Senate File 2275 - Reprinted SENATE FILE 2275 BY COMMITTEE ON STATE GOVERNMENT (SUCCESSOR TO SSB 3164) (As Amended and Passed by the Senate March 13, 2012 ) A BILL FOR An Act authorizing licensees authorized to operate gambling 1 games on an excursion boat, gambling structure, or racetrack 2 enclosure to operate internet wagering on poker and making 3 penalties applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 SF 2275 (4) 84 ec/nh/jh

S.F. 2275 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 . 16B. “Internet wagering service provider” 14 means a person who has entered into an agreement with an 15 internet wagering licensee or licensees to provide internet 16 wagering for an internet wagering licensee as authorized by 17 this chapter. 18 NEW SUBSECTION . 19A. “Player incentives” means, for 19 internet wagering, any bonuses, rewards, prizes, or other types 20 of promotional items provided to a person engaging in internet 21 wagering by an internet wagering licensee as an incentive to 22 engage in internet wagering. 23 NEW SUBSECTION . 22. “Rake” means a set fee or percentage of 24 the pot assessed by an internet wagering licensee for providing 25 the internet wagering services to a person engaging in internet 26 wagering for the right to participate in internet wagering. 27 NEW SUBSECTION . 23. “Tournament fee” means a set fee 28 assessed to a person engaging in internet wagering by the 29 internet wagering licensee for providing internet wagering 30 tournament services. 31 Sec. 3. Section 99F.3, Code 2011, is amended to read as 32 follows: 33 99F.3 Gambling games authorized. 34 The system of wagering on a gambling game as provided 35 -1- SF 2275 (4) 84 ec/nh/jh 1/ 8

S.F. 2275 by this chapter is legal, when conducted on an excursion 1 gambling boat, gambling structure, or racetrack enclosure at 2 authorized locations by a licensee , or, for internet wagering, 3 when conducted by an internet wagering licensee pursuant to 4 requirements established by the commission, as provided in this 5 chapter . 6 Sec. 4. Section 99F.4, subsections 14 and 22, Code 2011, are 7 amended to read as follows: 8 14. To require , except for internet wagering, all licensees 9 of gambling game operations to utilize a cashless wagering 10 system whereby all players’ money is converted to tokens, 11 electronic cards, or chips which only can be used for wagering 12 on the excursion gambling boat. 13 22. To require licensees to establish a process to allow a 14 person to be voluntarily excluded for life from an excursion 15 gambling boat and all other licensed facilities under this 16 chapter and chapter 99D , or from engaging in internet wagering 17 conducted by an internet wagering licensee under this chapter. 18 For internet wagering licensees, the process shall allow 19 players to limit the maximum amount of money that may be 20 transferred by that player into an internet wagering account 21 in a twenty-four-hour period . The process established shall 22 require that a licensee disseminate information regarding 23 persons voluntarily excluded to all licensees under this 24 chapter and chapter 99D . The state and any licensee under 25 this chapter or chapter 99D shall not be liable to any person 26 for any claim which may arise from this process. In addition 27 to any other penalty provided by law, any money or thing of 28 value that has been obtained by, or is owed to, a voluntarily 29 excluded person by a licensee as a result of wagers made by the 30 person after the person has been voluntarily excluded shall not 31 be paid to the person but shall be credited to the general fund 32 of the state. 33 Sec. 5. Section 99F.4, Code 2011, is amended by adding the 34 following new subsection: 35 -2- SF 2275 (4) 84 ec/nh/jh 2/ 8

S.F. 2275 NEW SUBSECTION . 27. To establish requirements for internet 1 wagering licensees and internet wagering service providers to 2 conduct internet wagering on poker as provided in this chapter. 3 At a minimum, the requirements shall include security measures 4 to insure the integrity of internet wagering and technical 5 standards governing the technology used to conduct internet 6 wagering. In addition, the requirements shall, subject to 7 reasonable conditions established by the commission, allow 8 persons who have registered with an internet wagering licensee 9 to engage in internet wagering with other persons, regardless 10 of location, to the extent permissible by law. 11 Sec. 6. NEW SECTION . 99F.4E Internet wagering on poker —— 12 licensing —— requirements. 13 1. Upon payment of the applicable internet wagering 14 license fee as determined by the commission and application 15 by a licensee authorized to operate gambling games under this 16 chapter, the commission shall issue an internet wagering 17 license to the licensee, following a review of the applicant 18 and internet wagering service provider in the manner provided 19 in this section and section 99F.6, subject to the provisions 20 of this chapter and rules adopted pursuant to this chapter 21 relating to gambling and internet wagering. A single joint 22 license to conduct internet wagering may be issued to more than 23 one licensee authorized to operate gambling games under this 24 chapter as determined by the commission. The issuance of a 25 license to conduct internet wagering under this chapter shall 26 not be considered the issuance of a new license under this 27 chapter. 28 2. An internet wagering licensee shall comply with the 29 following requirements: 30 a. Internet wagering shall be limited to wagering on poker 31 and all of its variations, including but not limited to Texas 32 hold ’em, Omaha hold ’em, draw poker, and stud poker. 33 b. Internet wagering shall be conducted by the licensee as 34 determined by the commission. 35 -3- SF 2275 (4) 84 ec/nh/jh 3/ 8

S.F. 2275 c. Internet wagering shall be limited to only those persons 1 who have registered with the licensee to engage in internet 2 wagering. To register, a person shall provide sufficient 3 information to the licensee to verify that the person is at 4 least twenty-one years of age and is otherwise authorized to 5 engage in internet wagering in this state. 6 d. (1) If an internet wagering license is issued to one 7 licensee authorized to operate gambling games under this 8 chapter, adjusted gross receipts received by the gambling games 9 licensee under this chapter from internet wagering each fiscal 10 year shall be added to the adjusted gross receipts received 11 by the licensee from gambling games other than from internet 12 wagering for purposes of imposing a tax on the adjusted gross 13 receipts received by the licensee as provided in section 14 99F.11. 15 (2) If a joint internet wagering license is issued to more 16 than one licensee authorized to operate gambling games under 17 this chapter, the tax rate imposed on adjusted gross receipts 18 from internet wagering on poker each fiscal year pursuant to 19 section 99F.11 shall be twenty-two percent or, if a majority 20 of participating licensees on the joint license are otherwise 21 subject to a tax rate of twenty-four percent on adjusted gross 22 receipts from gambling games over three million dollars under 23 section 99F.11, twenty-four percent. 24 e. An internet wagering licensee shall make distributions of 25 the receipts from internet wagering on poker in the same manner 26 as provided in section 99F.6, subsection 4, paragraph “a” , 27 subparagraph (2), or in the operating agreement entered into 28 with a qualified sponsoring organization as provided in section 29 99F.5, whichever is applicable. 30 f. Any other requirements as the commission establishes 31 to ensure the legality and integrity of conducting internet 32 wagering in this state. 33 3. A person holding a valid license pursuant to chapter 34 99D or section 99F.7 is exempt from further investigation 35 -4- SF 2275 (4) 84 ec/nh/jh 4/ 8

S.F. 2275 and examination for licensing to operate internet wagering 1 pursuant to this chapter. However, the commission may order 2 future investigations or examinations as the commission finds 3 appropriate. 4 Sec. 7. Section 99F.6, subsection 1, unnumbered paragraph 5 1, Code Supplement 2011, is amended to read as follows: 6 A person shall not be issued a license to conduct gambling 7 games on an excursion gambling boat or a license to operate 8 an excursion gambling boat under this chapter , an internet 9 wagering license, an internet wagering service provider 10 license, an occupational license, a distributor license, or 11 a manufacturer license unless the person has completed and 12 signed an application on the form prescribed and published 13 by the commission. The application shall include the full 14 name, residence, date of birth and other personal identifying 15 information of the applicant that the commission deems 16 necessary. The application shall also indicate whether the 17 applicant has any of the following: 18 Sec. 8. Section 99F.6, Code Supplement 2011, is amended by 19 adding the following new subsection: 20 NEW SUBSECTION . 5A. Before a license is granted to an 21 internet wagering service provider, the commission shall, 22 in addition to the requirements of this section, conduct 23 a comprehensive investigation of the service provider to 24 determine whether the service provider has accepted or assisted 25 in the acceptance of any wagers or other consideration related 26 to internet wagering. The commission shall not issue a license 27 to an internet wagering service provider if the commission 28 determines that the service provider has accepted or assisted 29 in the acceptance of any wagers or other consideration 30 related to internet wagering in violation of the laws of any 31 jurisdiction where the service provider has operated. 32 Sec. 9. Section 99F.7, subsection 1, Code Supplement 2011, 33 is amended to read as follows: 34 1. If the commission is satisfied that this chapter and 35 -5- SF 2275 (4) 84 ec/nh/jh 5/ 8

S.F. 2275 its rules adopted under this chapter applicable to licensees 1 have been or will be complied with, the commission shall issue 2 a license for a period of not more than three years to an 3 applicant to own a gambling game operation, to an applicant to 4 operate a gambling structure, and to an applicant to operate 5 an excursion gambling boat , and to an applicant to conduct 6 internet wagering . The commission shall decide which of the 7 gambling games authorized under this chapter the commission 8 will permit. The commission shall decide the number, location, 9 and type of gambling structures and excursion gambling boats 10 licensed under this chapter . The commission shall allow the 11 operation of an excursion boat or moored barge on or within one 12 thousand feet of the high water marks of the rivers, lakes, and 13 reservoirs of this state as established by the commission in 14 consultation with the United States army corps of engineers, 15 the department of natural resources, or other appropriate 16 regulatory agency. The license shall set forth, as applicable, 17 the name of the licensee, the type of license granted, the 18 location of the gambling structure or the place where the 19 excursion gambling boats will operate and dock, and the time 20 and number of days during the excursion season and the off 21 season when gambling may be conducted by the licensee. 22 Sec. 10. Section 99F.9, subsections 3 and 5, Code 2011, are 23 amended to read as follows: 24 3. The licensee may receive wagers only from a person 25 present on a licensed excursion gambling boat, licensed 26 gambling structure, or in a licensed racetrack enclosure , or 27 from a person engaging in internet wagering . An internet wager 28 may be placed from any location within this state or from 29 any other location where authorized by law, subject to any 30 requirements adopted by the commission. 31 5. A person under the age of twenty-one years shall not 32 engage in internet wagering or make or attempt to make a wager 33 on an excursion gambling boat, gambling structure, or in a 34 racetrack enclosure and shall not be allowed on the gaming 35 -6- SF 2275 (4) 84 ec/nh/jh 6/ 8

S.F. 2275 floor of an excursion gambling boat or gambling structure or 1 in the wagering area, as defined in section 99D.2 , or on the 2 gaming floor of a racetrack enclosure. However, a person 3 eighteen years of age or older may be employed to work on 4 the gaming floor of an excursion gambling boat or gambling 5 structure or in the wagering area or on the gaming floor of a 6 racetrack enclosure. A person who violates this subsection 7 with respect to engaging in internet wagering or making or 8 attempting to make a wager commits a scheduled violation under 9 section 805.8C, subsection 5 , paragraph “a” . 10 Sec. 11. Section 99F.12, subsection 2, Code 2011, is amended 11 to read as follows: 12 2. The licensee shall furnish to the commission reports 13 and information as the commission may require with respect to 14 the licensee’s activities. The gross receipts and adjusted 15 gross receipts from gambling shall be separately handled and 16 accounted for from all other moneys received from operation of 17 an excursion gambling boat or from operation of a racetrack 18 enclosure or gambling structure licensed to conduct gambling 19 games. For an internet wagering licensee, the gross receipts 20 and adjusted gross receipts from internet wagering shall be 21 separately handled and accounted for from all other moneys 22 received from other licensed activities of the licensee. The 23 commission may designate a representative to board a licensed 24 excursion gambling boat or to enter a racetrack enclosure or 25 gambling structure licensed to conduct gambling games. The 26 representative shall have full access to all places within the 27 enclosure of the boat, the gambling structure, or the racetrack 28 enclosure and shall directly supervise the handling and 29 accounting of all gross receipts and adjusted gross receipts 30 from gambling. The representative shall supervise and check 31 the admissions. The compensation of a representative shall be 32 fixed by the commission but shall be paid by the licensee. 33 Sec. 12. Section 99F.12, Code 2011, is amended by adding the 34 following new subsection: 35 -7- SF 2275 (4) 84 ec/nh/jh 7/ 8

S.F. 2275 NEW SUBSECTION . 2A. a. An internet wagering licensee 1 shall, in addition to the books and records otherwise required 2 by this section, make the following information available to 3 the commission upon request: 4 (1) Monthly auditable and aggregate financial statements of 5 internet wagering transactions. 6 (2) Calculation of all fees payable to government. 7 (3) The identity of registered players. 8 (4) The balance on a registered player’s account at the 9 start of a session of play. 10 (5) The wagers placed on each game time stamped by the games 11 server. 12 (6) The result of each game time stamped by the games 13 server. 14 (7) The amount won or lost by a registered player. 15 (8) The balance on a registered player’s account at the end 16 of the game. 17 b. Information described in paragraph “a” , subparagraphs (3) 18 through (8), shall be confidential. 19 Sec. 13. Section 99F.15, subsection 3, Code 2011, is amended 20 to read as follows: 21 3. A Except for internet wagering conducted as authorized 22 by this chapter, a person wagering or accepting a wager at 23 any location outside an excursion gambling boat, gambling 24 structure, or a racetrack enclosure is in violation of section 25 725.7 . 26 Sec. 14. Section 99F.15, subsection 4, unnumbered paragraph 27 1, Code 2011, is amended to read as follows: 28 A person commits a class “D” felony and, in addition, shall 29 be barred for life from internet wagering, excursion gambling 30 boats , and gambling structures under the jurisdiction of the 31 commission, if the person does any of the following: 32 -8- SF 2275 (4) 84 ec/nh/jh 8/ 8