Brief⁽¹⁾

The bill would authorize the Lottery to conduct games on "electronic gaming machines" at qualified parimutuel racetracks. The bill would earmark all revenue from those games and establish an oversight framework involving both the State Lottery and the Racing and Gaming Commission. Major provisions of the bill include the following.

• The Lottery would be authorized to conduct games on electronic gaming machines. The existing requirement that the Governor approve any new games would apply to these games. The State Lottery would own and operate the new games. The Lottery and the Racing and Gaming Commission would oversee and regulate the licensees involved with the games.



• Electronic gaming devices could be located only in facilities on or immediately adjacent to the real estate of a parimutuel licensee where live horse or dog racing was authorized prior to July 1, 1999. The Lottery could contract only with parimutuel licensees in counties where voters had approved a proposition authorizing the games. The only horse racing tracks with which the Lottery could contract for placement of the games would be those that have been approved for at least 21 days of live racing per year. Any facility in which electronic gaming is conducted would have to be equipped to display live and simulcast parimutuel electronic gaming races on video terminals and have parimutuel windows for wagering on all parimutuel races.



• In order for electronic games to be operated in the state:



• the track in Sedgwick County, after January 1, 2000, would have to conduct at least eight live racing programs of at least 12 live races each for at least 50 weeks each year;



• the track in Wyandotte County, after January 1, 2000, would have to conduct at least seven live racing programs of at least 12 live races each for at least 50 weeks each year; and



• the track in Crawford County, after January 1, 2000, would have to conduct at least 150 days of live racing composed of at least seven live racing programs of at least 12 live races per program each week. Beginning in 2001, if the net machine income at the track in Crawford County is less than $30,000,000, the parimutuel licensee could reduce to five the number of live racing programs per week.





• A vote on the proposition to have electronic gaming machines at a track in a county could be initiated by the county commission or by petition and voted on at a special or general election. A petition would have to be signed by at least 10 percent of voters who voted in the last Secretary of State election. If the proposal were rejected, it could not be submitted to the voters again for at least two years.



• The electronic gaming devices authorized by the bill could be any machine authorized by the Lottery Commission, activated by cash, token, or electronic card (purchased from a lottery gaming machine operator) to play any game authorized by the Lottery Commission. Machines could dispense cash, tokens, merchandise, or credits that could be redeemed for cash. Progressive electronic gaming machines would be permitted under the bill.



• Payouts on the electronic gaming machines would be at least 80 percent of the amount wagered.



• No one under 21 years of age could place a wager at an electronic gaming machine. No one under 21, except nongaming employees over 18, could be in an area where gaming is conducted. No employees under 21 could be involved in gaming. Parimutuel licensees could not allow persons under 21 years of age to play electronic gaming machines. Violation of the latter provision would be a class A nonperson misdemeanor for the first offense and a severity level 9, nonperson felony for second or subsequent offenses.



• Contracts between the Lottery and parimutuel licensees would be for a minimum of seven years and would be renewable for seven-year periods. The days and hours of operation of electronic gaming machines could not be restricted.



• All net machine income (total bets, less winnings) would be remitted to the Lottery and earmarked as follows:



• 1 percent would be distributed to local governments where the games are located.



• 1 percent would be paid to the organization licensee to fulfill any contractual obligation owed by the track owner/manager to the organization licensee.



• Reimbursement of the Lottery and the Racing and Gaming Commission for expenses attributable to the regulation and operation of electronic gaming machines. (Lottery and Racing and Gaming Commission reimbursements would effectively be capped at 14 percent of net machine revenue.)



• After the distributions above, the balance of the initial 16 percent of the net machine income would be split between the Economic Development Initiatives Fund and the Kansas Education Technology Enhancement Fund.



• The rest of the net machine income, not more than 84 percent of the total, would be distributed to the tracks where the revenue was generated.



• Track owners/managers would be required to use a portion of the net machine revenue to supplement purses for live races. A total of $1.5 million would be paid to operators of live horse races to use as purse supplements. Purse supplements for greyhound races at the three largest tracks in the state would be based on the number of points awarded to racers.



• The direct cost of implementing the bill would be borne by the track owners/managers, the Lottery, and the Racing and Gaming Commission. Ultimate ownership and control of the games and machines would be with the Lottery.



• The Lottery would be abolished July 1, 2007, rather than July 1, 2002.

Background

The bill was requested for introduction by Senator Jones. Proponents of the bill at the hearing before the Senate Committee on Federal and State Affairs included Senators Jones, Gilstrap, and Steineger; the owners of the Woodlands and the Wichita Greyhound Park; representatives of the Woodlands racetrack, the National Greyhound Association, the Greyhound Kennel Owners, City of Frontenac, and Unified Government of Wyandotte County; and an individual.

Opponents included representatives of: Stand Up For Kansas, Kansas Bowling, Kansans for Life at Its Best, Kansas Clubs and Associates, The Humane Society of the United States, Kansas American Legion, Quarterhorse Racing Association, the Horsemen's Protective and Benevolent Association, and the Kansas Bowling Proprietors Association.

The Committee's hearings on S.B. 329 were held in conjunction with hearings on S.B. 330 which also would have authorized the Lottery to conduct games on electronic gaming machines. That bill would have authorized the Lottery to place electronic gaming machines in clubs, taverns, drinking establishments, bingo halls, the State Fair, and historical sites as well as at racetracks. The latter bill was recommended unfavorably by the Committee on the same day it took action on S.B. 329.

The Senate Committee amended S.B. 329 by introducing a substitute that incorporates amendments suggested by the major proponents of the bill, the Greyhound Kennel Owners, and Senator Barone.

The Division of the Budget's fiscal note on the bill is based on an estimate of net machine income of $141.25 million in FY 2000. The fiscal note states that the Lottery estimates FY 2000 expenditures of $3.2 million and that the Racing and Gaming Commission estimates expenditure of approximately $804,000 for those agencies' roles in implementation of the bill. The Committee version of the bill altered the earmarking of revenue, so that portion of the fiscal note is not relevant to the substitute bill.

The Senate Committee discussed revenue estimates provided by the bill's proponents. Those estimates include net machine income of $150 million.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html