5-111

5-111. Wagering percentage to permittee and
state; exemptions

A. The commission shall prescribe rules governing wagering on races under the
system known as pari-mutuel wagering. Wagering shall be conducted by a permittee only by
pari-mutuel wagering and only on the dates for which racing or dark day simulcasting has
been authorized by the commission. Wagering for a licensed racing meeting shall be
conducted by a permittee only within an enclosure in which authorized racing takes place
and, in counties having a population of less than five hundred thousand persons or at
least one million five hundred thousand persons, as shown by the most recent United
States decennial census, at those additional facilities which are owned or leased by a
permittee and which are used by a permittee for handling wagering as part of the
pari-mutuel system and pool of the permittee at the enclosure where the authorized racing
is conducted. In all other counties, wagering may also be conducted at additional
facilities which are owned or leased by a permittee who is licensed to conduct live
racing in those counties or who has the consent of all commercial permittees currently
licensed to conduct live racing in those counties and which are used by a permittee for
handling wagering and as part of the pari-mutuel system and pool of the permittee at the
enclosure where the authorized racing is conducted. If the additional facilities have
not been used for authorized racing before their use for handling wagering, a permittee
shall not use the facilities for handling wagering before receiving approval for such use
by the governing body of the city or town, if located within the corporate limits, or by
the board of supervisors, if located in an unincorporated area of the county. A
permittee may televise the races to the additional facilities at the times the races are
conducted. For the purpose of section 5-110, subsection C only, a race upon which
wagering is permitted under this subsection shall be deemed to also occur at the
additional facility in the county in which the additional facility is located, and as
such shall be limited in the same manner as actual live racing in such county. For the
purpose of subsections B and C of this section, the wagering at the additional facility
shall be deemed to occur in the county in which the additional facility is located.

B. During the period of any permit for dog racing in any county, the state shall
receive five and one-half per cent of all monies handled in the pari-mutuel pool operated
by the permittee, to be paid daily during the racing meeting. In all counties having a
population of one million five hundred thousand persons or more, according to the most
recent United States decennial census, four and three-quarters per cent of the gross
amount of monies handled in a pari-mutuel pool shall be deducted from the pari-mutuel
pool and shall be deposited daily into a trust account for the payment of purse
amounts. In counties having a population of less than one million five hundred thousand
persons according to the most recent United States decennial census, four per cent of the
gross amount of monies handled in a pari-mutuel pool shall be deducted from the
pari-mutuel pool and shall be deposited daily in a trust account for the payment of purse
amounts. In addition, twenty-five per cent of any reduction in pari-mutuel taxes each
year resulting from the application of the hardship tax reduction credit determined
pursuant to subsection I of this section shall be deposited in the trust account for
supplementing purse amounts in an equitable manner over the racing meeting as determined
by the commission. Notwithstanding any other provision of this subsection, the
percentage paid by a permittee to the state does not apply to monies handled in a
pari-mutuel pool for wagering on simulcasts of out-of-state races. During a week in
which a permittee conducts live racing at the permittee's racetrack enclosure, the
permittee shall deduct from monies handled in a pari-mutuel pool for wagering on
simulcasts of out-of-state races and deposit daily in a trust account for the payment of
purse amounts the same percentage of the pari-mutuel pool as is deducted for purses for
live races unless otherwise agreed by written contract. Unless otherwise agreed by
written contract, if the commission reasonably determines that live racing will not be
conducted within one calendar year at a racetrack enclosure, the permittee shall deduct
from monies handled in a pari-mutuel pool for wagering on simulcasts of out-of-state
races and deposit daily in a trust account to supplement purses of any dog track where
live racing is conducted within a one hundred mile radius. The supplementing provided by
this subsection shall be in the most equitable manner possible as determined by the
commission. The permittee shall allocate the funds in the trust account and pay purse
amounts at least biweekly. The permittee may, at the permittee's discretion, pay
additional amounts to augment purses from the amounts received by the permittee under
this subsection.

C. During the period of a permit for horse, harness or dog racing, the permittee
which conducts such meeting may deduct up to and including twenty-five per cent of the
total amount handled in the regular pari-mutuel pools and may, at the permittee's option,
deduct up to and including thirty per cent of the total amount handled in the exacta,
daily double, quinella and other wagering pools involving two horses or dogs, and up to
and including thirty-five per cent of the total amount handled in the trifecta or other
wagering pools involving more than two horses or dogs in one or more races. The amounts
if deducted shall be distributed as prescribed in subsection D of this section and
section 5-111.02 for horse or harness racing permittees. For dog racing permittees,
unless otherwise agreed by written contract, the permittee shall allocate to purses from
amounts wagered on live racing conducted in this state an amount equal to fifty per cent
of any amounts that are deducted pursuant to this subsection in excess of twenty per cent
of the total amount handled in the regular pari-mutuel pools, twenty-one per cent of the
total amount handled in the exacta, daily double, quinella and other wagering pools
involving two dogs or twenty-five per cent of the total amount handled in the trifecta or
other wagering pools involving more than two dogs in one or more races. For dog racing
permittees the percentages prescribed in subsection B of this section shall be
distributed to the state and to the trust account for payment of purse amounts and the
permittee shall receive the balance. If the dog racing permittee has made capital
improvements, the distribution to the state shall be adjusted as provided in section
5-111.03. Monies deposited in the trust account for payment of purses pursuant to this
subsection shall be in addition to amounts deposited pursuant to subsection B of this
section.

D. During the period of a permit for horse or harness racing, the state shall
receive two per cent of the gross amount of the first one million dollars of the daily
pari-mutuel pools and five per cent of the gross amount exceeding one million dollars of
the daily pari-mutuel pools. Notwithstanding any other provision of this subsection, the
percentage paid by a permittee to the state does not apply to monies handled in a
pari-mutuel pool for wagering on simulcasts of out-of-state races. The permittee shall
retain the balance of the total amounts deducted pursuant to subsection C of this
section. Of the amount retained by the permittee, less the amount payable to the
permittee for capital improvements pursuant to section 5-111.02, breakage distributed to
the permittee pursuant to section 5-111.01 and other applicable state, county and city
transaction privilege or other taxes, unless otherwise agreed by written contract, fifty
per cent shall be used for purses. Unless otherwise agreed by written contract, fifty
per cent of the revenues received by the permittee from simulcasting races as provided in
section 5-112, net of costs of advertising, shall be utilized as a supplement to the
general purse structure. All amounts which are deducted from the pari-mutuel pool for
purses pursuant to this section and sections 5-111.01, 5-112 and 5-114 and revenues which
are received from simulcasting and which are to be used as a supplement to the general
purse structure pursuant to this subsection shall be deposited daily into a trust account
for the payment of purse amounts.

E. Any county fair racing association may apply to the commission for one racing
meeting each year and the commission shall set the number of days and the dates of such
meetings. A racing meeting conducted under this subsection shall be operated in such
manner that all profits accrue to the county fair racing association, and the county fair
racing association may deduct from the pari-mutuel pool the same amount as prescribed in
subsection C of this section. All county fair racing meetings, whether conducted by
county fair racing associations under the provisions of this subsection or by an
individual, corporation or association other than a county fair racing association, are
exempt from the payment to the state of the percentage of the pari-mutuel pool prescribed
by subsection D of this section and are also exempt from the provisions of section
5-111.01.

F. Monies from charity racing days are exempt from the state percentage of the
pari-mutuel pool prescribed in this section.

G. Sums held by a permittee for payment of unclaimed pari-mutuel tickets are exempt
from the provisions of the revised Arizona unclaimed property act, title 44, chapter 3.

H. All of the amounts received by a permittee from the gross amount of monies
handled in a pari-mutuel pool and all amounts held by a permittee for payment of purses
pursuant to this section and sections 5-111.01, 5-112 and 5-114 are exempt from the
provisions of title 42, chapter 5.

I. On August 1 of each year a permittee is eligible for a hardship tax credit
pursuant to this subsection. For purposes of this subsection, "permittee" shall include
any person who has succeeded to the interest of a permittee and who is authorized to
conduct racing at the facility for which the permit was issued. The department shall
determine the amount of any hardship tax credit as follows:

1. Determine the percentage decrease in pari-mutuel wagering by determining the
percentage decrease in pari-mutuel wagering between the base period amount and the amount
of pari-mutuel wagering in the previous fiscal year at the racetrack and the additional
wagering facilities operated by the permittee. The base period amount is the highest
total annual pari-mutuel wagering at the racetrack and all additional wagering facilities
as reported to the department for fiscal year 1989-1990, 1990-1991, 1991-1992, 1992-1993
or 1993-1994.

2. Determine the permittee's hardship tax credit by multiplying the total
pari-mutuel tax due as a result of wagering at the racetrack and all additional wagering
facilities for the previous fiscal year before applying any hardship tax credit amount by
the percentage decrease in pari-mutuel wagering determined pursuant to paragraph 1 of
this subsection and multiplying the result by three.

3. The permittee's pari-mutuel tax due as otherwise determined under subsections B
and D of this section shall be reduced for the current period and any future periods by
an amount equal to the amount of the hardship tax credit determined pursuant to this
subsection. The hardship tax credit is in addition to any other tax exemptions, rebates
and credits.