CHAPTER 253

FORMERLY

HOUSE BILL NO. 463

AS AMENDED BY SENATE AMENDMENT NO. 8

AN ACT TO AMEND TITLES 3 AND 29 OF THE DELAWARE CODE AND THE LAWS OF DELAWARE RELATING TO THE VIDEO LOTTERY AND HARNESS RACING.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Title 29, §4803, Delaware Code, by deleting the "." and adding to the existing subsection (i) the following sentence to read as follows:

and shall also mean an individual employee, person, or agent of an applicant or licensee who has the power to exercise significant influence over significant business decisions concerning the applicant's or licensee's video lottery business."

Section 2. Amend Title 29, §4803, Delaware Code, by adding a new subsection (j) to read as follows:

"(j)Video lottery operations employee' shall mean an individual employee, person or agent of an applicant or licensee who is responsible for the security of video lottery machines, or responsible for handling video lottery machine proceeds, or is otherwise employed in a position that allows direct access to the internal workings of video lottery machines."

Section 3. Amend Title 29, §4805(a)(16),(17), Delaware Code, by deleting the existing subsections and inserting the following new subsections:

"(16) A licensure requirement and enforcement procedure (taking no more than 90 days to complete, unless extenuating circumstances require a longer period in which case the Director and the State shall act with all deliberate speed to complete the process) for officers, directors, key employees, video lottery operations employees, and persons who own directly or indirectly 10% or more of such agent, which licensure requirement shall include the satisfaction of such security, fitness, and background standards as the Director may deem necessary relating to competence, honesty, and integrity, such that a person's reputation, habits, and associations do not pose a threat to the public interest of the State or to the reputation of or effective regulation and control of the video lottery; it being specifically understood that any person convicted of any felony, a crime involving gambling, or a crime of moral turpitude within ten (10) years prior to applying for a license hereunder or at any time thereafter shall be deemed unfit. The Delaware State Police shall conduct the security, fitness, and background checks required under this rule or regulation. It shall be the obligation of the video lottery agent to notify the Director on a continuing basis of any change in officers, partners, directors, key employees, video lottery operations employees, and persons who own, directly or indirectly, 10% or more of such entity.

(17) A licensure requirement and enforcement procedure (taking no more than 90 days to complete, unless extenuating circumstances require a longer period in which case the Director and the State shall act with all deliberate speed to complete the process) for those persons or entities including video lottery manufacturers who propose to contract with a video lottery agent or the State for the provision of goods or services including management services, which licensure requirements shall include the satisfaction of such security, fitness and background standards for officers, directors, key employees, video lottery operations employees, and persons who own directly or indirectly 10% or more of such entity, as the Director may deem necessary relating to competence, honesty, and integrity, such that a person's reputation, habits, and associations do not pose a threat to the public interest of the State or to the reputation of or effective regulations and control of the video lottery; it being specifically understood that any person convicted of any felony, a crime involving gambling, or a crime of moral turpitude within ten (10) years prior to applying for a license hereunder or at any time thereafter shall be deemed unfit. The Director may determine whether the licensing standards of another state are comprehensive, thorough, and provide similar adequate safeguards and, if so, may, in his discretion, license an applicant already licensed in such state without the necessity of a full application and background check. The Delaware State Police shall conduct the security, fitness, and background checks required under this rule or regulation. It shall be the obligation of any licensed entity, including technology providers, to notify the Director on a continuing basis of any change in officers, partners, directors, key employees, video lottery operations employees and persons who own, directly or indirectly, 10% or more of such entity."

Section 4. Amend Title 29, §4805(c), Delaware Code, by replacing the first two sentences with the sentence:

"The license granted pursuant to subsection (b)(13) may be revoked or suspended for cause upon 30 days' written notice to the licensee or due to a change in ownership as set forth in §4805(b)(13), but shall otherwise not be subject to expiration or termination."

Section 5. Further amend Title 29, §4805(c), Delaware Code, by deleting the sentences:

"At least 180 days prior to the expiration of a license, the licensed agent may apply for renewal of such license. A license renewal application shall be acted upon within 100 days, and the failure to grant or deny such renewal within 100 days shall be deemed a renewal."

Section 6. Amend Title 29, §4815(b) by replacing the first four lines with the following:

"All proceeds, net of proceeds returned to players pursuant to paragraph (1) of this subsection, from the operation of the video lottery shall be electronically transferred daily or weekly at the discretion of the Lottery Director into a designated State Lottery account by the agent, and transferred to the State Lottery Fund by the Lottery on a daily or weekly basis and shall be applied as follows:"

Section 7. Amend Title 29, §4815(b)(3)a. by replacing the existing subsection with the following subsection:

"a. Additional State Proceeds. The State shall receive an additional 12.27% of the proceeds remaining after payments made under paragraph (1) above from the proceeds attributable to licensees which conducted forty or fewer (but at least one) days of live harness horse races during 1992, 12.59% of such proceeds of licensees which conducted more than forty days of live harness racing during 1992 or which conduct thoroughbred racing under Title 28, and 12.73% of such proceeds of licensees which conduct thoroughbred horse racing pursuant to Chapter 101 of Title 3. From these proceeds, the State shall pay for all costs of equipment (both video lottery machines and related equipment), whether leased or owned by the State, used or under the control of such agent and the cost of the central computer used to monitor the equipment used by the agent. The State shall also pay $1,000,000 of the proceeds received under this section from licensees under this chapter which conduct live harness horse racing to fund the State's contribution to the Delaware Standardbred Breeder's Program. Said amount is to be allocated equally as of January 1st of the calendar year among existing licensees which conduct live harness horse racing, but monies shall not be expended for the program until such time as a plan has been approved pursuant to subparagraph D. of Title 29, §4815(b)(3)b.2., Delaware Code. Monies remaining after payment of all costs of equipment and central computer monitoring shall be deposited to the General Fund of the State."

Section 8. Amend Title 29, §4815(b)(3)b.2., Delaware Code, by adding a new subsection D. as follows:

"D. $1,000,000 of those proceeds, which would otherwise fund purses, on an annual basis ($500,000 to come from each licensee which conducts live harness horse racing) to be set aside for purses under this subsection (b)(3)b. 2. shall be used to fund a Delaware Standardbred Breeder's Program which shall be administered by a board comprised of 4 members from the Delaware Standardbred Owners Association, I member from the Standardbred Breeders and Owners of Delaware, Inc., 1 member from each video lottery agent licensed to conduct harness racing meets under Chapter 100 of Title 3, one member appointed by the Speaker of House of the General Assembly, one member appointed by the President Pro Tempore of the Senate of the General Assembly, the Secretary of Agriculture or his designee, and the Secretary of Finance or his designee. Members shall be chosen by the organizations they represent, and shall serve four- year terms except that four of the initial board selected by the members of the Delaware Standardbred Owners Association shall serve an initial term of two years, and four years thereafter. The Board created hereunder will present a plan for the administration of the Program to the General Assembly no later than May 15, 1999. This plan, and all subsequent amendments to the plan, shall be subject to the written approval of the Secretary of Agriculture or his designee, the Chairman of the Delaware Harness Racing Commission or his designee, and the Secretary of Finance or his designee. The board shall transmit minutes of all meetings and any proposed actions to the Delaware Harness Racing Commission within 10 days after each meeting. The board shall transmit an annual report detailing the allocation of proceeds from the fund and make available to the State Auditor or the State Auditor's representative such information as may be required to perform an annual audit of funds allocated from the Delaware Standardbred Breeder's Program. In addition to funding special purses for Delaware standardbred horses, the Board created hereby may also use the funds dedicated to this program for advertising, promotion, educational, and administrative purposes. Funds dedicated to the Delaware Standardbred Breeder's Program shall not be subject to the one-year payout requirement of §10048 of Title 3.

Section 9. Amend Title 29, §4815(b)(3)c. by deleting the subsection in its entirety and replacing the subsection with the following, and by adding subsection d.:

"c. For video lottery agents which are licensed only to conduct thoroughbred horse racing meetings under Chapter 101 of Title 3 or Chapter 4 of Title 28, such agents annually shall be paid and shall pay the sum of $175,000 plus an additional $175,000 (which shall be subtracted from the amount such agent is paid and shall pay as additional purses under §4815(b)(3)b. I.) for a total payment of $350,000 annually, adjusted for inflation by the Delaware Thoroughbred Racing Commission, to the organization which represents the majority of jockeys who are licensed and who regularly ride in Delaware for the purposes of providing health and other welfare benefits to active, disabled and retired jockeys pursuant to reasonable criteria for benefit eligibility. Such jockey organization shall annually provide to the Delaware Thoroughbred Racing Commission a certified financial statement of the expenditures made for the benefits provided under this subsection.

d. Commissions To Agents. The portion of such proceeds remaining after the payments required by paragraphs a., b. and c. of this paragraph shall be paid to such video lottery agent as commission."

Section 10. Amend Title 29, §4820(b) by replacing the subsection with the following:

"(b) Upon submission by a video lottery agent of a proposed plan for the lease or purchase of video lottery machines in accordance with procedures to be established by the Director, the Lottery Director 'shall lease or purchase the number, type, and kind of video lottery machines necessary for the efficient and economical operation of the Lottery, or the convenience of the players and in accordance with the plan of the licensee, provided that no more than 1000 video lottery machines shall be located within the confines of a racetrack property unless the Director approves up to an additional 1000 for each racetrack property, and further provided that the Director may amend such plan where the Director finds that such amendments are necessary to increase revenues, provided such amendments do not produce reductions in the overall net proceeds from the video lottery, protect the public welfare or ensure the security of the video lottery."

Section 11. Amend Title 29, §4823, by deleting said section in its entirety and replacing it with the following:

"§4823. Enforcement.

(a) Whoever violates this chapter or any rule or regulation duly promulgated
thereunder, or any condition of a license issued pursuant to §4805, or any Administrative Order issued pursuant to this section, shall be punishable as follows:

(1) If the violation has been completed, by a civil penalty imposed by
Superior Court, which shall have jurisdiction of civil penalty actions brought pursuant to this section, of not less than $1000 nor more than $10,000 for each completed violation. Each day of a continued violation shall be considered as a separate violation if, on each such day, the violator has knowledge of the facts constituting the violation and knows or should know that such facts constitute or may constitute a violation. Lack of knowledge regarding such facts or violation shall not be a defense to a continued violation with respect to the first day of its occurrence.

(2) If the violation is continuing or there is a substantial likelihood that
it will reoccur, the Director may also seek a temporary restraining order, preliminary injunction, or permanent injunction in the Court of Chancery, which shall have jurisdiction of an action for such relief.

(3) In his discretion, the Director may impose an administrative
penalty of not more than $1000 for each violation. Each day of continued violation shall be considered as a separate violation if the violator has knowledge of the facts constituting the violation and knows or should know that such facts constitute or may constitute a violation. Lack of knowledge regarding such facts or violation shall not be a defense to a continued violation with respect to the first day of its occurrence. Prior to the assessment of an administrative penalty, written notice of the Director's proposal to impose such penalty shall be given to the violator, and the violator shall have 30 days from receipt of such notice to request a public hearing. Any public hearing, if requested, shall be held prior to the imposition of the penalty and shall be governed by §10125 of Title 29. If no hearing is timely requested, the proposed penalty shall become final and shall be paid no later than 60 days from receipt of the notice of proposed penalty. Assessment of an administrative penalty shall take into account the circumstances, nature, and gravity of the violation, as well as any prior history of violations, the degree of culpability, the economic benefit to the violator resulting from the violation, any economic loss to the State, and such other matters as justice may require. In the event of nonpayment of an administrative penalty within 30 days after all legal appeal rights have been waived or otherwise exhausted, a civil action may be brought by the Director in Superior Court for the collection of the penalty, and for interest, from the date payment was due, attorneys' fees and other legal costs and expenses. The validity or amount of such administrative penalty shall not be subject to review in an action to collect the penalty. Any penalty imposed after a public hearing is held pursuant to this subsection shall be appealable to Superior Court, and such appeal shall be governed by §10142 of Title 29.

(0) In his discretion, the Director may endeavor to obtain compliance with requirements of this chapter by written Administrative Order. Such order shall be provided to the responsible party, shall specify the complaint, and propose a time for correction of the violation. It may also provide an opportunity for a public hearing at which the Director shall hear and consider any submission relevant to the violation, corrective action, or the deadline for correcting the violation.

(b) The Director shall enforce this chapter.

(c) Any interest, costs or expense collected under this section shall be
appropriated to the State Lottery Office to carry out the purposes of this Chapter."

Section 12. Amend Title 3, §10048(1) by striking the first sentence thereof and replacing it with the following:

"As to each racetrack so licensed by the Director of the State Lottery Office, the licensee shall, at a minimum, subject to the availability of racing stock, force majeure, casualty, and other circumstances beyond the reasonable control of the licensee, conduct live harness horse races on (i) at least 80 days if the licensee conducted more than 40 days of live harness horse races during 1992, or (ii) at least 60 days if the licensee conducted 40 or fewer days of live harness horse races during 1992. The obligation set forth in the preceding sentence to increase the number of days upon which live harness horse races must be conducted shall be contingent upon (i) the licensee receiving the necessary approvals from the Commission and any approvals required from the contracted horsemen's association to conduct year-round inbound and outbound simulcasting, (ii) the licensees continuing to be licensed under Title 29, Chapter 48 of the Delaware Code as a video lottery agent, and (iii) no authorization of any new, or expansion of any existing form of gambling beyond that as existing under the Delaware Code on February 1, 1998 (including but not limited to any increase in the number of video lottery agents), except for changes to "class II gaming" (as currently defined under 25 U.S.C. §2703) conducted by non-profit and charitable organizations."

Section 13. "If any provision hereof, or the application of such provision to any person or circumstance, is held invalid, the remainder of this Act shall not be affected thereby."

Approved March 26, 1998