AEIDF; HORSE RACING LICENSES; PROGRAMS S.B. 411-414:
SUMMARY OF INTRODUCED BILL
IN COMMITTEE
Senate Bill 411 through 414 (as introduced 6-27-23)
Sponsor: Senator Dan Lauwers (S.B. 411)
Senator Kevin Hertel (S.B. 412)
Senator John Cherry (S.B. 413 & 414)
Committee: Natural Resources and Agriculture
Date Completed: 10-10-23
INTRODUCTION
Collectively, the bills would modify requirements for live horse race dates, the conditions
under which simulcast wagering could take place, and provisions concerning the relationships
and fees paid from a race track licensee to Certified Horsemen's Organizations (CHOs). The
bills would amend the Lawful Internet Gaming Act and the Lawful Sports Betting Act to
eliminate caps on revenue allocated to the Michigan Agriculture Equine Industry Development
Fund (AEIDF) and delete language regarding the distribution of money to pay outstanding
winning tickets for light horse races. Specifically, Senate Bill 411 would modify allocations
from the AEIDF to standardbred and fair programs, thoroughbred programs, and breed-
specific programs, such as by increasing breeder's and owner's awards and grants for equine
industry research. Additionally, the bill would decrease the tax on money wagered on
interstate and intertrack simulcast races.
Senate Bill 411 and Senate Bill 414 are tie-barred. Senate Bill 411 is also tie-barred to Senate
Bill 412 and Senate Bill 413.
BRIEF FISCAL IMPACT
Senate Bill 411 would lower the tax on simulcast horse racing from 3.5% to 1% and reduce
the amount generated from taxes on third-party facilitators that is deposited in the AEIDF. It
also would increase the amount to the Horse Racing Advisory Commission. Senate Bill 412
would increase revenue by $4.7 million to the AEIDF and decrease the amount to the School
Aid Fund by the same amount by removing a $3.0 million cap on contributions to Michigan
Agriculture Equine Industry Development Fund. The bill also would remove the requirement
that any amount in the AEIDF that exceeds $8.0 million in deposits must be allocated to the
pari-mutuel horse racing disbursement account. Senate Bill 413 would remove a $3.0 million
cap on contributions to the AEIDF from the Internet Sports Betting, which would result in no
change in revenue to the AEIDF, due the amount only totaling $700,000 in FY 2021-22.
Senate Bill 414 would have no fiscal impact on state or local government.
MCL 431.302 et al (S.B. 411) Legislative Analyst: Eleni Lionas
432.315 (S.B. 412) Fiscal Analyst: Bruce R. Baker
432.415 (S.B. 413) Joe Carrasco, Jr.
431.252 (S.B. 414) Cory Savino, PhD
David Zin
Page 1 of 12 sb411-414/2324
CONTENT
Senate Bill 411 would amend the Horse Racing Law to do the following:
-- Delete a provision that prohibits the Horse Racing Advisory Commission from
issuing a license to a person who is licensed at another racetrack and has interest
in or co-ownership of that other racetrack.
-- Delete a provision that would allow the Commissioner to issue a track license to
a local unit of government that holds or had previously held a track license
without further application.
-- Require the Commissioner to keep data concerning a review or renewal of a track
license or race meeting license confidential.
-- Decrease the minimum number of live race meetings an applicant for a
thoroughbred or standardbred race meeting license would have to conduct, from
eight to six.
-- Allow race meeting licensees to participate in simulcasting if the licensee met
the six live race meetings requirement described above.
-- Allow the Commissioner to issue an amended license to conduct simulcast
wagering at a temporary location to a license applicant that met certain
requirements.
-- Modify the allocation of purse money to horsemen's purse pools.
-- Increase amounts to be paid to standardbred, thoroughbred, and fair programs
for purses and supplements.
-- Delete provisions that provide for payments for quarter horse, Appaloosa,
Arabian, and American paint horse programs.
-- Delete a provision that requires an amount over $8.0 million to be distributed to
the pari-mutuel horse racing disbursement account if the amount allocated to
the AEIDF exceeds $8.0 million in a given fiscal year.
-- Decrease a tax on money wagered on interstate and intertrack simulcast races
conducted at the holder's licensed race meetings from 3.5% to 1%.
Senate Bill 412 would amend the Lawful Internet Gaming Act delete a provision
specifying caps on revenue distributed to the AEIDF.
Senate Bill 413 would amend the Lawful Sports Betting Act to delete a provision
specifying caps on revenue distributed to the AEIDF.
Senate Bill 414 would amend Public Act 90 of 1951, which generally regulates the
conduct of races in the State, to delete language regarding the distribution of money
held by a licensee to pay outstanding winning tickets for light horse races and to
modify references to reflect changes proposed by Senate Bill 411
Senate Bill 411
Licenses
Under the Horse Racing Law, the Commissioner may issue certain general classes of licenses,
including occupational licenses, race meeting licenses, track licenses, and third-party
faciliatory licenses. Race meeting licenses are issued annually for the succeeding year to
persons to conduct live horse racing, simulcasting, and pari-mutual wagering on the results
of horse races.
The Commissioner may not issue a race meeting license to a person if the person is licensed
to conduct a race meeting at another licensed racetrack in the State and the person has a
Page 2 of 12 sb411-414/2324
controlling interest in or co-ownership of the other licensed racetrack. The bill would delete
this provision.
Track License
The Commissioner may issue track license to individuals to maintain or operate a racetrack
at which one or more race meeting licensees may conduct third party meetings in the State.
The Law allows the Commissioner to issue a track license to a local unit of government that
holds or had previously held a track license without further application. The bill would delete
this provision.
An applicant for a track license must submit an application that contains certain information
to the Commissioner, such as proof of financial responsibility, detailed plans and specifications
for the racetrack and grounds, and application and applicant personal information, among
other things. Under the bill, the Commissioner would have to keep all information, records,
interviews, reports, statements, memoranda, or other data supplied or used by the
Commissioner during the review or investigation of an application or renewal for a track
license confidential. The materials would be exempt from disclosure under the Freedom of
Information Act (FOIA).
The bill would prohibit the commissioner from accepting an application for a track license
unless the applicant applied for at least 30 days of live horse racing. "Live horse race" would
mean a horse race that is held a licensed track where the race meeting license that conducts
wagering on the race conducts its race meeting, and that is held immediately after wagering
on the race closes.
Thoroughbred or Standardbred Race Meeting License with Pari-Mutuel Wagering
The Law prescribes certain requirements to obtain a license to conduct thoroughbred or
standard bred horse race meetings with the pari-mutuel wagering.
("Simulcast" means the live transmission of video and audio signals conveying a horse race
to or from a licensed race meeting or third-party facilitator in the State. When used as a noun
the term means program of horse races transmitted. "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 commissions.)
Among other things, the application must specify the horse breed for which the applicant
desires to conduct live racing at the proposed race meeting and the days on which the
applicant proposes to conduct live horse racing at the race meeting. The bill would specify
that this requirement would apply to multiple breeds as applicable.
Additionally, the bill would prohibit the Commissioner from accepting the application to
conduct thoroughbred or standard bred horse race meetings with the pari-mutuel wagering.
unless the applicant applied for at least 30 days of live horse racing.
The Commissioner would have to keep all information, records, interviews, reports,
statements, memoranda, or other data supplied or used by the Commissioner in the course
of the review or investigation of an application or renewal for a race meeting license
confidential. The materials would be exempt from disclosure under FOIA.
Page 3 of 12 sb411-414/2324
Live Horse Racing Dates
Currently, an applicant for a license to conduct a thoroughbred race meeting or standardbred
race meeting must apply to conduct at least 30 days for live thoroughbred racing during its
proposed race meeting. Other than during the opening and closing week of a race season the
applicant must apply to have at least two days per week with no fewer than eight live horse
races programed. Instead, under the bill, the applicant would have to apply to conduct live
racing at least two days per week with no fewer than six live horse races programmed.
The Law specifies that if a race meeting licensee is unable to program and conduct eight live
horse races on a racing date awarded to the licensee because there are fewer than five entries
in a race, the licensee may not conduct any simulcasting on that day without written consent
of the Certified Horsemen's Organization (CHO) with which the licensee has a contract. If a
race meeting licensee is unable to program and conduct racing on a live racing date award to
the licensee or fewer than eight live horse races on an awarded live racing date because of a
labor dispute, fire, adverse weather conditions, or other causes beyond the licensee's control,
the licensee is considered to have conducted those races on that date for the purposes of the
Law and is not precluded from conducting any simulcasts. Under the bill these provisions
would instead apply to a licensee that was unable to conduct six live horse races.
Currently, "certified horsemen's organization" means an organization that is registered with
the Office of Racing Commissioner in a manner and form required by the Commissioner and
that can demonstrate all the following:
-- The organization's capacity to supply horses.
-- The organization's ability to assist a race meeting licensee in conducting the licensee's
racing program and protect the financial interests of the individuals participating at the
meetings.
-- The organization's ability to monitor and improve physical conditions and controls for
individuals and horses participating at licensed race meetings.
Under the bill, "certified horsemen's organization" would mean an organization that is certified
annually by breed by the Office of Racing Commissioner in a manner and form required by
the Commissioner and that can demonstrate all the following:
-- The organization has a contract with a race meeting license in the State.
-- The organization's capacity to supply horses.
-- The organization's ability to assist a race meeting licensee in conducting the licensee's
racing program and protect the financial interests of the individuals participating at the
meetings.
-- The organization's ability to monitor and improve physical conditions and controls for
individuals and horses participating at licensed race meetings.
-- That the members of the organization include as full active members, a majority of the
holders of occupational licenses for the breed.
Under the Law, 50% of all commissions where the live racing was conducted must be paid to
the horsemen's purse pool at the racetrack where the live racing was conducted. Instead,
under the bill, 50% of such commissions would have to be paid to the applicable CHO account
described under Contracts with CHO.
Simulcast Wagering
Under the Law, a race meeting license cannot conduct simulcast wagering unless the licensee
conducts at least 30 live racing days in a calendar year. The licensee may apply to the
Page 4 of 12 sb411-414/2324
Commissioner for a permit to televise simulcasts of horse races within the racetrack and the
Commissioner may issue a permit for individual race and full card simulcasts televised during,
between, before, or after programmed live races on days during the term of the applicant's
license when the applicant does not conduct live horse racing if certain conditions are met.
Among the conditions, the applicant must make a continuing good faith effort throughout the
duration of its race meeting to program at least eight live horse races on each live racing date
allocated to the applicant. The CHO with which the applicant has contracted must have
consented with the requested simulcasts on any live racing day when the applicant is unable
to program at least eight live horse races when applicable. The bill would decrease the
required amount of horse races from eight to six
Amended Simulcast License
Under the bill, the Commissioner would have to issue an amended simulcast license to conduct
simulcast wagering at a temporary facility to a race meeting licensee that could not satisfy
the live racing requirements if the race meeting licensee met the following requirements:
-- The race meeting licensee currently held a race meeting license or held a race meeting
license the previous year.
-- The race meeting licensee was building a new facility that was not ready to host live races.
-- The temporary facility was in the same municipality as the new facility.
The Law specifies that to obtain an amended license and satisfy the live racing requirements
the licensee must have a written contract with a CHO to pay a percentage of its net
commission from simulcasting to the live racing purse pool at another licensed racetrack
during the period the license is in effect. Under the bill, to obtain an amended license and
satisfy the live racing requirements, the licensee would have to have a written contract with
a CHO to pay a percentage of its net commission from simulcasting to the site-specific
horsemen's purse account for another race meeting licensee during the period when the
amended license was in effect.
(A "purse pool" means an amount of money allocated or apportioned to pay for prizes for
horse races and from which payment may be made to certified horsemen's organizations as
provided by the Law. A "horsemen's simulcast purse account" means an account maintained
with a financial institution and managed by a designated agency to receive and distribute
money as provided in the Law.)
Contracts with CHO
The Law requires an applicant that is issued a race meeting license to maintain an interest-
bearing account used exclusively to deposit all money due to the horsemen's purse pools. All
money due to this account must be deposited within a reasonable time after receipt of the
race meeting license. The name of the depository and the identification number of the account
must be designated in each race meeting application and all interest earned by the account
must be credited to the purse pool and deposited into the account.
Generally, a race meeting licensee must pay an amount equal to at least 25% to 40% of the
net commission generated at the licensee's race meeting to a site-specific horsemen's purse
account. The bill specifies that the account would have to be maintained by the CHO with
which the race meeting licensee had a contract under Section 13. (Section 13 of the Law
requires a race licensee to have a current written contract with a CHO before it may conduct
live or simulcast horseracing with pari-mutuel wagering on the results of the races pursuant
to its license.)
Page 5 of 12 sb411-414/2324
Money paid into a horsemen's purse account under the Law must be deposited in a depository
designated by the participating CHO and distributed by their designated agent for certain
purposes. The bill specifies that the purse account would have to be maintained the CHO with
which the race meeting license had a contract and would eliminate the provision requiring
that the money paid into the account would have to be deposited into a depository designated
by the CHO.
Michigan Agriculture Equine Industry Development Fund
Money received by the Commissioner and the State Treasurer under the Law must be paid
into the State Treasury and placed in the AEIDF which is administered by the Michigan
Department of Agriculture and Rural Development (MDARD). Money in the AEIDF may not be
spent except as appropriated by the Legislature and the money appropriated must be spent
to provide funding for agriculture and equine development programs as provided by Law. The
bill would specify that the money appropriated would have to be exclusively spent to provide
such funding.
Purses paid under the Fund 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 of application to MDARD for the purse supplement, the
purse supplement paid must be the lesser amount. The bill would delete this provision.
If the amount allocated to the AEIDF under the Law or any other source exceeds $8.0 million
in a fiscal year, the excess amount must be allocated to the pari-mutuel horse racing
disbursement account. The bill would delete this provision.
Standardbred and Fair Programs Payments from the Fund
The Law prescribes the following amounts to be paid to standa