Text: SF457            Text: SF459


Senate File 458

SENATE FILE BY COMMITTEE ON STATE GOVERNMENT (SUCCESSOR TO SSB 1165) A BILL FOR 1 An Act relating to certain forms of gambling, including horse 2 racing, pari=mutuel wagering, gambling games, and intrastate 3 internet poker, creating regulatory and tax structures, and 4 providing penalties. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 2322SV (1) 84 aw/rj PAG LIN 1 1 DIVISION I 1 2 HORSE RACING 1 3 Section 1. Section 99D.7, Code 2011, is amended by adding 1 4 the following new subsection: 1 5 NEW SUBSECTION. 2A. To adopt standards regarding the 1 6 duration of thoroughbred and quarter horse racing seasons, 1 7 so that a thoroughbred racing season shall not be less than 1 8 sixty=seven days, and so that a quarter horse racing season 1 9 shall not be less than twenty=six days. 1 10 Sec. 2. Section 99D.7, subsection 4, Code 2011, is amended 1 11 to read as follows: 1 12 4. a. To regulate the purse structure for race meetings 1 13 including establishing a minimum purse. 1 14 b. The commission shall, beginning July 1, 2012, regulate 1 15 the purse structure for all horse racing so that seventy=six 1 16 percent is designated for thoroughbred racing, fifteen and 1 17 one=quarter percent is designated for quarter horse racing, and 1 18 eight and three=quarter percent is designated for standardbred 1 19 racing. The purse moneys designated for standardbred racing 1 20 may only be used to support standardbred harness racing purses 1 21 at county fairs or for the maintenance or repair of harness 1 22 racing tracks at the fairgrounds for such county fairs. The 1 23 horse racetrack in Polk county shall not provide funding to 1 24 support standardbred racing at such county fairs that is not 1 25 otherwise provided for in this paragraph. 1 26 Sec. 3. Section 99D.11, subsection 2, Code 2011, is amended 1 27 to read as follows: 1 28 2. Licensees shall only permit the pari=mutuel or 1 29 certificate method of wagering, or the advanced deposit method 1 30 of wagering, as defined in this section. 1 31 Sec. 4. Section 99D.11, subsection 3, Code 2011, is amended 1 32 to read as follows: 1 33 3. The licensee may receive wagers of money only from a 1 34 person present in a licensed racetrack enclosure on a horse 1 35 or dog in the race selected by the person making the wager 2 1 to finish first in the race or from a person engaging in 2 2 advanced deposit wagering as defined in this section. The 2 3 person wagering shall acquire an interest in the total money 2 4 wagered on all horses or dogs in the race as first winners in 2 5 proportion to the amount of money wagered by the person. 2 6 Sec. 5. Section 99D.11, subsection 6, paragraph a, Code 2 7 2011, is amended to read as follows: 2 8 a. All wagering shall be conducted within the racetrack 2 9 enclosure where the licensed race is held, except as provided 2 10 in paragraph paragraphs "b" and "c". 2 11 Sec. 6. Section 99D.11, subsection 6, Code 2011, is amended 2 12 by adding the following new paragraph: 2 13 NEW PARAGRAPH. c. (1) The commission shall authorize the 2 14 licensee to conduct advanced deposit wagering. An advanced 2 15 deposit wager may be placed in person at a licensed racetrack 2 16 enclosure, or from any other location via a telephone=type 2 17 device or any other electronic means. 2 18 (2) For the purposes of this section, "advanced deposit 2 19 wagering" means a method of pari=mutuel wagering in which an 2 20 individual may establish an account, deposit money into the 2 21 account, and use the account balance to pay for pari=mutuel 2 22 wagering. Of the net revenue received through advanced deposit 2 23 wagering, fifty percent shall be directed to horse purses 2 24 created pursuant to section 99D.7, subsection 4, and fifty 2 25 percent shall be directed to the licensee for the pari=mutuel 2 26 horse racetrack located in Polk county. 2 27 Sec. 7. Section 99D.22, subsection 1, Code 2011, is amended 2 28 to read as follows: 2 29 1. a. A licensee shall hold at least one race on each 2 30 racing day limited to Iowa=foaled horses or Iowa=whelped 2 31 dogs as defined by the department of agriculture and land 2 32 stewardship using standards consistent with this section. 2 33 However, if sufficient competition cannot be had among that 2 34 class of horses or dogs on any day, another race for the day may 2 35 be substituted. 3 1 b. A sum equal to twelve percent of the purse won by 3 2 an Iowa=foaled horse or Iowa=whelped dog shall be used to 3 3 promote the horse and dog breeding industries. The twelve 3 4 percent shall be withheld by the licensee from the breakage 3 5 and shall be paid at the end of the race meeting to the state 3 6 department of agriculture and land stewardship which in turn 3 7 shall deposit it in a special fund to be known as the Iowa horse 3 8 and dog breeders fund. The department shall pay the amount 3 9 deposited in the fund that is withheld from the purse won by 3 10 an Iowa=foaled horse to the breeder of the winning Iowa=foaled 3 11 horse by December 31 of each calendar year. The department 3 12 shall pay the amount deposited in the fund that is withheld 3 13 from the purse won by an Iowa=whelped dog to the breeder of the 3 14 winning Iowa=whelped dog by March 31 of each calendar year. 3 15 For the purposes of this section, the breeder of a horse shall 3 16 be considered to be the owner of the brood mare at the time the 3 17 foal is dropped. 3 18 c. No less than twenty percent of all net purse moneys 3 19 distributed to each breed, as described in section 99D.7, 3 20 subsection 4, paragraph "b", shall be designated for registered 3 21 Iowa=bred foals in the form of breeder's awards or purse 3 22 supplement awards to enhance and foster the growth of the horse 3 23 breeding industry. 3 24 Sec. 8. Section 99F.6, subsection 4, paragraph a, Code 2011, 3 25 is amended to read as follows: 3 26 a. (1) Before a license is granted, the division of 3 27 criminal investigation of the department of public safety 3 28 shall conduct a thorough background investigation of the 3 29 applicant for a license to operate a gambling game operation 3 30 on an excursion gambling boat. The applicant shall provide 3 31 information on a form as required by the division of criminal 3 32 investigation. 3 33 (2) A qualified sponsoring organization licensed to operate 3 34 gambling games under this chapter shall distribute the receipts 3 35 of all gambling games, less reasonable expenses, charges, 4 1 taxes, fees, and deductions allowed under this chapter, as 4 2 winnings to players or participants or shall distribute the 4 3 receipts for educational, civic, public, charitable, patriotic, 4 4 or religious uses as defined in section 99B.7, subsection 3, 4 5 paragraph "b". However, a licensee to conduct gambling games 4 6 under this chapter shall, unless an operating agreement for an 4 7 excursion gambling boat otherwise provides, distribute at least 4 8 three percent of the adjusted gross receipts for each license 4 9 year for educational, civic, public, charitable, patriotic, 4 10 or religious uses as defined in section 99B.7, subsection 3, 4 11 paragraph "b". However, if a licensee who is also licensed to 4 12 conduct pari=mutuel wagering at a horse racetrack has unpaid 4 13 debt from the pari=mutuel racetrack operations, the first 4 14 receipts of the gambling games operated within the racetrack 4 15 enclosure less reasonable operating expenses, taxes, and fees 4 16 allowed under this chapter shall be first used to pay the 4 17 annual indebtedness. 4 18 (3) The commission shall authorize, subject to the debt 4 19 payments for horse racetracks and the provisions of paragraph 4 20 "b" for dog racetracks, a licensee who is also licensed to 4 21 conduct pari=mutuel dog or horse racing to use receipts from 4 22 gambling games within the racetrack enclosure to supplement 4 23 purses for races particularly for Iowa=bred horses pursuant to 4 24 an agreement which shall be negotiated between the licensee and 4 25 representatives of the dog or horse owners. For agreements 4 26 subject to commission approval concerning purses for horse 4 27 racing beginning on or after January 1, 2006, and ending 4 28 before January 1, 2021, the agreements shall provide that 4 29 total annual purses for all horse racing shall be no less than 4 30 eleven percent of the first two hundred million dollars of net 4 31 receipts, and six percent of net receipts above two hundred 4 32 million dollars. In addition, live standardbred horse racing 4 33 shall not be featured at the horse racetrack in Polk county. 4 34 Agreements that are subject to commission approval concerning 4 35 horse purses for a particular period of time beginning on or 5 1 after January 1, 2006, and ending before January 1, 2021, shall 5 2 be jointly submitted to the commission for approval. 5 3 (4) A qualified sponsoring organization shall not make a 5 4 contribution to a candidate, political committee, candidate's 5 5 committee, state statutory political committee, county 5 6 statutory political committee, national political party, or 5 7 fund=raising event as these terms are defined in section 5 8 68A.102. The membership of the board of directors of a 5 9 qualified sponsoring organization shall represent a broad 5 10 interest of the communities. 5 11 (5) For purposes of this paragraph, "net receipts" means the 5 12 annual adjusted gross receipts from all gambling games less the 5 13 annual amount of money pledged by the owner of the facility to 5 14 fund a project approved to receive vision Iowa funds as of July 5 15 1, 2004. 5 16 DIVISION II 5 17 COUNTY REFERENDUMS AND 5 18 GAMBLING GAME LICENSING 5 19 Sec. 9. Section 99F.4A, subsection 8, paragraph a, Code 5 20 2011, is amended to read as follows: 5 21 a. The commission shall, upon the immediate payment 5 22 of the applicable table games license fee and submission 5 23 to the commission by June 1, 2005, of an application by a 5 24 licensee of a pari=mutuel dog or horse racetrack licensed to 5 25 conduct gambling games at a pari=mutuel racetrack enclosure, 5 26 issue a license to the licensee to conduct table games of 5 27 chance, including video machines that simulate table games 5 28 of chance, at the pari=mutuel racetrack enclosure subject to 5 29 the requirements of this subsection. However, a table games 5 30 license may only be issued to a licensee required to pay a 5 31 table games license fee of three million dollars under this 5 32 subsection if the licensee, and all other licensees of an 5 33 excursion gambling boat in that county, file an agreement 5 34 with the commission authorizing the granting of a table games 5 35 license under this subsection and permitting all licensees 6 1 of an excursion gambling boat to operate a moored barge as 6 2 of a specific date. The licensee shall be granted a table 6 3 games license by the commission without conducting a separate 6 4 referendum authorizing table games upon payment of the 6 5 applicable license fee to the commission which table games 6 6 license fee may be offset by the licensee against taxes imposed 6 7 on the licensee by section 99F.11, to the extent of twenty 6 8 percent of the table games license fee paid pursuant to this 6 9 subsection for each of five consecutive fiscal years beginning 6 10 with the fiscal year beginning July 1, 2008. Fees paid 6 11 pursuant to this subsection are not refundable to the licensee. 6 12 A licensee shall not be required to pay a fee to renew a table 6 13 games license issued pursuant to this subsection. Moneys 6 14 collected by the commission from a table games license fee paid 6 15 under this subsection shall be deposited in the rebuild Iowa 6 16 infrastructure fund created in section 8.57. 6 17 Sec. 10. Section 99F.7, subsection 11, Code 2011, is amended 6 18 by striking the subsection. 6 19 Sec. 11. Section 99F.7, subsection 15, Code 2011, is amended 6 20 to read as follows: 6 21 15. If a licensed excursion boat stops at more than one 6 22 harbor and travels past a county without stopping at any port 6 23 in that county, the commission shall require the excursion boat 6 24 operator to develop a schedule for ports of call in which a 6 25 county referendum has been approved, and the port of call has 6 26 that have the necessary facilities to handle the boat. The 6 27 commission may limit the schedule to only one port of call per 6 28 county. 6 29 DIVISION III 6 30 INTERNET POKER 6 31 Sec. 12. NEW SECTION. 99H.1 Internet poker ==== purpose. 6 32 1. This chapter may be cited as the "Iowa Internet Poker 6 33 Consumer Protection and Revenue Generation Act of 2011". 6 34 2. It is the purpose of this chapter to create a framework 6 35 for the state to regulate intrastate internet poker in order to 7 1 ensure consumer protections and provide to the state additional 7 2 revenue that otherwise escapes Iowa taxation, by authorizing, 7 3 creating, and implementing a licensing and regulatory structure 7 4 and system of intrastate internet poker to do all of the 7 5 following: 7 6 a. Provide that intrastate internet poker is only offered 7 7 for play in a manner that is lawful under the federal Unlawful 7 8 Internet Gambling Enforcement Act of the federal Security and 7 9 Accountability for Every Port Act of 2006, Pub. L. No. 109=347, 7 10 which authorizes a state to regulate and conduct intrastate 7 11 internet gambling, such as poker. 7 12 b. Provide a new source of revenue that will generate 7 13 economic benefits to the state through the authorization of 7 14 lawful and regulated intrastate internet poker in Iowa instead 7 15 of allowing economic benefits to flow to unregulated foreign 7 16 operators and markets. 7 17 c. Create a contractual relationship between licensed 7 18 affiliates and an internet poker hub operator with the 7 19 technical expertise to ensure that wagering authorized by this 7 20 chapter is only offered to registered players who are at least 7 21 twenty=one years of age and physically present within the 7 22 borders of this state at the time of play. 7 23 d. Ensure that the internet poker hub operator is qualified 7 24 to be licensed by the state and to meet all statutory, 7 25 regulatory, and contractual requirements of the state while 7 26 protecting registered poker players. 7 27 e. Allow a licensee authorized to conduct gambling games 7 28 on or in an excursion gambling boat, gambling structure, or 7 29 racetrack enclosure to become an affiliate of the internet 7 30 poker hub operator. 7 31 f. Ensure that the state is able to collect all taxes and 7 32 fees from the play of intrastate internet poker. 7 33 g. Create a system to protect each registered player's 7 34 private information and prevent fraud and identity theft and 7 35 ensure that the registered player's financial transactions are 8 1 processed in a secure and transparent fashion. 8 2 h. Ensure that the regulatory agency has unlimited access 8 3 to the premises and records of the internet poker hub operator 8 4 and affiliates to ensure strict compliance with its regulations 8 5 concerning credit authorization, account access, and other 8 6 security provisions. 8 7 i. Require the internet poker hub operator to provide 8 8 accessible customer service to registered players. 8 9 j. Require the internet poker hub operator's internet site 8 10 to contain information relating to problem gambling, including 8 11 a telephone number that an individual may call to seek 8 12 information and assistance for a potential gambling addiction. 8 13 Sec. 13. NEW SECTION. 99H.2 Definitions. 8 14 As used in this chapter, unless otherwise required by the 8 15 context: 8 16 1. "Adjusted gross receipts" means the total amount of 8 17 money received by the internet poker affiliates from registered 8 18 players for participation in authorized games less winnings 8 19 paid to registered players. 8 20 2. "Affiliate" means an operator licensed under chapter 99D 8 21 or 99F that maintains an internet site as a portal into the 8 22 state internet poker network. 8 23 3. "Authorized game" means a game or series of games of 8 24 poker which are played as a nonbanking game on the state 8 25 internet poker network. 8 26 4. "Commission" means the Iowa racing and gaming commission. 8 27 5. "Convicted" means having been found guilty, regardless of 8 28 adjudication, as a result of a jury verdict, nonjury trial, or 8 29 entry of a plea of guilty or nolo contendere. 8 30 6. "Internet poker hub operator" or "poker hub operator" 8 31 means a computer system operator that is licensed by the state 8 32 and contracts with the state to operate the state internet 8 33 poker network. 8 34 7. "Intrastate internet poker" means authorized games of 8 35 poker played over the internet by registered players who are 9 1 physically present within the borders of this state at the time 9 2 of play. 9 3 8. "Nonbanking game" means an authorized game in which an 9 4 internet poker hub operator or affiliate is not a participant 9 5 and has no financial stake in the outcome of the authorized 9 6 game. 9 7 9. "Player incentives" means any bonuses, rewards, prizes, 9 8 or other types of promotional items provided to a registered 9 9 player by an internet poker hub operator or affiliate as an 9 10 incentive to begin or continue playing on the state internet 9 11 poker network. 9 12 10. "Rake" means a set fee or percentage of the pot 9 13 assessed by an internet poker hub operator for providing the 9 14 internet poker services to registered players for the right to 9 15 participate in an authorized game conducted by the internet 9 16 poker hub operator or affiliates. 9 17 11. "Registered player" means a person who is registered 9 18 with an affiliate to participate in an authorized game 9 19 conducted on the state internet poker network. 9 20 12. "State internet poker network" means the computer system 9 21 operated by the internet poker hub operator and affiliates that 9 22 authorizes the playing of and wagering on intrastate internet 9 23 poker by registered players through the internet site portals 9 24 of affiliates. 9 25 13. "Tournament fee" means a set fee assessed to registered 9 26 players by the internet poker hub operator for providing the 9 27 internet poker tournament services. 9 28 Sec. 14. NEW SECTION. 99H.3 Intrastate internet poker 9 29 authorized. 9 30 1. Under the federal Unlawful Internet Gambling Enforcement 9 31 Act of the federal Security and Accountability for Every Port 9 32 Act of 2006, Pub. L. No. 109=347, a state is authorized to 9 33 regulate and conduct intrastate internet poker as long as all 9 34 players and the internet wagering activities are located within 9 35 the state. 10 1 2. Notwithstanding any other provision of law, a person may 10 2 operate a state internet poker network as an internet poker hub 10 3 operator and a person may participate as a registered player in 10 4 an authorized game or tournament provided on the state internet 10 5 poker network by an affiliate if such game or tournament and 10 6 poker operations are conducted strictly in accordance with the 10 7 provisions of this chapter and federal law. 10 8 Sec. 15. NEW SECTION. 99H.4 Authority of the commission. 10 9 The commission shall regulate the operation of the state 10 10 internet poker network, the internet poker hub operator, the 10 11 affiliates, and the play of intrastate internet poker under 10 12 this chapter and rules adopted pursuant to this chapter. The 10 13 commission may do all of the following: 10 14 1. Adopt rules related to intrastate internet poker, 10 15 including but not limited to rules governing all of the 10 16 following: 10 17 a. The issuance of operator and individual occupational 10 18 licenses to an internet poker hub operator, affiliates, and 10 19 their employees. 10 20 b. The operation of the state internet poker network and 10 21 technical system requirements. 10 22 c. Security of the financial information of registered 10 23 players and registered player accounts. 10 24 d. Bonuses, awards, promotions, and other incentives to 10 25 registered players. 10 26 e. Recordkeeping and reporting requirements. 10 27 f. The distribution of intrastate internet poker income. 10 28 g. The imposition and collection of all fees and taxes 10 29 imposed by this chapter. 10 30 2. Conduct investigations and monitor operation of the 10 31 state internet poker network and the playing of authorized 10 32 games on the state internet poker network. 10 33 3. Review the books, accounts, and records of any current or 10 34 former internet poker hub operator or affiliate. 10 35 4. Suspend or revoke any license or permit, after hearing, 11 1 for any violation of this chapter or the rules adopted pursuant 11 2 to this chapter. 11 3 5. Take testimony, issue summons and subpoenas for any 11 4 witness, and issue subpoenas duces tecum in connection with any 11 5 matter within its jurisdiction. 11 6 6. Monitor and ensure proper collection of taxes and fees 11 7 imposed by this chapter. 11 8 7. Require the internet poker hub operator to adopt internal 11 9 controls to ensure no compromise of revenue to the state. 11 10 8. Monitor, audit, and verify the cash flow and accounting 11 11 of state internet poker network revenue for any given operating 11 12 day. 11 13 9. Monitor and ensure that the playing of intrastate 11 14 internet poker is conducted fairly and that all personal 11 15 and financial information provided by registered players is 11 16 protected by the internet poker hub operator. 11 17 Sec. 16. NEW SECTION. 99H.5 Internet poker hub operator ==== 11 18 license required. 11 19 1. A person shall not operate as the internet poker hub 11 20 operator in this state unless the person holds a valid internet 11 21 poker hub operator license issued under this section. 11 22 2. Only a person holding a valid intrastate internet 11 23 poker license issued by the commission may provide intrastate 11 24 internet poker for play to registered players. 11 25 3. An internet poker hub operator must be an entity 11 26 authorized to conduct business in this state. 11 27 4. A person seeking a license or renewal of a license 11 28 to operate as the internet poker hub operator shall 11 29 make application on forms prescribed by the commission. 11 30 Applications for an internet poker hub operator license 11 31 shall contain all of the information the commission, by 11 32 rule, determines is required to ensure eligibility under this 11 33 section. 11 34 5. As a condition of licensure and to maintain continued 11 35 authority to conduct intrastate internet poker, an internet 12 1 poker hub operator licensee must provide the documentation 12 2 required under this section on a timely basis to the commission 12 3 and the documentation must be appropriate, current, and 12 4 accurate. 12 5 Sec. 17. NEW SECTION. 99H.6 Selection of an internet poker 12 6 hub operator ==== negotiated agreement. 12 7 The commission shall, subject to agreement by a majority of 12 8 licensed affiliates, select an internet poker hub operator that 12 9 meets the licensure and technical requirements and expertise 12 10 to provide services for lawful intrastate internet poker and 12 11 authorized games in Iowa. The applicant must demonstrate 12 12 the ability to ensure that intrastate internet poker is only 12 13 offered to registered players who are at least twenty=one years 12 14 of age and who are physically present within the borders of 12 15 this state at the time of play. 12 16 Sec. 18. NEW SECTION. 99H.7 Internet poker hub operator 12 17 ==== qualifications. 12 18 For the purposes of this chapter, the commission shall 12 19 consider all of the following as minimum qualifications to 12 20 determine whether an internet poker hub operator applicant 12 21 together with an applicant's proposed subcontractor is legally, 12 22 technically, and financially qualified to become the state's 12 23 internet poker hub operator: 12 24 1. The applicant, and any subcontractor, is an entity 12 25 authorized to conduct business in this state. 12 26 2. The applicant, and any subcontractor, has not in the 12 27 past accepted any wagers of moneys or other consideration on 12 28 any internet gambling activity, including poker, from any Iowa 12 29 resident. However, this subsection does not disqualify an 12 30 applicant or subcontractor who accepts internet pari=mutuel 12 31 wagers from any Iowa resident through a legal internet 12 32 pari=mutuel wagering entity authorized in another state. 12 33 3. The applicant's, and any subcontractor's, executives 12 34 and key employees meet the requirements to obtain intrastate 12 35 internet poker occupational licenses from the commission, as 13 1 set forth in section 99H.11. 13 2 4. The applicant, any subcontractors, and all entities with 13 3 an ownership interest in the applicant or any subcontractors 13 4 have demonstrated compliance with all federal and state laws in 13 5 the jurisdictions in which they provide services. 13 6 5. The applicant has provided all necessary documentation 13 7 and information relating to all proposed subcontractors of the 13 8 applicant. 13 9 6. The applicant has provided a description of the manner in 13 10 which the applicant will facilitate compliance with all of the 13 11 standards set forth in this chapter, including but not limited 13 12 to all of the following: 13 13 a. Registered player processes and requirements relating 13 14 to intrastate play, age verification, and exclusion of problem 13 15 gamblers. 13 16 b. Network system requirements, including but not limited 13 17 to connectivity, hardware, software, anti=fraud systems, virus 13 18 prevention, data protection, access controls, firewalls, 13 19 disaster recovery, and redundancy. 13 20 c. Gaming systems, including but not limited to hardware 13 21 and software that ensures that games are legal, games are 13 22 independent and fair, game and betting rules are available to 13 23 all registered players, and all data used for the conduct of 13 24 each game is randomly generated and unpredictable. 13 25 d. Ongoing auditing by the commission and accounting 13 26 systems, including but not limited to those for registered 13 27 player accounts, participation fees, distribution of funds to 13 28 registered players, and distribution of revenue to the state. 13 29 7. The applicant has provided all other documentation or 13 30 information that the commission, by rule, has determined is 13 31 required to ensure that the applicant is legally, technically, 13 32 and financially qualified to enter into a contract to become 13 33 the state's internet poker hub operator. 13 34 Sec. 19. NEW SECTION. 99H.8 Annual bond required. 13 35 The holder of a license to be the internet poker hub operator 14 1 in this state shall be financially and otherwise responsible 14 2 for the operation of the state internet poker network and 14 3 for the conduct of any employee involved in the operation of 14 4 the state internet poker network. Before the issuance of an 14 5 internet poker hub operator license, a qualified applicant for 14 6 such a license must provide evidence of a surety bond in the 14 7 amount of one million dollars, payable to the state, for each 14 8 year that the licensee is licensed to be the internet poker hub 14 9 operator in this state. The bond shall be issued by a surety or 14 10 sureties authorized to do business in this state and approved 14 11 by the commission. The bond shall guarantee that the internet 14 12 poker hub operator fulfills all financial requirements of the 14 13 contract. Such bond shall be kept in full force and effect by 14 14 an internet poker hub operator during the term of the license. 14 15 Sec. 20. NEW SECTION. 99H.9 Internet poker hub operator 14 16 ==== obligations. 14 17 An internet poker hub operator shall comply with the terms of 14 18 its contract with the state and with all of the following: 14 19 1. The accepted proposal agreed to by the affiliates 14 20 and an internet poker hub operator applicant shall govern 14 21 the interpretation of the contract creating a contractual 14 22 relationship entered into between the affiliates and the 14 23 internet poker hub operator. 14 24 2. The contract between the affiliates and the internet 14 25 poker hub operator is for a five=year period and may be renewed 14 26 for a period equal to the original contract, if agreed to by 14 27 both parties. 14 28 3. The contract between the affiliates and the internet 14 29 poker hub operator may be amended by mutual written agreement 14 30 of the affiliates and the internet poker hub operator. 14 31 4. If this chapter is amended, the internet poker hub 14 32 operator may declare the contract null and void within sixty 14 33 days after the effective date of the amendment and must provide 14 34 at least ninety days' prior written notice to the affiliates of 14 35 such intent; otherwise, the internet poker hub operator agrees 15 1 to be bound by the amendments to this chapter enacted after the 15 2 terms of the contract are established. 15 3 5. In the event of commercial infeasibility due to a change 15 4 in federal law rendering the provision of intrastate internet 15 5 poker services illegal, the internet poker hub operator may 15 6 abandon the contract after providing the affiliates with at 15 7 least ninety days' prior written notice of its intent to end 15 8 the contract and a statement explaining its interpretation 15 9 that continuing to provide services under the contract is 15 10 commercially infeasible. 15 11 6. If a dispute arises between the parties to the contract, 15 12 the affiliates or the internet poker hub operator may pursue an 15 13 administrative law or district court remedy interpreting the 15 14 contract and the rights and responsibilities in the contract. 15 15 Sec. 21. NEW SECTION. 99H.10 Excursion gambling boat, 15 16 gambling structure, or racetrack enclosure affiliate license 15 17 required ==== application ==== fees. 15 18 An affiliate license may only be issued to an excursion 15 19 gambling boat or gambling structure operator licensed under 15 20 section 99F.5, or to a racetrack enclosure operator licensed 15 21 under section 99F.4A, who actively operates an excursion 15 22 gambling boat, gambling structure, or racetrack enclosure with 15 23 a minimum of ten tables, complies with all the requirements of 15 24 chapter 99F and the rules adopted pursuant to that chapter, and 15 25 complies with the following requirements: 15 26 1. The affiliate may only provide intrastate internet poker 15 27 for play to registered players through the state internet poker 15 28 network. 15 29 2. After the initial affiliate license is granted, the 15 30 affiliate's application for the renewal of that license shall 15 31 be made in conjunction with the affiliate's renewal application 15 32 for its license issued under section 99F.4A or 99F.5. 15 33 3. A person seeking a license or renewal of a license to 15 34 operate as an affiliate shall make the application on forms 15 35 prescribed by the commission. An application for an affiliate 16 1 license shall contain all of the information the commission, by 16 2 rule, determines is required to ensure eligibility. 16 3 4. As a condition of licensure and to maintain continued 16 4 authority for the conduct of intrastate internet poker, the 16 5 affiliate licensee must provide the documentation required 16 6 under this section on a timely basis to the commission and the 16 7 documentation must be appropriate, current, and accurate. 16 8 5. An affiliate licensee shall not sell or lease all or any 16 9 portion of its excursion gambling boat, gambling structure, or 16 10 racetrack enclosure licensed under chapter 99F to any person or 16 11 entity, or contract with any person or entity to operate its 16 12 internet site, conduct marketing or promotional activities, or 16 13 conduct any other aspects of business associated with the play 16 14 of poker under chapter 99F or the play of intrastate internet 16 15 poker under this chapter, that does not meet and comply with 16 16 all requirements and provisions of this chapter and chapter 16 17 99F. 16 18 6. The annual affiliate license fee shall be two hundred 16 19 fifty thousand dollars, payable to the commission. 16 20 7. The commission shall adopt rules regarding affiliate 16 21 licenses and renewals. 16 22 Sec. 22. NEW SECTION. 99H.11 Business and employee 16 23 occupational license required ==== applications ==== fees. 16 24 1. A person employed by or otherwise working for the 16 25 internet poker hub operator or an affiliate in any capacity 16 26 related to and while conducting intrastate internet poker 16 27 operations must hold a valid employee occupational license 16 28 issued by the commission. 16 29 2. The internet poker hub operator or an affiliate shall 16 30 not employ or allow to be employed any person in any capacity 16 31 related to the operation of intrastate internet poker unless 16 32 the person holds a valid employee occupational license. 16 33 3. The internet poker hub operator or affiliate shall 16 34 not contract with, or otherwise do business with, a business 16 35 required to hold a valid intrastate internet poker business 17 1 occupational license, unless the business holds such a valid 17 2 license. 17 3 4. A proprietorship, partnership, corporation, 17 4 subcontractor, or other entity must obtain a valid intrastate 17 5 internet poker business occupational license issued by the 17 6 commission to partner with, contract with, be associated 17 7 with, or participate in the conduct of intrastate internet 17 8 poker operations with the internet poker hub operator or an 17 9 affiliate. 17 10 5. The commission shall establish, by rule, a schedule for 17 11 the annual renewal of internet poker hub operator and affiliate 17 12 occupational licenses. Intrastate internet poker occupational 17 13 licenses are not transferable. 17 14 6. A person seeking an intrastate internet poker 17 15 occupational license, or renewal of such a license, shall 17 16 make the application on forms prescribed by the commission 17 17 and include payment of the appropriate application fee. An 17 18 application for an intrastate internet poker occupational 17 19 license shall contain all of the information the commission, by 17 20 rule, determines is required to ensure eligibility under this 17 21 section. 17 22 7. The commission shall adopt rules regarding intrastate 17 23 internet poker occupational licenses and renewals. 17 24 8. Pursuant to rules adopted by the commission, any person 17 25 may apply for and, if qualified, be issued an intrastate 17 26 internet poker occupational license valid for a period of three 17 27 years upon payment of the full occupational license fee for 17 28 each of the three years for which the license is issued. The 17 29 intrastate internet poker occupational license is valid during 17 30 its specified term at the internet poker hub operator or an 17 31 affiliate where intrastate internet poker is authorized to be 17 32 conducted. 17 33 9. The intrastate internet poker occupational license fee 17 34 for initial application and annual renewal shall be determined 17 35 by rule of the commission but shall not exceed fifty dollars 18 1 for an occupational license for an employee of the internet 18 2 poker hub operator or an affiliate licensee or one thousand 18 3 dollars for a business occupational license for nonemployees 18 4 of the licensee providing goods or services to an internet 18 5 poker hub operator or an affiliate licensee. Failure to pay 18 6 the required fee constitutes grounds for disciplinary action 18 7 by the commission against the internet poker hub operator or 18 8 an affiliate licensee. 18 9 10. A person holding a valid individual occupational 18 10 license issued by the commission under section 99F.6 is not 18 11 required to obtain an individual employee occupational license 18 12 under this section. 18 13 Sec. 23. NEW SECTION. 99H.12 Business and employee 18 14 occupational license denial, revocation, suspension, limitation, 18 15 or nonrenewal. 18 16 The commission may do all of the following: 18 17 1. Deny an application for, or revoke, suspend, or place 18 18 conditions or restrictions on, a license of an employee or 18 19 business that has been refused a license by any other state 18 20 gaming commission, governmental department, agency, or other 18 21 authority exercising regulatory jurisdiction over gaming in 18 22 another state or jurisdiction. 18 23 2. Deny an application for, or suspend or place conditions 18 24 or restrictions on, a license of any employee or business that 18 25 is under suspension or has unpaid fines in another state or 18 26 jurisdiction. 18 27 3. Deny, suspend, revoke, or refuse to renew any internet 18 28 poker hub operator or affiliate occupational license if the 18 29 applicant for the license or the licensee has violated this 18 30 chapter or the rules of the commission governing the conduct of 18 31 persons connected with the play of intrastate internet poker. 18 32 4. Deny, suspend, revoke, or refuse to renew any internet 18 33 poker hub operator or affiliate occupational license if the 18 34 applicant for the license or the licensee has been convicted 18 35 in this state, in any other state, or under the laws of the 19 1 United States of a capital felony, a felony, or an offense in 19 2 any other state that would be a felony under the laws of this 19 3 state involving arson; trafficking in, conspiracy to traffic 19 4 in, smuggling, importing, conspiracy to smuggle or import, or 19 5 delivery, sale, or distribution of a controlled substance; 19 6 racketeering; or a crime involving a lack of good moral 19 7 character; or the applicant has had a gaming license revoked 19 8 by this state or any other jurisdiction for any gaming=related 19 9 offense. 19 10 5. Deny, revoke, or refuse to renew any internet poker hub 19 11 operator or affiliate occupational license if the applicant 19 12 for the license or the licensee has been convicted of a felony 19 13 or misdemeanor in this state, in any other state, or under the 19 14 laws of the United States if such felony or misdemeanor is 19 15 related to gambling or bookmaking as described in chapter 725. 19 16 Sec. 24. NEW SECTION. 99H.13 Registered players ==== 19 17 eligibility. 19 18 1. All registered players must be located within this state 19 19 at the time of play of intrastate internet poker. 19 20 2. A person who has not attained twenty=one years of age 19 21 shall not be a registered player or play intrastate internet 19 22 poker. 19 23 3. The internet poker hub operator and affiliates shall 19 24 exclude from play any person who has submitted a completed 19 25 internet poker self=exclusion form. 19 26 a. The internet poker hub operator and affiliates shall have 19 27 an internet poker self=exclusion form available and accessible 19 28 on the internet site page that is displayed when either of the 19 29 following occur: 19 30 (1) A person opens the internet site page to register as a 19 31 registered player. 19 32 (2) A registered player accesses the first internet site 19 33 page prior to playing. 19 34 b. Upon receipt of a completed internet poker self=exclusion 19 35 form, the affiliate shall immediately provide a copy of 20 1 the completed form to the internet poker hub operator, each 20 2 affiliate, and the commission. The commission shall ensure 20 3 that all other affiliates exclude the person from the play of 20 4 intrastate internet poker. 20 5 c. The internet poker hub operator and affiliate shall 20 6 retain the original form to identify persons who request to be 20 7 excluded from play. 20 8 d. The internet poker hub operator and affiliate shall 20 9 prominently display a link to the internet site of a 20 10 responsible gaming organization as identified by the commission 20 11 for services related to the prevention of compulsive and 20 12 addictive gambling. 20 13 e. A person shall not bring any action against the internet 20 14 poker hub operator or an affiliate for negligence or any 20 15 other claim if a person who has filled out an internet poker 20 16 self=exclusion form gains access and plays intrastate internet 20 17 poker despite the request to be excluded. 20 18 Sec. 25. NEW SECTION. 99H.14 Intrastate internet poker ==== 20 19 authorized games. 20 20 1. In order to offer a specific game of poker for play, the 20 21 internet poker hub operator shall provide the commission with 20 22 all of the following: 20 23 a. A description of any game of poker and the betting rules 20 24 it proposes to offer to registered players. 20 25 b. Documentation relating to development and testing of the 20 26 game's software. 20 27 2. Upon submission of the information required in 20 28 subsection 1, the internet poker hub operator may begin 20 29 offering the game. If the commission does not object to the 20 30 proposed game of poker within thirty days after receipt of 20 31 the submission, the game shall be considered authorized and 20 32 the internet poker hub operator submitting the proposal may 20 33 continue to offer the game to registered players. 20 34 3. Games and betting events shall be operated strictly in 20 35 accordance with the specified game and betting rules. 21 1 4. The internet poker hub operator shall ensure that the 21 2 authorized games of poker are fair. For each proposed or 21 3 authorized game offered for play, the gaming system shall 21 4 display all of the following information: 21 5 a. The name of the game. 21 6 b. Any restrictions on play. 21 7 c. The rules of the game. 21 8 d. All instructions on how to play. 21 9 e. The unit and total bets permitted. 21 10 f. The registered player's current account balance, which 21 11 shall be updated in real time. 21 12 g. Any other information that the internet poker hub 21 13 operator determines is necessary for the registered player 21 14 to have in real time to compete fairly in the proposed or 21 15 authorized game. 21 16 5. All proposed and authorized game results shall be 21 17 conducted in such a fashion so that data used to create results 21 18 shall be unpredictable such that it is infeasible to predict 21 19 the next occurrence in a game, given complete knowledge of 21 20 the algorithm and hardware generating the sequence, and all 21 21 previously generated numbers. 21 22 6. The internet poker hub operator shall deploy controls and 21 23 technology to ensure the ability to minimize fraud or cheating 21 24 through collusion, such as external exchange of information 21 25 between different players, or any other means. 21 26 a. If the internet poker hub operator becomes aware that 21 27 fraud or cheating is taking place or has taken place, the 21 28 internet poker hub operator shall immediately take steps to 21 29 stop such activities and inform the commission of all relevant 21 30 facts. 21 31 b. The internet poker hub operator shall immediately inform 21 32 the commission of any complaints and investigate whether the 21 33 complaints are true and shall expeditiously act to prevent 21 34 further fraud or collusion from taking place on the state 21 35 internet poker network. The internet poker hub operator shall 22 1 report the results of the investigation in writing to the 22 2 commission within twenty=four hours after the complaint and 22 3 shall continue to report every twenty=four hours until its 22 4 investigation is concluded. This paragraph does not prevent 22 5 the commission from conducting an independent investigation 22 6 or initiating an administrative action to protect registered 22 7 players from fraud and collusion on the state internet poker 22 8 network and does not prohibit a registered player, the internet 22 9 poker hub operator, an affiliate, or the commission from 22 10 reporting suspected criminal activities to law enforcement 22 11 officials. 22 12 c. A registered player shall not bring an action for damages 22 13 against the internet poker hub operator for attempting to 22 14 prevent fraud or cheating if the internet poker hub operator 22 15 can demonstrate that the internet poker hub operator acted to 22 16 prevent such actions as soon as it became aware of them. 22 17 7. If the gaming server or software does not allow a game to 22 18 be completed, the hand shall be voided and all funds relating 22 19 to the incomplete hand shall be returned to the registered 22 20 player's account. 22 21 Sec. 26. NEW SECTION. 99H.15 Registered players accounts. 22 22 1. The internet poker hub operator shall register players 22 23 and establish registered player accounts prior to play and 22 24 shall ensure that personally identifiable information is 22 25 accessible to an individual registered player and to regulators 22 26 but is otherwise secure. 22 27 2. A person shall not participate in any game on the state 22 28 internet poker network unless the person is registered as a 22 29 player and holds an account. 22 30 3. Accounts may be established in person or by mail, 22 31 telephone, or any electronic means. 22 32 4. To register and establish an account, a person must 22 33 provide all of the following registration information: 22 34 a. First name and surname. 22 35 b. Principal residence address. 23 1 c. Telephone number. 23 2 d. Social security number. 23 3 e. Legal identification or certification to prove that the 23 4 person is at least twenty=one years of age. 23 5 f. Valid electronic mail address. 23 6 g. The source of funds to be used to establish the account 23 7 after the registration process is complete. 23 8 5. An individual shall not register for more than three 23 9 registered player accounts per calendar year. A registered 23 10 player shall not have more than three registered player 23 11 accounts at any time. 23 12 6. Prior to completing the registration process, the 23 13 internet poker hub operator shall explain to the person in a 23 14 conspicuous fashion the privacy policies of the state internet 23 15 poker network, and the person must assent to all of the 23 16 following policies: 23 17 a. Personal identifying information shall not be shared 23 18 with any nongovernment third parties except for licensed 23 19 subcontractors of an internet poker hub operator for the sole 23 20 purpose of permitting registered players to participate in 23 21 games on the state internet poker network or upon receipt of 23 22 a court order to subpoena such information from the internet 23 23 poker hub operator. 23 24 b. All personally identifiable information about registered 23 25 players shall be shared with the commission, and any other 23 26 governmental agency that receives a court order to subpoena 23 27 such information. 23 28 7. The internet poker hub operator shall also require that 23 29 a person agree to the terms of a use agreement applying to 23 30 registered players. 23 31 8. The internet poker hub operator shall provide a 23 32 registered player with the means to update the information 23 33 provided in subsection 4. 23 34 9. The internet poker hub operator may revoke the accounts 23 35 of a registered player for any of the following reasons: 24 1 a. The registered player provided false information in the 24 2 registration process. 24 3 b. The registered player has not updated registration 24 4 information to keep it current. 24 5 c. The registered player has violated the internet poker hub 24 6 operator's terms of use agreement. 24 7 10. The internet poker hub operator may suspend or revoke 24 8 the account of a registered player if the internet poker hub 24 9 operator suspects the registered player has participated in 24 10 illegal activity on the state internet poker network. 24 11 11. The internet poker hub operator shall establish and 24 12 maintain an account for each registered player. The internet 24 13 poker hub operator shall do all of the following: 24 14 a. Provide a means for a registered player to put funds into 24 15 an account; however, a registered player shall not increase the 24 16 amount in an account after a game has started and before the 24 17 game has been completed. 24 18 b. Maintain records on the balance of each registered 24 19 player's account. 24 20 c. Prohibit a registered player from placing a wager unless 24 21 the registered player's account has sufficient funds to cover 24 22 the amount of the wager. 24 23 d. Not provide credit to a registered player's account 24 24 or act as an agent for a credit provider to facilitate the 24 25 provision of funds. 24 26 e. Provide a means for a registered player to transfer money 24 27 out of the registered player's account. 24 28 12. The internet poker hub operator shall put in place 24 29 other systems that provide registered players with the ability 24 30 to control aspects of their play. Upon registration and at 24 31 each time when a registered player logs onto the state internet 24 32 poker network, the internet poker hub operator shall permit 24 33 the registered player to adjust the registered player's play 24 34 settings to do any of the following: 24 35 a. Set a limit on the deposits that can be made per day. 25 1 b. Set a limit on the amount that can be wagered within a 25 2 specified period of time. 25 3 c. Set a limit on the losses that may incur within a 25 4 specified period of time. 25 5 d. Set a limit on the amount of time that can be played 25 6 after logging on to the state internet poker network. 25 7 e. Prevent the state internet poker network from allowing 25 8 the registered player to play for a definite or indefinite 25 9 period of time. 25 10 13. During play, in order to assist a registered player to 25 11 decide whether to suspend play, the registered player's screen 25 12 shall do all of the following: 25 13 a. Indicate how long the registered player has been playing. 25 14 b. Indicate the registered player's winnings or losses since 25 15 the time of last logging in. 25 16 c. Give an option to the registered player to end the 25 17 session or return to the game. 25 18 d. Require the registered player to confirm that the 25 19 registered player has read the message. 25 20 Sec. 27. NEW SECTION. 99H.16 Registered players accounts 25 21 ==== records and reports. 25 22 1. The internet poker hub operator shall establish a book 25 23 of accounts, regularly audit, and make all financial records 25 24 available to the commission. The internet poker hub operator 25 25 shall demonstrate that it has a system of maintaining records 25 26 and reports that is readily available to the commission. The 25 27 records and reports shall include all of the following: 25 28 a. Monthly auditable and aggregate financial statements of 25 29 gaming transactions. 25 30 b. Calculation of all fees payable to government. 25 31 c. The identity of registered players. 25 32 d. The balance on a registered player's account at the start 25 33 of a session of play. 25 34 e. The wagers placed on each game time stamped by the games 25 35 server. 26 1 f. The result of each game time stamped by the games server. 26 2 g. The amount won or lost by a registered player. 26 3 h. The balance on a registered player's account at the end 26 4 of the game. 26 5 2. The internet poker hub operator shall reconcile all 26 6 data log files regarding the registered players' accounts on a 26 7 monthly basis. 26 8 Sec. 28. NEW SECTION. 99H.17 Internet poker hub operator ==== 26 9 technical systems. 26 10 1. An internet poker hub operator shall put in place 26 11 technical systems that materially aid the commission 26 12 in fulfilling its regulatory, consumer protection, and 26 13 revenue=raising functions and allow the commission unrestricted 26 14 access to and the right to inspect the technical systems. 26 15 2. The internet poker hub operator shall ensure that the 26 16 state internet poker network is protected from manipulation or 26 17 tampering to affect the random probabilities of winning plays. 26 18 3. The internet poker hub operator shall define and document 26 19 its methodology for all of the following: 26 20 a. The development, implementation, and maintenance of 26 21 gaming software in a manner representative of industry best 26 22 practice standards. 26 23 b. Server connectivity requirements that include all of the 26 24 following: 26 25 (1) Minimum game server connectivity requirements that 26 26 ensure players are protected from losses due to connectivity 26 27 problems. 26 28 (2) The system's ability to recover all transactions 26 29 involving player funds in the event of a failure or 26 30 malfunction. 26 31 (3) Aborted game procedures. 26 32 c. Ability of the system to recover all information required 26 33 for viewing a game interrupted due to loss of connectivity. 26 34 d. Consumer protection requirements. 26 35 e. Responsible advertising, marketing, and promotion 27 1 that ensure that registered players are not misled through 27 2 advertising or promotional activities, and ensure that the 27 3 terms and conditions of promotions are followed. 27 4 f. Anti=money=laundering controls. 27 5 g. Preventive and detective controls addressing money 27 6 laundering and fraud risks which shall be documented and 27 7 implemented. 27 8 4. The internet poker hub operator shall retain all such 27 9 documentation for at least twelve months. 27 10 Sec. 29. NEW SECTION. 99H.18 Participation fee. 27 11 The internet poker hub operator shall charge a fee or 27 12 a tournament fee to registered players for the right to 27 13 participate in authorized games or tournaments conducted on the 27 14 state internet poker network. The participation fee may be a 27 15 per=hand charge, a flat fee, an hourly rate, or a rake subject 27 16 to the posted maximum amount but shall not be based on the 27 17 amount won by registered players. The fee shall be designated 27 18 and conspicuously posted on the registered player's screen 27 19 prior to the start of each proposed or authorized game. 27 20 Sec. 30. NEW SECTION. 99H.19 Prohibited relationships. 27 21 1. A proprietorship, partnership, corporation, 27 22 subcontractor, or other entity must obtain a valid intrastate 27 23 internet poker business occupational license issued by the 27 24 commission to partner with, contract with, be associated 27 25 with, or participate in the conduct of intrastate internet 27 26 poker operations with the internet poker hub operator or an 27 27 affiliate. 27 28 2. A person employed by or performing any function on behalf 27 29 of the commission shall not do any of the following: 27 30 a. Be an officer, director, owner, or employee of any person 27 31 or entity licensed by the commission. 27 32 b. Have or hold any interest, direct or indirect, in or 27 33 engage in any commerce or business relationship with any person 27 34 licensed by the commission. 27 35 3. An employee of the commission or a relative living in the 28 1 same household as the employee shall not play at any time on 28 2 the state internet poker network. 28 3 4. An occupational licensee of the internet poker hub 28 4 operator or a relative living in the same household as the 28 5 occupational licensee shall not play at any time on the state 28 6 internet poker network. This subsection does not apply to an 28 7 occupational licensee of an affiliate. 28 8 Sec. 31. NEW SECTION. 99H.20 Prohibited acts ==== penalties. 28 9 1. The internet poker hub operator may conduct any proposed 28 10 or authorized game under section 99H.14 unless specifically 28 11 prohibited by the commission or by this chapter. 28 12 2. A person who has not attained twenty=one years of age 28 13 shall not hold an intrastate internet poker occupational 28 14 license or engage in any game conducted on the state internet 28 15 poker network. 28 16 3. An entity shall not offer intrastate internet poker for 28 17 free or for money or any other consideration to individuals 28 18 present in this state unless the entity can demonstrate that 28 19 it is in compliance with the laws and tax regulations of the 28 20 United States and of this state. 28 21 4. An entity that has accepted any wager of money or other 28 22 consideration on any internet gambling activity, including 28 23 poker, from any Iowa resident is not eligible to apply for 28 24 licensure and participate in intrastate internet poker in this 28 25 state. 28 26 5. Except as otherwise provided by law and in addition to 28 27 any other penalty, a person who knowingly makes or causes to be 28 28 made, or aids, assists, or procures another to make, a false 28 29 statement in any report, disclosure, application, or any other 28 30 document required under this chapter or any rule adopted under 28 31 this chapter is subject to an administrative penalty of up to 28 32 ten thousand dollars. 28 33 6. A person who manipulates or attempts to manipulate 28 34 the outcome, payoff, or operation of the play of intrastate 28 35 internet poker by tampering, collusion, or fraud, or by the use 29 1 of any object, instrument, or device, by any means, commits a 29 2 class "C" felony. 29 3 Sec. 32. NEW SECTION. 99H.21 License fees. 29 4 1. Upon the submission of the initial application for an 29 5 internet poker hub operator license and annually thereafter, 29 6 on the anniversary date of the issuance of the initial 29 7 license, the internet poker hub operator licensee shall pay a 29 8 nonrefundable license fee of two hundred fifty thousand dollars 29 9 for the succeeding twelve months of licensure. 29 10 2. Upon submission of the initial application for an 29 11 affiliate license and annually thereafter, as prescribed by 29 12 the commission, the licensee shall pay to the commission a 29 13 nonrefundable license fee of one thousand dollars for the 29 14 succeeding twelve months of licensure. 29 15 3. The license fees required under this section shall 29 16 be considered repayment receipts as defined in section 8.2 29 17 and shall be used by the commission for the regulation, 29 18 investigation, and enforcement of the intrastate internet poker 29 19 provisions under this chapter. These fees shall be accounted 29 20 for separately from taxes or fees paid pursuant to chapters 99D 29 21 and 99F. 29 22 Sec. 33. NEW SECTION. 99H.22 Internet poker hub operator 29 23 ==== advance payment. 29 24 Upon the awarding of a contract to be the internet poker 29 25 hub operator by the affiliates pursuant to its selection under 29 26 section 99H.6, the internet poker hub operator licensee shall 29 27 pay to the commission a nonrefundable payment of three million 29 28 dollars. This payment shall be treated as an advance payment 29 29 to the state by the internet poker hub operator and shall be 29 30 credited against the tax on adjusted gross receipts derived 29 31 from the play of intrastate internet poker. 29 32 Sec. 34. NEW SECTION. 99H.23 Wagering tax on adjusted gross 29 33 receipts. 29 34 For the purposes of this chapter, a tax is imposed on the 29 35 adjusted gross receipts received each fiscal year, applicable 30 1 to the affiliate as a licensee, in the same manner and at the 30 2 rate described in section 99F.11. 30 3 Sec. 35. NEW SECTION. 99H.24 Rulemaking ==== more than one 30 4 internet hub operator. 30 5 The commission shall adopt rules pursuant to chapter 17A 30 6 relating to the operation and administration of intrastate 30 7 internet poker under this chapter. The commission may also 30 8 adopt rules to allow for the operation and licensing of more 30 9 than one internet hub operator. 30 10 Sec. 36. NEW SECTION. 99H.25 Legislative authority ==== 30 11 administration of chapter. 30 12 The general assembly finds and declares that it has 30 13 exclusive authority over the conduct of intrastate internet 30 14 poker in this state. Only the commission and other authorized 30 15 state agencies shall administer this chapter and regulate 30 16 the intrastate internet poker industry in this state, 30 17 including operation of the internet poker hub operator, play 30 18 of authorized games, and the state internet poker network 30 19 authorized in this chapter, as provided by law and as provided 30 20 in rules adopted by the commission. 30 21 EXPLANATION 30 22 This bill relates to gambling establishments within the 30 23 state. 30 24 The bill would allow for gambling games at pari=mutuel 30 25 facilities to be used to supplement racing purses in 30 26 perpetuity. Current law requires that such supplements end 30 27 before 2021. 30 28 The bill requires that the Iowa racing and gaming commission 30 29 adopt standards for the length of the thoroughbred and quarter 30 30 horse racing seasons, so that the thoroughbred racing season 30 31 be not less than 67 days in duration and so that the quarter 30 32 horse racing season be not less than 26 days in duration. 30 33 The bill requires that no less than 20 percent of all net 30 34 purse moneys distributed to each breed must be designated 30 35 for certain purposes to foster the growth of the Iowa horse 31 1 breeding industry. The bill also sets requirements for the 31 2 proportionate use of horse purses, so that 76 percent of purse 31 3 funds are designated for thoroughbred races, 15.25 percent of 31 4 purse funds are designated for quarter horse races, and 8.75 31 5 percent of purse funds are designated for standardbred races. 31 6 The bill states that moneys designated for standardbred racing 31 7 can only be used to support harness racing at county fairs. 31 8 The bill also prohibits the horse racetrack in Polk county 31 9 from contributing other funding for such racing that is not 31 10 otherwise provided for under the purse structure designations 31 11 of the bill. 31 12 The bill permits advanced deposit wagering for pari=mutuel 31 13 licensees. The bill would allow for an advanced deposit wager 31 14 to be placed in person at a licensed racetrack enclosure or 31 15 from any other location by telephone or other electronic 31 16 means. In this form of wagering an individual creates an 31 17 account, deposits money into that account, and can use the 31 18 balance within the account for pari=mutuel wagering. The bill 31 19 specifies that 50 percent of the revenue from advanced deposit 31 20 wagering be distributed to certain race purses and the other 50 31 21 percent be directed to the licensee for the pari=mutuel horse 31 22 racetrack in Polk county. 31 23 The bill would prohibit live standardbred horse racing 31 24 by the licensee for the pari=mutuel horse racetrack in Polk 31 25 county. 31 26 The bill eliminates the requirement that county referenda be 31 27 conducted to approve the continued licensing of gambling games 31 28 on excursion boats, in gambling structures, and in racetrack 31 29 enclosures, and makes conforming amendments. 31 30 The bill authorizes the creation of an intrastate internet 31 31 poker network and provides a regulatory structure for its 31 32 implementation, operation, and taxation. 31 33 The bill provides that it may be cited as the "Internet Poker 31 34 Consumer Protection and Revenue Generation Act of 2011". The 31 35 bill states that its purpose is to provide intrastate internet 32 1 poker play only in accordance with federal law, provide a 32 2 new source of revenue for the state, create a contractual 32 3 relationship with an internet poker hub operator with certain 32 4 technical expertise, provide for a negotiated agreement between 32 5 the internet poker hub operator and affiliate licensees, allow 32 6 physical gambling facilities to operate affiliate internet 32 7 sites, ensure taxability, protect player information, ensure 32 8 regulatory access to data and information, ensure customer 32 9 service, and provide information on problem gambling. 32 10 The bill defines certain terms used in new Code chapter 99H. 32 11 The bill provides authority over intrastate internet 32 12 poker to the Iowa racing and gaming commission. The bill 32 13 provides that the commission may adopt certain rules, conduct 32 14 investigations, monitor operations, review books and accounts, 32 15 suspend or revoke licenses upon a hearing, take testimony, 32 16 issue summons and certain subpoenas, monitor and ensure 32 17 collection of taxes, monitor and ensure fairness of games 32 18 conducted, and ensure the protection of player information. 32 19 The bill provides for the licensing of an internet poker 32 20 hub operator by the commission. The bill provides that only a 32 21 person holding the internet poker hub operator license issued 32 22 by the commission and certain affiliates can provide intrastate 32 23 internet poker to registered players. The hub operator must 32 24 be authorized to conduct business in the state, must complete 32 25 an application, and must provide all documentation as required 32 26 by the commission. 32 27 The bill provides that the selection of an internet poker hub 32 28 operator must be by a negotiated agreement with the affiliates, 32 29 and requires that the successful applicant demonstrate the 32 30 ability to ensure that players are at least 21 years of age and 32 31 present within the state at the time of play. 32 32 The bill includes other selection qualifications of 32 33 the internet poker hub operator. The applicant and any 32 34 subcontractor must be authorized to conduct business in Iowa 32 35 and must not have accepted certain types of wagers previously. 33 1 Certain executives or employees of the applicant, and any 33 2 subcontractor, must meet the requirements to obtain an 33 3 intrastate internet poker occupational or business license 33 4 from the commission. The bill does not require here that 33 5 these officers actually obtain such licenses. The applicant, 33 6 subcontractor, and all entities with an ownership interest in 33 7 either must have demonstrated compliance with all federal and 33 8 state laws under which they provide services. The applicant 33 9 must provide certain information on subcontractors and provide 33 10 certain descriptions of how the applicant will comply with the 33 11 standards set under this new Code chapter. The commission may 33 12 by rule require and an applicant must provide any additional 33 13 documentation or information to ensure that an applicant is 33 14 legally, technically, and financially qualified to become the 33 15 state's internet poker hub operator. 33 16 The bill provides for an internet poker hub operator 33 17 license, along with a corresponding application and fees. 33 18 The licensing application requires disclosure of certain 33 19 information related to the applicant and its direct or indirect 33 20 owners. This information includes authorization to conduct 33 21 business in the state, current and historical financial 33 22 information, documents related to legal and regulatory 33 23 proceedings, documents related to business history including 33 24 state and federal tax filings, documents related to the 33 25 nature and sources of financing, documentation of financial 33 26 qualification, and any other information required by the 33 27 commission by rule in order to ensure eligibility. 33 28 The bill requires that internet poker hub operator license 33 29 applicants provide subcontractor information including 33 30 all necessary documentation and information related to 33 31 subcontractors of the internet poker hub operator. This 33 32 information includes but is not limited to a description of 33 33 subcontractor services to be provided, additional subcontractor 33 34 information, and any other information required by the 33 35 commission by rule in order to ensure eligibility. 34 1 The bill requires that an internet poker hub operator 34 2 license applicant provide a description of how it will 34 3 facilitate compliance with the requirements of the chapter 34 4 related to but not limited to registered player requirements 34 5 including intrastate play, age verification, and exclusion of 34 6 problem gamblers; system requirements including connectivity, 34 7 hardware, software, anti=fraud systems, virus prevention, data 34 8 protection, access controls, firewalls, disaster recovery, and 34 9 redundancy; gaming systems requirements including legality, 34 10 independence and fairness, availability of rules, randomness, 34 11 and unpredictability; and accounting systems requirements 34 12 including player accounts, participation fees, transparency and 34 13 reporting, distribution of revenue, and ongoing auditing. 34 14 The bill requires that before the commission issues an 34 15 internet poker hub operator license, that each qualified 34 16 applicant provide evidence of a surety bond of $1 million 34 17 payable to the state for each year that the licensee is so 34 18 licensed. The bond shall be held in full force and effect 34 19 during the term of the license. 34 20 The internet poker hub operator must comply with the 34 21 contract between the affiliates and the operator. The contract 34 22 will be for five years and may be renewed for additional 34 23 five=year periods. The contract may be amended by written 34 24 agreement of the affiliates and the operator. If this new 34 25 Code chapter is amended, the operator may declare the contract 34 26 null and void within 60 days after the effective date of the 34 27 amendment. If the operator fails to make such a declaration, 34 28 the operator shall be bound to the requirements of the new Code 34 29 chapter as amended. In the event that a change in federal law 34 30 renders the provisions of intrastate internet poker illegal, 34 31 the operator may abandon the contract after providing the 34 32 affiliates at least 90 days prior written notice explaining its 34 33 interpretation that continuing to provide services under the 34 34 contract is commercially infeasible. 34 35 The bill provides that only those holding a valid excursion 35 1 gambling boat, gambling structure, or racetrack enclosure 35 2 affiliate license, also referred to as an affiliate license, 35 3 may provide intrastate internet poker for play to registered 35 4 players through the state internet poker network. The bill 35 5 provides that after an affiliate license is issued that it 35 6 must be renewed in conjunction with its excursion gambling 35 7 boat, gambling structure, or racetrack enclosure license 35 8 respectively. The bill requires that any affiliate application 35 9 be made on forms prescribed by the commission and contain all 35 10 information required by the commission by rule. The applicant 35 11 must provide all documentation required, and shall not sell or 35 12 lease licensed property, or contract with any person or entity 35 13 to operate its internet site unless the individual or entity 35 14 purchasing leasing or contracting with the licensee meets and 35 15 complies with all the requirement of Code chapter 99F and this 35 16 new Code chapter. The annual affiliate license fee shall be 35 17 $250,000 payable to the commission and the commission shall 35 18 adopt rules related to affiliate licenses. 35 19 The bill requires business and employee occupational 35 20 licenses. The bill requires that any person employed or 35 21 otherwise working for the internet poker hub operator or an 35 22 affiliate must hold a valid occupational license issued by the 35 23 commission. The bill requires that the internet hub operator 35 24 and any affiliate not employ any individual in any capacity 35 25 related to the operation of intrastate internet poker who does 35 26 not hold a valid occupational license. The bill requires that 35 27 an internet hub operator and any affiliate not contract with 35 28 or employ a business required to hold a business occupational 35 29 license which does not hold such a license. The bill 35 30 requires that any proprietorship, partnership, corporation, 35 31 subcontractor, or other entity must obtain a business 35 32 occupational license issued by the commission to conduct 35 33 business with the internet poker hub operator or any affiliate. 35 34 The bill requires the commission to adopt a schedule 35 35 for occupational license renewals and requires that all 36 1 occupational licenses be nontransferable. The bill requires 36 2 that one apply for an occupational license or renewal, pay 36 3 an appropriate fee and provide all required information or 36 4 documentation. The commission must adopt rules regarding 36 5 license applications and renewals. Licenses will be valid for 36 6 three years upon payment of a full occupational license fee for 36 7 the three years. The initial employee occupational license 36 8 fee shall not exceed $50 annually. The initial business 36 9 occupational license fee shall not exceed $1,000 annually. An 36 10 individual holding a valid individual occupational license 36 11 issued by the commission under Code section 99F.6 is not 36 12 required to obtain a license under this new Code section 36 13 99H.11. 36 14 The bill provides that the commission may deny an 36 15 application for, or revoke, suspend, or place restrictions on, 36 16 a license of any person or entity that was refused a similar 36 17 license elsewhere, that is under suspension or has unpaid fines 36 18 elsewhere, that has violated this new Code chapter or the 36 19 rules adopted by the commission, or that has been convicted of 36 20 certain offenses. 36 21 The bill sets eligibility requirements for registered 36 22 players. The bill requires that a registered player be located 36 23 within the state, be at least 21 years of age, and must not have 36 24 submitted a completed internet poker self=exclusion form. The 36 25 bill provides certain requirements for the creation and use of 36 26 an internet poker self=exclusion form. The bill provides that 36 27 a person shall not bring any action of negligence or any other 36 28 claim resulting from a self=excluded individual gaining access 36 29 to play despite their request to be excluded. 36 30 The bill requires that in order for an internet poker hub 36 31 operator to offer a specific game, the hub operator must 36 32 provide the commission with certain information, including 36 33 a description of the game and documentation related to the 36 34 development and testing of the game. After submission of this 36 35 information, the internet poker hub operator may begin offering 37 1 the game and the game shall be considered authorized if not 37 2 disapproved by the commission within 30 days. All games must 37 3 be conducted in accordance with game and betting rules. The 37 4 internet poker hub operator must ensure the fairness of all 37 5 games and must ensure the display of the game's name, any 37 6 restrictions on play, the rules of the game, play instructions, 37 7 unit and total bets permitted, the player's current account 37 8 balance, and any other information deemed necessary by the 37 9 internet poker hub operator. 37 10 The bill requires that all proposed and authorized game 37 11 results be unpredictable even given complete knowledge of 37 12 algorithms and hardware generating sequence, and all previously 37 13 generated numbers. The bill requires the internet poker hub 37 14 operator to take steps to minimize fraud and cheating through 37 15 collusion. The bill requires that if the operator becomes 37 16 aware of fraud or cheating actually taking place, the operator 37 17 must attempt to end those activities and report relevant facts 37 18 to the commission. The operator is required to inform the 37 19 commission of complaints and investigate such complaints. The 37 20 bill limits legal actions against the operator in the event 37 21 that the operator can demonstrate taking action upon becoming 37 22 aware of fraud or cheating. The bill requires that if a server 37 23 or software does not allow a game to be completed, that the 37 24 hand be voided and all funds relating to the incomplete hand 37 25 shall be returned to the registered player's account. 37 26 The bill provides for the creation of registered player 37 27 accounts by the internet poker hub operator. The operator 37 28 must ensure that personally identifiable information is secure 37 29 but accessible to individual players and regulators. The 37 30 bill requires that an individual be a registered player to 37 31 participate in any game on the state internet poker network. 37 32 The bill allows for accounts to be established in person, 37 33 by mail, by telephone, or by electronic means. The bill 37 34 requires that an individual establishing an account provide 37 35 the individual's first name and surname, the address of the 38 1 individual's principal residence, telephone number, social 38 2 security number, proof of age, a valid e=mail address, and the 38 3 source of funds used to establish the account. An individual 38 4 may register up to three registered player accounts per year 38 5 and shall not have more than three registered player accounts 38 6 at any time. The hub operator must conspicuously present its 38 7 privacy policies before such registration may be completed. 38 8 The bill requires that personally identifiable information 38 9 not be shared with any nongovernmental individual or entity 38 10 not acting as a subcontractor. All information will be shared 38 11 with the commission. The hub operator must require that an 38 12 individual agree with the terms of use before the individual 38 13 may become a registered player. The hub operator must provide 38 14 registered players with the means to update their information, 38 15 and may suspend or revoke the accounts of registered players 38 16 for certain reasons. The hub operator must establish and 38 17 maintain and account for each registered player with means of 38 18 placing funds into the account. The bill requires the hub 38 19 operator to maintain certain records, to prohibit certain 38 20 wagers, not provide credit for a player's account, and to 38 21 provide a registered player with the means to transfer money 38 22 out of the player's account. The bill requires the hub 38 23 operator to provide registered players with certain functional 38 24 controls related to their wagering and to provide them with 38 25 certain information related to their play. 38 26 The bill requires the internet poker hub operator to 38 27 establish a book of accounts and make all financial records 38 28 available to the commission. The hub operator must demonstrate 38 29 its system of maintaining records and reports readily available 38 30 to the commission. The records and reports must include 38 31 certain monthly statements, a calculation of fees payable to 38 32 government, the identity of registered players, certain player 38 33 account balances, wagers, and results of each game with time 38 34 stamps. The hub operator must reconcile registered players' 38 35 accounts monthly. 39 1 The bill provides technical requirements. An internet poker 39 2 hub operator must put in place certain technical systems to 39 3 aid the commission in its regulatory, consumer protection, 39 4 and revenue=raising functions. The operator must ensure 39 5 against tampering or manipulation with relevant systems, and 39 6 both define and document certain methodologies related to 39 7 gaming software, server connectivity, certain game procedures, 39 8 consumer protections, advertising, money=laundering, and 39 9 certain preventive and detective controls. 39 10 The bill provides that the internet hub operator must charge 39 11 certain fees. The bill explicitly prohibits certain employees 39 12 of the commission and employees' relatives living in the same 39 13 household from playing on the state internet poker network. 39 14 The same limitation applies to occupational licensees and their 39 15 relatives. The bill provides additional limits for commission 39 16 employees. 39 17 The bill enumerates certain prohibited acts and provides 39 18 penalties. The bill provides that the internet poker hub 39 19 operator may conduct any proposed game unless prohibited by the 39 20 commission or the new Code chapter. The bill provides that 39 21 a person under the age of 21 shall not hold an occupational 39 22 license or participate in any of these games. 39 23 The bill provides that it is a violation of state law for 39 24 any entity to offer internet poker for free, for money, or 39 25 for any other consideration to individuals within this state 39 26 unless that entity can demonstrate compliance with the laws 39 27 and tax regulations of this state and the United States. The 39 28 bill prohibits any entity that has accepted any wager of money 39 29 or other consideration on any internet gambling activity from 39 30 being eligible to apply for licensure in intrastate internet 39 31 poker in this state. 39 32 The bill provides for an administrative penalty of up to 39 33 $10,000 to be assessed on any individual who knowingly makes, 39 34 causes to be made, aids, assists, or procures another to make a 39 35 false statement in any report, disclosure, application, or any 40 1 other document required in this new Code chapter in addition to 40 2 any other penalty, and except as otherwise provided by law. 40 3 The bill creates a class "C" felony for manipulating or 40 4 attempting to manipulate the outcome, payoff, or operation of 40 5 intrastate internet poker by tampering, collusion, fraud, or by 40 6 the use of any object, instrument, or device. 40 7 The bill provides for license fees for the internet poker hub 40 8 operator and affiliates. The hub operator licensee is required 40 9 to pay an annual fee of $250,000 and the affiliates licensees 40 10 are required to pay an annual fee of $1,000 each. These fees 40 11 are nonrefundable. The commission is required to use these 40 12 fees to cover costs related to regulating, investigating, and 40 13 enforcing this new Code chapter. The bill further requires 40 14 that these fees be accounted for separately from taxes or fees 40 15 paid pursuant to Code chapters 99D and 99F. 40 16 The bill requires that the selected internet poker hub 40 17 operator licensee pay the commission a nonrefundable $3 million 40 18 upon being awarded such license. This payment shall be treated 40 19 as an advance payment to the state by the hub operator and this 40 20 payment will be credited against the tax on adjusted gross 40 21 receipts derived from the play of intrastate internet poker. 40 22 For the purposes of the new Code chapter, a tax is imposed 40 23 on the adjusted gross receipts received each fiscal year in 40 24 the same manner and at the rate described in section 99F.11, 40 25 applicable to affiliates as licensees. 40 26 The bill provides the commission with rulemaking authority 40 27 and allows for the operation and licensing of more than one 40 28 internet hub operator. The bill also provides a legislative 40 29 finding that the general assembly has exclusive authority 40 30 over intrastate internet poker. The bill provides that the 40 31 commission and other authorized state agencies must administer 40 32 this new Code chapter and regulate the industry as provided by 40 33 law and by rules adopted by the commission. LSB 2322SV (1) 84 aw/rj
Text: SF457            Text: SF459