TITLE 16. ECONOMIC REGULATION

PART 8. TEXAS RACING COMMISSION

CHAPTER 303. GENERAL PROVISIONS

SUBCHAPTER D. TEXAS BRED INCENTIVE PROGRAMS

DIVISION 2. PROGRAM FOR HORSES

16 TAC §303.93

The Texas Racing Commission proposes amendments to 16 TAC §303.93, Quarter Horse Rules. The amendments would change from August 15 to December 31 the date a Texas-bred Quarter Horse broodmare must return to Texas in order to keep its Texas-bred accreditation. This would allow such broodmares to leave the state but still maintain accreditation as long as they return to Texas no later than December 31, allowing them to compete in prestigious races that take place between September and December.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT

Chuck Trout, Executive Director, has determined that for the first five-year period the proposed amendments are in effect, there will be no fiscal implications for local or state government as a result of enforcing the amendments.

ANTICIPATED PUBLIC BENEFIT AND COST

Mr. Trout has determined that for each year of the first five years that the proposed amendments are in effect, the anticipated public benefit will be the ability of accredited Texas-bred Quarter Horse broodmares to race nationally, benefiting Texas owners and breeders as well as the Texas racing industry generally. There is no anticipated economic cost to persons required to comply with the amendments, as the proposed rule is more permissive than the current rule.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Trout has determined that the proposed amendments will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

For each year of the first five years that the amendments are in effect, the government growth impact is as follows: the amendments do not create or eliminate a government program; the amendments do not create any new employee positions or eliminate any existing employee positions; implementation of the amendments does not require an increase or decrease in future legislative appropriations to the agency; implementation of the amendments will not require an increase or decrease in fees paid to the agency; the amendments do not create a new regulation; the amendments limit an existing regulation by expanding the length of time an accredited Texas-bred Quarter Horse broodmare can be outside of Texas without losing its accreditation; the amendments do not increase or decrease the number of individuals subject to the rule's applicability; and the amendments may positively affect this state's economy by allowing accredited Texas-bred Quarter Horse broodmares to spend longer periods of time in other states, increasing the profile and desirability of Texas-bred Quarter Horses and potentially earning purses for Texas owners and breed awards for Texas breeders.

EFFECT ON SMALL AND MICRO-BUSINESSES

The proposed amendments will have no adverse economic effect on small or micro-businesses, and, therefore, preparation of an economic impact statement and a regulatory flexibility analysis is not required.

IMPACT ON EMPLOYMENT CONDITIONS

There are no negative impacts upon employment conditions in this state as a result of the proposed amendments.

ADVERSE ECONOMIC EFFECT ON RURAL COMMUNITIES

There will be no adverse effect on rural communities as a result of the proposed amendments. Since the agency has determined that the amendments will have no adverse economic effect on rural communities, preparation of an economic impact statement and a regulatory flexibility analysis, as detailed under Texas Government Code §2006.002, is not required.

EFFECT ON AGRICULTURAL, HORSE, AND GREYHOUND INDUSTRIES

The amendments will have a neutral to positive effect on the state's agricultural, horse breeding, horse training, greyhound breeding, and greyhound training industry by providing greater opportunities for accredited Texas-bred Quarter Horse broodmares to race outside of Texas.

PUBLIC COMMENTS

All comments or questions regarding the proposed amendments may be submitted in writing within 30 days following publication of this notice in the Texas Register to Jean Cook, Assistant to the Executive Director for the Texas Racing Commission, at P.O. Box 12080, Austin, Texas 78711-2080, telephone (512) 833-6699, or fax (512) 833-6907.

STATUTORY AUTHORITY

The amendments are proposed under Texas Revised Civil Statutes Annotated, Article 179e, §3.02, which authorizes the Commission to adopt rules to administer the Act and to make rules relating exclusively to horse racing. The amendments implement Texas Revised Civil Statutes Annotated, Article 179e.

§303.93.Quarter Horse Rules.

(a) (No change.)

(b) Eligibility for Accreditation.

(1) (No change.)

(2) ATB Broodmares.

(A) - (C) (No change.)

(D) A mare may leave Texas for [breeding, medical, or] racing purposes without losing its accreditation provided the mare returns to Texas each year before December 31 and remains in Texas until foaling. A mare may leave Texas for breeding or medical purposes without losing its accreditation provided the mare returns to Texas each year before August 15 and remains in Texas until foaling. [August 15.] All foals of an ATB broodmare are eligible to be accredited as ATB horses provided the mare is bred to an ATB stallion at least every other breeding. TQHA may require documentation regarding breeding activity to prove eligibility for accreditation.

(3) (No change.)

(c) - (f) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 21, 2017.

TRD-201705317

Devon Bijansky

General Counsel

Texas Racing Commission

Earliest possible date of adoption: February 4, 2018

For further information, please call: (512) 833-6699


CHAPTER 309. RACETRACK LICENSES AND OPERATIONS

SUBCHAPTER A. RACETRACK LICENSES

DIVISION 1. GENERAL PROVISIONS

16 TAC §309.13

The Texas Racing Commission proposes new 16 TAC §309.13, Supplemental Fee. The section would impose a one-time supplemental license fee on the racing associations to pay for an efficiency, economy, and effectiveness audit as requested by the associations. The new section would allocate the cost of the audit equally among the associations and would provide for refunds in the event that the Commission collected more than necessary for the audit. The proposed new rule is necessary to raise revenue to pay for the audit.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT

Chuck Trout, Executive Director, has determined that for the first five-year period the rule is in effect, there will be no negative fiscal implications for local or state government as a result of enforcing the new rule. In the event that the audit reveals opportunities for the Commission to improve the efficiency of its operations, there could be cost savings to state government.

ANTICIPATED PUBLIC BENEFIT AND COST

Mr. Trout has determined that for each year of the first five years that the new section is in effect, the anticipated public benefit will be the ability of the Commission to use the audit results to improve, if needed, the efficiency, economy, and/or effectiveness of the agency's operations. An additional public benefit is the continued existence of the Racing Commission, as the audit (and, consequently, the supplemental fee to fund it) is part of an agreement among nine of the ten licensed racing associations to support the Commission through the payment of fees. The tenth association, while not in support of the full industry agreement, has also expressed support for the audit and the supplemental fee. The only probable economic cost to persons required to comply with the rule is the cost to the racing associations of the audit, which they volunteered to pay for as part of their proposal to address the Commission's funding issues.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Trout has determined that the proposed rule will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

For each year of the first five years that the new section is in effect, the government growth impact is as follows: the new section does not create or eliminate a government program; the new section does not create any new employee positions or eliminate any existing employee positions; implementation of the rule does not require an increase or decrease in future legislative appropriations to the agency; implementation of the rule will increase the fees paid to the agency by the racetracks on a one-time basis in the first year only; the new section creates a new one-time regulation; the new section does not expand, limit, or repeal any existing regulations; the new section does not increase or decrease the number of individuals subject to the rule's applicability; and the proposed rule positively affects this state's economy by enabling all of the economic activity associated with pari-mutuel racing in Texas to continue.

EFFECT ON SMALL AND MICRO-BUSINESSES

The new section will have no adverse economic effect on small or micro-businesses, and therefore preparation of an economic impact statement and a regulatory flexibility analysis is not required.

IMPACT ON EMPLOYMENT CONDITIONS

There are no negative impacts upon employment conditions in this state as a result of the proposed new section.

ADVERSE ECONOMIC EFFECT ON RURAL COMMUNITIES

There will be no adverse effect on rural communities as a result of the proposed rules. Since the agency has determined that the proposed rules will have no adverse economic effect on rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, is not required.

EFFECT ON AGRICULTURAL, HORSE, AND GREYHOUND INDUSTRIES

The new section will have a neutral to positive effect on the state's agricultural, horse breeding, horse training, greyhound breeding, and greyhound training industry by providing the revenue the agency requires to undergo the audit, potentially revealing opportunities for greater efficiency that will ultimately benefit the racing industry, whose fees support the agency.

PUBLIC COMMENTS

All comments or questions regarding the proposed new section may be submitted in writing within 30 days following publication of this notice in the Texas Register to Jean Cook, Assistant to the Executive Director for the Texas Racing Commission, at P.O. Box 12080, Austin, Texas 78711-2080, telephone (512) 833-6699, or fax (512) 833-6907.

STATUTORY AUTHORITY

The new section is proposed under Texas Revised Civil Statutes Annotated, Article 179e, §3.02, which authorizes the Commission to adopt rules to administer the Act, and §5.01, which requires the Commission to set fees in amounts reasonable and necessary to cover the costs of regulating, overseeing, and licensing live and simulcast racing at racetracks, and under §6.18, which authorizes the Commission to prescribe a reasonable annual fee to be paid by each racetrack licensee to pay the costs of administering and enforcing the Act. The new section implements Texas Revised Civil Statutes Annotated, Article 179e.

§309.13.Supplemental Fee.

(a) Purpose of Fee. The fee in this section is necessary to pay the Commission's costs to procure an independent audit of the economy, efficiency and effectiveness of its operations, as requested by the racing industry, and the fees collected under this section shall only be used for this purpose.

(b) Amount of Fee. In addition to the license fees prescribed by §309.8, Racetrack License Fees, a licensed racing association shall pay a supplemental license fee to the Commission in an amount that equals the total cost of the audit, not to exceed $200,000, divided by the number of racing associations in good standing in Texas.

(c) The supplemental fee shall be due 15 days after the Commission sends an invoice to the association.

(d) Refunds. In the event that the total amount the Commission collects under this section exceeds its actual costs, any amount remaining shall be refunded to paying associations in equal shares not later than December 31, 2018.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 21, 2017.

TRD-201705311

Devon Bijansky

General Counsel

Texas Racing Commission

Earliest possible date of adoption: February 4, 2018

For further information, please call: (512) 833-6699


CHAPTER 321. PARI-MUTUEL WAGERING

SUBCHAPTER C. REGULATION OF LIVE WAGERING

DIVISION 2. DISTRIBUTION OF PARI-MUTUEL POOLS

16 TAC §321.320

The Texas Racing Commission proposes amendments to 16 TAC §321.320, Super Hi-Five. The amendments would permit licensed racing associations to offer a unique payout option as a fourth option to the existing super hi-five wager.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT

Chuck Trout, Executive Director, has determined that for the first five-year period the amendments are in effect, there will be no fiscal implications for local or state government as a result of enforcing the amendments.

ANTICIPATED PUBLIC BENEFIT AND COST

Mr. Trout has determined that for each year of the first five years that the proposed amendments are in effect, the anticipated public benefit will be the ability of racing associations to offer an additional wagering option, supporting the industry through additional purse funds and raising tax revenue for the state. There is no anticipated economic cost to persons required to comply with the amendments, as the proposed rule is more permissive than the current rule.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Trout has determined that the proposed amendments will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

For each year of the first five years that the amendments are in effect, the government growth impact is as follows: the amendments do not create or eliminate a government program; the amendments do not create any new employee positions or eliminate any existing employee positions; implementation of the amendments does not require an increase or decrease in future legislative appropriations to the agency; implementation of the amendments will not require an increase or decrease in fees paid to the agency; the amendments do not create a new regulation; the amendments do not expand or repeal an existing regulation but limit an existing regulation in that they permit an additional option to racing associations offering the Super Hi-Five wager; the amendments do not increase or decrease the number of individuals subject to the rule's applicability; and the amendments do not adversely affect the state's economy but may positively affect the economy.

EFFECT ON SMALL AND MICRO-BUSINESSES

The amendments will have no adverse economic effect on small or micro-businesses, and therefore preparation of an economic impact statement and a regulatory flexibility analysis is not required.

IMPACT ON EMPLOYMENT CONDITIONS

There are no negative impacts upon employment conditions in this state as a result of the proposed amendments.

ADVERSE ECONOMIC EFFECT ON RURAL COMMUNITIES

There will be no adverse economic effect on rural communities as a result of the proposed amendments. Since the agency has determined that the amendments will have no adverse economic effect on rural communities, preparation of an economic impact statement and a regulatory flexibility analysis, as detailed under Texas Government Code §2006.002, is not required.

EFFECT ON AGRICULTURAL, HORSE, AND GREYHOUND INDUSTRIES

The amendments will have a neutral to positive effect on the state's agricultural, horse breeding, horse training, greyhound breeding, and greyhound training industry by supporting the industry through additional purse funds.

PUBLIC COMMENTS

All comments or questions regarding the proposed amendments may be submitted in writing within 30 days following publication of this notice in the Texas Register to Jean Cook, Assistant to the Executive Director for the Texas Racing Commission, at P.O. Box 12080, Austin, Texas 78711-2080, telephone (512) 833-6699, or fax (512) 833-6907.

STATUTORY AUTHORITY

The amendments are proposed under Texas Revised Civil Statutes Annotated, Article 179e, §3.02, which authorizes the Commission to adopt rules to administer the Act. The amendments implement Texas Revised Civil Statutes Annotated, Article 179e.

§321.320.Super Hi-Five.

(a) (No change.)

(b) A person purchasing a super hi-five ticket shall select the five animals that will finish first, second, third, fourth, and fifth in one race. The pool shall be distributed only to the holders of tickets who [that] select the same order of finish as officially posted.

(c) If no super hi-five ticket is sold for the winning combination, then the net pool shall be carried over and paid out in the following manner:

(1) (No change.)

(2) An association can, at its option, offer [announce] a consolation pool[,] equal to 25% of the net pool[, will be offered]. The offering of a consolation pool shall be announced at least 72 hours in advance of the first day upon which a consolation pool will be offered, and shall be publicized. Notice of the consolation pool may be announced, by way of example, via press release, internet, simulcast signal, and on-track announcements.

(3) If there are no ticket holders who selected first-place, second-place, third-place, fourth-place, and fifth-place finishers in order and a consolation pool is offered, then a consolation pool shall be established. The consolation pool shall be [equal to 25% of the net pool and] distributed as a single price pool among those ticket holders and paid out as follows:

(A) - (E) (No change.)

(d) Unique winning ticket option.

(1) Unique winning ticket, as used in this subsection, shall be defined as having occurred when there is one and only one winning ticket whose combination finished in correct sequence as the first five betting interests, to be verified by the unique serial number assigned by the totalisator company that issued the winning ticket. In the event that there is more than one winning ticket whose combination finished in correct sequence as the first five betting interests, a unique winning ticket shall be deemed to not have occurred.

(2) If an association elects to offer the unique winning ticket option, the net super hi-five pool shall be distributed to winning wagers in the following order of precedence, based on the official order of finish:

(A) as a single price pool, including any applicable carry-over, to the holder of a unique winning ticket whose combination finished in correct sequence as the first five betting interests, but if there is no such unique winning ticket, then

(B) the net pool shall be divided into two separate pools. The major pool of the net pool shall be paid as a carryover into the next regularly scheduled super hi-five pool. The remaining minor pool shall be paid as a super hi-five consolation pool, which shall be equally divided among those ticket holders who correctly select the first five interests in order, but if there are no such wagers, then

(C) the entire net pool shall be carried over into the next regularly scheduled super hi-five pool.

(3) The association shall specify the minimum monetary amount of a unique winning ticket wager with prior approval of the executive secretary.

(4) Prior to the start of the race meet, the association shall specify the percentages for a major and minor pool with prior approval of the executive secretary.

(5) A written request to distribute the super hi-five pool plus any carryover on a specific date and performance may be submitted by the association to the executive secretary for approval. The request must be for a specified date no greater than one year from the date the request is submitted and contain justification for the distribution, an explanation of the benefit to be derived, and the intended date and performance for the distribution. Should the super hi-five net pool and any applicable carryover be designated for distribution on a specified date and performance in which there is no unique winning ticket, the entire pool shall be distributed using the method described in subsection (i) of this section.

(6) Unless otherwise stated in writing by the Commission under paragraph (5) of this subsection, on the last super hi-five race on the final day of the meeting, the net pool, including any applicable carryover, shall be distributed using the method described in subsection (i) of this section.

(e) [(d)] The minimum number of wagering interests required to offer super hi-five wagering in a race shall be seven actual starters. If scratches cause the number of horses in a race to fall below seven, then the super hi-five pool for that race shall be canceled.

(f) [(e)] Super hi-five wagers on races in which wagering has been canceled or the race declared no contest shall be refunded. Any carryover pool added to the net pool of a super hi-five race which is canceled shall carry forward to be added to the next consecutive super hi-five wagering pool.

(g) [(f)] If fewer [less] than five animals finish and the race is declared official by the stewards or judges, payout [then pay off] shall be made to ticket holders selecting the finishing animals in order of finish as provided above, disregarding any selections beyond the number of betting interests.

(h) [(g)] In the event of a dead heat in any finishing position, the wagers shall be paid as follows:

(1) all [All] wagers selecting either of the dead-heat positions with the correct non-dead-heat position shall be winners and share in the pool; and

(2) payouts [Payouts] will be calculated by splitting the pool equally between each winning combination, then dividing split pools by the number of winning tickets. A dead heat will produce separate and distinct payouts respective to each winning combination.

(i) [(h)] If on the final day of a race meeting or on a designated mandatory payout date the pool has not been distributed under subsection (b), [or] (c), or (d) of this section, then the net pool for that performance plus any carryover from previous performances shall be paid out in the following manner:

(1) To those who selected first-place, second-place, third-place, and fourth-place finishers in order. If there are no such wagers, then

(2) To those who selected first-place, second-place, and third-place finishers in order. If there are no such wagers, then

(3) To those who selected first-place and second-place finishers in order. If there are no such wagers, then

(4) To those who selected the first-place finisher.

(j) [(i)] If the final or designated mandatory payoff performance is canceled or the pool has not been distributed under subsection (i) [(h)] of this section, the pool shall be deposited in an interest-bearing account approved by the executive secretary. The pool plus all accrued interest shall then be carried over and added to the super hi-five pari-mutuel pool in the following race meeting on a date and performance designated by the executive secretary.

(k) [(j)] If an animal is scratched or declared a nonstarter, no further tickets may be issued designating such animal and all super hi-five tickets previously issued designating such animal shall be refunded and the money deducted from the gross super hi-five pool.

(l) [(k)] For purposes of statutory deductions and commissions, the net amount does not include any amounts carried over from any previous super hi-five pool.

(m) [(l)] The association may select a distinctive name for the super hi-five, with prior approval of the executive secretary.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 21, 2017.

TRD-201705334

Devon Bijansky

General Counsel

Texas Racing Commission

Earliest possible date of adoption: February 4, 2018

For further information, please call: (512) 833-6699