HOUSE BILL NO. 4005

January 26, 2021, Introduced by Rep. Hall and referred to the Committee on Regulatory Reform.

"Horse racing law of 1995,"

by amending sections 2, 12, 14, 17, 19, 20, 20a, and 22 (MCL 431.302, 431.312, 431.314, 431.317, 431.319, 431.320, 431.320a, and 431.322), sections 2, 12, and 14 as amended by 2016 PA 271 and sections 17, 19, 20, and 22 as amended and section 20a as added by 2019 PA 153; and to repeal acts and parts of acts.

the people of the state of michigan enact:

Sec. 2. As used in this act:

(a) "Affiliate" means a person who, directly or indirectly, controls, is controlled by, or is under common control with; is in a partnership or joint venture relationship with; or is a co-shareholder of a corporation, co-member of a limited liability company, or co-partner in a limited liability partnership with a person who holds or applies for a race meeting or track license under this act. For purposes of this subdivision, a controlling interest is a pecuniary interest of more than 15%.

(b) "Breaks" means the cents over any multiple of 10 otherwise payable to a patron on a wager of $1.00.

(c) "Certified horsemen's organization" means an organization that is registered with the office of racing commissioner in a manner and form required by the racing commissioner and that can demonstrate all of the following:

(i) The organization's capacity to supply horses.

(ii) The organization's ability to assist a race meeting licensee in conducting the licensee's racing program.

(iii) The organization's ability to monitor and improve physical conditions and controls for individuals and horses participating at licensed race meetings.

(iv) The organization's ability to protect the financial interests of the individuals participating at licensed race meetings.

(d) "Commissioner" or "racing commissioner" means the executive director of the Michigan gaming control board appointed under section 4 of the Michigan gaming control Gaming Control and revenue act, Revenue Act, 1996 IL 1, MCL 432.204, who is ordered under Executive Reorganization Order No. 2009-31, MCL 324.99919, to perform all the functions and exercise the powers performed and exercised by the racing commissioner before that position was abolished.

(e) "Controlled substance" means that term as defined in section 7104 of the public health code, 1978 PA 368, MCL 333.7104.

(f) "Day of operation" means a period of 24 hours beginning at 12 noon and ending at 11:59 a.m. the following day.

(g) "Drug" means any of the following:

(i) A substance intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or other animals.

(ii) A substance, other than food, intended to affect the structure or condition or any function of the body of humans or other animals.

(iii) A substance intended for use as a component of a substance specified in subparagraph (i) or (ii).

(h) "Fair" means a county, district, or community fair or a state fair.

(i) "Foreign substance" means a substance, or its metabolites, that does not exist naturally in an untreated horse or, if natural to an untreated horse, exists at an unnaturally high physiological concentration as a result of having been administered to the horse.

(j) "Full card simulcast" means an entire simulcast racing program of 1 or more race meeting licensees located in this state, or an entire simulcast racing program of 1 or more races simulcasted from 1 or more racetracks located outside of this state.

(k) "Horsemen's simulcast purse account" means an account maintained with a financial institution and managed by a designated agent as described in section 19 to receive and distribute money as provided in this act.

(l) "Member of the immediate family" means the spouse, child, parent, or sibling.

(m) "Net commission" means the amount determined under section 17(3), after first deducting from the licensee's statutory commission the applicable state tax on wagering due and payable under section 22 and the actual verified fee paid by the licensee to the sending host track to receive the simulcast signal.

(n) "Office of the racing commissioner" means the horse racing section of the horse racing, audit, and gaming technology division of the Michigan gaming control board created by section 4 of the Michigan gaming control Gaming Control and revenue act, Revenue Act, 1996 IL 1, MCL 432.204, which operates under the direction of the executive director of the Michigan gaming control board, to which Executive Reorganization Order No. 2009-31, MCL 324.99919, transferred all of the authority, powers, duties, functions, records, personnel, property, unexpended balances of appropriations, allocations, or other funds of the office of racing commissioner that previously existed under this act and that was abolished by that executive reorganization order.

(o) "Pari-mutuel" and "pari-mutuel wagering" mean the form or system of gambling in which the winner or winners divide the total amount of money bet, after deducting the net commission.a system by which the wagers on the outcome of a live horse race, run in the past or to be run in the future, are placed with, or in, a wagering pool conducted by an operator licensed or otherwise permitted to do so under the laws of this state and in which the participants do not wager against the operator. Pari-mutuel and pari-mutuel wagering do not include wagering on a banked game in which the race meeting licensee is a participant or otherwise holds a stake in the outcome of the game, or in which the race meeting licensee established a bank against which the participants play. However, pari-mutuel and pari-mutuel wagering include a nonrefundable contribution to the pool to serve as a seed or guarantee. Pari-mutuel and pari-mutuel wagering do not include a video lottery that must be authorized under the McCauley-Traxler-Law-Bowman-McNeely lottery act, 1972 PA 239, MCL 432.1 to 432.47, or any other law of this state.

(p) "Person" means an individual, firm, partnership, corporation, association, or other legal entity.

(q) "Purse pool" means an amount of money allocated or apportioned to pay prizes for horse races and from which payments may be made to certified horsemen's organizations as provided in this act.

(r) "Standardbred" means a horse registered with the United States Trotting Association that races on designated gaits of pace or trot.

(s) "Thoroughbred" means a thoroughbred, quarter, paint, Arabian, or other breed horse. Thoroughbred does not include a standardbred.

(t) "Veterinarian" means an individual licensed to practice veterinary medicine under part 188 of the public health code, 1978 PA 368, MCL 333.18801 to 333.18838, or under a state or federal law applicable to the individual.

Sec. 12. (1) An applicant for a license to conduct a thoroughbred race meeting shall apply to conduct not fewer than 30 days of live thoroughbred racing during its proposed race meeting. Except during the opening and closing week of a race meeting, the applicant shall apply to conduct live racing not fewer than 2 days per week, with not fewer than 8 live horse races programmed, and shall conduct live racing programs on the days allocated by the racing commissioner. The commissioner shall allocate not fewer than 10 days of live horse racing to a race meeting licensee with not fewer than 6 programmed live races per allocated day.

(2) An applicant for a license to conduct a standardbred race meeting shall apply to conduct not fewer than 30 days of live standardbred harness horse racing during its proposed race meeting. Except during the opening and closing week of a race meeting, the applicant shall apply to conduct live horse racing not fewer than 2 days per week, with not fewer than 8 live horse races programmed, and shall conduct live racing programs on the days awarded. The commissioner shall allocate not fewer than 10 days of live horse racing to a race meeting licensee with not fewer than 6 programmed live races per allocated day.

(3) If a race meeting licensee is unable to program and conduct 8 live horse races on a racing date awarded to the licensee because there are fewer than 5 entries in a race, the licensee shall not conduct any simulcasting or pari-mutuel wagering on that day without the written consent of the certified horsemen's organization with which it has a contract.

(4) If a race meeting licensee is unable to conduct racing on a live racing date awarded to the licensee or fewer than 8 live horse races on an awarded live racing date because of a labor dispute, fire, adverse weather conditions, or other causes beyond the race meeting licensee's control, the race meeting licensee is considered to have conducted those races or that race date for purposes of this act and is not precluded from conducting any simulcasts or pari-mutuel wagering because of the licensee's inability to conduct those live races or that race date.

(5) Intertrack simulcast races that a race meeting licensee contracts to receive from other racetracks that are canceled for any of the reasons described in subsection (4) are offered to the public for purposes of this act.

(6) If an entire race meeting or the balance of a race meeting and racing dates awarded to a licensee cannot be raced because of an act of God or significant physical damage to the licensed racetrack at which the race meeting was licensed to be conducted caused by fire or some other catastrophe, the racing commissioner may transfer those dates to another race meeting licensee upon application of the substitute licensee if the substitute licensee satisfies the requirements for licensure under this act and demonstrates that it has or will have a legal or contractual right to the use of a different licensed racetrack facility on the racing dates in question, and all race meeting licensees that will be conducting live racing on those dates within 50 miles of the substitute racetrack consent to the transfer.

(7) Notwithstanding anything in this act to the contrary, if the racing commissioner determines that 1 or more of the conditions listed in subsection (8) apply and the contracted certified horsemen's organization is in agreement, the racing commissioner may amend an existing race meeting license and simulcast permit to allow the licensee to continue simulcasting or conducting pari-mutuel wagering during the remaining period of the race meeting license. An amended license under this section may be issued by the racing commissioner at any time, including at the time of the initial issuance of the race meeting license for the upcoming year during which it is valid.

(8) The racing commissioner may issue an order amending a race meeting license under subsection (7) if he or she determines that the licensee is capable of conducting simulcast horse racing or pari-mutuel wagering in accordance with this act and that 1 or more of the following conditions exist:

(a) There is inadequate horse supply for the licensee to conduct a live race meeting of at least 10 days with 6 races per day.

(b) There is inadequate funding of live racing purses to support the licensee's conducting of a live race meeting of at least 10 days with 6 races per day.

(9) In order to obtain an amended license issued under subsection (7) and satisfy the live racing requirements of this act, the licensee must have a written contract with a certified horsemen's organization to pay a percentage of its net commission from simulcasting or from conducting pari-mutuel wagering to the live racing purse pool at another racetrack licensed under this act during the period when the amended license issued under subsection (7) is in effect. Unless otherwise provided in the written contract between the licensee and the certified horsemen's organization, the payment must be not less than 25% of net commission from simulcasting or from conducting pari-mutuel wagering if only 1 certified horsemen's organization has a contract for live race days in this state for the calendar year. If both certified horsemen's organizations have a contract for live race dates in this state for the calendar year, the payment must be not more than 40% of the net commission from simulcasting.

(10) Subsections (7) to (9) apply only to amendments to a race meeting license for the purpose of allowing simulcast-only operations or pari-mutuel wagering-only and are not limitations on or requirements for other race meeting license amendments the racing commissioner may approve or deny.

(11) Notwithstanding anything in this act to the contrary, if a race meeting licensee and the certified horsemen's organization with which the licensee has a contract jointly request that the licensee be allowed to conduct a live race meeting with fewer than 8 races per day, the racing commissioner shall approve the request and issue an order amending the license accordingly.

Sec. 14. (1) Before November 1 of the year preceding the year for which applications are made, the racing commissioner shall grant or deny each application for a race meeting license, allocate or deny the dates, for which application has been made, on which pari-mutuel wagering on live races may be conducted at each licensed race meeting in this state, and shall also determine whether the applicant may simulcast under section 18 during the calendar year for which the license is issued. The racing commissioner may grant a race meeting license for any time period up to 1 year during which the licensee may conduct live and simulcast horse races with pari-mutuel wagering on the results of the races.

(2) Subject to section 12(4), all simulcasting or pari-mutuel wagering authorized by the racing commissioner must be conditioned on the holder of the license conducting not fewer than 8 live horse races on each live racing date allocated in the holder's race meeting license, unless this requirement is waived in writing by both the racing commissioner and the certified horsemen's organization with which the licensee has contracted.

(3) The racing commissioner shall not issue a race meeting license to an organization organized for a charitable purpose or organized for the purpose of distributing its profits or income to charitable organizations.

(4) Except as provided in section 12(4), (5), and (6), if after the issuance of a race meeting license the racing commissioner determines on further investigation that the holder of a race meeting license has not met, or will be unable to meet, the requirements of the license, the racing commissioner may impose a fine or suspend or revoke the race meeting license, or both, for all or part of the remainder of the time period for which the license was granted. Before making the required determination to impose a fine or suspend or revoke a race meeting license under this subsection, the racing commissioner shall consider whether the race meeting licensee's inability or failure to meet the requirements of its license is due to a cause beyond the control of the race meeting licensee.

(5) Any action taken by the racing commissioner under subsection (4) becomes effective 10 days after the holder of the race meeting license receives written notice unless the commissioner finds that the public health, safety, or welfare requires emergency action and immediate effect of the commissioner's order.

(6) A denial of a race meeting license under subsection (3) may be appealed to the circuit court for judicial review under section 631 of the revised judicature act of 1961, 1961 PA 236, MCL 600.631. A suspension or revocation of a race meeting license may be appealed under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

(7) Each applicant issued a race meeting license shall maintain an interest bearing account used exclusively to deposit all money due to horsemen's purse pools under this act. All money due to this account must be deposited within a reasonable time after receipt by the race meeting licensee. The name of the depository and the identification number of the account must be designated in each race meeting license application and all interest earned by the account must be credited to the purse pool and deposited in the account.

Sec. 17. (1) The pari-mutuel system of wagering on the results of horse races as permitted by this act is not unlawful. All forms of pari-mutuel wagering must be conducted under a race meeting license preapproved by the racing commissioner by rule or written order of the commissioner. The racing commissioner shall not allow a holder of a race meeting license to conduct pari-mutuel wagering on the outcome of a live horse race run in the past at a licensed racetrack unless the legislative body for the local unit of government in which the licensed racetrack is located has adopted an ordinance authorizing the activities surrounding the conduct of pari-mutuel wagering on the outcome of a live horse race run in the past at the licensed racetrack.

(2) If pari-mutuel wagering is used at a race meeting, a totalisator or other device that is equal in accuracy and clearness to a totalisator and approved by the racing commissioner must be used. The odds display of the totalisator or other device must be placed in full view of the patrons.

(3) Subject to section 18(3), each holder of a race meeting license shall retain as his or her commission on all forms of straight wagering 17% of all money wagered involving straight wagering on the results of live and simulcast horse races conducted at the licensee's race meetings. Subject to section 18(3), each holder of a race meeting license shall retain as his or her commission on all forms of multiple wagering without the written permission of the racing commissioner not more than 28% and with the written permission of the racing commissioner not more than 35% of all money wagered involving any form of multiple wagering on the results of live and simulcast horse races conducted at the licensee's race meeting. Except as otherwise provided by contract, 50% of all commissions from wagering on the results of live racing at the racetrack where the live racing was conducted must be paid to the horsemen's purse pool at the racetrack where the live racing was conducted. As used in this subsection:

(a) "Straight wagering" means a wager made on the finishing position of a single specified horse in a single specified race.

(b) "Multiple wagering" means a wager made on the finishing positions of more than 1 horse in a specified race or the finishing positions of 1 or more horses in more than 1 specified race.

(4) All breaks must be retained by the race meeting licensee and paid directly to the city or township in which the racetrack is located as a fee for services provided under section 21.

(5) Payoff prices of tickets of a higher denomination must be calculated as even multiples of the payoff price for a $1.00 wager. Each holder of a race meeting license shall distribute to the persons holding winning tickets, as a minimum, a sum not less than $1.10 calculated on the basis of each $1.00 deposited in a pool, except that each race meeting licensee may distribute a sum of not less than $1.05 to persons holding winning tickets for each $1.00 deposited in a minus pool. As used in this subsection, "minus pool" means any win, place, or show pool in which the payout would exceed the total value of the pool.

(6) A holder of a race meeting license shall not knowingly permit a person less than 18 years of age to be a patron of the pari-mutuel wagering conducted or supervised by the holder.

(7) Any act or transaction relative to pari-mutuel wagering on the results of live or simulcast horse races ~~may be~~ conducted by a race meeting licensee under this act ~~for the race meeting licensee to~~ must comply with the auditing requirements of section 23. A person shall not provide messenger service for the placing of a bet for another person who is not a patron. However, this subsection does not prevent simulcasting or intertrack or interstate common pool wagering inside or outside this state as permitted by this act or the rules promulgated under this act.

(8) Any form of pari-mutuel wagering on the results of live or simulcast horse races must only be conducted or operated by a race meeting licensee, which may use its contracted licensed third-party facilitators, as determined and approved by the racing commissioner. The race meeting licensee is responsible for all conduct of its third-party facilitators. All wagers must be placed by persons within this state and may be placed only in person at a licensed race meeting or electronically through a licensed third-party facilitator. A race meeting licensee or licensed third-party facilitator shall not solicit, offer, accept, or process wagers on or in connection with other gaming or gambling products, including, but not limited to, slot machines and casino table games.

(9) A person that does not hold a race meeting license or a third-party facilitator license that solicits or accepts wagers on the results of live or simulcast horse races from individuals in this state is guilty of a felony punishable by imprisonment for not more than 5 years or a fine of not more than $10,000.00, or both. Each act of solicitation or wager that is accepted in violation of this section is a separate offense.

(10) Only a race meeting licensee or its contracted licensed third-party facilitator may process, accept, offer, or solicit wagers on the results of live or simulcast horse races as determined and approved by the racing commissioner.

(11) As used in this section, "act or transaction relative to pari-mutuel wagering on the results of live or simulcast horse races" means those steps taken by a race meeting licensee to accept a wager and process it within the ordinary course of its business and in accordance with this act.

Sec. 19. (1) Subject to subsection (2), a race meeting licensee shall pay an amount equal to not less than 25% and not more than 40% of the net commission generated at the licensee's race meeting to a site-specific horsemen's purse account. Money paid into a horsemen's purse account under this act must be deposited in a depository designated by the participating certified horsemen's organizations and distributed by their designated agent as follows:

(a) For purses for live horse races at a licensed race meeting in this state.

(b) Each year, all certified horsemen's organizations that participate in a live race meeting may receive an amount approved by order of the racing commissioner to use for general expenses. Beginning on January 1 and ending on December 31 of each year, the certified horsemen's organization is entitled to not less than 5% of the site-specific horsemen's purse account as ordered by the racing commissioner.

(2) A race meeting licensee shall pay the net commission generated from wagering on live and simulcast racing through the race meeting licensee's third-party facilitator to the pari-mutuel horse racing disbursement account. ~~On the first day of each month after the effective date of the amendatory act that added this subsection,~~ Beginning January 1, 2020, and on the first day of each month after that date, money paid into the pari-mutuel horse racing disbursement account must be distributed as follows:

(a) Fifty percent to be divided equally to each certified horsemen's organization.

(b) Fifty percent to be divided equally to each ~~track~~ race meeting licensee.

Sec. 20. (1) It is the policy of this state to encourage the breeding of horses of all breeds in this state and the ownership of such horses by residents of this state to provide for sufficient numbers of high quality race horses of all breeds to participate in licensed race meetings in this state; to promote the positive growth and development of high quality horse racing and other equine competitions in this state as a business and entertainment activity for residents of this state; and to establish and preserve the substantial agricultural and commercial benefits of the horse racing and breeding industry to this state. It is the intent of the legislature to further this policy by the provisions of this act and annual appropriations to administer this act and adequately fund the agriculture and equine industry programs established by this section.

(2) Except for money generated from the tax on wagers processed through licensed third-party facilitators operating under this act under section 22, 22(2)(b) and the tax on pari-mutuel wagering under section 22(4), money received by the racing commissioner and the state treasurer under this act must be paid promptly into the state treasury and placed in the Michigan agriculture equine industry development fund created in subsection (3).

(3) The Michigan agriculture equine industry development fund is created in the department of treasury. The Michigan agriculture equine industry development fund must be administered by the director of the department of agriculture and rural development with the assistance and advice of the racing commissioner.

(4) Money must not be expended from the Michigan agriculture equine industry development fund except as appropriated by the legislature. Money appropriated by the legislature from the Michigan agriculture equine industry development fund must be expended by the director of the department of agriculture and rural development with the advice and assistance of the racing commissioner to provide funding for agriculture and equine industry development programs as provided in subsections (5) to (11).

(5) The following amounts must be paid to standardbred and fair programs:

(a) A sum not to exceed 75% of the purses for standardbred harness horse races offered by fairs and races at licensed pari-mutuel racetracks. Purse supplements paid under this subdivision for overnight races at fairs for which Michigan sired, Michigan bred, or Michigan owned harness horses are eligible must be $1,000.00. However, if the average purse offered for maiden overnight races of the same breed at any licensed race meeting in this state during the previous year as calculated by the department of agriculture and rural development was less than $1,000.00, purse supplements for overnight races at fairs paid under this subdivision must not exceed that average purse.

(b) A sum to be allotted on a matching basis, but not to exceed $15,000.00 each year to a single fair, for the purpose of equipment rental during fairs; ground improvement; constructing, maintaining, and repairing buildings; and making the racetrack more suitable and safe for racing at fairs.

(c) A sum to be allotted for paying special purses at fairs on 2-year-old and 3-year-old standardbred harness horses conceived after January 1, 1992, that is Michigan bred, or that is sired by a standardbred stallion registered with the department of agriculture and rural development, that was leased or owned by a resident or residents of this state, and that did not serve a mare at a location outside of this state from February 1 through July 31 of the calendar year in which the conception occurred. A foal that is born on or after January 1, 2002 of a mare owned by a nonresident of this state and that is conceived outside of this state from transported semen of a stallion registered with the department of agriculture and rural development is eligible for Michigan tax-supported races only if, in the year that the foal is conceived, the department of agriculture and rural development's agent for receiving funds as the holding agent for stakes and futurities is paid a transport fee as determined by the department of agriculture and rural development and administered by the Michigan Harness Horsemen's Association.

(d) A sum to pay not more than 75% of an eligible cash premium paid by a fair or exposition. The commission of agriculture and rural development shall promulgate rules establishing which premiums are eligible for payment and a dollar limit for all eligible payments.

(e) A sum to pay breeders' awards in an amount not to exceed 10% of the gross purse to breeders of Michigan bred standardbred harness horses for each time the horse wins a race at a licensed race meeting or fair in this state. As used in this subdivision, "Michigan bred standardbred harness horse" means a horse from a mare owned by a resident or residents of this state at the time of conception, that was conceived after January 1, 1992, and sired by a standardbred stallion registered with the department of agriculture and rural development that was leased or owned by a resident or residents of this state and that did not serve a mare at a location outside of this state from February 1 through July 31 of the calendar year in which the conception occurred. To be eligible, each mare must be registered with the department of agriculture and rural development. A foal that is born on or after January 1, 2002 of a mare owned by a nonresident of this state and that is conceived outside of this state from transported semen of a stallion registered with the department of agriculture and rural development is eligible for Michigan tax-supported races only if, in the year that the foal is conceived, the department of agriculture and rural development's agent for receiving funds as the holding agent for stakes and futurities is paid a transport fee as determined by the department of agriculture and rural development and administered by the Michigan Harness Horsemen's Association.

(f) A sum not to exceed $4,000.00 each year to be allotted to fairs to provide training and stabling facilities for standardbred harness horses.

(g) A sum to be allotted to pay the presiding judges and clerks of the course at fairs. Presiding judges and clerks of the course must be hired by the fair's administrative body with the advice and approval of the racing commissioner. The director of the department of agriculture and rural development may allot funds for a photo finish system and a mobile starting gate. The director of the department of agriculture and rural development shall allot funds for the conducting of tests, the collection and laboratory analysis of urine, saliva, blood, and other samples from horses, and the taking of blood alcohol tests on drivers, jockeys, and starting gate employees, for those races described in this subdivision. The department may require a driver, jockey, or starting gate employee to submit to a breathalyzer test, urine test, or other noninvasive fluid test to detect the presence of alcohol or a controlled substance. If the results of a test show that a person has more than .05% of alcohol in his or her blood, or has present in his or her body a controlled substance, the person is not permitted to continue in his or her duties on that race day and until he or she can produce, at his or her own expense, a negative test result.

(h) A sum to pay purse supplements to licensed pari-mutuel harness race meetings for special 4-year-old filly and colt horse races.

(i) A sum not to exceed 0.25% of all money wagered on live and simulcast horse races in this state must be placed in a special standardbred sire stakes fund each year, 100% of which must be used to provide purses for races run exclusively for 2-year-old and 3-year-old Michigan sired standardbred horses at licensed harness race meetings in this state. As used in this subdivision, "Michigan sired standardbred horses" means standardbred horses conceived after January 1, 1992 and sired by a standardbred stallion registered with the department of agriculture and rural development that was leased or owned by a resident or residents of this state and that did not serve a mare at a location outside of this state from February 1 through July 31 of the calendar year in which the conception occurred. A foal that is born on or after January 1, 2002 of a mare owned by a nonresident of this state and that is conceived outside of this state from transported semen of a stallion registered with the department of agriculture and rural development is eligible for Michigan tax-supported races only if, in the year that the foal is conceived, the department of agriculture and rural development's agent for receiving funds as the holding agent for stakes and futurities is paid a transport fee as determined by the department of agriculture and rural development and administered by the Michigan Harness Horsemen's Association.

(6) The following amounts must be paid to thoroughbred programs:

(a) A sum to be allotted thoroughbred race meeting licensees to supplement the purses for races to be conducted exclusively for Michigan bred horses.

(b) A sum to pay awards to owners of Michigan bred horses that finish first, second, or third in races open to non-Michigan bred horses.

(c) A sum to pay breeders' awards in an amount not to exceed 10% of the gross purse to the breeders of Michigan bred thoroughbred horses for each time Michigan bred thoroughbred horses win at a licensed race meeting in this state.

(d) A sum to pay purse supplements to licensed thoroughbred race meetings for special 4-year-old and older filly and colt horse races.

(e) A sum not to exceed 0.25% of all money wagered on live and simulcast horse races in this state must be placed in a special thoroughbred sire stakes fund each year, 100% of which must be used to provide purses for races run exclusively for 2-year-old and 3-year-old and older Michigan sired thoroughbred horses at licensed thoroughbred race meetings in this state and awards for owners of Michigan sired horses or stallions. As used in this subdivision, "Michigan sired thoroughbred horses" means thoroughbred horses sired by a stallion registered with the department of agriculture and rural development that was leased or owned exclusively by a resident or residents of this state and that did not serve a mare at a location outside of this state during the calendar year in which the service occurred.

(7) The following amounts must be paid for quarter horse programs:

(a) A sum to supplement the purses for races to be conducted exclusively for Michigan bred quarter horses.

(b) A sum to pay not more than 75% of the purses for registered quarter horse races offered by fairs.

(c) A sum to pay breeders' awards in an amount not to exceed 10% of a gross purse to breeders of Michigan bred quarter horses for each time a Michigan bred quarter horse wins at a county fair or licensed race meeting in this state.

(d) As used in this subsection, "Michigan bred quarter horse" means Michigan bred quarter horse as that term is defined in R 285.817.1 of the Michigan Administrative Code. Each mare and stallion must be registered with the director of the department of agriculture and rural development.

(8) The following amounts must be paid for Appaloosa programs:

(a) A sum to supplement the purses for races to be conducted exclusively for Michigan bred Appaloosa horses.

(b) A sum to pay not more than 75% of the purses for registered Appaloosa horse races offered by fairs.

(c) A sum to pay breeders' awards in an amount not to exceed 10% of the gross purse to the breeders of Michigan bred Appaloosa horses for each time Michigan bred horses win at a fair or licensed race meeting in this state.

(d) As used in this subsection, "Michigan bred Appaloosa horse" means a Michigan bred Appaloosa horse as that term is defined in R 285.819.1 of the Michigan Administrative Code. Each mare and stallion must be registered with the director of the department of agriculture and rural development.

(9) The following amounts must be paid for Arabian programs:

(a) A sum to supplement the purses for races to be conducted exclusively for Michigan bred Arabian horses.

(b) A sum to pay not more than 75% of the purses for registered Arabian horse races offered by fairs.

(c) A sum to pay breeders' awards in an amount not to exceed 10% of the gross purse to the breeders of Michigan bred Arabian horses for each time Michigan bred horses win at a fair or licensed racetrack in this state.

(d) As used in this subsection, "Michigan bred Arabian horse" means a Michigan bred horse as that term is defined in R 285.822.1(i) of the Michigan Administrative Code. Each mare and stallion shall be registered with the director of the department of agriculture and rural development.

(10) The following sums must be paid for American paint horse programs:

(a) A sum to supplement the purses for races to be conducted exclusively for Michigan bred American paint horses.

(b) A sum to pay not more than 75% of the purses for registered American paint horse races offered by fairs.

(c) A sum to pay breeders' awards in an amount not to exceed 10% of the gross purse to the breeders of Michigan bred American paint horses for each time a Michigan bred American paint horse wins at a county fair or licensed race meeting in this state.

(d) As used in this subsection, "Michigan bred American paint horse" means a Michigan bred paint horse as that term is defined in R 285.823.1 of the Michigan Administrative Code.

(11) The following amounts must be paid for the equine industry research, planning, and development grant fund program:

(a) A sum to fund grants for research projects conducted by persons affiliated with a university or governmental research agency or institution or other private research entity approved by the racing commissioner, which are beneficial to the horse racing and breeding industry in this state.

(b) A sum to fund the development, implementation, and administration of new programs that promote the proper growth and development of the horse racing and breeding industry in this state and other valuable equine-related commercial and recreational activities in this state.

(12) As used in subsection (11), "equine industry research" means the study, discovery and generation of accurate and reliable information, findings, conclusions, and recommendations that are useful or beneficial to the horse racing and breeding industry in this state through improvement of the health of horses; prevention of equine illness and disease, and performance-related accidents and injuries; improvement of breeding technique and racing performance; and compilation and study of valuable and reliable statistical data regarding the size, organization, and economics of the industry in this state; and strategic planning for the effective promotion, growth, and development of the industry in this state.

(13) An amount must be allotted annually to the racing commissioner that is sufficient to pay for the collection and laboratory analysis of urine, saliva, blood, and other samples from horses and licensed individuals involved in horse racing on which pari-mutuel wagers are made and for the conducting of tests described in section 16(4).

(14) Money appropriated and allotted to the Michigan agriculture equine industry development fund must not revert to the general fund and must be carried forward from year to year until disbursed to fund grants for research projects beneficial to the industry.

(15) A percentage of the Michigan agriculture equine industry development fund that is equal to 1/15 of 1% of the gross wagers made each year in each of the racetracks licensed under this act must be deposited in the compulsive gaming prevention fund created in section 3 of the compulsive gaming prevention act, 1997 PA 70, MCL 432.253.

(16) The director of the department of agriculture and rural development shall promulgate rules pursuant to the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, to implement this section. The rules promulgated under this subsection must do all of the following:

(a) Prescribe the conditions under which the Michigan agriculture equine industry development fund and related programs described in subsections (1) to (14) must be funded.

(b) Establish conditions and penalties regarding the programs described in subsections (5) to (12).

(17) Funds under the control of the department of agriculture and rural development in this section must be disbursed under the rules promulgated under subsection (16). All funds under the control of the department of agriculture and rural development approved for purse supplements and breeders' awards must be paid by the state treasurer not later than 45 days from the date of the race.

(18) Purses paid under this section must be based on actual purses awarded in a race. If the actual purses awarded are less than the purse supplement amount requested by a fair or licensed pari-mutuel racetrack at the time they applied to the department of agriculture and rural development for the purse supplement, the purse supplement paid must be the lesser amount.

(19) If the amount allocated to the Michigan agriculture equine industry development fund under this act or any other source exceeds $8,000,000.00 in a fiscal year, the amount in excess of $8,000,000.00 must be allocated to the pari-mutuel horse racing disbursement account under section 19.

Sec. 20a. The tax imposed under section 22 22(2)(b) on wagers processed through licensed third-party facilitators operating under this act and the tax imposed under section 22(4) on pari-mutuel wagering must be allocated as follows:

(a) Ninety percent to be deposited in the Michigan agriculture and equine industry development fund created under section 20.

(b) Ten percent to the horse racing advisory commission created in section 6a to be expended as provided in section 6a(12)(d).

Sec. 22. (1) A licensed racetrack shall pay a license fee to the racing commissioner of $1,000.00 annually.

(2) Each holder of a race meeting license shall pay to the state treasurer, from the holder's commission, as follows:

(a) A tax in the amount of 3.5% of money wagered on interstate and intertrack simulcast races conducted at the holder's licensed race meetings.

(b) A tax in the amount of 1% of wagers processed through licensed third-party facilitators operating under this act.

(3) By eliminating the pari-mutuel wagering tax on live racing programs and altering the calculation of the tax on simulcast horse racing, it is not the intent of the legislature to diminish the funding and appropriations for the Michigan agriculture equine industry development fund and related programs described in section 20. The pari-mutuel tax alteration effected by this section is intended to generally allow for the improvement of the pari-mutuel horse racing and breeding industry in this state by increasing purses at licensed race meetings and making additional pari-mutuel revenues available for capital improvements at licensed racetracks in this state.

(4) A race meeting licensee that conducts pari-mutuel wagering on the results of live horse races that are run in the past shall pay to the state treasurer a tax in the amount of 1% of all money wagered on the pari-mutuel wagering in a manner and time as required by the racing commissioner.

Enacting section 1. Section 19b of the horse racing law of 1995, 1995 PA 279, MCL 431.319b, is repealed.