Section 23-110-407 - Disposition of wagering money - Portion for franchise holder(a)(1) At the racing meet held in calendar year 1989 and at the racing meet held in each calendar year thereafter, the franchise holder shall withhold not more than seventeen percent (17%) and not less than five and one-half percent (5.5%) of all moneys wagered on races in which the wagerer is required to select one (1) horse and not more than twenty-one percent (21%) and not less than five and one-half percent (5.5%) of all moneys wagered on races in which the wagerer is required to select more than one (1) horse. Within those limits, the exact amounts to be withheld shall be specified in the wagering program requested by the franchise holder and approved by the Arkansas Racing Commission as specified in § 23-110-402.(2) From the amounts withheld pursuant to the provisions of subdivision (a)(1) of this section, the franchise holder shall pay the following: (A)(i) At all racing meets conducted in calendar years 1989 - 2001, an amount equal to two and one-half percent (2.5%) of all moneys wagered on all races shall be paid to the commission as a privilege tax for the use and benefit of the State of Arkansas.(ii) At all racing meets conducted in calendar year 2002 and in each calendar year thereafter, an amount equal to one percent (1%) of all moneys wagered on all races shall be paid to the commission as a privilege tax for the use and benefit of the State of Arkansas; and(B)(i) In the case of all racing meets for thoroughbred horses, an amount equal to one-half of one percent (0.5%) of all moneys wagered shall be paid to the commission for deposit into the Arkansas Racing Commission Purse and Awards Fund to be used for purse supplements, breeders' awards, owners' awards, and stallion awards as hereinafter specified.(ii) The number of Arkansas-bred races shall be a matter for negotiation between the franchise holder and the Arkansas Thoroughbred Breeders' and Horsemen's Association.(3) The remainder of the amounts withheld pursuant to the provisions of subdivision (a)(1) of this section shall be retained by the franchise holder for use as follows: (A)(i) For all racing meets:(a) In calendar years 1989 - 2001, three percent (3%) of all moneys wagered on races in which the wagerer is required to select one (1) horse, and two percent (2%) of all moneys wagered on races where the wagerer is required to select more than one (1) horse, i.e., the purse, construction, and patronage and tourism promotion moneys; and(b) In calendar year 2002 and in each calendar year thereafter, four and one-half percent (4.5%) of all moneys wagered on races in which the wagerer is required to select one (1) horse, and three and one-half percent (3.5%) of all moneys wagered on races in which the wagerer is required to select more than one (1) horse, i.e., the purse, construction, and patronage and tourism promotion moneys, shall be set aside by the franchise holder in a separate account to be used only for purses and construction, for debt service on money borrowed by the franchise holder for construction, or for promotions to encourage patronage and tourism.(ii)(a) As used in this section, the term "construction":(1) Shall include all items and expenditures incurred in keeping the overall racing facility in the best possible condition for the patrons, horsemen, and franchise holder, including, without limitation, land acquisition, provided that the franchise holder submits plans for utilizing the acquired land for an approved purpose within five (5) years of the acquisition, new construction with related equipment, and reconstruction, renovation, reconditioning, and repairing of facilities with related equipment;(2) Shall not include ordinary or routine maintenance of the overall racing facility and shall not include the construction or improvement of areas of the racing facility not generally accessible by, or used for the benefit of, either the horsemen or patrons, or both; and(3) Shall not apply to office furniture, office telephones, or other office equipment primarily devoted to the use of the franchise holder and providing little or no benefit to either horsemen or patrons, or both.(b) The franchise holder may be reimbursed only for construction and patronage and tourism promotion expenditures from the purse, construction, and patronage and tourism promotion fund after submitting a claim that itemizes each expenditure listing the specific expenditure and the payee of the expenditure and stating in specific terms with respect to construction expenditures how the expenditure jointly benefits the patrons, horsemen, and franchise holder.(iii)(a) The commission shall have jurisdiction and shall seek the assistance of the Department of Finance and Administration to check and verify compliance by the franchise holder with the provisions of this subdivision (a)(3). The commission shall make periodic determinations as to compliance under such rules as the commission shall adopt.(b) The franchise holder must deliver to the department any documents reasonably requested to check and verify compliance with this subdivision (a)(3), within thirty (30) days of receiving a written request for the documents. If the department does not receive the requested documents within the time period provided, the Secretary of the Department of Finance and Administration shall notify the commission, and no reimbursement shall be approved from the fund until the documents are delivered.(c) In the case of construction and patronage and tourism promotion, the commission may use a multiyear approach based on a multiyear program being undertaken by the franchise holder so that accountability for expenditures may be based on expenditures made during the entire multiyear period out of the purse, construction, and patronage and tourism promotion moneys derived during the multiyear period, provided that the multiyear period shall not exceed five (5) years, unless the commission makes a specific determination that a longer period is necessary to finance long-term construction projects for the joint benefit of patrons, horsemen, and the franchise holder.(d) The franchise holder may seek prior approval from the commission for expenditures. The application for the approval must contain the information required by subdivision (a)(3)(A)(ii)(b) of this section. The initial approval will be subject to a final approval by the commission that the expenditures were made for the approved purposes in compliance with the requirements of this subdivision (a)(3), and the commission shall seek assistance from the department to verify that the expenditures were made for the approved purposes.(e) If there is a final determination that any of the purse, construction, and patronage and tourism promotion moneys have not been used for the purposes specified in this subdivision (a)(3), the franchise holder shall pay the amount equal to any moneys used for an unauthorized purpose to the commission for the use and benefit of the State of Arkansas.(iv)(a) The purse, construction, and patronage and tourism promotion moneys shall not be subject to the provisions of any contract or agreement between the franchise holder and any organization representing horsemen. To that end, any contractual obligations for the use of moneys for purses shall not apply to any expenditures for construction or patronage and tourism promotion out of the purse, construction, and patronage and tourism promotion moneys.(b) Any expenditures for purses out of the purse, construction, and patronage and tourism promotion moneys shall be in addition to contractual purse obligations affecting moneys other than the purse, construction, and patronage and tourism promotion moneys.(c) The franchise holder shall determine the amount of the purse, construction, and patronage and tourism promotion moneys to be used for the authorized purposes, except that at least one-half (1/2) of the purse, construction, and patronage and tourism promotion moneys must be used for purses;(v) If the amount of approved expenditures exceeds the balance of the purse, construction, and patronage and tourism promotion fund, the excess amount will remain payable to the franchise holder out of the purse, construction, and patronage and tourism promotion fund. However, with respect to expenditures incurred by the franchise holder on or after January 1, 2001, interest shall not accrue on the deficit balance, unless the interest is payable to an unrelated third-party lender with respect to indebtedness directly incurred to finance construction expenditures as contemplated by this subdivision (a)(3);(B) The remainder of the amounts withheld pursuant to the provisions of subdivision (a)(1) of this section shall be retained by the franchise holder for its own use and benefit; and(C) One percent (1%) of the moneys set aside by the franchise holder for purses from the moneys retained by it pursuant to the provisions of this subdivision (a)(3), including that portion of the purse, construction, and patronage and tourism promotion moneys actually used for purses, shall be paid from the moneys set aside for purses to the Arkansas Horsemen's Benevolent and Protective Association, Inc. to be used for its benevolent purposes. The payment shall be made by the franchise holder at the conclusion of each racing meet.(b) All payments to the commission under subdivision (a)(2)(B) of this section and all payments to a city or town and a county shall be made by the franchise holder at the conclusion of the racing meet involved. Such payments to a city or town and a county shall be used by the city, town, or county for such lawful purposes as the city, town, or county shall determine. All payments due the State of Arkansas under subdivision (a)(2)(A) of this section shall be paid to the commission daily.Amended by Act 2019, No. 315,§ 2816, eff. 7/24/2019.Acts 1957, No. 46, § 23; 1965, No. 142, § 1; 1967, No. 130, § 3; 1983, No. 251, §§ 2, 3; A.S.A. 1947, § 84-2749; Acts 1987, No. 440, § 4; 1989, No. 12, § 3; 1999, No. 1576, § 1; 2001, No. 1294, § 1.