Proposed Rules Title 16

TITLE 16. ECONOMIC REGULATION

Part 8. TEXAS RACING COMMISSION

Chapter 303. GENERAL PROVISIONS

Subchapter B. POWERS AND DUTIES OF THE COMMISSION

16 TAC §303.41

The Texas Racing Commission proposes an amendment to §303.41, Allocation of Race Dates. The section proposed for amendment relates to the method by which live race dates are requested and designated under §§8.01, 8.02, and 10.01 of the Act. The purpose of the amendment is to allow the Commission more flexibility in allocating live race dates to the racetrack associations.

The change to §303.41 of the Rules of Racing will modify the timeframe the Commission may designate for live race date applications. The amendment will modify the current race date application deadline from the July 1 calendar year to a method by which the Commission may designate an application period upon its own motion or upon the request of an association. Once the Commission has designated an application period, the amendment requires the Commission to publicize the application period to the affected associations at least 30 days before the closing date of the period.

Charla Ann King, Executive Secretary for the Texas Racing Commission, has determined that for the first five year period the amendment is in effect there will be no fiscal implications for state or local government as a result of enforcing the amendment.

Ms. King has also determined that for each year of the first five years the amendment is in effect the anticipated public benefit will be that the Commission will have more flexibility to respond to the changing conditions of the racing industry. The Commission will be able to consider and allocate race dates for time periods longer or shorter than one year. The Commission will also be able to separately consider and allocate race dates by track class.

There is no anticipated economic cost to an individual required to comply with the proposed amendment.

There are no foreseeable implications relating to costs or revenues for small or micro-businesses as a result of enforcing or administering the proposed amendment.

There are no negative impacts upon employment conditions in this state as a result of the proposed amendment.

By allowing the Commission greater flexibility to respond to the needs of the racing industry when allocating race dates, this amendment will have a positive effect on the state's agricultural, horse breeding, horse training, greyhound breeding, and greyhound training industries.

All comments or questions regarding the proposed amendment may be submitted in writing within 30 days following publication of this notice in the Texas Register to Gloria Giberson, Assistant to the Executive Secretary for the Texas Racing Commission, at P.O. Box 12080, Austin, Texas 78711-2080, telephone (512) 833-6699, or fax (512) 833-6907.

The amendment is proposed under the Texas Civil Statutes, Article 179e, §§3.02 and 3.021, which authorizes the Commission to make rules relating to all aspects of greyhound and horse racing, and §§8.01, 8.02, and 10.01, which pertain to the authorization of the Commission to allocate live race dates.

The amendment implements Texas Civil Statutes, Article 179e.

§303.41.Allocation of Race Dates.

(a) The commission shall allocate live race dates, including charity days, to each association for such time periods and at such racing locations as the commission determines in accordance with the Act and this section.

(b) Upon its own motion or upon the request of any association, the commission may designate an application period during which the commission shall accept applications for race dates.

(d) Upon designation by the commission of an application period under this section, the executive secretary shall publicize that application period to the affected greyhound and horse racing associations at least 30 days before the closing date of the period. [ ~~An association shall apply to the commission not later than July 1 of each year for live race dates to be conducted in the next calendar year.~~ ]

(e) The application must be on a form prescribed by the commission. After the request is filed, the executive secretary may require the association to submit additional information if the executive secretary determines the additional information is necessary to effectively evaluate the request.

(f) [ ~~(b)~~ ] In allocating race dates under this section, the commission may consider the following factors and the degree to which the association's proposed race meeting will serve to nurture, promote, develop, or improve the horse or greyhound industry in Texas:

(1) the association's current ability to pay all fees and other amounts owed to the commission, to the state, and to local governments;

(2) the association's willingness and ability to comply and past performance in complying with the Rules and the Act;

(3) the current condition of the association's racetrack and facilities for patrons, race animals, and occupational licensees;

(4) the anticipated effect of the proposed race meeting on the continuity of racing during the year;

(5) the live race dates requested by other associations licensed to conduct races for the same species of animal;

(6) the anticipated overall economic effect to the state from the race meeting;

(7) the anticipated effect of the race meeting on the greyhound or horse breeding industry in Texas;

(8) the anticipated effect of scheduled race meetings in neighboring race states on the proposed race meeting; and

(9) the anticipated availability of race animals for the race meetings.

(g) [ ~~(c)~~ ] The commission shall approve the actual days awarded, and the total number of performances. The commission may require a minimum number of races in a race meet.

(h) [ ~~(d)~~ ] An association shall conduct pari-mutuel racing on each race date granted under this section, and in accordance with the race date calendar approved by the Commission, unless the association receives the prior approval of the executive secretary.

(i) [ ~~(e)~~ ] If circumstances beyond the control of the association prevent the association from conducting a performance, the commission may award a make-up performance.

(j) [ ~~(f)~~ ] Change in Race Date Allocation.

(1) The executive secretary may permit an association to request additional live race dates after its request under this section has been acted on by the commission if the executive secretary determines that:

(A) the request includes evidence that granting the additional live race dates will enhance the breeding and training industries for horses or greyhounds;

(B) the association's failure to request the live race dates initially was not due to the association's neglect; and

(C) if the request duplicates a request by the association that has already been denied by the commission, changed circumstances exist that necessitate additional consideration by the commission.

(2) An association may request a change to the live race dates granted by the commission provided the association obtains the approval of all associations that are affected by the proposed change. This subsection applies to any proposed change to the number or format of live race dates.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 11, 2007.

TRD-200702362

Mark Fenner

General Counsel

Texas Racing Commission

Earliest possible date of adoption: July 22, 2007

For further information, please call: (512) 833-6699

Chapter 309. RACETRACK LICENSES AND OPERATIONS

Subchapter A. RACETRACK LICENSES

16 TAC §309.6

The Texas Racing Commission proposes an amendment to §309.6, Security for Compliance. The section proposed for amendment relates to the security that racetrack associations must post under §6.04(b) of the Texas Racing Act, Texas Civil Statutes, Article 179e. The purpose of the security is to ensure an association's compliance with the Act and the Rules and to ensure that an association completes its racetrack facilities and starts racing by the dates approved by the Commission.

The change will clarify that §6.04(b) of the Texas Racing Act allows the Commission to require security from both new and existing racetrack associations. The change will enable the Commission to require security from an existing association that does not have a racetrack facility and that does not have security currently posted. The change will also enable the Commission to require security from an existing licensee that does have a racetrack facility, but that did not conduct live racing in the previous calendar year and does not have security currently posted.

The change will not require security from an association that does have a racetrack facility and that did conduct live racing in the previous calendar year.

The change will establish criteria that the agency will consider in determining the amount of the required security. These criteria include the amounts of revenue that will be lost to the state's general revenue fund, to the Texas Bred Incentive Programs, and to the Commission's general revenue dedicated accounts if simulcast and live racing do not begin on the dates approved by the Commission.

The change clarifies that any interest earned on security posted as United States Treasury Bonds or through irrevocable assignments of federally insured deposits will remain the property of the association.

The change requires the forfeiture of such amounts as appropriate for the amount of revenue lost to the state's general revenue fund and to the Texas Bred Incentive Programs should an association fail to conduct live or simulcast racing by the dates approved by the Commission.

The change clarifies that any portion of the security may be forfeited to the Commission for any accrued fees, penalties or interest owed by the association. After the association completes its first live race meet, any remaining security will be returned to the association.

Charla Ann King, Executive Secretary for the Texas Racing Commission, has determined that for the first five year period the amendment is in effect that there may be fiscal implications for state government as a result of enforcing the amendment. If an association fails to start live or simulcast racing by the dates approved by the Commission, the Commission will forfeit to the state's general revenue fund that portion of the security that is appropriate to compensate the state for the pari-mutuel tax revenue lost as a result of the failure to start racing. The exact amount of forfeiture would be established by Order for each racetrack that is subject to the security requirement. Based on current projections, the pari-mutuel tax on a Class 2 license will range from approximately $700 to $1,050 per day. In addition, the Commission may forfeit a portion of the security for any fees, penalties, or interest due the Commission.

Ms. King has determined that there will be no fiscal implications for local government as a result of enforcing the amendment.

Ms. King has also determined that for each year of the first five years the amendment is in effect the anticipated public benefit will be that holders of inactive licenses will be encouraged to construct a racetrack and start conducting live and simulcast racing. As a result, local economies will be strengthened from the new construction and new employment opportunities at the racetrack; local trainers and owners will benefit from the increased racing opportunities and additional purses; the agricultural economy will benefit from increased demand for hay, feed, and tack, as well as increased demand for related services.

There is no anticipated economic cost to an individual required to comply with the proposed amendment.

There are foreseeable implications relating to costs or revenues for small or micro-businesses as a result of enforcing or administering the proposed amendment. Although the Commission will return the security to those associations that comply with an Order for Security, those associations who fail to comply will lose a portion of the security for each missed day as a result. Based on current projections, the total amount forfeited by a Class 2 racetrack per missed simulcast day will be approximately $950 to $1,800. The total amount forfeited by a Class 2 racetrack per missed live race day will be approximately $950 to $1,200. Any interest earned on security will remain the property of the association.

Some small and micro-businesses will benefit from the proposed amendment since the security also ensures that appropriate payments are made to the Texas Bred Incentive Programs. The Texas Bred Incentive Programs are an economic development program intended to promote, develop and improve the breeding of race animals within the state. Proceeds are used to supplement purses, fund breeder and owner awards, and support breed registries. As a result, this amendment will benefit those small and micro-businesses in the breeding, training, and related agricultural industries.

There are no negative impacts upon employment conditions in this state as a result of the proposed amendment.

By encouraging the construction of race tracks, encouraging the conduct of live and simulcast racing, and providing for contributions to the Texas Bred Incentive Programs, this amendment will have a positive effect on the state's agricultural, horse breeding, horse training, greyhound breeding, and greyhound training industries.

All comments or questions regarding the proposed amendment may be submitted in writing within 30 days following publication of this notice in the Texas Register to Gloria Giberson, Assistant to the Executive Secretary for the Texas Racing Commission, at P.O. Box 12080, Austin, Texas 78711-2080, telephone (512) 833-6699, or fax (512) 833-6907.

The amendments are proposed under the Texas Civil Statutes, Article 179e, §§3.02 and 3.021, which authorizes the Commission to make rules relating to all aspects of greyhound and horse racing, and §6.04(b), which requires applicants to post security to ensure compliance with the Act and the Rules of the Commission.

The amendment implements Texas Civil Statutes, Article 179e.

§309.6. Order for Security for Compliance.

(a) An association must post security in an amount determined by the Commission to adequately ensure:

(1) the association's compliance with the Act and the Rules;

(2) the association's completion of the racetrack facilities on or before the date approved by the Commission;

(3) the start of simulcast racing on or before the date approved by the Commission; and

(4) the start of live racing on or before the date approved by the Commission. [ Not later than 10 business days after the Commission's order issuing a racetrack license to an applicant under this chapter becomes final and unappealable, the applicant must post security in an amount determined by the Commission to adequately ensure the association's compliance with the Act and the Rules and the association's completion of the racetrack facilities and the start of racing on the date approved by the Commission. The amount of the security must be reasonable in relation to the amount of revenue that will be lost if the association fails to start racing on the date approved by the Commission. ]

(b) Not later than 10 business days after the Commission issues its security order, the association must submit the security amount as directed. [ Cash, cashier's checks, surety bonds, irrevocable bank letters of credit, United States Treasury bonds that are readily convertible to cash, or irrevocable assignments of federally insured deposits in banks, savings and loan institutions, and credit unions are acceptable as security for purposes of this section. ]

(c) If an association has not posted security, either because the Commission did not originally require the association to post security or because the association has already forfeited its security, and the association has not completed its racetrack facilities or has failed to conduct live racing in the previous calendar year, the Commission may:

(1) approve a new date by which the association must complete its racetrack facilities;

(2) approve a date by which the association must begin simulcast racing;

(3) approve a date by which the association must begin live racing; and

(4) require the association to post security in amount determined by the Commission. [ If an association fails to start racing on the date approved by the Commission, the Commission may forfeit any portion of the security that is appropriate for the amount of revenue lost due to the failure to start racing. ]

(d) In determining the amount of the security that the association shall post, the Executive Secretary shall prepare a security estimate proposal to be submitted to the Commission for consideration. In preparing the security estimate proposal the Executive Secretary shall:

(1) make security estimate calculations using wagering and operations data from:

(A) the association's application if the site location is the same as that provided in the original application; or

(B) updated data provided by the association at the request of the Executive Secretary if the site location is different from that included within the original application.

(2) make security estimate calculations based on the following criteria:

(A) pari-mutuel tax due the general revenue fund from live wagering pools;

(B) pari-mutuel tax due the general revenue fund from simulcast same species wagering pools;

(D) the Racing Commission's general revenue dedicated account from live wagering pools and breakage;

(E) Texas Bred Incentive Program funds due the Racing Commission's general revenue dedicated account from simulcast same species wagering pools and breakage;

(F) Texas Bred Incentive Program funds due the Racing Commission's general revenue dedicated account from simulcast cross-species wagering pools and breakage;

(G) race day fees due the Racing Commission's general revenue dedicated account from live wagering as detailed under Section 309.8, Racetrack License Fees; and

(H) race day fees due the Racing Commission's general revenue dedicated account from simulcast wagering as detailed under Section 309.8, Racetrack License Fees. [ ~~After the association begins racing, the Commission shall return the remaining security to the association.~~ ]

(e) Cash, cashier's checks, surety bonds, irrevocable bank letters of credit, United States Treasury bonds that are readily convertible to cash, or irrevocable assignments of federally insured deposits in banks, savings and loan institutions, and credit unions are acceptable as security for purposes of this section. Interest earned on a United States Treasury bond or on an irrevocable assignment of a federally insured deposit is not subject to the assignment and remains the property of the association.

(f) If an association fails to conduct simulcast racing by the date approved by the Commission, the Commission shall forfeit to the state's general revenue fund and to the Texas Bred Incentive Programs that portion of the security that is appropriate for the amount of revenue lost to those funds. Exceptions to this requirement may be allowed only if the association's failure to conduct live racing by the date approved by the Commission was due to an emergency that the Commission determines was unforeseeable and beyond the association's control.

(g) If an association fails to conduct live racing by the date approved by the Commission, the Commission shall forfeit to the state's general revenue fund and to the Texas Bred Incentive Programs that portion of the security that is appropriate for the amount of revenue lost to those funds. Exceptions to this requirement may be allowed only if the association's failure to conduct live racing by the date approved by the Commission was due to an emergency that the Commission determines was unforeseeable and beyond the association's control.

(h) If an association is liable to the Commission for any accrued fees, penalties or interest, the Commission may forfeit any portion of the security that is appropriate for those fees, penalties or interest.

(i) After the association completes its first live race meet after posting security under this section, the Commission shall return the remaining security to the association.