars calculated as provided in paragraph "b". 4 6 b. For the fiscal year beginning July 1, 2003, and each 4 7 succeeding fiscal year, thirty percent, subject to a racetrack 4 8 enclosure credit on operating agreement consideration imposed 4 9 in the subsequent fiscal year as calculated pursuant to this 4 10 paragraph. For purposes of this paragraph, the racetrack 4 11 enclosure credit for each racetrack enclosure shall be 4 12 calculated by multiplying the racetrack percentage for that 4 13 racetrack enclosure by the all=racetracks credit amount. The 4 14 all=racetracks credit amount is the lesser of the following: 4 15 (1) One=half of the difference, if positive, between the 4 16 adjusted receipts amount for a fiscal year and the base 4 17 receipts amount. 4 18 (2) The maximum credit amount. The maximum credit amount 4 19 is an amount, for the applicable fiscal year, equal to the 4 20 total, for all racetrack enclosures, of ten percent of 4 21 adjusted gross receipts over three million dollars from 4 22 gambling games from each racetrack enclosure. 4 23 Sec. 3. Section 99F.11, Code 2003, is amended to read as 4 24 follows: 4 25 99F.11 WAGERING TAX == RATE == ALLOCATIONS. 4 26 1. For purposes of this section: 4 27 a. "Adjusted receipts amount" means the total amount of 4 28 the adjusted gross receipts tax collected by the treasurer of 4 29 state and operating agreement consideration that would be 4 30 collected by the commission on adjusted gross receipts over 4 31 three million dollars from gambling games without 4 32 consideration of any racetrack enclosure tax credit that is 4 33 credited during that fiscal year. 4 34 b. "Base receipts amount" means the total amount of the 4 35 adjusted gross receipts tax collected by the treasurer of 5 1 state and operating agreement consideration collected by the 5 2 commission for the fiscal year beginning July 1, 2002, from 5 3 taxes imposed and operating agreement consideration collected 5 4 on adjusted gross receipts over three million dollars from 5 5 gambling games. 5 6 c. "Operating agreement consideration" means the 5 7 consideration required to be paid pursuant to an operating 5 8 agreement entered into pursuant to section 99F.4C and 5 9 calculated as provided by section 99F.4D on adjusted gross 5 10 receipts from gambling games by a licensee authorized to 5 11 conduct gambling games at a racetrack enclosure. 5 12 d. "Racetrack percentage" means, for a racetrack 5 13 enclosure, the percentage calculated by dividing the adjusted 5 14 receipts amount of the racetrack enclosure by the total 5 15 adjusted receipts amount for all racetrack enclosures. 5 16 2. A tax is imposed on the adjusted gross receipts 5 17 receivedannuallyeach fiscal year from gambling games 5 18 authorized under this chapter at the rate of five percent on 5 19 the first one million dollars of adjusted gross receipts, at 5 20 the rate of ten percent on the next two million dollars of 5 21 adjusted gross receipts, and at the rate of twenty percent on 5 22 any amount of adjusted gross receipts over three million 5 23 dollars. 5 24 3. a.However, beginning January 1, 1997Notwithstanding 5 25 any provision of subsection 2 to the contrary, the tax rate on 5 26 any amount of adjusted gross receipts over three million 5 27 dollars from gambling games at racetrack enclosuresis twenty= 5 28 two percent and shall increase by two percent each succeeding 5 29 calendar year until the rate is thirty=six percentshall be as 5 30 follows: 5 31 b. For the fiscal year beginning July 1, 2003, and each 5 32 succeeding fiscal year, thirty percent, subject to a racetrack 5 33 enclosure tax credit on taxes imposed in the subsequent fiscal 5 34 year as calculated pursuant to this paragraph. For purposes 5 35 of this paragraph, the racetrack enclosure tax credit for each 6 1 racetrack enclosure shall be calculated by multiplying the 6 2 racetrack percentage for that racetrack enclosure by the all= 6 3 racetracks tax credit amount. The all=racetracks tax credit 6 4 amount is the lesser of the following: 6 5 (1) One=half of the difference, if positive, between the 6 6 adjusted receipts amount for a fiscal year and the base 6 7 receipts amount. 6 8 (2) The maximum credit amount. The maximum credit amount 6 9 is an amount, for the applicable fiscal year, equal to the 6 10 total, for all racetrack enclosures, of ten percent of 6 11 adjusted gross receipts over three million dollars from 6 12 gambling games from each racetrack enclosure. 6 13 4. The taxes imposed by this section shall be paid by the 6 14 licensee to the treasurer of state within ten days after the 6 15 close of the day when the wagers were made and shall be 6 16 distributed as follows: 6 171.a. If the gambling excursion originated at a dock 6 18 located in a city, one=half of one percent of the adjusted 6 19 gross receipts shall be remitted to the treasurer of the city 6 20 in which the dock is located and shall be deposited in the 6 21 general fund of the city. Another one=half of one percent of 6 22 the adjusted gross receipts shall be remitted to the treasurer 6 23 of the county in which the dock is located and shall be 6 24 deposited in the general fund of the county. 6 252.b. If the gambling excursion originated at a dock 6 26 located in a part of the county outside a city, one=half of 6 27 one percent of the adjusted gross receipts shall be remitted 6 28 to the treasurer of the county in which the dock is located 6 29 and shall be deposited in the general fund of the county. 6 30 Another one=half of one percent of the adjusted gross receipts 6 31 shall be remitted to the treasurer of the Iowa city nearest to 6 32 where the dock is located and shall be deposited in the 6 33 general fund of the city. 6 343.c. Three=tenths of one percent of the adjusted gross 6 35 receipts shall be deposited in the gambling treatment fund 7 1 specified in section 99E.10, subsection 1, paragraph "a". 7 24.d. The remaining amount of the adjusted gross receipts 7 3 tax shall be credited to the general fund of the state. 7 4 Sec. 4. EFFECTIVE DATE. This Act, being deemed of 7 5 immediate importance, takes effect upon enactment. 7 6 HF 696 7 7 ec/es/25