To amend sections 3769.03, 3769.08, 3769.083, 3769.085, and 3769.088 and to enact sections 3769.0811, 3769.0812, and 3769.0813 of the Revised Code to authorize wagering at a track on horse races that are telecast via an instant racing system and to levy a tax on amounts wagered in this manner.

Section 1.  That sections 3769.03, 3769.08, 3769.083, 3769.085, and 3769.088 be amended and sections 3769.0811, 3769.0812, and 3769.0813 of the Revised Code be enacted to read as follows:

Sec. 3769.03.  The state racing commission shall prescribe the rules and conditions under which horse racing may be conducted and may issue, deny, suspend, diminish, or revoke permits to conduct horse racing as authorized by sections 3769.01 to 3769.14 of the Revised Code. The commission may impose, in addition to any other penalty imposed by the commission, fines in an amount not to exceed ten thousand dollars on any permit holder or any other person who violates the rules or orders of the commission. The commission may prescribe the forms of wagering that are permissible, the number of races, the procedures on wagering, and the wagering information to be provided to the public.

The commission may require totalizator equipment to display the amount of wagering in each wagering pool. The commission shall initiate safeguards as necessary to account for the amount of money wagered at each track in each wagering pool. It may require permit holders to install equipment that will provide a complete check and analysis of the functioning of any computers and require safeguards on their performance. The commission shall require all permit holders, except those holding state fair, county fair, or other fair permits, to provide a photographic recording, approved by the commission, of the entire running of all races conducted by the permit holder.

The state racing commission may issue, deny, suspend, or revoke licenses to those persons engaged in racing and to those employees of permit holders as is in the public interest for the purpose of maintaining a proper control over horse-racing meetings. The commission, as is in the public interest for the purpose of maintaining proper control over horse-racing meetings, also may rule any person off a permit holder's premises. License fees shall include registration fees and shall be set by the commission. Each license issued by the commission, unless revoked for cause, shall be for the period of one year from the first day of January of the year in which it is issued, except as otherwise provided in section 3769.07 of the Revised Code. Applicants for licenses issued by the commission shall submit their fingerprints to the commission, and the commission may forward the fingerprints to the federal bureau of investigation or, to any other agency, or to both, for examination.

There is hereby created in the state treasury the state racing commission operating fund. All license fees established and collected by the commission pursuant to this section, and the amounts specified in divisions (B) and (C) of section 3769.08 and, division (A)(6) of section 3769.087, and division (C)(2) of section 3769.0813 of the Revised Code, shall be paid into the state treasury to the credit of the fund. Moneys in the fund shall be expended by the commission to defray its operating costs, salaries and expenses, and the cost of administering and enforcing this chapter.

The commission may deny a permit to any permit holder that has defaulted in payments to the public, employees, or the horsemen and may deny a permit to any successor purchaser of a track for as long as any of those defaults have not been satisfied by either the seller or purchaser.

The commission shall deny a permit to any permit holder that has defaulted in payments to the state or has defaulted in payments required under section 3769.089 or, 3769.0810, or 3769.0813 of the Revised Code and shall deny a permit to any successor purchaser of a track for as long as those defaults have not been satisfied by either the seller or purchaser.

Any violation of this chapter, of any rule of racing adopted by the commission, or of any law or rule with respect to racing in any jurisdiction shall be sufficient reason for a refusal to issue a license, or a suspension or revocation of any license issued, pursuant to this section.

With respect to the issuance, denial, suspension, or revocation of a license to a participant in horse racing, the action of the commission shall be subject to Chapter 119. of the Revised Code.

The commission may sue and be sued in its own name. Any action against the commission shall be brought in the court of common pleas of Franklin county. Any appeal from a determination or decision of the commission rendered in the exercise of its powers and duties under this chapter shall be brought in the court of common pleas of Franklin county.

The commission, biennially, shall make a full report to the governor of its proceedings for the two-year period ending with the thirty-first day of December preceding the convening of the general assembly and shall include its recommendations in the report. The commission, semiannually, on the thirtieth day of June and on the thirty-first day of December of each year, shall make a report and accounting to the governor.

Sec. 3769.08.  (A) Any person holding a permit to conduct a horse-racing meeting may provide a place in the race meeting grounds or enclosure at which the permit holder may conduct and supervise the pari-mutuel system of wagering by patrons of legal age on the live racing programs and simulcast racing programs conducted by the permit holder.

The pari-mutuel method of wagering upon the live racing programs and simulcast racing programs held at or conducted within such race track, and at the time of such horse-racing meeting, or at other times authorized by the state racing commission, shall not be unlawful. No other place, except that provided and designated by the permit holder and except as provided in section 3769.26 of the Revised Code, nor any other method or system of betting or wagering, except the pari-mutuel system, shall be used or permitted by the permit holder; nor, except as provided in section 3769.089, 3769.0812, or 3769.26 of the Revised Code, shall the pari-mutuel system of wagering be conducted by the permit holder on any races except the races at the race track, grounds, or enclosure for which the person holds a permit. Each Except as provided in section 3769.0813 of the Revised Code, each permit holder may retain as a commission an amount not to exceed eighteen per cent of the total of all moneys wagered.

The pari-mutuel wagering authorized by this section is subject to sections 3769.25 to 3769.28 of the Revised Code, with the exception that pari-mutuel wagering conducted under section 3769.0812 of the Revised Code is not subject to those sections.

(B) At the close of each racing day, each permit holder authorized to conduct thoroughbred racing, out of the amount retained on that day by the permit holder, shall pay by check, draft, or money order to the tax commissioner, as a tax, a sum equal to the following percentages of the total of all moneys wagered on live racing programs on that day and shall separately compute and pay by check, draft, or money order to the tax commissioner, as a tax, a sum equal to the following percentages of the total of all money wagered on simulcast racing programs on that day:

(1) One per cent of the first two hundred thousand dollars wagered, or any part of that amount;

(2) Two per cent of the next one hundred thousand dollars wagered, or any part of that amount;

(3) Three per cent of the next one hundred thousand dollars wagered, or any part of that amount;

(4) Four per cent of all sums over four hundred thousand dollars wagered.

Except as otherwise provided in section 3769.089 of the Revised Code, each permit holder authorized to conduct thoroughbred racing shall use for purse money a sum equal to fifty per cent of the pari-mutuel revenues retained by the permit holder as a commission after payment of the state tax under this division. This fifty per cent payment shall be in addition to the purse distribution from breakage specified in this section.

Subject to division (M) of this section, from the moneys paid to the tax commissioner by thoroughbred racing permit holders, one-half of one per cent of the total of all moneys so wagered on a racing day shall be paid into the Ohio fairs fund created by section 3769.082 of the Revised Code, one and one-eighth per cent of the total of all moneys so wagered on a racing day shall be paid into the Ohio thoroughbred race fund created by section 3769.083 of the Revised Code, and one-quarter of one per cent of the total of all moneys wagered on a racing day by each permit holder shall be paid into the state racing commission operating fund created by section 3769.03 of the Revised Code. The required payment to the state racing commission operating fund does not apply to county and independent fairs and agricultural societies. The remaining moneys may be retained by the permit holder, except as provided in this section with respect to the odd cents redistribution. Amounts paid into the PASSPORT fund shall be used solely for the support of the PASSPORT program as determined in appropriations made by the general assembly. If the PASSPORT program is abolished, the amount that would have been paid to the PASSPORT fund under this chapter shall be paid to the general revenue fund of the state. As used in this chapter, "PASSPORT program" means the PASSPORT program created under section 173.40 of the Revised Code.

The total amount paid to the Ohio thoroughbred race fund under this section and division (A) of section 3769.087 of the Revised Code shall not exceed by more than six per cent the total amount paid to this fund under this section and that section during the immediately preceding calendar year.

Each year, the total amount calculated for payment into the Ohio fairs fund under this division, division (C) of this section, and division (A) of section 3769.087 of the Revised Code shall be an amount calculated using the percentages specified in this division, division (C) of this section, and division (A) of section 3769.087 of the Revised Code.

A permit holder may contract with a thoroughbred horsemen's organization for the organization to act as a representative of all thoroughbred owners and trainers participating in a horse-racing meeting conducted by the permit holder. A "thoroughbred horsemen's organization" is any corporation or association that represents, through membership or otherwise, more than one-half of the aggregate of all thoroughbred owners and trainers who were licensed and actively participated in racing within this state during the preceding calendar year. Except as otherwise provided in this paragraph, any moneys received by a thoroughbred horsemen's organization shall be used exclusively for the benefit of thoroughbred owners and trainers racing in this state through the administrative purposes of the organization, benevolent activities on behalf of the horsemen, promotion of the horsemen's rights and interests, and promotion of equine research. A thoroughbred horsemen's organization may expend not more than an aggregate of five per cent of its annual gross receipts, or a larger amount as approved by the organization, for dues, assessments, and other payments to all other local, national, or international organizations having as their primary purposes the promotion of thoroughbred horse racing, thoroughbred horsemen's rights, and equine research.

(C) Except as otherwise provided in division (B) of this section, at the close of each racing day, each permit holder authorized to conduct harness or quarter horse racing, out of the amount retained that day by the permit holder, shall pay by check, draft, or money order to the tax commissioner, as a tax, a sum equal to the following percentages of the total of all moneys wagered on live racing programs and shall separately compute and pay by check, draft, or money order to the tax commissioner, as a tax, a sum equal to the following percentages of the total of all money wagered on simulcast racing programs on that day:

(1) One per cent of the first two hundred thousand dollars wagered, or any part of that amount;

(2) Two per cent of the next one hundred thousand dollars wagered, or any part of that amount;

(3) Three per cent of the next one hundred thousand dollars wagered, or any part of that amount;

(4) Four per cent of all sums over four hundred thousand dollars wagered.

Except as otherwise provided in division (B) and subject to division (M) of this section, from the moneys paid to the tax commissioner by permit holders authorized to conduct harness or quarter horse racing, one-half of one per cent of all moneys wagered on that racing day shall be paid into the Ohio fairs fund; from the moneys paid to the tax commissioner by permit holders authorized to conduct harness racing, five-eighths of one per cent of all moneys wagered on that racing day shall be paid into the Ohio standardbred development fund; and from the moneys paid to the tax commissioner by permit holders authorized to conduct quarter horse racing, five-eighths of one per cent of all moneys wagered on that racing day shall be paid into the Ohio quarter horse development fund.

(D) In addition, subject to division (M) of this section, beginning on January 1, 1996, from the money paid to the tax commissioner as a tax under this section and division (A) of section 3769.087 of the Revised Code by harness horse permit holders, one-half of one per cent of the amount wagered on a racing day shall be paid into the Ohio standardbred development fund. Beginning January 1, 1998, the The payment to the Ohio standardbred development fund required under this division does not apply to county agricultural societies or independent agricultural societies.

The total amount paid to the Ohio standardbred development fund under this division, division (C) of this section, and division (A) of section 3769.087 of the Revised Code and the total amount paid to the Ohio quarter horse development fund under this division and division (A) of that section shall not exceed by more than six per cent the total amount paid into the fund under this division, division (C) of this section, and division (A) of section 3769.087 of the Revised Code in the immediately preceding calendar year.

(E) Subject to division (M) of this section, from the money paid as a tax under this chapter by harness and quarter horse permit holders, one-quarter of one per cent of the total of all moneys wagered on a racing day by each permit holder shall be paid into the state racing commission operating fund created by section 3769.03 of the Revised Code. This division does not apply to county and independent fairs and agricultural societies.

(F) Except as otherwise provided in section 3769.089 of the Revised Code, each permit holder authorized to conduct harness racing shall pay to the harness horsemen's purse pool a sum equal to fifty per cent of the pari-mutuel revenues retained by the permit holder as a commission after payment of the state tax under division (C) of this section. This fifty per cent payment is to be in addition to the purse distribution from breakage specified in this section.

(G) In addition, each permit holder authorized to conduct harness racing shall be allowed to retain the odd cents of all redistribution to be made on all mutual mutuel contributions exceeding a sum equal to the next lowest multiple of ten.

Forty per cent of that portion of that total sum of such odd cents shall be used by the permit holder for purse money for Ohio sired, bred, and owned colts, for purse money for Ohio bred horses, and for increased purse money for horse races. Upon the formation of the corporation described in section 3769.21 of the Revised Code to establish a harness horsemen's health and retirement fund, twenty-five per cent of that portion of that total sum of odd cents shall be paid at the close of each racing day by the permit holder to that corporation to establish and fund the health and retirement fund. Until that corporation is formed, that twenty-five per cent shall be paid at the close of each racing day by the permit holder to the tax commissioner or the tax commissioner's agent in the county seat of the county in which the permit holder operates race meetings. The remaining thirty-five per cent of that portion of that total sum of odd cents shall be retained by the permit holder.

(H) In addition, each permit holder authorized to conduct thoroughbred racing shall be allowed to retain the odd cents of all redistribution to be made on all mutuel contributions exceeding a sum equal to the next lowest multiple of ten. Twenty per cent of that portion of that total sum of such odd cents shall be used by the permit holder for increased purse money for horse races. Upon the formation of the corporation described in section 3769.21 of the Revised Code to establish a thoroughbred horsemen's health and retirement fund, forty-five per cent of that portion of that total sum of odd cents shall be paid at the close of each racing day by the permit holder to that corporation to establish and fund the health and retirement fund. Until that corporation is formed, that forty-five per cent shall be paid by the permit holder to the tax commissioner or the tax commissioner's agent in the county seat of the county in which the permit holder operates race meetings, at the close of each racing day. The remaining thirty-five per cent of that portion of that total sum of odd cents shall be retained by the permit holder.

(I) In addition, each permit holder authorized to conduct quarter horse racing shall be allowed to retain the odd cents of all redistribution to be made on all mutuel contributions exceeding a sum equal to the next lowest multiple of ten, subject to a tax of twenty-five per cent on that portion of the total sum of such odd cents that is in excess of two thousand dollars during a calendar year, which tax shall be paid at the close of each racing day by the permit holder to the tax commissioner or the tax commissioner's agent in the county seat of the county within which the permit holder operates race meetings. Forty per cent of that portion of that total sum of such odd cents shall be used by the permit holder for increased purse money for horse races. The remaining thirty-five per cent of that portion of that total sum of odd cents shall be retained by the permit holder.

(J)(1) To encourage the improvement of racing facilities for the benefit of the public, breeders, and horse owners, and to increase the revenue to the state from the increase in pari-mutuel wagering resulting from those improvements, the taxes paid by a permit holder to the state as provided for in this chapter shall be reduced by three-fourths of one per cent of the total amount wagered for those permit holders who make capital improvements to existing race tracks or construct new race tracks. The percentage of the reduction that may be taken each racing day shall equal seventy-five per cent of the taxes levied under divisions (B) and (C) of this section and section 3769.087 of the Revised Code, and division (F)(2) of section 3769.26 of the Revised Code, as applicable, divided by the calculated amount each fund should receive under divisions (B) and (C) of this section and section 3769.087 of the Revised Code, and division (F)(2) of section 3769.26 of the Revised Code and the reduction provided for in this division. If the resulting percentage is less than one, that percentage shall be multiplied by the amount of the reduction provided for in this division. Otherwise, the permit holder shall receive the full reduction provided for in this division. The amount of the allowable reduction not received shall be carried forward and applied against future tax liability. After any reductions expire, any reduction carried forward shall be treated as a reduction as provided for in this division.

If more than one permit holder is authorized to conduct racing at the facility that is being built or improved, the cost of the new race track or capital improvement shall be allocated between or among all the permit holders in the ratio that the permit holders' number of racing days bears to the total number of racing days conducted at the facility.

A reduction for a new race track or a capital improvement shall start from the day racing is first conducted following the date actual construction of the new race track or each capital improvement is completed and the construction cost has been approved by the state racing commission, unless otherwise provided in this section. A reduction for a new race track or a capital improvement shall continue for a period of twenty-five years for new race tracks and for fifteen years for capital improvements if the construction of the capital improvement or new race track commenced prior to March 29, 1988, and for a period of ten years for new race tracks or capital improvements if the construction of the capital improvement or new race track commenced on or after March 29, 1988, but before the effective date of this amendment June 6, 2001, or until the total tax reduction reaches seventy per cent of the approved cost of the new race track or capital improvement, as allocated to each permit holder, whichever occurs first. A reduction for a new race track or a capital improvement approved after the effective date of this amendment June 6, 2001, shall continue until the total tax reduction reaches one hundred per cent of the approved cost of the new race track or capital improvement, as allocated to each permit holder.

A reduction granted for a new race track or a capital improvement, the application for which was approved by the racing commission after March 29, 1988, but before the effective date of this amendment June 6, 2001, shall not commence nor shall the ten-year period begin to run until all prior tax reductions with respect to the same race track have ended. The total tax reduction because of capital improvements shall not, during any one year, exceed for all permit holders using any one track three-fourths of one per cent of the total amount wagered, regardless of the number of capital improvements made. Several capital improvements to a race track may be consolidated in an application if the state racing commission approved the application prior to March 29, 1988. No permit holder may receive a tax reduction for a capital improvement approved by the racing commission on or after March 29, 1988, at a race track until all tax reductions have ended for all prior capital improvements approved by the racing commission under this section or section 3769.20 of the Revised Code at that race track. If there are two or more permit holders operating meetings at the same track, they may consolidate their applications. The racing commission shall notify the tax commissioner when the reduction of tax begins and when it ends.

Each fiscal year the state racing commission shall submit a report to the tax commissioner, the office of budget and management, and the legislative service commission. The report shall identify each capital improvement project undertaken under this division and in progress at each race track, indicate the total cost of each project, state the tax reduction that resulted from each project during the immediately preceding fiscal year, estimate the tax reduction that will result from each project during the current fiscal year, state the total tax reduction that resulted from all such projects at all race tracks during the immediately preceding fiscal year, and estimate the total tax reduction that will result from all such projects at all race tracks during the current fiscal year.

(2) In order to qualify for the reduction in tax, a permit holder shall apply to the state racing commission in such form as the commission may require and shall provide full details of the new race track or capital improvement, including a schedule for its construction and completion, and set forth the costs and expenses incurred in connection with it. The racing commission shall not approve an application unless the permit holder shows that a contract for the new race track or capital improvement has been let under an unrestricted competitive bidding procedure, unless the contract is exempted by the controlling board because of its unusual nature. In determining whether to approve an application, the racing commission shall consider whether the new race track or capital improvement will promote the safety, convenience, and comfort of the racing public and horse owners and generally tend towards the improvement of racing in this state.

(3) If a new race track or capital improvement is approved by the state racing commission and construction has started, the tax reduction may be authorized by the commission upon presentation of copies of paid bills in excess of one hundred thousand dollars or ten per cent of the approved cost, whichever is greater. After the initial authorization, the permit holder shall present copies of paid bills. If the permit holder is in substantial compliance with the schedule for construction and completion of the new race track or capital improvement, the racing commission may authorize the continuation of the tax reduction upon the presentation of the additional paid bills. The total amount of the tax reduction authorized shall not exceed the percentage of the approved cost of the new race track or capital improvement specified in division (J)(1) of this section. The racing commission may terminate any tax reduction immediately if a permit holder fails to complete the new race track or capital improvement, or to substantially comply with the schedule for construction and completion of the new race track or capital improvement. If a permit holder fails to complete a new race track or capital improvement, the racing commission shall order the permit holder to repay to the state the total amount of tax reduced. The normal tax paid by the permit holder shall be increased by three-fourths of one per cent of the total amount wagered until the total amount of the additional tax collected equals the total amount of tax reduced.

(4) As used in this section division:

(a) "Capital improvement" means an addition, replacement, or remodeling of a structural unit of a race track facility costing at least one hundred thousand dollars, including, but not limited to, the construction of barns used exclusively for the race track facility, backstretch facilities for horsemen, paddock facilities, new pari-mutuel and totalizator equipment and appurtenances to that equipment purchased by the track, new access roads, new parking areas, the complete reconstruction, reshaping, and leveling of the racing surface and appurtenances, the installation of permanent new heating or air conditioning, roof replacement or restoration, installations of a permanent nature forming a part of the track structure, and construction of buildings that are located on a permit holder's premises. "Capital improvement" does not include the cost of replacement of equipment that is not permanently installed, ordinary repairs, painting, and maintenance required to keep a race track facility in ordinary operating condition.

(b) "New race track" includes the reconstruction of a race track damaged by fire or other cause that has been declared by the state racing commission, as a result of the damage, to be an inadequate facility for the safe operation of horse racing.

(c) "Approved cost" includes all debt service and interest costs that are associated with a capital improvement or new race track and that the state racing commission approves for a tax reduction under division (J) of this section.

(5) The state racing commission shall not approve an application for a tax reduction under this section if it has reasonable cause to believe that the actions or negligence of the permit holder substantially contributed to the damage suffered by the track due to fire or other cause. The racing commission shall obtain any data or information available from a fire marshal, law enforcement official, or insurance company concerning any fire or other damage suffered by a track, prior to approving an application for a tax reduction.

(6) The approved cost to which a tax reduction applies shall be determined by generally accepted accounting principles and verified by an audit of the permit holder's records upon completion of the project by the state racing commission, or by an independent certified public accountant selected by the permit holder and approved by the commission.

(K) No other license or excise tax or fee, except as provided in sections 3769.01 to 3769.14 of the Revised Code, shall be assessed or collected from such licensee by any county, township, district, municipal corporation, or other body having power to assess or collect a tax or fee. That portion of the tax paid under this section by permit holders for racing conducted at and during the course of an agricultural exposition or fair, and that portion of the tax that would have been paid by eligible permit holders into the PASSPORT fund as a result of racing conducted at and during the course of an agricultural exposition or fair, shall be deposited into the state treasury to the credit of the horse racing tax fund, which is hereby created for the use of the agricultural societies of the several counties in which the taxes originate. The state racing commission shall determine eligible permit holders for purposes of the preceding sentence, taking into account the breed of horse, the racing dates, the geographic proximity to the fair, and the best interests of Ohio racing. On the first day of any month on which there is money in the fund, the tax commissioner shall provide for payment to the treasurer of each agricultural society the amount of the taxes collected under this section upon racing conducted at and during the course of any exposition or fair conducted by the society.

(L) From the tax paid under this section by harness track permit holders, the tax commissioner shall pay into the Ohio thoroughbred race fund a sum equal to a percentage of the amount wagered upon which the tax is paid. The percentage shall be determined by the tax commissioner and shall be rounded to the nearest one-hundredth. The percentage shall be such that, when multiplied by the amount wagered upon which tax was paid by the harness track permit holders in the most recent year for which final figures are available, it results in a sum that substantially equals the same amount of tax paid by the tax commissioner during that year into the Ohio fairs fund from taxes paid by thoroughbred permit holders. This division does not apply to county and independent fairs and agricultural societies.

(M) Twenty-five per cent of the taxes levied on thoroughbred racing permit holders, harness racing permit holders, and quarter horse racing permit holders under this section, division (A) of section 3769.087 of the Revised Code, and division (F)(2) of section 3769.26 of the Revised Code shall be paid into the PASSPORT fund. The tax commissioner shall pay any money remaining, after the payment into the PASSPORT fund and the reductions provided for in division (J) of this section and in section 3769.20 of the Revised Code, into the Ohio fairs fund, Ohio thoroughbred race fund, Ohio standardbred development fund, Ohio quarter horse fund, and state racing commission operating fund as prescribed in this section and division (A) of section 3769.087 of the Revised Code. The tax commissioner shall thereafter use and apply the balance of the money paid as a tax by any permit holder to cover any shortage in the accounts of such funds resulting from an insufficient payment as a tax by any other permit holder. The moneys received by the tax commissioner shall be deposited weekly and paid by the tax commissioner into the funds to cover the total aggregate amount due from all permit holders to the funds, as calculated under this section and division (A) of section 3769.087 of the Revised Code, as applicable. If, after the payment into the PASSPORT fund, sufficient funds are not available from the tax deposited by the tax commissioner to pay the required amounts into the Ohio fairs fund, Ohio standardbred development fund, Ohio thoroughbred race fund, Ohio quarter horse fund, and the state racing commission operating fund, the tax commissioner shall prorate on a proportional basis the amount paid to each of the funds. Any shortage to the funds as a result of a proration shall be applied against future deposits for the same calendar year when funds are available. After this application, the tax commissioner shall pay any remaining money paid as a tax by all permit holders into the PASSPORT fund. This division does not apply to permit holders conducting racing at and during the course of an agricultural exposition or fair as described in division (K) of this section.

Sec. 3769.083.  (A) As used in this section:

(1) An "accredited Ohio thoroughbred horse" means a horse conceived in this state and born in this state which is both of the following:

(a) Born of a mare that is domiciled in this state at the time of the horse's conception, that remains continuously in the state through the date on which the horse is born, and that is registered as required by the rules of the state racing commission;

(b) By a stallion that stands for breeding purposes only in this state in the year in which the horse is conceived, and that is registered as required by the rules of the commission.

(2) An "Ohio foaled horse" means a horse registered as required by the rules of the state racing commission which is either of the following:

(a) A horse born of a mare that enters this state before foaling and remains continuously in this state until the horse is born;

(b) A thoroughbred foal produced within the state by any broodmare shipped into the state to foal and be bred to a registered Ohio stallion. To qualify this foal as an Ohio foaled horse, the broodmare shall remain in this state one year continuously after foaling or continuously through foaling to the cover of the Ohio stallion, whichever is sooner. All horses previously registered as Ohio conceived and foaled shall be considered as Ohio foaled horses effective January 1, 1976.

Any thoroughbred mare may leave this state for periods of time for purposes of activities such as veterinary treatment or surgery, sales purposes, breeding purposes, racing purposes, and similar activities if permission is granted by the state racing commission and the mare is returned to this state immediately upon the conclusion of the requested activity.

(3) "Horse," "stallion," "mare," or "foal" means a horse of the thoroughbred breed as distinguished from a horse of the standard breed or any other breed, and "race" means a race for thoroughbred horses conducted by a permit holder of the state racing commission.

(4) "Horse" includes animals of all ages and of both sexes.

(B) There is hereby created in the state treasury the Ohio thoroughbred race fund, to consist of moneys paid into it pursuant to sections 3769.08 and, 3769.087, and 3769.0813 of the Revised Code. All investment earnings on the cash balances in the fund shall be credited to it. Moneys to the credit of the fund shall be distributed on order of the state racing commission. The commission, with the advice and assistance of the Ohio thoroughbred racing advisory committee, shall use the fund, except as provided in divisions (C)(2) and (3) and (D) of this section, to promote races and provide purses for races for horses in the following classes:

(1) Accredited Ohio thoroughbred horses;

(2) Ohio foaled horses.

Not less than ten nor more than twenty-five per cent of the total money to be paid from the fund for all types of races shall be allocated to races restricted to accredited Ohio thoroughbred horses. The commission may combine the classes of horses described in divisions (B)(1) and (2) of this section in one race, except in stakes races.

(C)(1) Each permit holder conducting thoroughbred races shall schedule races each week for horses in the classes named in division (B) of this section; the number of the races shall be prescribed by the state racing commission. The commission, pursuant to division (B) of this section, shall prescribe the class or classes of the races to be held by each permit holder and, with the advice of the Ohio thoroughbred racing advisory committee, shall fix the dates and conditions of the races and the amount of moneys to be paid from the Ohio thoroughbred race fund to be added in each race to the minimum purse established by the permit holder for the class of race held.

(2) The commission, with the advice of the Ohio thoroughbred racing advisory committee, may provide for stakes races to be run each year, and fix the number of stakes races and the time, place, and conditions under which each shall be run. The commission shall fix the amount of moneys to be paid from the Ohio thoroughbred race fund to be added to the purse provided for each stakes race by the permit holder, except that, in at least four stakes races each year, the commission shall require, if four stakes races can be arranged, that the permit holder conducting the stakes race provide no less than fifteen thousand dollars for the purse for the stakes race, and the commission shall provide moneys from the fund to be added to the purse in an amount equal to or greater than the amount provided by the permit holder. The commission may require a nominating, sustaining, and entry fee not to exceed one per cent of the money added from the fund for each horse in any stakes race, which fee shall be added to the purse for the race.

Stakes races where money is added from the Ohio thoroughbred race fund shall be open only to accredited Ohio thoroughbred horses and Ohio foaled horses. Twenty-five per cent of the total moneys to be paid from the fund for stakes races shall be allocated to races for only accredited Ohio thoroughbred horses. The commission may require a nominating, sustaining, and entry fee, not to exceed one per cent of the money added from the fund, for each horse in any of these stakes races. These fees shall be accumulated by the commission and shall be paid out by the commission at its discretion as part of the purse money for additional races.

(3) The commission may pay from the Ohio thoroughbred race fund to the breeder of a horse of class (1) or (2) of division (B) of this section winning first, second, or third prize money of a purse for a thoroughbred race an amount not to exceed fifteen per cent of the first, second, or third prize money of the purse. For the purposes of this division, the term "breeder" shall be defined by rule of the commission.

The commission also may provide for stallion owners' awards in an amount equal to not less than three nor more than ten per cent of the first, second, or third place share of the purse. The award shall be paid to the owner of the stallion, provided that the stallion was standing in this state as provided in division (A)(1)(b) of this section at the time the horse placing first, second, or third was conceived.

(D) The state racing commission may provide for the expenditure of moneys from the Ohio thoroughbred race fund in an amount not to exceed in any one calendar year ten per cent of the total amount received in the account that year to provide for research projects directed toward improving the breeding, raising, racing, and health and soundness of thoroughbred horses in the state and toward education or promotion of the industry. Research for which the moneys from the fund may be used may include, but shall not be limited to, studies of pre-race blood testing, post-race testing, improvement of the breed, and nutrition.

(E) The state racing commission shall appoint qualified personnel as may be required to supervise registration of horses under the terms of this section, to determine the eligibility of horses for accredited Ohio thoroughbred races, Ohio foaled races, and the stakes races authorized by division (C)(2) of this section, and to assist the Ohio thoroughbred racing advisory committee and the commission in determining the conditions, class, and quality of the race program to be established under this section so as to carry out the purposes of this section. The personnel shall serve at the pleasure of the commission, and compensation shall be fixed by the commission. The compensation of the personnel and necessary expenses shall be paid out of the Ohio thoroughbred race fund.

The commission shall adopt rules as are necessary to carry out this section and shall administer the stakes race program and other races supported by the Ohio thoroughbred race fund in a manner best designed to aid in the development of the thoroughbred horse industry in the state, to upgrade the quality of horse racing in the state, and to improve the quality of horses conceived and foaled in the state.

Sec. 3769.085. (A) There is hereby created in the state treasury the Ohio standardbred development fund, to consist of moneys paid into it pursuant to section sections 3769.08 and 3769.0813 of the Revised Code and any fees assessed for or on behalf of the Ohio sires stakes races. All fees so assessed shall be exempt from the requirements of divisions (D) and (M) of that section 3769.08 of the Revised Code. All investment earnings on the cash balance in the fund shall be credited to the fund. Moneys to the credit of the fund shall be distributed on order of the state racing commission with the approval of the Ohio standardbred development commission.

(B) The Ohio standardbred development commission shall consist of three members, all to be residents of this state knowledgeable in breeding and racing, to be appointed by the governor with the advice and consent of the senate. One member shall be a standardbred breeder, and one member shall be a standardbred owner. Of the initial appointments, one member shall be appointed for a term ending June 30, 1977, and two members shall be appointed for terms ending June 30, 1979. Thereafter, appointments for other than unexpired terms shall be for four years. Terms shall begin the first day of July and end the thirtieth day of June. Any member appointed to fill a vacancy occurring prior to the expiration of the term for which the member's predecessor was appointed shall hold office for the remainder of that term. Any member shall continue in office subsequent to the expiration date of the member's term until a successor takes office. Members shall receive no compensation, except that they shall be paid actual and necessary expenses from the Ohio standardbred development fund. The state racing commission also shall be reimbursed from the fund for actual expenses approved by the development commission. The development commission may elect one member to serve as secretary.

(C) Upon application not later than the first day of December from the harness tracks conducting races with pari-mutuel wagering, other than agricultural expositions and fairs, the Ohio standardbred development commission, after a hearing and not later than the twentieth day of January, shall allocate and approve all available moneys for colt races for two-year-old and three-year-old colts and fillies, both trotting and pacing. Separate races for fillies shall be provided at each age and gait. Up to five races and a championship race shall be scheduled for each of the eight categories of age, sex, and gait. The allocations shall take into account the time of year that racing colts is feasible, the equity and continuity of the proposed dates for racing events, and the amounts to be added by the tracks, looking to the maximum benefit for those participating in the races. Representatives of the tracks and the Ohio harness horsemen's association shall be given an opportunity to be heard before the allocations are made. No races shall be contested earlier than the first day of May or later than the first day of November; all permit holders operating extended pari-mutuel meetings between those dates shall be entitled to at least three races. No funds for a race shall be allocated to and paid to a permit holder by the development commission unless the permit holder adds at least twenty-five per cent to the amount allocated by the development commission, and not less than five thousand dollars to each race.

Colts and fillies eligible to the races shall be only those sired by a standardbred stallion that was registered with the state racing commission and stood in the state the entire breeding season of the year the colt or filly was conceived.

If the development commission concludes that sufficient funds are available to add aged races without reducing purse levels of the colt and filly races, the development commission may allocate funds to four-year-old and up races of each sex and gait with Ohio eligibility required as set forth in this section.

(D) The state racing commission may allocate an amount not to exceed five per cent of the total Ohio standardbred development fund available in any one calendar year to research projects directed toward improving the breeding, raising, racing, and health and soundness of horses in the state and toward education or promotion of the industry.

Sec. 3769.088.  (A) If any permit holder required by this chapter to pay the taxes levied by sections 3769.08, 3769.087, 3769.0813, 3769.26, and 3769.28 of the Revised Code fails to pay the taxes, the tax commissioner may make an assessment against the permit holder based upon any information in the commissioner's possession.

A penalty of up to fifteen per cent may be added to the amount of every assessment made under this section. The commissioner may adopt rules providing for the imposition and remission of penalties added to assessments made under this section.

The commissioner shall give the party assessed written notice of the assessment in the manner provided in section 5703.37 of the Revised Code. With the notice, the commissioner shall provide instructions on how to petition for reassessment and request a hearing on the petition.

(B) Unless the party assessed files with the tax commissioner within sixty days after service of the notice of assessment, either personally or by certified mail, a written petition for reassessment signed by the party assessed or that party's authorized agent having knowledge of the facts, the assessment becomes final, and the amount of the assessment is due and payable from the party assessed to the commissioner. The petition shall indicate the objections of the party assessed, but additional objections may be raised in writing if received by the commissioner prior to the date shown on the final determination. If the petition has been properly filed, the commissioner shall proceed under section 5703.60 of the Revised Code.

(C) After an assessment becomes final, if any portion of the assessment remains unpaid, including accrued interest, a certified copy of the tax commissioner's entry making the assessment final may be filed in the office of the clerk of the court of common pleas in the county in which the place, track, or enclosure for which the permit was issued is located or the county in which the party assessed resides or has its principal place of business. If the party assessed maintains no place of business in this state and is not a resident of this state, the certified copy of the entry may be filed in the office of the clerk of the court of common pleas of Franklin county.

Immediately upon the filing of the entry, the clerk shall enter a judgment for the state against the party assessed in the amount shown on the entry. The judgment may be filed by the clerk in a loose-leaf book entitled "special judgments for state horse racing tax," and shall have the same effect as other judgments. Execution shall issue upon the judgment upon the request of the tax commissioner, and all laws applicable to sales on execution shall apply to sales made under the judgment.

The portion of the assessment not paid within sixty days after the day the assessment was issued shall bear interest at the rate per annum prescribed by section 5703.47 of the Revised Code from the day the tax commissioner issues the assessment until the day the assessment is paid. Interest shall be paid in the same manner as the tax and may be collected by the issuance of an assessment under this section.

(D) All money collected by the tax commissioner under this section shall be treated as revenue arising from the taxes imposed by sections 3769.08, 3769.087, 3769.0813, 3769.26, and 3769.28 of the Revised Code.

Sec. 3769.0811. As used in sections 3769.0811 to 3769.0813 of the Revised Code:

(A) "Instant racing system" means a telecast, for pari-mutuel wagering purposes, of audio and visual signals of horse races previously conducted at facilities inside or outside this state, that is to a place, track, or enclosure for which a permit is issued under section 3769.06 of the Revised Code, and that is displayed on individual viewing terminals.

(B) "Permit holder" has the same meaning as in section 3769.25 of the Revised Code.

(C) "Permit holder's commission" means an amount that does not exceed twelve per cent of the total of all moneys wagered on a racing day on horse races telecast via an instant racing system to a permit holder's place, track, or enclosure for which a permit is issued under section 3769.06 of the Revised Code.

Sec. 3769.0812. (A) Upon written request by any permit holder, the state racing commission shall authorize the permit holder to operate on racing days an instant racing system at the permit holder's place, track, or enclosure for which the permit is issued under section 3769.06 of the Revised Code.

(B) Each permit holder that receives an authorization may install and operate individual viewing terminals at the permit holder's place, track, or enclosure to implement an instant racing system. A permit holder shall design and operate the instant racing system so that a person is not able to fast-forward the last ten seconds of any telecast.

Sec. 3769.0813. (A) The moneys wagered on horse races telecast via an instant racing system on a racing day shall be separated from the moneys wagered on live horse races conducted at, and on other horse races simulcast to, the permit holder's place, track, or enclosure on that racing day. Each permit holder shall retain a permit holder's commission from the former moneys.

(B) At the close of each racing day, the permit holder shall pay by check, draft, or money order to the state tax commissioner, as a tax, an amount equal to twenty per cent of the permit holder's commission. The moneys wagered on horse races telecast via an instant racing system are subject only to this tax and not to any tax levied under section 3769.08 or 3769.087 or division (E) of section 3769.089 of the Revised Code.

(C) The amount of the permit holder's commission that remains after the payment to the state tax commissioner of the tax levied under division (B) of this section is the permit holder's net commission. The net commission shall be allocated in the following manner:

(1)(a) The permit holder shall pay an amount equal to nineteen per cent of the net commission to the permit holder's purse account.

(b) The Ohio division of the horsemen's benevolent and protective association may direct that up to fifty per cent of the net commission that is paid to the permit holder's purse account under division (C)(1)(a) of this section may be designated for either of the following:

(i) Horsemen's health and benevolence programs;

(ii) Payment into the Ohio thoroughbred race fund created by section 3769.083 of the Revised Code.

(c) The Ohio harness horsemen's association may direct that up to fifty per cent of the net commission that is paid to the permit holder's purse account under division (C)(1)(a) of this section may be designated for any of the following:

(i) Horsemen's health and benevolence programs;

(ii) Payment into the Ohio standardbred development fund created by section 3769.085 of the Revised Code;

(iii) Payment into the Ohio fairs fund created by section 3769.082 of the Revised Code.

(2) The permit holder shall pay an amount not to exceed one per cent of the net commission, as determined by rule of the state racing commission, into the state racing commission operating fund created by section 3769.03 of the Revised Code, as an administrative fee.

(3) The permit holder shall retain the balance of the net commission that remains after paying the amounts described in divisions (C)(1) and (2) of this section.

Section 2.  That existing sections 3769.03, 3769.08, 3769.083, 3769.085, and 3769.088 of the Revised Code are hereby repealed.