This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0765 - Authorizes Horse Racing Commission to regulate off-track pari-mutuel wagering
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 3290-02
BILL NO. Perfected SCS for SB 765
SUBJECT: Gambling
TYPE: Original
DATE: March 31, 1998
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS Net Effect on All State Funds * Revenue, costs, and transfers net to zero. ESTIMATED NET EFFECT ON FEDERAL FUNDS Net Effect on All Federal Funds
FUND AFFECTED
FY 1999
FY 2000
FY 2001 General Revenue
$0
($36,400 to $91,000)
($72,800 to $182,000) Missouri Horse Racing
Fund*
$0
$0
$0 Missouri Breeders Fund
$0
$91,000
$182,000 Horse Racing for
Education Fund
$0
$848,991 to $903,591
$1,824,832 to $1,934,032 Total Estimated
$0
$903,591
$1,934,032
FUND AFFECTED
FY 1999
FY 2000
FY 2001 None
Total Estimated
$0
$0
$0
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 7 pages.
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| Local Government | $0 | $0 | $0 |
FISCAL ANALYSIS
ASSUMPTION
The Department of Revenue, Office of State Courts Administrator, Office of Prosecution Services, Department of Economic Development, Attorney General's Office, and Department of Elementary and Secondary Education assume this proposal would not fiscally impact their agencies.
The State Treasurer's Office (STO) states that this proposal would create a new accounting fund. The number of accounting transactions would increase slightly, as would the funds available for investment. STO assumes any costs associated with increased accounting transactions and investments could be absorbed through its current appropriations.
The Office of State Public Defender (SPD) assumes existing staff could provide representation for those 5 to 10 cases arising where indigent persons are accused of "Operating Pari-mutuel wagering without a license." However, passage of more than one similar proposal would require the SPD to request an increased appropriation to cover the cumulative cost of representing the indigent accused.
The Office of Administration (OA) assumes that additional revenue would be generated as a result of this proposal. OA assumes that four wagering facilities would be open for 364 days with an average daily handle of $50,000, making the total annual handle approximately $72,800,000. The percentage (2%) to be paid to Missouri would result in income of $1,456,000 for the Missouri Horse Racing fund. This proposal also creates a $2 admissions tax which would result in revenue of $728,000 ($2 x 364,000 patrons) for the Missouri Horse Racing Fund, and a .25% tax, yielding revenue of $182,000 for the Missouri Breeders Fund.
Officials of the Gaming Commission (GAM) assume the Horse Racing Commission would require thirteen FTE to implement the duties outlined in this proposal, which would include 5 officers of the Highway Patrol. They would also request expenses and equipment to include training, office equipment, and patrol cars. Based on responses received to a similar proposal ASSUMPTION (continued)
from last session, Oversight assumes that 6 FTE would be sufficient to accomplish the duties
outlined in this proposal. The 6 FTE would consist of an Executive Director, a Security Director, a Licensing Director, a Pari-Mutuel Director, an Executive Secretary, and an Information Support Coordinator. Costs would include related equipment and expenses for these FTE.
Officials of the Department of Public Safety, Missouri Highway Patrol (MHP) anticipate no fiscal impact based on the assumptions that the Horse Racing Commission will be responsible for any costs related to this proposal and that the number of criminal history checks required by this proposal will be absorbed by current staff. MHP states that if the number of record checks is more than anticipated, the Criminal Records and Identification Division will require additional Fingerprint Technicians. Oversight assumes that statutory authority currently exists for enforcement of horse racing facilities, and has not shown any additional costs for this provision.
The Office of Secretary of State (SOS) states that this proposal gives the Missouri Horse Racing Commission the authority to promulgate administrative rules setting forth standards for the facilities within which off-track pari-mutuel wagering will be conducted. SOS anticipates that these rules would require approximately 30 pages in the Missouri Register and 20 pages in the Code of State Regulations. SOS estimates the costs for publishing and distributing these rules at $1,210 in FY99 only. Oversight assumes SOS could increase fees to cover additional costs, per Section 536.033 RSMo, and therefore, will not include any publication costs in the fiscal impact for the proposal.
The Department of Public Safety, Division of Liquor Control did not respond to our fiscal impact request. Oversight assumes this proposal would not fiscally impact this agency.
Oversight assumes that this proposal would only become effective upon passage and approval of a constitutional amendment allowing off-track pari-mutuel wagering. Therefore, this proposal would have no fiscal impact in FY99, and would only impact the latter half of FY00. Oversight notes that this proposal also removes from general revenue a tax on licensees of 10% of all moneys received each day from admissions, and instead, credits these moneys to the Missouri Horse Racing Fund. According to the Gaming Commission, admissions in Illinois range from $2 to $5. Based on similar admissions, Oversight assumes this tax would range from $72,800 to $182,000.
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | (6 Mo.) | ||
| GENERAL REVENUE | |||
| Loss of 10% admissions tax | $0 | ($36,400 | ($72,800 |
| to $91,000) | to $182,000) | ||
|
ESTIMATED NET EFFECT |
($36,400 | ($72,800 | |
| ON GENERAL REVENUE | $0 | to $91,000) | to $182,000) |
| MISSOURI HORSE RACING FUND | |||
| Income | |||
| 2% commission on wagers | $0 | $728,000 | $1,456,000 |
| $2 Admissions fee | $0 | $364,000 | $728,000 |
| 10% Admissions tax | $36,400 | $72,800 | |
| $0 | to $91,000 | to $182,000 | |
| Cost - Horse Racing Commission | |||
| Personal Service (6 FTE) | $0 | ($94,969) | ($194,686) |
| Fringe Benefits | $0 | (26,620) | (54,570) |
| Expense and Equipment | $0 | (157,820) | (182,712) |
| Total Costs - Horse Racing Commission | $0 | ($279,409) | ($431,968) |
| Transfer to Horse Racing for | ($848,991 | ($1,824,832 | |
| Education Fund | $0 | to 903,591) | to 1,934,032) |
|
ESTIMATED NET EFFECT ON | |||
| MISSOURI HORSE RACING FUND | $0 | $0 | $0 |
| MISSOURI BREEDERS FUND | |||
| Income-Gaming Commission | |||
| .25% commission on wagers | $0 | $91,000 | $182,000 |
|
ESTIMATED NET EFFECT ON | |||
| MISSOURI BREEDERS FUND | $0 | $91,000 | $182,000 |
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | (6 Mo.) | ||
| HORSE RACING FOR | |||
| EDUCATION FUND | |||
| Transfer from Missouri Horse | $848,991 | $1,824,832 | |
| Racing Fund | $0 | to $903,591 | to $1,934,032 |
|
ESTIMATED NET EFFECT | |||
| ON HORSE RACING FOR | $848,991 | $1,824,832 | |
| EDUCATION FUND | $0 | to $903,591 | to $1,934,032 |
| FISCAL IMPACT - Local Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| 0 | 0 | 0 | |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal makes numerous changes to the law relating to horse racing and pari-mutuel wagering. It requires members of the Horse Racing Commission to be residents of the state and from different counties. The Governor is authorized to designate one of the members as chair of the Commission and to remove any member for malfeasance or neglect of duty in office. It also authorizes the Commission to hire an executive director and other employees. Background investigations for potential employees are also authorized.
This proposal requires all licensing revenue, other than revenue designated for the Missouri breeders fund, to be deposited in the Missouri Horse Racing Fund. Commission expenses are to be paid out of the fund, and any surplus deposited in the newly created Horse Racing for Education Fund. The Commission is authorized to promulgate rules and regulations governing pari-mutuel wagering.
DESCRIPTION (continued)
The Commission is also authorized to investigate applicants, observe the conduct of licensees and others who are materially involved with the licensee, and to levy administrative penalties of up to $2,000 per day for violations. The Commission is required to determine whether associated pari-mutuel facilities, where simulcasting is allowed, are in the public interest and that such facilities are economically feasible. Applicants for licensing must be either residents of Missouri or incorporated, formed or organized in the state. The Commission may license an applicant to operate one or more race tracks and no more than five associated pari-mutuel facilities. Licenses are valid unless revoked for cause.
This proposal requires an application fee of $50,000 per applicant and allows the Commission to assess additional amounts if investigation costs exceed that amount. If an applicant is denied a license, a refund of the difference between the fee and the investigation costs is required. Good faith affirmative action efforts are required of all applicants. This proposal also limits licensing associated pari-mutuel wagering to licensees with a live race track which run within 3 years of license date and maintain at least 21 days of live racing in Missouri, and requires applicants which are not related to the state fair to provide a permanent racing facility with an initial investment of at least fifty million dollars.
The Commission is required to approve associated pari-mutuel wagering systems. The system may be physically located outside the state. The proposal specifies requirements for associated pari-mutuel wagering system operators, and bonding requirements for licensees. The proposal prohibits public funds from being used for the purchase, construction, operation, or maintenance of any privately-owned racing facility, and also prohibits tax increment financing from being utilized for redevelopment projects that include privately-owned racing facilities.
This legislation requires admission fees to be deposited in the Missouri Horse Racing Fund. Each licensee is required to pay an admission of $2 for each person entering an associated pari-mutuel facility. Licensees are required to keep records of number of admissions to associated facilities as well as to race meeting grounds. This proposal creates a Class A misdemeanor for operating pari-mutuel wagering without a license or in a manner other than as specified by law.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Gaming Commission
Office of Administration
Budget and Planning
Department of Revenue
Department of Elementary and Secondary Education
State Treasurer's Office
Department of Public Safety
Missouri State Highway Patrol
Office of Secretary of State
Department of Economic Development
Office of State Courts Administrator
Attorney General's Office
State Public Defender
Office of Prosecution Services
NOT RESPONDING: Department of Public Safety, Division of Liquor Control
Jeanne Jarrett, CPA
Director
March 31, 1998