KRS 230.3761: Interstate Racing and Wagering Compact. (Effective upon contingency)

The Governor of this Commonwealth is authorized and directed to execute a compact on

behalf of the Commonwealth with any of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, and each territory or possession of the United States,

legally joining therein in the form substantially as follows:

ARTICLE I

PURPOSES

The purposes of this compact are:

(A) To enable member states to act jointly and cooperativel y to create more uniform,

effective, and efficient practices, programs, rules, and regulations relating to live

pari-mutuel horse or greyhound racing and to pari -mutuel wagering activities, both

on-track and off-track, that occur in or affect a member state;

(B) To facilitate the health and growth of the industry by simplifying the process of

participating in live horse and greyhound racing and pari -mutuel wagering,

improving the quality and integrity of racing and wagering, more effectively

regulating simulcast and wagering systems and activities, and through cooperative

action reducing the costs incurred by each member state or participant;

(C) To authorize the Kentucky Horse Racing and Gaming Corporation to participate in

this compact;

(D) To permit offic ials from the member states to participate in this compact and,

through the compact commission established by this compact, to enter into

contracts with governmental agencies and other persons to carry out the purposes of

this compact; and

(E) To establish the compact commission created by this compact as an interstate

governmental entity duly authorized to request and to receive criminal history

record information from the Federal Bureau of Investigation and from state, local,

and foreign law enforcement agencies.

ARTICLE II

DEFINITIONS

For the purposes of this compact, the following terms shall have the following meaning:

(A) "Commissioner" means the chairperson of the member state racing commission, or

such person's designee, who represents th e member state as a voting member of the

compact commission and anyone who is serving as such person's alternate;

(B) "Compact commission" means the organization of officials from the member states

that is authorized and empowered by this compact to carry out the purposes of this

compact;

(C) "Compact rule" means a rule or regulation adopted by a member state through the

compact to govern, for two (2) or more member states, any part of live pari -mutuel

horse and greyhound racing or pari -mutuel wagering activities, whether on-track or

off-track, that occur in or affect such states;

(D) "Live racing" means live horse or greyhound racing with pari-mutuel wagering;

(E) "Member state" means each state that has enacted this compact;

(F) "National industry stakehol der" means a non -governmental organization that the

compact commission determines from a national perspective significantly

represents one (1) or more categories of participants in live racing and pari -mutuel

wagering;

(G) "Participants in live racing and pari-mutuel wagering" means all persons who

participate in, operate, provide industry services for, or are involved with live

racing and pari-mutuel wagering;

(H) "State" means each of the several states of the United States, the District of

Columbia, the Commonwealth of Puerto Rico, and each territory or possession of

the United States; and

(I) "State racing commission" means the state racing commission, or its equivalent, in

each member state. Where a member state has more than one (1), it shall mean all

such racing commissions, or their equivalents.

ARTICLE III

COMPOSITION AND MEETINGS OF COMPACT COMMISSION

The member states shall create and participate in a compact commission as follows:

(A) This compact shall come into force when enacted by any six (6) eligible states, and

shall thereafter become effective as to any other member state that enacts this

compact. Any state that has adopted or authorized pari -mutuel wagering or live

horse or greyhound racing shall be eligible to become a party to this compac t. A

compact rule, fee, practice, or program shall not become effective in a new member

state based merely upon it entering the compact.

(B) The member states hereby create the racing and wagering commission, a body

corporate and an interstate governmental entity of the member states, to coordinate

the decision-making and actions of each member state racing commission through a

compact commission.

(C) The compact commission shall consist of one (1) commissioner, the chairperson of

the state racing commissio n or such person's designee, from each member state.

When a commissioner is not present to perform any duty in the compact

commission, a designated alternate may serve instead. The person who represents a

member state in the compact commission shall serve and perform such duties

without compensation or remuneration; provided that, subject to the availability of

budgeted funds, each may be reimbursed for ordinary and necessary costs and

expenses. The designation of a commissioner, including the alternate, sh all be

effective when written notice has been provided to the compact commission. The

commissioner, including the alternate, must be a member or employee of the state

racing commission.

(D) The compact commissioner from each state shall participate as an a gent of the state

racing commission. Each commissioner shall have the assistance of the state racing

commission in regard to all decision making and actions of the state in and through

the compact commission.

(E) Each member state, by its commissioner, sha ll be entitled to one (1) vote in the

compact commission. A majority vote of the total number of commissioners shall

be required to issue or renew a license, to receive and distribute any funds, and to

adopt, amend, or rescind the by -laws. A compact rule, fee, practice, or program

shall take effect in and for each member state whose commissioner votes

affirmatively to adopt it. Other compact actions shall require a majority vote of the

commissioners who are meeting.

(F) Meetings and votes of the compact com mission may be conducted in person or by

telephone or other electronic communication. Meetings may be called by the

chairperson of the compact commission or by any two (2) commissioners.

Reasonable notice of each meeting shall be provided to all commission ers serving

in the compact commission.

(G) No action may be taken at a compact commission meeting unless there is a quorum,

which is either a majority of the commissioners in the compact commission or,

where applicable, all the commissioners from any membe r states who propose or

are voting affirmatively to adopt a compact rule, fee, practice, or program.

(H) Once effective, the compact shall continue in force and remain binding according to

its terms upon each member state; provided that, a member state may withdraw

from the compact by repealing the statute that enacted the compact into law. The

racing commission of a withdrawing state shall give written notice of such

withdrawal to the compact chairperson, who shall notify the member state racing

commissions. A withdrawing state shall remain responsible for any unfulfilled

obligations and liabilities. The effective date of withdrawal from the compact shall

be the effective date of the repeal.

ARTICLE IV

OPERATION OF COMPACT COMMISSION

The compact commission is hereby granted, so that it may be an effective means to

pursue and achieve the purposes of each member state in this compact, the power and

duty:

(A) To adopt, amend, and rescind by-laws to govern its conduct, as may be necessary or

appropriate to carry out the purposes of the compact; to publish them in a

convenient form; and to file a copy of them with the state racing commission of

each member state;

(B) To elect annually from among the commissioners (including alternates) a

chairperson, vice-chairperson, and treasurer with such authority and duties as may

be specified in the by-laws;

(C) To establish and appoint committees which it deems necessary for the carrying out

of its functions, including advisory committees which shall b e comprised of

national industry stakeholders and organizations, and such other persons as may be

designated in accordance with the by -laws, to obtain their timely and meaningful

input into the compact rule, fee, practice, and program making processes;

(D) To establish an executive committee, with membership established in the by -laws,

which shall oversee the day -to-day activities of compact administration and

management by the executive director and staff; hire and fire as may be necessary

after consultati on with the compact commission; administer and enforce

compliance with the provisions, by -laws, rules, fees, practices, and programs of the

compact; and perform such other duties as the by-laws may establish;

(E) To create, appoint, and abolish all those o ffices, employments, and positions,

including an executive director, useful to fulfill its purposes; to hire persons for

them; to prescribe their powers, duties, and qualifications; and to provide for their

term, tenure, removal, compensation, fringe and r etirement benefits, and other

conditions of employment;

(F) To delegate day -to-day management and administration of its duties, as needed, to

an executive director and support staff, such as the Association of Racing

Commissioners International, Inc., or its successor;

(G) To adopt an annual budget sufficient to provide for the payment of the reasonable

expenses of its establishment, organization, and ongoing activities. The budget shall

be fully funded by means established by the compact commission. A memb er state

may choose to participate in funding by means other than a compact fee or fees, in

which case the compact commission shall make a finding of how much the member

state, including its racing and wagering, may benefit from budget items (less

program costs funded by user fees); and the member state may provide such

funding by its own means. Indivisible benefits to live racing shall be allocated by

proportion of annual purses. Nothing in this provision shall prevent the compact

commission from paying ob ligations accrued in a prior year or from revising its

finding of the benefit to a member state from the preceding year; and

(H) To provide a mediation and a binding dispute resolution service for member states

who decide to use them to resolve a compact d ispute among each other; provided,

that the design and implementation of each program shall be established by

compact rule making.

ARTICLE V

GENERAL POWERS AND DUTIES

To allow each member state, as and when it chooses, to achieve the purpose of this

compact through joint and cooperative action, the member states are hereby granted the

power and duty, by and through the compact commission:

(A) To act jointly and cooperatively to create a more equitable and uniform pari -mutuel

racing and wagering interstate r egulatory framework, including but not limited to

the adoption of standardized rules of racing and equine drug regulations, closing

inequalities in how regulatory standards and statutory requirements apply to

industry participants; improving wagering monit oring and integrity; and making

industry and participant information more available to government officials;

(B) To collaborate with national industry stakeholders and industry organizations, such

as the Racing Medication and Testing Consortium, in the des ign and

implementation of compact rules, fees, practices, and programs in a manner that

serves the best interests of racing;

(C) To create more uniform, effective, or efficient practices and programs, with the

consent of each member state that shall partic ipate in them, relating to any part of

live pari -mutuel horse or greyhound racing or pari -mutuel wagering activities,

whether on-track or off-track, that occur in or affect a member state;

(D) To adopt compact rules, which shall have the force and effect o f state rules or

regulations in the member states who vote to adopt them, to govern all or any part

of live pari-mutuel horse and greyhound racing or pari-mutuel wagering activities;

(E) To charge and collect a fee for services provided by the compact, inc luding

licensure and renewal of each license applicant, and for defraying the actual cost of

compact commission administration, procedures, activities and programs; and

(F) To issue and renew licenses for participants in live racing and pari-mutuel wagering

who are found by the compact commission to have met its licensure or renewal

requirements in categories it chooses to license. It shall establish the term for each

category, and the license criteria and weight given to character and integrity

information that in its judgment meet the most restrictive requirements of the

member states. The compact commission shall not have the power or authority to

deny a license. If it determines that an applicant will not be eligible, it shall notify

the applicant that i t will not be able to process the application any further, which

shall not constitute and shall not be considered to be the denial of a license.

Although an applicant shall have the right to present further evidence and to be

heard, the final decision on i ssuance or renewal of a license shall be made by the

compact commission pursuant to its established requirements. The compact

commission shall have the power and duty to investigate license applicants and, as

permitted by federal and state law, to gather i nformation, including criminal history

records from the Federal Bureau of Investigation and from state, local, and foreign

country law enforcement agencies (including the Royal Canadian Mounted Police),

necessary to decide whether an applicant meets its li cense requirements. Such

criminal history record information may be received and reviewed only by the

officials on, and employees of, the compact commission, and that information may

be used only for the purposes of this compact. No such official or employ ee may

disclose or disseminate such criminal history record information to any person or

entity other than another official on, or employee of, the compact commission. The

compact commission, its employees, or its designee shall take the fingerprints of

each license applicant and, pursuant to Public Law 92 -544 or Public Law 100 -413,

forward the fingerprints to a state identification bureau, the Association of Racing

Commissioners International (an association of state officials regulating pari-mutuel

wagering, designated by the Attorney General of the United States), or another

entity with an equivalent designation, for submission to the Federal Bureau of

Investigation or other receiving law enforcement agency. The compact commission

shall cooperate with the Interstate Compact on Licensure of Participants in Live

Racing with Pari-Mutuel Wagering and, if requested by that entity, assume all of its

licensing and employer duties and responsibilities with the authority of and

pursuant to all of the licensing stan dards, laws, rules and regulations applicable to

that entity.

ARTICLE VI

OTHER POWERS AND DUTIES

The compact commission may exercise such incidental powers and duties as may be

necessary and proper for it to function in a useful manner, including but not l imited to the

power and duty:

(A) To enter into contracts and agreements with governmental agencies and other

persons, including officers and employees of a member state, to provide personal

services for its activities and such other services as may be necessary;

(B) To borrow, accept, and contract for the services of personnel from any state,

federal, or other governmental agency, or from any other person or entity;

(C) To receive information from and to provide information to each member state

racing commission, including its officers and staff, on such terms and conditions as

may be established in the by-laws;

(D) To acquire, hold, and dispose of any real or personal property by gift, grant,

purchase, lease, license, and similar means and to receive addit ional funds through

gifts, grants, and appropriations;

(E) To purchase and maintain insurance and bonds, and to require others to do so;

(F) When authorized by a compact rule, to conduct hearings, issue subpoenas requiring

the attendance and testimony of witnesses and the production of evidence, and

render decisions and orders;

(G) To establish in the by -laws the requirements that shall describ e and govern its

duties to conduct open or public meetings and to provide public access to compact

records and information, which shall include the exceptions established by law in

one (1) or more member states and shield any confidential submissions made in

connection with license applications; and

(H) To enforce compliance with the provisions, by -laws, rules, fees, practices, and

programs of the compact using such means as may be consistent with this compact.

ARTICLE VII

COMPACT RULE MAKING

In the exercise of its rule making authority, the compact commission shall:

(A) Engage in formal rule making pursuant to a process that substantially conforms to

the Model State Administrative Procedure Act of 1981 as amended, as may be

appropriate to the actions and operations of the compact commission;

(B) Gather information and engage in discussions with advisory committees, national

industry stakeholders, and others to foster and conduct a collaborative approach in

the design and advancement of compact rules in a man ner that serves the best

interests of racing and as established in the by-laws;

(C) Not publish a proposed compact rule in a member state over its objection. The

affirmative vote of a member state for a proposed compact rule shall be necessary

and sufficie nt to adopt, amend, or rescind a compact rule as applicable to that

member state; and

(D) Have a standing committee that reviews at least quarterly the participation in and

value of compact rules and, when it determines that a revision is appropriate or

when requested to by any member state, submits a revising proposed compact rule.

To the extent a revision would only add or remove a member state or states from

where a compact rule has been adopted, the vote required by this article shall be

required of only such state or states.

ARTICLE VIII

COMPACT FEES

(A) The compact commission may charge and collect a fee for services provided by the

compact, including licensure and renewal of each license applicant, and for

defraying the actual cost of compact commissi on administration, procedures,

activities, and programs; provided that such latter fee or fees shall not create a

disproportionate cost for any member state.

(B) Compact fees must relate to participation in live horse or greyhound racing and

pari-mutuel wa gering activities, whether on -track or off -track, that occur in or

affect a member state. No fee shall be adopted except after consultation with

relevant advisory committees and interested national industry stakeholders.

(C) The establishment of a compact fee may include a requirement that a participant in

live horse or greyhound racing with pari -mutuel wagering, as a condition of

continued participation, collect, hold, and remit to the compact commission funds

that belong to a third party, with which it co nducts related transactions, that is

obliged to pay the compact fee.

(D) The compact commission may require fee payments to occur on a periodic basis,

accompanied by a sworn report attesting to accuracy and completeness, and may

provide that it shall have the power to examine the books and records of any

persons required to pay or remit it, for the purpose of ascertaining whether the

proper amounts are being paid. Such books and records shall not thereby be made

available for public inspection.

(E) No fee s hall be adopted before the completion of a period of public notice and

participation substantially conforming, as may be appropriate to the actions and

operations of the compact commission, for making rules under the Model State

Administrative Procedure Act of 1981 as amended.

ARTICLE IX

STATUS AND RELATIONSHIP TO MEMBER STATES

(A) The compact commission, as an interstate governmental entity, shall be exempt

from all taxation in and by the member states.

(B) The compact commission shall not pledge the credi t of any member state except by

and with the appropriate legal authority of that state.

(C) The compact commission shall adopt an annual budget that is sufficient to provide

for the payment of the reasonable expenses of its establishment, organization, and

ongoing activities, and by which member states shall fully fund the compact

commission by the means set forth in this compact.

(D) Each member state shall reimburse or otherwise pay the expenses of its

commissioner, including any alternate, in the compact commission.

(E) No member state, except as provided in Article XII of this compact, shall be held

liable for the debts or other financial obligations incurred by the compact

commission.

(F) No member state shall have, while it participates in the compact commission, any

claim to or ownership of any property held by or vested in the compact commission

or to any compact commission funds held pursuant to this compact except for state

license or other fees or moneys collected by the compact commission as its agent.

(G) The compact dissolves upon the date of the withdrawal of the member state that

reduces membership in the compact to one (1) state. Upon dissolution, the compact

becomes null and void and shall be of no further force or effect, although rules and

programs adopted through this compact shall remain rules and programs in each

member state that had adopted or consented to them, and the business and affairs of

the racing and wagering compact shall be concluded and any surplus funds shall be

distributed to the former member states in accordance with the by-laws.

ARTICLE X

RIGHTS AND RESPONSIBILITIES OF MEMBER STATES

(A) Each member state in the compact shall accept the decisions, duly applicable to it,

of the compact commission in regard to compact rules, fees, practices, and

programs, and the issuance or renewal of licenses.

(B) When the compact commission determines tha t an application shall not be

processed further, the member states shall not treat this as the denial of a license or

otherwise penalize the applicant because of such action by the compact

commission.

(C) Each member state in the compact shall have and exercise the right:

(1) To charge a fee for the use of a compact license within that member state

equal to the fee charged for a comparable state license;

(2) To apply its own standards and procedures to determine whether the use of a

compact commission licen se should be suspended or revoked in its

jurisdiction;

(3) To apply its own standards for licensure or renewal of state applicants who do

not meet the licensure requirements of the compact commission, who are

within a category of participants in racing and wagering that the compact

commission does not license, or who apply to the member state for a state

license; and

(4) To apply its own standards and procedures, except as may be provided by

rule, to determine whether a participant in live racing or pari -mutuel wagering

has violated any rule or regulation in its jurisdiction and to impose an

appropriate penalty.

(D) Each member state racing commission shall promptly notify the compact

commission, or its designee, whenever the member state has adjudged a violation of

any state or compact rule and imposed a suspension or revocation upon a compact

commission licensee.

(E) All departments, agencies, bodies, officers, and employees of each member state

and its political subdivisions are authorized to cooperate wit h the compact

commission and shall take all necessary and appropriate action, such as to publish

proposed and adopted rules in state registries and administrative codes, to effectuate

and in furtherance of compact duties or actions that may affect the state.

(F) This compact shall not be construed to diminish or limit the powers and

responsibilities of the member state racing commission, or to invalidate any action

it has previously taken, except to the extent it has, by its compact commissioner,

expressed its consent to a specific rule or other action of the compact commission.

The compact commissioner from each state shall serve as the agent of the state

racing commission and shall possess substantial racing and wagering knowledge

and experience as a regul ator or participant in the racing and wagering industry in

order to participate effectively in compact rule making.

ARTICLE XI

ENFORCEMENT OF COMPACT

(A) Any member state in the compact and the compact commission may initiate legal

action in the United Sta tes District Court, in any federal district where the compact

commission has an office, to enforce compliance by any member state or the

compact commission with the compact provisions, by -laws, fees, findings,

practices, and programs.

(B) Any member state in the compact and the compact commission may initiate legal

action, in any state or federal court, to enforce the compact provisions, fees,

practices, and programs against any person, including a non -member state or

political subdivision. Member states th at benefit from the compact commission, its

employees, or one (1) of its provisions, by -laws, fees, findings, practices, or

programs shall provide or share in the cost of legal services to defend or uphold

them.

(C) The compact commission shall have standi ng to intervene in any legal action that

pertains to the subject matter of the compact and might affect its powers, duties, or

actions.

(D) The courts and executive in each member state shall enforce the compact and take

all actions necessary and appropria te to effectuate its purposes and intent. Compact

provisions, by -laws, and rules shall be received by all judges, departments,

agencies, bodies, and officers of each member state and its political subdivisions as

evidence of them.

(E) The compact commission may require, from the date a compact fee was required to

be paid, interest not to exceed the rate of one percent (1%) per month and a penalty

not to exceed five percent (5%). The compact commission may, if it determines that

any fees received by it were paid in error, and provided that an application for it is

filed with the compact commission within one (1) year from the time the erroneous

payment is made, correct the error by a refund, without interest, including from

other collected fees.

(F) The compact commission, if it determines that a payment or report is in error, may

make a finding that fixes the correct amount of the fee. It must issue the finding

within three (3) years from when a fee or report was due or filed. The finding shall

be final and c onclusive unless an application for a hearing is filed by the subject

within thirty (30) days. The action of the compact commission in making a final

finding, after a hearing, shall be reviewable in state court as provided in this

compact.

ARTICLE XII

LEGAL ACTIONS AGAINST COMPACT

(A) Any person may commence a claim, action, or proceeding against the compact

commission in state court for damages or to challenge a compact rule, fee, practice,

or program that is duly applicable to that state. The compact comm ission shall have

the benefit of the same limits of liability, defenses, rights to indemnity and defense

by the state, and other legal rights and defenses for non-compact matters of the state

racing commission in the state. All legal rights and defenses th at arise from this

compact shall also be available to the compact commission.

(B) A compact commissioner, alternate, or other member or employee of a state racing

commission who undertakes compact activities or duties does so in the course of

business of t heir state racing commission, and shall have the benefit of the same

limits of liability, defenses, rights to indemnity and defense by the state, and other

legal rights and defenses for noncompact matters of state employees in their state.

The executive director and other employees of the compact commission shall have

the benefit of these same legal rights and defenses of state employees in the

member state in which they are primarily employed. All legal rights and defenses

that arise from this compact shall also be available to them.

(C) Each member state shall be liable for and pay judgments filed against the compact

commission to the extent related to its participation in the compact. Where liability

arises from action undertaken jointly with other member states, the liability shall be

divided equally among the states for whom the applicable rule, fee, practice,

program, or action or omission of the executive director or other employees of the

compact commission was undertaken; and no member state shall co ntribute to or

pay, or be jointly or severally or otherwise liable for, any part of any judgment

beyond its share as determined in accordance with this article.

ARTICLE XIII

RESTRICTIONS ON AUTHORITY

(A) Notwithstanding anything to the contrary herein, the compact commission shall not

adopt any practice, program, or rule that may change Kentucky requirements

governing the amount and distribution of the takeout, retention, or breakages on

intrastate wagers or that imposes licensure requirements for non -racing or non -

wagering employees of any racetrack or off -site wagering facility operating wholly

within the state.

(B) Kentucky state laws applicable to pari -mutuel racing and wagering shall remain in

full force and effect.

(C) Notwithstanding anything to the contrary herein, no fee except for services

provided by the compact commission shall be adopted by the compact commission

in Kentucky without the prior consent of any horsemen (as expressed by their

recognized horsemen's organization) licensed by the state racing commission who,

or any franchised or state racing commission licensed racing corporation that,

would be obliged to pay the fee.

ARTICLE XIV

CONSTRUCTION, SAVING AND SEVERABILITY

(A) This compact sh all be liberally construed so as to effectuate its purposes. The

provisions of this compact shall be severable and if any phrase, clause, sentence, or

provision of this compact is declared to be contrary to the Constitution of the

United States or of any m ember state, or the applicability of this compact to any

government, agency, person, or circumstance is held invalid, the validity of the

remainder of this compact and its applicability to any government, agency, person,

or circumstance shall not be affect ed. If all or some portion of this compact is held

to be contrary to the constitution of any member state, the compact shall remain in

full force and effect as to the remaining member states and in full force and effect

as to the state affected as to all severable matters.

(B) In the event of any allegation, finding, or ruling against the compact or its

procedures or actions, provided that a member state has followed the compact's

stated procedures, any rule it purported to adopt using the procedures of thi s statute

shall constitute a duly adopted and valid state rule, and any program that it

purported to create or agree to using the procedures of this statute shall constitute a

duly made and valid state program and multilateral agreement with the other

consenting member states.