KRS 230.227: Board of directors -- Membership -- Appointment -- Terms -- Conflict of

interest -- Compensation -- Powers and duties -- Background check -- Removal

-- Ethics.

(1) (a) The affairs and responsibilities of the corporation shall be administere d by a

board of directors composed of seventeen (17) members. All seventeen (17)

members shall be appointed by the Governor.

(b) The Governor shall appoint a chair and vice chair of the board, subject to the

advice and consent of the Senate. A chair or vic e chair appointed when the

Senate is not in session shall serve only until the next regular session, or

special session if such matter is included in the call therefor of the General

Assembly, at which time the chair or vice chair shall be subject to

confirmation by the Senate. If the Senate is not in session, the appointments

shall be subject to review by the Interim Joint Committee on State

Government, which shall hold a public hearing and shall transmit its

recommendations to the Senate. If the Senate re fuses to confirm the chair or

vice chair, then the chair or vice chair shall forfeit the office as of the date on

which the Senate refuses to confirm the chair or vice chair.

(c) Members of the board appointed by the Governor shall serve a term of four

(4) years unless a member is removed, except the initial appointments under

subsection (6)(c) of this section shall be as follows:

1. Two (2) year terms shall be served by:

a. The five (5) members appointed under subsection (2)(b)2., 4., 6.,

8., and 11. of this section;

b. Two (2) appointees under subsection (2)(b)1. of this section;

c. One (1) appointee under subsection (2)(b)5. of this section; and

d. One (1) appointee under subsection (2)(b)9. of this section; and

2. Three (3) year terms shall be served by:

a. The three (3) members appointed under subsection (2)(b)3., 7., and

10. of this section;

b. One (1) appointee under subsection (2)(b)1. of this section;

c. Two (2) appointees under subsection (2)(b)5. of this section; and

d. Two (2) appointees under subsection (2)(b)9. of this section.

(2) For appointments of the board of directors:

(a) Any member appointed to fill a vacancy occurring other than by expiration of

a term shall be appointed for the remainder of the unexpired term; and

(b) In making appointments, the Governor shall appoint members who meet the

following qualifications:

1. Three (3) members who represent the Thoroughbred industry;

2. One (1) member who represents the standardbred industry;

3. One (1) equine veterinarian who currently practices with race horses;

4. One (1) member shall be selected based on his or her training and

experience in the fields of investigation and law enforcement;

5. Three (3) experts in the gaming industry, with knowledge about the

technical and logistical sides of the wagering experience. At least one

(1) of these experts shall have expertise in the technical and logistical

sides of pari-mutuel wagering on previously run horse races;

6. One (1) expert in the operational aspects of the horse industry, with

particular knowledge of horse breeding;

7. One (1) expert in the operational aspects of the horse industry, with

particular knowledge of horse racing;

8. One (1) horse trainer licensed under this chapter;

9. Three (3) charitable gaming representatives;

10. One (1) member who represents the quarter horse industry; and

11. One (1) at -large member with no financial interest in the business or

industry regulated.

(3) (a) A member of the board of directors, by himself or herself or through others,

shall not knowingly:

1. Use or attempt to use the member's influence in any manner which

involves a substantial conflict between his or her personal or private

interest and the member's duties to the corporation;

2. Use or attempt to use any means to influence the corporation in

derogation of the corporation;

3. Use the member's official position or office to obtain financial gain for

himself or herself, or any spouse, parent , brother, sister, or child of the

director; or

4. Use or attempt to use his or her official position to secure or create

privileges, exemptions, advantages, or treatment for the member or

others in derogation of the interests of the corporation or of the

Commonwealth.

(b) A director shall not appear before the board or the corporation in any manner

other than as a director.

(c) A director shall abstain from action on an official decision in which he or she

has or may have a personal or private interest, and shall disclose the existence

of that personal or private interest in writing to each other member of the

board on the same d ay on which the director becomes aware that the interest

exists or that an official decision may be under consideration by the board.

This disclosure shall cause the decision on these matters to be made in a

meeting of the members of the board who do not have the conflict from which

meeting the director shall be absent and from all votes on which matters the

director shall abstain.

(d) In determining whether to abstain from action on an official decision because

of a possible conflict of interest, a directo r shall consider the following

guidelines:

1. Whether a substantial threat to the director's independence of judgment

has been created by his or her personal or private interest;

2. The effect of the director's participation on public confidence in the

integrity of the corporation and of racing and gaming;

3. Whether the director's participation is likely to have any significant

effect on the disposition of the matter;

4. The need for the director's particular contribution, such as special

knowledge of the subject matter, to the effective functioning of the

corporation; and

5. Whether the official decision will affect the director in a manner

differently from the public, or will affect him or her as a member of a

business, profession, occupation, or group to no greater extent generally

than other members of the director's business, profession, occupation, or

group.

Any director may request a vote of the disinterested members of the board on

whether any director shall abstain from action on an official decision.

(e) A director shall not knowingly disclose or use confidential information

acquired in the course of his or her official duties in order to further the

director's own economic interests, or those of any person.

(f) A director shall not knowingly recei ve, directly or indirectly, any interest or

profit arising from the use or loan of corporation funds or funds to be raised

through the corporation.

(g) A director shall not knowingly accept compensation, other than that provided

in this section for directors, for performance of his or her official duties.

(h) A present or former director shall not, within one (1) year following

termination of the director's membership on the board, accept employment,

compensation, or other economic benefit from any person o r business that

contracts or does business with the corporation in matters in which he or she

was directly involved during the director's tenure. This provision shall not

prohibit an individual from continuing in the same business, firm, occupation,

or profession in which he or she was involved prior to becoming a director,

provided that, for a period of one (1) year following termination of his or her

position as a director, the director personally refrains from working on any

matter in which the director was directly involved as a director. A director's

involvement in an official decision or other action of the corporation

impacting a broad class of persons or entities, and affecting the director to no

greater extent generally than the members of the class , shall not prohibit the

director's employment or engagement as a member of the class for any period

after service as a director.

(i) A director, or a spouse, child, brother, sister, or parent of that director shall

not have a financial interest of more th an five percent (5%) of the total value

of any vendor, other supplier of goods or services to the corporation, or

related entity. The corporation shall provide each member of the board with a

list of all current vendors, which shall be updated on at least a quarterly basis.

(4) The board of directors shall:

(a) Approve, disapprove, amend, or modify the budget recommended by the

president for the operation of the corporation;

(b) Approve, disapprove, amend, or modify the terms of major procurements

recommended by the president;

(c) Determine whether to recommend administrative regulations to carry out and

implement its powers and duties, the operation of the corporation, the conduct

of live horse racing, pari -mutuel wagering, sports wagering, fantasy contests ,

fixed-odds wagering, breed integrity and development, and on and after July

1, 2025, charitable gaming, and any other matters necessary or desirable for

the efficient and effective operation of the corporation or convenience of the

public;

(d) Review the performance of the corporation and:

1. Advise the president and make recommendations to him or her

regarding operations of the corporation;

2. Identify potential improvements in this chapter, the administrative

regulations of the corporation, and the mana gement of the corporation;

and

3. Request from the corporation any information the board determines to

be relevant to its duties; and

(e) Provide the president with private -sector perspectives on the operation of a

racing and gaming enterprise.

(5) In all other matters, the board shall advise and make recommendations.

(6) (a) The initial members of the board shall be the members of the Kentucky Horse

Racing Commission serving as of July 1, 2024. Those members shall continue

to serve as board members of the corporation for two (2) additional years until

July 1, 2026. The initial three (3) board members of the corporation who are

charitable gaming representatives shall be appointed on or after March 27,

2025, to serve until July 1, 2026.

(b) Any board member vacancy that occurs between July 1, 2024, and July 1,

2026, shall be filled by appointment for the remainder of that time period. An

appointment of the chair or vice chair created by a vacancy between July 1,

2024, and July 1, 2026, shall require confirmation of the appointment by the

Senate as provided in KRS 11.160 and subsection (1) of this section.

(c) Beginning on July 1, 2026, board members shall be appointed for initial and

regular terms in accordance with this section.

(7) (a) Members of the board shall receive no compensation for serving on the board,

but shall be reimbursed for travel expenses for attending meetings and

performing other official functions consistent with the reimbursement policy

for state employees established by KRS 45.101 and administrative regulations

promulgated thereunder.

(b) The vice chair may act in the absence of the chair.

(c) Before entering upon the discharge of their duties, all members of the board of

directors of the Kentucky Horse Racing and Gaming C orporation shall take

the constitutional oath of office.

(8) (a) All persons appointed to the corporation shall be of good moral character and

shall not have been convicted of, or under indictment for, a felony in

Kentucky, in any other state, in federal court, or in a foreign country.

(b) A board member of the corporation, or any family member of a member of

the corporation, at the time of appointment or during the member's tenure on

the corporation, shall not be a member of the legislature, a person holdi ng any

elective office in the state government, or any officer or official of any

political party.

(9) Each appointed board member of the corporation shall be required to undergo a

national and state criminal background investigation. The criminal backgrou nd

investigation shall be by means of a fingerprint check by the Department of

Kentucky State Police or equivalent state police body in the member's home state

and the Federal Bureau of Investigation, pursuant to the following requirements:

(a) The member shall provide his or her fingerprints to the Department of

Kentucky State Police, or equivalent state police body in the member's home

state, for submission to the Federal Bureau of Investigation after a state

criminal background check is conducted;

(b) The results of the national and state criminal background check shall be sent

to the corporation;

(c) The corporation shall be prohibited from releasing any criminal history record

information to any private or public entity, or authorizing receipt by such

private or public entity; and

(d) Any fee charged by the Department of Kentucky State Police or the Federal

Bureau of Investigation shall be an amount no greater than the actual cost of

processing the request and conducting the background check. The corpora tion

may charge this fee to the member.

(10) (a) The Governor may remove any board member for misfeasance, malfeasance,

or nonfeasance in office.

(b) The removal may be made after the member has been served with a copy of

the charges against him or her and the member has a public hearing, if

requested.

(c) The member charged may request a public hearing. The request shall be in

writing and shall be submitted to the Governor's office within ten (10) days of

the service of charges upon the member.

(d) If a pu blic hearing is timely requested, the hearing shall be held before a

hearing officer appointed by the Governor. The hearing officer shall make

findings of fact and conclusions of law based upon the record of the hearing,

and shall provide the Governor with a recommendation for action. The

Governor's final decision, after recommendation by the hearing officer, may

be appealed to the Circuit Court of the county in which the cause of action

arose.

(11) Members of the board of directors shall be subject to all applicable provisions of

KRS Chapter 11A, except that this chapter shall control if and to the extent that any

provision in this chapter is expressly inconsistent with any provision of KRS

Chapter 11A.

(12) The provisions of KRS Chapters 18A and 64 shall not apply to the board, president,

managers, or staff of the corporation.