An Act concerning racing with parimutuel wagering; amending K.S.A. 1995 Supp. 74-8802, 74-8805 and 74-8813 and repealing the existing sections.

Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 1995 Supp. 74-8802 is hereby amended to read as follows: 74-8802. As used in this act unless the context otherwise requires:

(a) ``Breakage'' means the odd cents by which the amount payable on each dollar wagered exceeds:

(1) A multiple of $.10, for parimutuel pools from races conducted in this state; and

(2) a multiple of such other number of cents as provided by law of the host jurisdiction, for interstate combined wagering pools.

(b) ``Commission'' means the Kansas racing commission created by this act.

(c) ``Concessionaire licensee'' means a person, partnership, corpora- tion or association licensed by the commission to utilize a space or priv- ilege within a racetrack facility to sell goods.

(d) ``Contract'' means an agreement, written or oral, between two or more persons, partnerships, corporations or associations, or any combi- nation thereof, which creates an obligation between the parties.

(e) ``Dual racetrack facility'' means a racetrack facility for the racing of both horses and greyhounds or two immediately adjacent racetrack facilities, owned by the same licensee, one for racing horses and one for racing greyhounds.

(e) (f) ``Executive director'' means the executive director of the com- mission.

(f) (g) ``Facility manager licensee'' means a person, partnership, cor- poration or association licensed by the commission and having a contract with an organization licensee to manage a racetrack facility.

(g) (h) ``Facility owner licensee'' means a person, partnership, cor- poration or association, or the state of Kansas or any political subdivision thereof, licensed by the commission to construct or own a racetrack fa- cility but does not mean an organization licensee which owns the race- track facility in which it conducts horse or greyhound racing.

(h) (i) ``Fair association'' means an association organized pursuant to K.S.A. 2-125 et seq. and amendments thereto or a nonprofit association determined by the commission to be otherwise organized to conduct fair activities pursuant to findings of fact entered by the commission in a license order.

(i) (j) ``Financial interest'' means an interest that could result directly or indirectly in receiving a pecuniary gain or sustaining a pecuniary loss as a result of ownership or interest in a business entity or activity or as a result of a salary, gratuity or other compensation or remuneration from any person.

(j) (k) ``Greyhound'' means any greyhound breed of dog properly reg- istered with the national greyhound association of Abilene, Kansas.

(k) (l) ``Horsemen's association'' means any association or corpora- tion:

(1) All officers, directors, members and shareholders of which are licensed owners of horses or licensed trainers of horses, or both;

(2) which is applying for or has been issued a facility owner license authorizing ownership of Eureka Downs, Anthony Downs or a racetrack facility on or adjacent to premises used by a fair association to conduct fair activities; and

(3) none of the officers, directors, members or shareholders of which holds another facility owner license or is an officer, director, member or shareholder of another facility owner licensee.

(l) (m) ``Horsemen's nonprofit organization'' means any nonprofit or- ganization:

(1) All officers, directors, members or shareholders of which are li- censed owners of horses or licensed trainers of horses, or both; and

(2) which is applying for or has been issued an organization license authorizing the conduct of horse races at Eureka Downs, Anthony Downs or a racetrack facility on or adjacent to premises used by a fair association to conduct fair activities.

(m) (n) ``Host facility'' means the racetrack at which the race is run or, if the race is run in a jurisdiction which is not participating in the interstate combined wagering pool, the racetrack or other facility which is designated as the host facility.

(n) (o) ``Host jurisdiction'' means the jurisdiction where the host fa- cility is located.

(o) (p) ``Interstate combined wagering pool'' means a parimutuel pool established in one jurisdiction which is combined with comparable pari- mutuel pools from one or more racing jurisdictions for the purpose of establishing the amount of money returned on a successful wager in the participating jurisdictions.

(p) (q) ``Intertrack wagering'' means wagering on a simulcast race at a licensed racetrack facility or at a facility which is licensed in its racing jurisdiction to conduct live races.

(q) (r) ``Intrastate combined wagering pool'' means a parimutuel pool which is combined with comparable parimutuel pools from one or more racetrack facilities for the purpose of establishing the amount of money returned on a successful wager at the participating racetrack facilities.

(r) (s) ``Kansas-whelped greyhound'' means a greyhound whelped and raised in Kansas for the first six months of its life.

(s) (t) ``Minus pool'' means a parimutuel pool in which, after deduct- ing the takeout, not enough money remains in the pool to pay the legally prescribed minimum return to those placing winning wagers, and in which the organization licensee would be required to pay the remaining amount due.

(t) (u) ``Nonprofit organization'' means:

(1) A corporation which is incorporated in Kansas as a not-for-profit corporation pursuant to the Kansas general corporation code and the net earnings of which do not inure to the benefit of any shareholder, individ- ual member or person; or

(2) a fair association.

(u) (v) ``Occupation licensee'' means a person licensed by the com- mission to perform an occupation or provide services which the commis- sion has identified as requiring a license pursuant to this act.

(v) (w) ``Off-track wagering'' means wagering on a simulcast race at a facility which is not licensed in its jurisdiction to conduct live races.

(w) (x) ``Organization licensee'' means a nonprofit organization li- censed by the commission to conduct races pursuant to this act and, if the license so provides, to construct or own a racetrack facility.

(x) (y) ``Parimutuel pool'' means the total money wagered by individ- uals on one or more horses or greyhounds in a particular horse or grey- hound race to win, place or show, or combinations thereof, as established by the commission, and, except in the case of an interstate or intrastate combined wagering pool, held by the organization licensee pursuant to the parimutuel system of wagering. There is a separate parimutuel pool for win, for place, for show and for each of the other forms of betting provided for by the rules and regulations of the commission.

(y) (z) ``Parimutuel wagering'' means a form of wagering on the out- come of horse and greyhound races in which those who wager purchase tickets of various denominations on one or more horses or greyhounds and all wagers for each race are pooled and the winning ticket holders are paid prizes from such pool in amounts proportional to the total re- ceipts in the pool.

(z) (aa) ``Race meeting'' means the entire period of time for which an organization licensee has been approved by the commission to hold live or simulcast horse or greyhound races at which parimutuel wagering is conducted, including such additional time as designated by the com- mission for the conduct of official business before and after the races.

(aa) (bb) ``Racetrack facility'' means a racetrack within Kansas used for the racing of horses or greyhounds, or both, including the track sur- face, grandstands, clubhouse, all animal housing and handling areas, other areas in which a person may enter only upon payment of an admission fee or upon presentation of authorized credentials and such additional areas as designated by the commission.

(bb) (cc) ``Racing jurisdiction'' or ``jurisdiction'' means a govern- mental authority which is responsible for the regulation of live or simul- cast racing in its jurisdiction.

(cc) (dd) ``Racing or wagering equipment or services licensee'' means any person, partnership, corporation or association licensed by the com- mission to provide integral racing or wagering equipment or services, as designated by the commission, to an organization licensee.

(dd) (ee) ``Recognized greyhound owners' group'' means the duly rec- ognized group elected in accordance with rules and regulations of the commission by a majority of the Kansas licensed greyhound owners at the racetrack facility voting in the election. The commission may desig- nate an organization such as the national greyhound association of Abi- lene, Kansas, to conduct the election.

(ee) (ff) ``Recognized horsemen's group'' means the duly recognized group, representing the breeds of horses running at a racetrack facility, elected in accordance with rules and regulations of the commission by a majority of the licensed owners and trainers at the racetrack facility voting in the election. If the licensee does not have a recognized horsemen's group, the commission shall designate as the recognized horsemen's group one that serves another organization licensee, but not one that serves a fair association organization licensee.

(ff) (gg) ``Simulcast'' means a live audio-visual broadcast of an actual horse or greyhound race at the time it is run.

(gg) (hh) ``Takeout'' means the total amount of money withheld from each parimutuel pool for the payment of purses, taxes and the share to be kept by the organization licensee. Takeout does not include the break- age. The balance of each pool less the breakage is distributed to the holders of winning parimutuel tickets.

Sec. 2. K.S.A. 1995 Supp. 74-8805 is hereby amended to read as follows: 74-8805. (a) (1) The governor shall appoint, subject to confir- mation by the senate as provided by K.S.A. 75-4315b and amendments thereto, an executive director of the commission, to serve at the pleasure of the governor and under the direction and supervision of the commis- sion. Before appointing any person as executive director, the governor shall cause the Kansas bureau of investigation to conduct a criminal his- tory record check and background investigation of the person.

(2) The executive director shall: (A) Be in the unclassified service under the Kansas civil service act; (B) devote full time to the executive director's assigned duties; (C) receive such compensation as determined by the commission governor, subject to the limitations of appropriations therefor; (D) be a citizen of the United States and an actual resident of Kansas during employment by the commission; (E) not have been con- victed of a felony under the laws of any state or of the United States prior to or during employment by the commission; and (F) have familiarity with the horse and dog racing industries sufficient to fulfill the duties of the office of executive director.

(3) The executive director shall: (A) Recommend to the commission the number and qualifications of employees necessary to implement and enforce the provisions of this act; (B) employ persons for those positions approved by the commission, subject to the limitations of appropriations therefor; and (C) perform such other duties as directed by the commis- sion.

(b) (1) The executive director shall appoint an inspector of parimu- tuels to serve at the pleasure of the executive director. Before appointing any person as inspector of parimutuels, the executive director shall cause the Kansas bureau of investigation to conduct a criminal history record check and background investigation of the person.

(2) The inspector of parimutuels shall: (A) Be in the unclassified serv- ice under the Kansas civil service act; (B) devote full time to the inspec- tor's assigned duties; (C) receive such compensation as determined by the executive director, subject to the limitations of appropriations there- for; (D) be a citizen of the United States and an actual resident of Kansas during employment as inspector of parimutuels; (E) not have been con- victed of a felony under the laws of any state or of the United States prior to or during employment by the commission; and (F) be a certified public accountant with at least three years of auditing experience.

(3) The inspector of parimutuels shall: (A) Inspect and audit the con- duct of parimutuel wagering by organization licensees, including the equipment and facilities used and procedures followed; (B) train and su- pervise such personnel as employed by the executive director to assist with such duties; and (C) perform such other duties as directed by the executive director.

(c) (1) The executive director shall appoint a director of security to serve at the pleasure of the executive director. Before appointing any person as director of security, the executive director shall cause the Kan- sas bureau of investigation to conduct a criminal history record check and background investigation of the person.

(2) The director of security shall: (A) Be in the unclassified service under the Kansas civil service act; (B) devote full time to the security director's assigned duties; (C) receive such compensation as determined by the executive director, subject to the limitations of appropriations therefor; (D) be a citizen of the United States and an actual resident of Kansas during employment as director of security; (E) not have been convicted of a felony under the laws of any state or of the United States prior to or during employment by the commission; and (F) be a profes- sional law enforcement officer with a minimum of five years' experience in the field of law enforcement and at least a bachelor's degree in law enforcement administration, law, criminology or a related science or, in lieu thereof, a minimum of 10 years' experience in the field of law en- forcement.

(3) The director of security shall: (A) Conduct investigations relating to compliance with the provisions of this act and rules and regulations of the commission; (B) recommend proper security measures to organiza- tion licensees; (C) train and supervise such personnel as employed by the executive director to assist with such duties; and (D) perform such other duties as directed by the executive director.

(d) (1) The executive director may appoint a director of racing op- erations to serve at the pleasure of the executive director. Before appoint- ing any person as director of racing operations, the executive director shall cause the Kansas bureau of investigation to conduct a criminal his- tory record check and background investigation of the person.

(2) The director of racing operations shall: (A) Be in the unclassified service under the Kansas civil service act; (B) devote full time to the director's assigned duties; (C) receive such compensation as determined by the executive director, subject to the limitations of appropriations therefor; (D) be a citizen of the United States and an actual resident of Kansas during employment as director of racing operations; (E) not have been convicted of a felony under the laws of any state or of the United States prior to or during employment by the commission; and (F) have a minimum of 10 five years' experience in racing operations.

(3) The director of racing operations shall: (A) Supervise racing op- erations, including stewards and racing judges; (B) be responsible for training and education of stewards and racing judges; (C) advise the com- mission on necessary or desirable changes in rules and regulations relating to conduct of races; (D) train and supervise such personnel as employed by the executive director to assist with such duties; and (E) perform such other duties as directed by the executive director.

(e) The commission may appoint an advisory committee of persons knowledgeable in the horse and greyhound breeding and racing industries to provide information and recommendations to the commission regard- ing the administration of this act. Members of such advisory committee shall serve without compensation or reimbursement of expenses.

(f) Except as otherwise provided by this act, all employees of the commission shall be in the classified service under the Kansas civil service act.

(g) No employee of the commission shall have been convicted of a felony under the laws of any state or of the United States prior to or during employment by the commission. Before employing any person, the commission shall cause a criminal history record check of the person to be conducted.

(h) The commission shall cause the Kansas bureau of investigation to conduct a criminal history record check and background investigation of a person before employing the person in any of the following positions:

(1) Deputy director;

(2) accountant;

(3) computer systems analyst;

(4) legal assistant;

(5) auditor;

(6) racing judge;

(7) steward;

(8) special investigator enforcement agent;

(9) office supervisor;

(10) human resource manager;

(11) office specialist; or

(12) any other sensitive position, as determined by the commission.

(i) On July 1, 1995, the commission shall cause the Kansas bureau of investigation to conduct a criminal history record check and background investigation of persons in the employment of the commission in the following positions on that date:

(1) Animal health officer;

(2) inspector of parimutuels;

(3) office supervisor;

(4) human resource manager; and

(5) office specialist.

Sec. 3. K.S.A. 1995 Supp. 74-8813 is hereby amended to read as follows: 74-8813. (a) A nonprofit organization may apply to the commis- sion for an organization license to conduct horse races or an organization license to conduct greyhound races, or both such licenses. In addition, an organization license may authorize the licensee to construct or own a racetrack facility if so provided by the commission. The application for an organization license shall be filed with the commission at a time and place prescribed by rules and regulations of the commission. The appli- cation shall specify the days when and the exact location where it proposes to conduct such races and shall be in a form and include such information as the commission prescribes. A nonrefundable application fee in the form of a certified check or bank draft shall accompany the application. Except as provided pursuant to K.S.A. 74-8814 and amendments thereto, such fee shall be $5,000 for each application. If the application fee is insufficient to pay the reasonable expenses of processing the application and investigating the applicant's qualifications for licensure, the commis- sion shall require the applicant to pay to the commission, at such times and in such form as required by the commission, any additional amounts necessary to pay such expenses. No license shall be issued to an applicant until the applicant has paid such additional amounts in full, and such amounts shall not be refundable except to the extent that they exceed the actual expenses of processing the application and investigating the appli- cant's qualifications for licensure.

(b) If an applicant for an organization license is proposing to construct a racetrack facility, such applicant, at the time of submitting the appli- cation, shall deposit with the commission, in such form as prescribed by rules and regulations of the commission, the sum of: (1) $500,000, if the number of racing days applied for in a racing season is 150 days or more; (2) $250,000, if the number of racing days applied for is less than 150 days; or (3) a lesser sum established by the commission, if the applicant meets the qualifications set forth in subsection (a)(1) or (a)(2) of K.S.A. 74-8814 and amendments thereto or if the applicant will be conducting races only on the state fairgrounds. Only one such deposit shall be re- quired for a dual racetrack facility. The executive director shall promptly remit any deposit received pursuant to this subsection to the state treas- urer. The state treasurer shall deposit the entire amount in the state treasury and credit it to the racing applicant deposit fund created by K.S.A. 74-8828 and amendments thereto. If the application is denied by the commission, the deposit, and any interest accrued thereon, shall be refunded to the applicant. If the license is granted by the commission in accordance with the terms of the application or other terms satisfactory to the applicant, the deposit, and any interest accrued thereon, shall be refunded to the licensee upon completion of the racetrack facility in ac- cordance with the terms of the license. If the licensee fails to complete the racetrack facility in accordance with the terms of the license, the deposit, and any interest accrued thereon, shall be forfeited by the ap- plicant.

(c) To qualify for an organization license to conduct horse or grey- hound races:

(1) The applicant shall be a bona fide, nonprofit organization which, if applicable, meets the requirements of subsection (d);

(2) the applicant shall have, either by itself or through contractual relationships with other persons or businesses approved by the commis- sion, the financial capability, manpower and technical expertise, as de- termined by the commission, to properly conduct horse races or grey- hound races, or both, and, if applicable, to operate a parimutuel wagering system;

(3) if the applicant is proposing to construct a racetrack facility, the applicant shall submit detailed plans for the construction of such facility, including the means and source of financing such construction and op- eration, sufficient to convince the commission that such plans are feasible;

(4) submit for commission approval a written copy of each contract and agreement which the applicant proposes to enter into, including all those listed in subsection (n), which contracts and agreements shall con- form to the restrictions placed thereon by subsections (n), (o) and (p);

(5) the applicant shall propose to conduct races within only one county, and in such county the majority of the qualified electors have approved either: (A) The constitutional amendment permitting the con- duct of horse and dog races and parimutuel wagering thereon; or (B) a proposition permitting horse and dog races and parimutuel wagering thereon within the boundaries of such county;

(6) no director, officer, employee or agent of the applicant shall have been convicted of any of the following in any court of any state or of the United States or shall have been adjudicated in the last five years in any such court of committing as a juvenile an act which, if committed by an adult, would constitute any of the following: (A) Fixing of horse or grey- hound races; (B) illegal gambling activity; (C) illegal sale or possession of any controlled substance; (D) operation of any illegal business; (E) re- peated acts of violence; or (F) any felony; and

(7) no director or officer of the applicant shall be addicted to, and a user of, alcohol or a controlled substance.

(d) To qualify for an organization license to conduct horse or grey- hound races, a nonprofit organization, other than a fair association, a horsemen's nonprofit organization or a nonprofit organization conducting races only on the state fair grounds, shall:

(1) Distribute all of its net earnings from the conduct of horse and greyhound races, other than that portion of the net earnings which is necessary to satisfy the debt service obligations, not otherwise deducted from net earnings, of an organization licensee owning the racetrack facility or that portion of the net earnings which is set aside as reasonable reserves for future improvement, maintenance and repair of the racetrack facility owned by the organization licensee, only to organizations, other than it- self, which: (A) Have been exempted from the payment of federal income taxes pursuant to section 501(c)(3) of the federal internal revenue code of 1986, as in effect July 1, 1987, (B) are domiciled in this state and (C) expend the moneys so distributed only within this state;

(2) distribute not more than 25% of such net earnings to any one such organization in any calendar year;

(3) not engage in, and have no officer, director or member who en- gages in, any prohibited transaction, as defined by section 503(b) of the federal internal revenue code of 1986, as in effect July 1, 1987; and

(4) have no officer, director or member who is not a bona fide resi- dent of this state.

(e) Within 30 days after the date specified for filing, the commission shall examine each application for an organization license for compliance with the provisions of this act and rules and regulations of the commission. If any application does not comply with the provisions of this act or rules and regulations of the commission, the application may be rejected or the commission may direct the applicant to comply with the provisions of this act or rules and regulations of the commission within a reasonable time, as determined by the commission. Upon proof by the applicant of com- pliance, the commission may reconsider the application. If an application is found to be in compliance and the commission finds that the issuance of the license would be within the best interests of horse and greyhound racing within this state from the standpoint of both the public interest and the horse or greyhound industry, as determined solely within the discretion of the commission, the commission may issue an organization license to the applicant. The commission shall approve the issuance of organization licenses for a period established by the commission but not to exceed 25 years. Such license may provide that during its term it con- stitutes an exclusive license within a radius of the location specified in the license, as determined by the commission. No racing of any kind regulated by this act shall be conducted by any other person within the territory covered by such exclusive license without the written consent of the licensee. For each license issued, the commission shall specify the location, type, time and date of all races and race meetings which the commission has approved for the licensee to conduct. The license shall be issued upon receipt of the license fee and the furnishing of a surety bond or other financial security approved by the commission, conditioned on, and in an amount determined by the commission as sufficient to pay, the licensee's potential financial liability for unpaid taxes, purses and dis- tribution of parimutuel winnings and breakage. No organization license shall be transferred to any other organization or entity.

(f) When considering the granting of organization licenses or racing days between two or more competing applicants, the commission shall give consideration to the following factors:

(1) The character, reputation, experience and financial stability of those persons within the applicant organizations who will be supervising the conduct of the races and parimutuel wagering for the organization;

(2) the quality of the racing facilities and adjoining accommodations;

(3) the amount of revenue that can reasonably be expected to be generated from state and local taxes, the economic impact for the re- spective horse or greyhound breeding industries in Kansas and the indi- rect economic benefit to the surrounding area, in the determination of which economic benefit the commission shall solicit written recommen- dations from all interested parties in the surrounding area;

(4) the location of the race meetings in relation to the principal cen- ters of population and the effect of such centers on the ability of the organizations to sustain a financially sound racing operation; and

(5) testimony from interested parties at public hearings to be con- ducted in the geographic areas where the applicants would be conducting their race meetings.

(g) Except as otherwise provided pursuant to K.S.A. 74-8814 and amendments thereto, each organization licensee shall pay a license fee in the amount of $200 for each day of racing approved by the commission. Such fees shall be paid at such times and by such means as prescribed by rules and regulations of the commission. The commission may authorize the state treasurer to refund from the state racing fund a fee paid for any racing day which was canceled with advance notice to and with the ap- proval of the commission.

(h) Organization licensees may apply to the commission for changes in approved race meetings or dates or for additional race meetings or dates as needed throughout the terms of their licenses. Application shall be made upon forms furnished by the commission and shall contain or be accompanied by such information as the commission prescribes. Upon approval by the commission, the organization licensee shall pay an addi- tional license fee for any race days in excess of the number originally approved and included in the calculation of the initial license fee.

(i) All organization licenses shall be reviewed annually by the com- mission to determine if the licensee is complying with the provisions of this act and rules and regulations of the commission and following such proposed plans and operating procedures as were approved by the com- mission. The commission may review an organization license more often than annually upon its own initiative or upon the request of any interested party. The commission shall require each organization licensee, other than a fair association, or horsemen's nonprofit organization, to file an- nually with the commission a certified financial audit of the licensee by an independent certified public accountant, which audit shall be open to inspection by the public, and may require an organization licensee to provide any other information necessary for the commission to conduct the annual or periodic review.

(j) Subject to the provisions of subsection (k), the commission, in accordance with the Kansas administrative procedure act, may suspend or revoke an organization license or may impose a civil fine not exceeding $5,000, or may both suspend such license and impose such fine, for each of the following violations by a licensee:

(1) One or more violations, or a pattern of repeated violations, of the provisions of this act or rules and regulations of the commission;

(2) failure to follow one or more provisions of the licensee's plans for the financing, construction or operation of a racetrack facility as submitted to and approved by the commission;

(3) failure to maintain compliance with the requirements of subsec- tion (c) or (d), if applicable, for the initial issuance of an organization license;

(4) failure to properly maintain or to make available to the commis- sion such financial and other records sufficient to permit the commission to verify the licensee's nonprofit status and compliance with the provisions of this act or rules and regulations of the commission;

(5) providing to the commission any information material to the is- suance, maintenance or renewal of the licensee's license knowing such information to be false or misleading;

(6) failure to meet the licensee's financial obligations incurred in con- nection with the conduct of a race meeting; or

(7) a violation of K.S.A. 74-8833 and amendments thereto or any rules and regulations adopted pursuant to that section.

(k) Prior to suspension or revocation of a license pursuant to subsec- tion (j), the commission shall give written notice of the reason therefor in detail to the organization licensee and to all facility owner and facility manager licensees with whom the organization licensee is doing business. Upon receipt of such notice by all of such licensees, the organization licensee shall have 30 days in which to cure the alleged violation, if it can be cured. If the commission finds that the violation has not been cured upon expiration of the 30 days, or upon a later deadline granted by the commission, or if the commission finds that the alleged violation is of such a nature that it cannot be cured, the commission shall proceed to suspend or revoke the license pursuant to subsection (j). Nothing in this subsection shall be construed to preclude the commission from imposing a fine pursuant to subsection (j) even if the violation is cured within 30 days or such other period as provided by the commission.

(l) Prior to the expiration of an organization license, the organization may apply to the commission for renewal of such license. The renewal application shall be in a form and include such information as the com- mission prescribes. The commission shall grant such renewal if the or- ganization meets all of the qualifications required for an initial license. The commission may charge a fee for the processing of the renewal ap- plication not to exceed the application fee authorized for an initial license.

(m) Once an organization license has been issued, no person there- after and during the term of such license shall in any manner become the owner or holder, directly or indirectly, of any shares of stock or certificates or other evidence of ownership or become a director or officer of such organization licensee without first having obtained the written approval of the commission.

(n) An organization licensee shall submit to the commission for ap- proval a copy of each contract and agreement which the organization licensee proposes to enter into and any proposed modification of any such contract or agreement, including but not limited to those involving:

(1) Any person to be employed by the organization licensee;

(2) any person supplying goods and services to the organization li- censee, including management, consulting or other professional services;

(3) any lease of facilities, including real estate or equipment or other personal property; or

(4) the operation of any concession within or adjacent to the racetrack facility.

The commission shall reject any such contract or agreement which violates any provision of this act or rules and regulations of the commis- sion, which provides for payment of money or other valuable considera- tion which is clearly in excess of the fair market value of the goods, serv- ices or facilities being purchased or leased or which, in the case of a contract or agreement with a facility owner licensee or a facility manager licensee, would not protect the organization licensee from incurring losses due to contractual liability.

(o) Organization licensees shall not by lease, contract, agreement, un- derstanding or arrangement of any kind grant, assign or turn over to any person the parimutuel system of wagering described in K.S.A. 74-8819 and amendments thereto or the operation and conduct of any horse or greyhound race to which such wagering applies, but this subsection shall not prohibit the organization licensee from contracting with and com- pensating others for providing services in connection with the financing, acquisition, construction, equipping, maintenance and management of the racetrack facility; the hiring and training of personnel; the promotion of the facility; operation and conduct of a simulcast race displayed by a simulcasting licensee; parimutuel wagering at racetrack facilities; and par- imutuel wagering at off-track wagering and intertrack wagering facilities in other jurisdictions to which live races conducted by the organization licensee are simulcast.

(p) An organization licensee shall not in any manner permit a person other than such licensee to have a share, percentage or proportion of money received from parimutuel wagering at the racetrack facility except as specifically set forth in this act, except that:

(1) A facility owner licensee may receive gross percentage rental fees under a lease if all terms of the lease are disclosed to the commission and such lease is approved by the commission;

(2) a person who has contracted with an organization licensee to pro- vide one or more of the services permitted by subsection (o) may receive compensation in the form of a percentage of the money received from parimutuel wagering if such contract is approved by the commission and such person is licensed as a facility manager; and

(3) a person who has contracted with a simulcasting licensee to allow such licensee to display a simulcast race conducted by such person may receive compensation in the form of a percentage of or a fee deducted from the money received by the licensee from parimutuel wagers placed on such race if such contract is filed with the commission.

(q) Directors or officers of an organization licensee are not liable in a civil action for damages arising from their acts or omissions when acting as individual directors or officers, or as a board as a whole, of a nonprofit organization conducting races pursuant to this act, unless such conduct constitutes willful or wanton misconduct or intentionally tortious conduct, but only to the extent the directors and officers are not required to be insured by law or are not otherwise insured against such acts or omissions. Nothing in this section shall be construed to affect the liability of an organization licensee for damages in a civil action caused by the negligent or wrongful acts or omissions of its directors or officers, and a director's or officer's negligence or wrongful act or omission, while acting as a di- rector or officer, shall be imputed to the organization licensee for the purpose of apportioning liability for damages to a third party pursuant to K.S.A. 60-258a and amendments thereto.

(r) If an applicant for an organization license proposes to construct a racetrack facility and the commission determines that such license should be issued to the applicant, the commission shall issue to the applicant an organization license conditioned on the submission by the licensee to the commission, within a period of time prescribed by the commission, of a commitment for financing the construction of the racetrack facility by a financial institution or other source, subject to approval by the commis- sion. If such commitment is not submitted within the period of time originally prescribed by the commission or such additional time as au- thorized by the commission, the license shall expire at the end of such period.

(s) If an organization licensee's license authorizes the construction of a dual racetrack facility, such license shall be conditioned on the comple- tion of such facility within a time specified by the commission. If, within the time specified by the commission, the licensee has not constructed a dual racetrack facility in accordance with the plans submitted to the com- mission pursuant to subsection (c)(3), the commission, in accordance with the Kansas administrative procedure act, shall:

(1) Impose upon the licensee a civil fine equal to 5% of the total parimutuel pools for all races held at the licensee's facility on and after the date that racing with parimutuel wagering is first conducted at such facility and until the date that construction of the dual racetrack facility is completed and horse racing has begun; and

(2) revoke the licensee's license unless the licensee demonstrates rea- sonable cause for the failure to complete the facility.

(t) Any license granted an organization licensee to conduct races at a dual racetrack facility shall be conditioned on the organization licensee's conducting live horse races on not less than 20% of the annual racing days granted the licensee by the commission. If an organization licensee fails to comply with such condition, the commission shall may revoke the organization licensee's license unless the licensee demonstrates reason- able justification for the failure to complete the facility.

(u) The refusal to renew an organization license shall be in accor- dance with the Kansas administrative procedure act and shall be subject to review under the act for judicial review and civil enforcement of agency actions.

(v) The grant or denial of an original organization license shall not be subject to the Kansas administrative procedure act. Such grant or denial shall be a matter to be determined in the sole discretion of the commis- sion, whose decision shall be final upon the grant of a license to one of two or more competing applicants without the necessity of a hearing on the denial of a license to each other competing applicant. Any action for judicial review of such decision shall be by appeal to the supreme court in accordance with the act for judicial review and civil enforcement of agency actions, except that the scope of review shall be limited to whether the action of the commission was arbitrary or capricious or constituted an abuse of discretion. All competing applicants for the organization li- cense shall be parties to such appeal. Any such appeal shall have priority over other cases except those having statutory priority.

Sec. 4. K.S.A. 1995 Supp. 74-8802, 74-8805 and 74-8813 are hereby repealed.

Sec. 5. This act shall take effect and be in force from and after its publication in the statute book.

Approved April 10, 1996.