A.R.S. tit. 5 | Title 5 — Amusements and Sports

Chapter 1 Horse and Dog Racing

Article 1 General Provisions

§ 5-101 Definitions

In this article, unless the context otherwise requires:

"Additional wagering facility" means a facility that is not the enclosure in which authorized racing takes place but that meets the requirements of section 5-111, subsection A and is used by a permittee for handling pari-mutuel wagering.
"Advance deposit wagering" means a form of pari-mutuel wagering that allows a person to deposit monies in advance in an account with an advance deposit provider and use the monies to pay for pari-mutuel wagering on live or simulcast racing that the advance deposit pari-mutuel wagering permittee accepts or makes.
"Advance deposit wagering provider" means a betting system or multijurisdictional wagering provider that is authorized to conduct advance deposit wagering pursuant to this article.
"Applicant" means a person, partnership, association or corporation placing before the department an application for a permit or license.
"Association" means a body of persons, corporations, partnerships or associations, united and acting together without a charter from the state for the prosecution of some common enterprise.
"Commercial horse racing" means horse racing conducted other than by a county fair association.
"Commission" means the Arizona racing commission.
"Concessionaire" means a person, partnership, association or corporation that offers goods or services for sale to the public, a permittee or a licensee at an enclosure in which authorized racing takes place or an additional wagering facility.
"County fair facility" means any place, enclosure or track constructed in accordance with a permit issued by the commission for the purpose of running county fair horse racing dates as well as any commercial dates for horse racing that may be awarded by the commission in reference to the location.
"County fair racing association" means an association duly authorized by the board of supervisors to conduct a county fair racing meeting for the benefit of the county.
"Dark day simulcast" means a simulcast received on a day when there are no posted races conducted at the enclosure in which authorized racing takes place.
"Department" means the department of gaming.
"Desensitized" means that a horse's legs on arrival at the receiving barn or saddling paddock do not respond appropriately to tests for feeling administered by an official veterinarian.
"Director" means the director of the department of gaming.
"Dog racing" means racing in which greyhound dogs chase a mechanical lure.
"Entered" means that a horse or dog has been registered with an authorized racing official as a participant in a specified race and has not been withdrawn prior to presentation of the horse or dog for inspection and testing as provided in section 5-105.
"Financial interest" means any direct pecuniary interest.
"Firm" means a business unit or enterprise that transacts business.
"Handle" means the total amount of money contributed to all pari-mutuel pools by bettors.
"Harness racing" means horse racing in which the horses are harnessed to a sulky, carriage or similar vehicle and driven by a driver.
"Horse racing" means racing in which horses are mounted and ridden by jockeys. For purposes of county fair racing meetings, "horse racing" means racing in which horses or mules are mounted and ridden by jockeys.
"License" means the license issued by the department to each employee or other person participating in any capacity in a racing meeting, including officials and employees of the pari-mutuel department.
"Pari-mutuel wagering" means a system of betting that provides for the distribution among the winning patrons of at least the total amount wagered less the amount withheld under state law.
"Permit" means a permit for a racing meeting issued under this article.
"Racing meeting" means a number of days of racing allotted by the commission in one permit.
"Simulcast" means the telecast shown within this state of live audio and visual signals of horse, harness or dog races conducted at an out-of-state track or the telecast shown outside this state of live audio and visual signals of horse or harness races originating within this state for the purpose of pari-mutuel wagering.
"Source market fee" means the fee that an advance deposit wagering provider pays to a commercial permittee in the state where the advance deposit wagering customer resides.
"Telephone" means any device that a person uses for voice communications in connection with the services of a telephone company.
"Unauthorized racing meeting" means any racing meeting conducted outside the bounds of a permit.
"Undesirable" includes known bookmakers, touts, persons convicted of a violation of this article or of any law prohibiting bookmaking or any other illegal forms of wagering, or any other person whose presence would, in the opinion of the director, be inimical to the interests of the state.
"Week" means seven consecutive days beginning on Monday and ending on Sunday, mountain standard time.

§ 5-101.01 Division of racing; director; qualifications; term; deputy director; conflict of interest

A. There is established a division of racing within the department of gaming.

B. The director shall administer the division. To be eligible for appointment as director, a person must have a minimum of five years of experience in business and administration and shall not have a financial interest in a racetrack or in the racing industry in this state during that person's appointment.

C. The director may establish the position of deputy director of the division.

D. The position of deputy director, if applicable, is exempt from title 41, chapter 4, articles 5 and 6. The deputy director, if applicable, is eligible to receive compensation pursuant to section 38-611.

E. The provisions of title 38, chapter 3, article 8, relating to conflict of interest, apply to the director and all other employees of the department.

F. Neither the director, any employee of the department nor any member of the immediate family of the director or other employee of the department may:

Have any pecuniary interest in a racetrack in this state or in any stable, compound or farm licensed under this chapter.
Wager money at a racetrack enclosure or additional wagering facility in this state or wager money on the results of any race held at a racetrack enclosure in this state.
Hold more than a five percent interest in any entity doing business with a racetrack in this state.
Have any interest, whether direct or indirect, in a license issued pursuant to this chapter or in a licensee, facility or entity that is involved in any way with pari-mutuel wagering. For the purposes of this paragraph, "interest" includes employment.

G. Failure to comply with subsection F of this section is grounds for dismissal.

H. For the purposes of subsection F of this section, "immediate family" means a spouse or children who regularly reside in the household of the director or other employee of the department.

§ 5-102 Arizona racing commission; members; appointment; terms

There shall be an Arizona racing commission consisting of five members, who shall be appointed by the governor pursuant to section 38-211. Appointment shall be for a term of five years which shall expire on the third Monday in January of the appropriate year.

§ 5-103 Commissioners; qualifications; oath; interest in racing prohibited; exception; annual report

A. A member of the commission shall have been a resident of this state and a qualified elector for at least five years before the governor appoints the member.

B. Before entering on the discharge of the appointee's duties, each appointee shall take the official oath.

C. A person who has a financial interest, either directly or indirectly, in a racetrack, or the operation of licensed wagering on the results of races, is not qualified for membership on the commission or appointment or employment by the commission, but this subsection does not affect the entrance into a race outside this state of a horse or dog belonging to a member, or the winning of a purse or award by a member's horse or dog.

D. A commissioner or member or a relative of the commissioner or member to the first degree of consanguinity may not have a financial interest in a licensee or permittee regulated by the division.

E. Of the five members appointed to the commission, two shall have a financial interest or substantial experience in the horse or harness racing industry.

F. Members of the commission are eligible to receive compensation pursuant to section 38-611 for each day spent in the discharge of their duties and reimbursement for all expenses necessarily and properly incurred in attending meetings of or for the commission.

G. The governor shall remove any commissioner who ceases to meet the qualifications prescribed by this section.

§ 5-103.01 Prohibited activities

An employee or appointee of the commission may not:

Enter into any business dealing, venture or contract with an owner or lessee of a race track or any permittee.
Be employed in any capacity by any race track or permittee.
Participate as an owner-trainer, trainer or jockey in any racing meeting conducted in this state.

§ 5-104 Arizona racing commission; director; division; powers and duties

A. The commission shall:

Issue racing dates.
Prepare and adopt complete rules to govern the racing meetings that are required to protect and promote the safety and welfare of the animals participating in racing meetings, to protect and promote public health, safety and the proper conduct of racing and pari-mutuel wagering and any other matter pertaining to the proper conduct of racing within this state.
Conduct hearings on applications for permits and approve permits and shall conduct rehearings on licensing and regulatory decisions made by the director as required pursuant to rules adopted by the commission.
Conduct all reviews of applications to construct capital improvements at racetracks as provided in this chapter.

B. The director shall license personnel and shall regulate and supervise all racing meetings held and pari-mutuel wagering conducted in this state and cause the various places where racing meetings are held and wagering is conducted to be visited and inspected on a regular basis. The director may delegate to stewards any of the director's powers and duties that are necessary to fully carry out and effectuate the purposes of this chapter. The director shall exercise immediate supervision over the division. The director is subject to ongoing supervision by the commission, and the commission may approve or reject decisions of the director in accordance with rules established by the commission.

C. The commission or the division is authorized to allow stewards, with the written approval of the director, to require a jockey, apprentice jockey, sulky driver, groom, horseshoer, outrider, trainer, assistant trainer, exercise rider, pony rider, starter, assistant starter, jockey's agent, veterinarian, assistant veterinarian, cool-out, security or maintenance worker, official or individual licensed in an occupational category whose role requires direct hands-on contact with horses, while on the grounds of a permittee, to submit to a test if the stewards have reason to believe the licensee is under the influence of or unlawfully in possession of any prohibited substance regulated by title 13, chapter 34.

D. The division shall employ the services of the office of administrative hearings to conduct hearings on matters requested to be heard by the director or the commission for the division except for those rehearings that are required by the terms of this chapter to be conducted by the commission. Any person adversely affected by a decision of a steward or by any other decision of the division may request a hearing on the decision. The decision of the administrative law judge becomes the decision of the director unless rejected or modified by the director within thirty days. The commission may hear any appeal of a decision of the director in accordance with title 41, chapter 6, article 10.

E. The division may visit and investigate the offices, tracks or places of business of any permittee and place in those offices, tracks or places of business expert accountants and other persons as the division deems necessary for the purpose of ascertaining that the permittee or any licensee is in compliance with the rules adopted pursuant to this article.

F. The division shall establish and collect the following licensing fees and regulatory assessments, which shall not be reduced for capital improvements pursuant to section 5-111.02:

For each racing license issued, a license fee.
From the purse accounts provided for in section 5-111, a regulatory assessment to pay for racing animal medication testing, animal safety and welfare.
From each permittee, a regulatory assessment for each day of dark day simulcasting conducted in excess of the number of live racing days conducted by the permittee.
From each commercial racing permittee, a regulatory assessment payable from amounts deducted from pari-mutuel pools by the permittee, in addition to the amounts the permittee is authorized to deduct pursuant to section 5-111, subsection B from amounts wagered on live and simulcast races from in-state and out-of-state wagering handled by the permittee.

G. The commission shall establish financial assistance procedures for promoting adoption of retired racehorses. The provision of financial assistance to nonprofit enterprises for the purpose of promoting adoption of retired racehorses is contingent on a finding by the commission that the program presented by the enterprise is in the best interest of the racing industry and this state. On a finding by the commission, the commission is authorized to make grants to nonprofit enterprises whose programs promote adoption of retired racehorses. The commission shall develop an application process. The commission shall require an enterprise to report to the commission on the use of grants under this subsection. Financial assistance for nonprofit enterprises that promote adoption of retired racehorses under this subsection shall not exceed the amount of retired racehorse adoption surcharges collected pursuant to this subsection. The commission shall collect a retired racehorse adoption surcharge in addition to each civil penalty assessed in connection with horse or harness racing pursuant to this article. The amount of the retired racehorse adoption surcharge shall be five percent of the amount collected for each applicable civil penalty.

H. A license is valid for the period established by the commission, but not more than five years, except for a temporary license issued pursuant to section 5-107.01, subsection F. The licensing period shall begin July 1.

I. A person may submit an application in writing that objects to any decision of track stewards within three days after the official notification of the decision. On application, the division or administrative law judge shall review the objection. In the case of a suspension of a license by the track stewards, the suspension shall run for a period of not more than six months. Before the end of this suspension period, filing an application for review is not cause for reinstatement. If at the end of this suspension period the division or administrative law judge has not held a hearing to review the decision of the stewards, the suspended license shall be reinstated until the division or administrative law judge holds a hearing to review the objection. Except as provided in section 41-1092.08, subsection H, a final decision of the commission is subject to judicial review pursuant to title 12, chapter 7, article 6.

J. The commission or the director may issue subpoenas for the attendance of witnesses and the production of books, records and documents relevant and material to a particular matter before the commission or division and the subpoenas shall be served and enforced in accordance with title 41, chapter 6, article 10.

K. Any member of the commission, the administrative law judge or the director or the director's designee may administer oaths, and the oaths shall be administered to any person who appears before the commission to give testimony or information pertaining to matters before the commission.

L. The commission shall adopt rules that require permittees to retain for three months all official race photographs and videotapes. The division shall retain all photographs and videotapes that are used as evidence in an administrative proceeding until the conclusion of the proceeding and any subsequent judicial proceeding. All photographs and videotapes must be available to the public on request, including photographs and videotapes of races concerning which an objection is made, regardless of whether the objection is allowed or disallowed.

M. The director may establish a management review section for the development, implementation and operation of a system of management reports and controls in major areas of division operations, including licensing, workload management and staffing, and enforcement of this article and the rules of the commission.

N. In cooperation with the department of public safety, the director shall establish a cooperative fingerprint registration system. Each applicant for a license or permit under this article or any other person who has a financial interest in the business or corporation making the application shall submit to fingerprint registration as part of the background investigation conducted pursuant to section 5-108. The cooperative fingerprint registration system shall be maintained in an updated form using information from available law enforcement sources and shall provide current information to the director on request as to the fitness of each racing permittee and each racing licensee to engage in the racing industry in this state.

O. The director shall develop and require division staff to use uniform procedural manuals in the issuance of any license or permit under this article and in the enforcement of this article and the rules adopted under this article.

P. The director shall submit an annual report containing operational and economic performance information as necessary to evaluate the department's budget request for the next fiscal year to the governor, the speaker of the house of representatives, the president of the senate and the secretary of state not later than September 30 each year. The annual report shall be for the preceding fiscal year and shall contain performance information as follows:

The total state revenues for the previous fiscal year from the overall pari-mutuel handle with an itemization for each horse racing meeting, each harness racing meeting, each advanced deposit wagering permittee and each additional wagering facility.
The total state revenues for the previous fiscal year from the regulation of racing, including licensing fees assessed pursuant to subsection F of this section and monetary penalties assessed pursuant to section 5-108.02.
The amount and use of capital improvement funds pursuant to section 5-111.02 that would otherwise be state revenues.
The number of licenses and permits issued, renewed, pending and revoked during the previous fiscal year.
The investigations conducted during the previous fiscal year and any action taken as a result of the investigations.
The division budget for the immediately preceding three fiscal years, including the number of full-time, part-time, temporary and contract employees, a statement of budget needs for the forthcoming fiscal year and a statement of the minimum staff necessary to accomplish these objectives.
Revenues generated for this state for the preceding fiscal year by persons holding racing meeting and advanced deposit wagering permits.
Recommendations for increasing state revenues from the regulation of the racing industry while maintaining the financial health of the industry and protecting the public interest.

Q. The commission may certify animals as Arizona bred or as Arizona stallions. The commission may delegate this authority to a breeders' association it contracts with for these purposes. The commission may authorize the association, racing organization or division to charge and collect a reasonable fee to cover the cost of breeding or ownership certification or transfer of ownership for racing purposes.

R. The commission may obtain the services of the office of administrative hearings on any matter that the commission is empowered to hear.

S. The division may adopt rules pursuant to title 41, chapter 6 to carry out the purposes of this article, ensure the safety and integrity of racing in this state and protect the public interest.

§ 5-104.01 Audits and special investigations; exemption

A. The department shall require that an annual financial audit be conducted of each permittee licensed under this chapter. The department may also require a financial audit from any concessionaire licensed under this article. The department may, for any audit required by this section, require a permittee or concessionaire to supply a certified audit to the department. The commission shall adopt rules that require each permittee to select an accounting firm approved by the auditor general to conduct the annual financial audit when a certified audit is required. Audits performed pursuant to this section shall be conducted in accordance with auditing standards established by the auditor general.

B. All permittees and licensees subject to the financial audit as prescribed by this section shall afford reasonable and needed facilities and make returns and exhibits to the department or audit firm in the form and at the time prescribed by the department. The auditor representing the department shall have access to all information, records, pari-mutuel betting devices and equipment necessary to conduct electronic data processing and other audits and reviews. The computer software and other proprietary information and records obtained by the auditor are not subject to disclosure and are exempt from title 39, chapter 1.

C. The commission may reduce the number of racing days of a permittee or revoke the permit or license of a person who knowingly fails or refuses to make the prescribed returns or exhibits or give information as required.

D. The department may expend monies for the purpose of special investigations of permittees or licensees to determine compliance with this chapter or the rules issued pursuant to this chapter.

E. The department may require that the audit and investigation of a permittee and licensee include any person who has a substantial interest, as defined in section 38-502, in the permittee or licensee.

F. This section does not apply to a racing meeting operated by a county fair association.

§ 5-105 Appointment of personnel; tests; reports; detention of animals; testing facilities

A. For purposes of detecting violations of this article, the department shall appoint qualified veterinarians, biochemists and such other personnel subject to title 41, chapter 4, article 4 as the department considers necessary or may contract with a duly qualified chemical laboratory located either within or outside this state. The testing personnel may, in accordance with such procedures as the commission by regulation prescribes:

Examine horses entered in a race within six hours before the start of the race to determine if the horse has been desensitized or drugged. For the purposes of the examination a horse does not have to be held in a retaining barn.
Perform such other tests and inspections as the department considers necessary to carry out this article including the random splitting of samples.
Store blood, urine and saliva samples in a frozen state or in any other appropriate manner by which they may be preserved for future analysis.
Perform tests on horses that die while on property under the jurisdiction of the department.
Analyze samples of urine, blood or saliva taken immediately after a race from the horse that won the race to determine if the horse has been drugged. The department may additionally analyze samples of any other animal entered in a race.

B. The veterinarian authorized by the department may order the taking and analysis of samples from a losing favorite or from any other horse when the veterinarian, based on the performance of the horse in the race, has probable cause to believe that the horse has been drugged or desensitized. If a blood sample is required, the veterinarian shall take the sample.

C. The identity of any horse determined under this section to be drugged or desensitized shall, in accordance with such procedures as the commission prescribes by regulation, be reported to a steward and the appropriate county attorney. If any horse is not made available in accordance with such regulations as the commission prescribes for any test or inspection required under this section the identity of such horse shall be reported to a steward.

D. A permittee shall, in accordance with regulations prescribed by the commission, provide the testing personnel with adequate space and facilities so that the inspections, tests and other procedures described in subsection A of this section may be performed. Access to such space and facilities shall be restricted in accordance with regulations prescribed by the commission.

E. Testing personnel may detain for a period of not to exceed twenty-four hours for examination, testing or the taking of evidence any horse at a race that is drugged or desensitized or that such person, based on the results of an inspection, test or other procedure conducted under this section, has probable cause to believe is drugged or desensitized. Any horse that is detained may not be moved during such detention from the place where the horse is detained except as authorized by testing personnel pursuant to rule and regulation of the commission.

F. The department shall retain for three years copies of all post-mortem reports on animals. The department shall retain all such reports that are used as evidence in a judicial proceeding at least until the conclusion of the proceeding.

§ 5-106 Supervisor of mutuels; pari-mutuel auditors; other employees; stewards

A. The director shall appoint a supervisor of mutuels, security personnel and as many other employees as may be necessary for the enforcement of the laws of this state and the rules relating to racing.

B. The director shall determine which employees shall give bond to the state for the faithful performance of their respective duties in an amount as the department shall prescribe. The cost of providing the bonds shall be a charge against the state.

C. The compensation of employees shall be as determined pursuant to section 38-611.

D. The director shall keep a record of all proceedings and preserve all books, documents and papers of the commission and department.

E. The supervisor of mutuels shall monitor the wagering and the pari-mutuel departments at all racing meetings and additional wagering facilities and shall enter into no other employment or contracts of employment involving racing or pari-mutuel wagering either within or without the state during days of racing in the state.

F. The security personnel appointed by the director shall assist in keeping the peace at all racing meetings and additional wagering facilities, shall enforce all laws of the state relating to racing and all rules of the commission and shall perform other duties as the commission or director shall prescribe and in the discharge of their duties shall have the authority of peace officers.

G. The director shall establish a security section charged with the responsibility for investigative matters relating to the proper conduct of racing and pari-mutuel wagering including barring undesirables from racing, undercover investigations, fingerprinting persons licensed by the department and reviewing license applications. The person in charge of the security section shall have at least five years of experience in law enforcement or in conducting or supervising investigations in some aspect of racing law enforcement.

H. If on investigation by the department there is substantial evidence indicating that the security at any track or additional wagering facility is not satisfactory, the director may order the permittee to remedy the deficiency. If after ten days following the order the permittee has not remedied the deficiency, the department may institute its own security personnel program until the deficiency in security is remedied and may charge the permittee the actual costs incurred therefor. The permittee may petition the department for a hearing at any time to review the necessity of the department further maintaining its own security personnel.

I. Persons employed by the department as investigators must have training in a general investigation course, including instruction in appropriate Arizona law, conducted or approved by the director.

J. For each horse or harness racing meeting, the director, with the approval of the commission, shall employ two persons qualified as stewards. For each horse or harness racing meeting, the permittee, with the approval of the commission, shall employ one person qualified and licensed by the department as a steward. An applicant who wishes to be licensed or employed as a steward by the department for a commercial horse or harness racing meeting must be certified as a steward by a national organization approved by the department. The director shall designate one of the two stewards employed by the department pursuant to this section as chief steward for each horse or harness racing meeting. The director shall designate the remaining stewards as assistant stewards. For each horse or harness racing meeting conducted by a county fair racing association, the director, with the approval of the commission, shall employ three persons qualified as stewards. The director shall designate one of the three stewards as chief steward for each horse or harness racing meeting conducted by a county fair racing association, and shall designate the remaining stewards as assistant stewards.

§ 5-107 Nature of racing meeting permits; application for permit; cash deposit; return; bond; conditions and priorities for satisfaction of bond

A. Permits to conduct racing meetings are deemed to be personal in nature, are nontransferable and shall terminate on a substantial change of ownership of the permittee. The sale or transfer of twenty-five percent or more of the equity of a permittee shall be considered a substantial change of ownership. Nothing in this subsection shall be construed so as to cause the termination of a permit on the death of the permittee, or if a corporation, the death of a shareholder thereof, during the period for which such permit was granted.

B. Every applicant making application for a permit to hold a racing meeting shall file an application with the commission. The commission shall promulgate rules and regulations regarding application procedures. The application shall include:

The full name and address of the applicant, and if a corporation, the name of the state under which it is incorporated. If such applicant is an association or corporation, the residence addresses of the members of the association and the names of all directors of the corporation shall be included, and the stock certificate records of such applicant shall be made available to the department on request of the director. The department shall be notified within ten days of the election of any new officer or director of a permittee, and the identity of every person who acquires ten percent or more of a permittee's equity or interest. Each new officer, director or substantial owner shall furnish all information requested by the department to facilitate approval of his participation in racing in this state.
The exact location where it is desired to conduct or hold a racing meeting.
A statement as to whether or not the racing plant is owned or leased, and if leased, the name and residence of the fee owner, or if a corporation, the names and addresses of the directors of the corporation.
A complete financial statement and balance sheet of the person, corporation or other business entity making such application, completed and certified by a certified public accountant. In the case of applications for renewal of dog racing meeting permits that were in existence before May 5, 1972, such financial statement and balance sheet shall be on a calendar year basis. In the case of applications for renewal of horse or harness racing meeting permits that were in existence before May 5, 1972, such financial statement and balance sheet shall be on a fiscal year basis. In the case of all new permit applications made from and after May 5, 1972, and renewal applications of such permits, such financial statement and balance sheet shall be on either a calendar year or fiscal year basis, at the discretion of the department. In addition, the application shall identify any guarantors or any indebtedness of the applicant, and the department shall be provided, on request, with a statement from a certified public accountant certifying that the net worth of any guarantor or guarantors is at least equal to the amount of the unpaid indebtedness so guaranteed. Applications for racing meetings operated by county fair racing associations are exempt from this paragraph.
A complete list of all management and concession contracts in effect at the time of the application, copies of which shall be furnished to the department on request. If the applicant is granted a permit he shall further be required, on the request of the department, to submit a complete list of all subsequent management and concession contracts, and copies of such contracts shall be submitted to the department on request.
Such other relevant and material information pertaining to the application as the department may require.

C. Not less than ten days before the commencement of a commercial racing meeting, the permittee shall submit to the department a cash deposit in such amount, but not to exceed five thousand dollars, as the director deems necessary to insure payment of fees and the amount due the state as the percentage of pari-mutuel receipts payable to the state as prescribed by law. On termination of the racing meeting, the deposit shall be returned to the applicant, less any fees or pari-mutuel receipts remaining unpaid.

D. In addition to the cash deposit and before the issuance of a racing meeting permit, the applicant shall deposit with the department a bond payable to the state for the benefit of the state and any person covered by this section, in such amount, but not to exceed three hundred thousand dollars in the case of horse or harness racing meeting permittees, as the director deems necessary, with a surety or sureties to be approved by the department and the attorney general and conditioned in accordance with the following order of priorities:

That the permittee shall first faithfully pay to the state the percentage of the pari-mutuel receipts, as applicable, prescribed by law and all taxes due to the state.
That thereafter the permittee shall pay to the owner thereof all funds held by the permittee for the account of such owner, including purses won, if such owner is or has been licensed by the department.
That thereafter the permittee shall pay all salaries and wages due to the employees of such permittee in connection with the conduct of the racing meeting.
That thereafter the permittee shall pay all amounts due to the breeder of any horse for a breeder's award.

E. Any person, including the state, claiming against the bond may maintain an action at law against the permittee and the surety or sureties, and the surety or sureties may be sued on the bond in successive actions until the penal sum thereof is exhausted. If it appears that there is more than one claim on such bond or if it appears that the state may have an interest therein, the state or any other claimant may move the court in which such actions are filed to intervene or to consolidate such actions to determine the priority order of claims in accordance with subsection D of this section. No suit may be commenced on the bond after the expiration of one year following the day of the closing of the racing meeting during which any act or failure to act giving rise to a claim against the bond shall arise.

F. The bond prescribed by this section shall be effective for the period of the racing permit granted by the commission, and the liability of the surety for all claims shall be limited to the face amount of the bond. If the surety desires to make payment without awaiting court action, the amount of any bond filed in compliance with this chapter shall be reduced to the extent of any payments made by such surety in good faith thereunder. Any such payment shall be based first on the priority of claim order as established by subsection D of this section and thereafter on the priority of the date the written claims are received by the surety before court action.

§ 5-107.01 Necessity for permits for racing meetings; licenses for officials and other persons; unauthorized racing meetings; violation; classification

A. A person, association or corporation shall not hold any racing meeting without having first obtained and having in full force and effect a permit that is issued by the department.

B. A trainer, driver, jockey, apprentice jockey, horse owner, exercise rider, agent, jockey's agent, stable foreman, groom, valet, veterinarian, horseshoer, steward, stable watchman, starter, timer, judge, food and beverage concessionaire, manager or other person acting as a participant or official at any racing meeting including all employees of the pari-mutuel department and any other person or official the department deems proper shall not participate in racing meetings without having first obtained and having in full force and effect a license or credentials that are issued by the department, pursuant to such rules as the commission shall make. The department shall not revoke a license except for cause and after a hearing.

C. Each person, association or corporation that holds a permit or a license under this chapter shall comply with all rules and orders of the commission or department.

D. Any credential or license that is issued by the department to a licensee shall be used only as prescribed by commission rule or order of the director. Use for purposes other than those prescribed is grounds for suspension or revocation or imposition of a civil penalty as provided in section 5-108.02, subsection E.

E. All applicants for a permit or license shall submit to the department a full set of fingerprints, background information and the fees that are required pursuant to section 41-1750. The department of gaming shall submit the fingerprints to the department of public safety for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation. The applicant shall pay the fingerprint fee and costs of the background investigation in an amount that is determined by the department. For such purpose the department of gaming and the department of public safety may enter into an intergovernmental agreement pursuant to title 11, chapter 7, article 3. The fees shall be credited pursuant to section 35-148.

F. The director may issue a temporary license to an owner, trainer, driver or jockey who is duly licensed in another jurisdiction for special races or special circumstances for a period of not to exceed thirty days. The director may allow a trainer so licensed to complete an application for a temporary license for an owner if the owner is not immediately available to personally submit the application.

G. A licensed owner, lessee or trainer of a qualified horse who has applied to a permittee to be stabled at a track and who has not been granted a stall shall not be prohibited from bringing the horse on the race grounds for the purpose of entering the animal in races that are held by the permittee or for the purposes of qualifying to race solely for the reason that the animal is not being stabled at the track if the owner, lessee or trainer is in compliance with rules adopted by the commission.

H. A person, association or corporation that knowingly holds an unauthorized racing meeting is guilty of a class 6 felony.

§ 5-107.02 Qualification for eligibility of racing meeting operator

No person, association or corporation is eligible to operate a racing meeting with a permit issued under this chapter unless he is an owner or the lessee of the track named in the permit. A permit shall not be issued to any corporation or association unless the corporation or association in its application for the permit has specifically named the manager who will operate the racing meeting, has supplied the department with all relevant information concerning this manager including his relationship with the corporation or association, any previous experience in the racing field, and any other relevant and material information the commission may have requested, and has obtained the commission's approval of the manager so named in the application.

§ 5-107.03 Separate financial records of permittee and concessionaire; violations

A. Each permittee and each concessionaire who has a proprietary interest in a permit shall keep separate financial books, statements and records with respect to the operations conducted by him at each particular place, track, additional wagering facility or enclosure. A commercial racing permittee and concessionaire shall keep and maintain the financial books, statements and records in accordance with generally accepted accounting principles so as to reflect accurately the operations conducted by each permittee and concessionaire who has a proprietary interest in a permit. A county fair racing association may keep and maintain the financial books, statements and records on a cash basis on approval of the department. Such financial books, statements and records shall be open for examination by the director or his designated representative.

B. All financial information that is given by a commercial racing permittee or concessionaire to any state agency, body or department shall accurately reflect the total income of each permittee and concessionaire who has a proprietary interest in a permit from each particular place, track or enclosure.

C. Any violation of this section by any permittee is a ground for refusal to renew or for the revocation of a permit only after written notice to the permittee and a full hearing thereon.

§ 5-108 Issuance of permit or license; grounds for refusal to issue; nontransferable; renewal

A. The department shall conduct a thorough investigation concerning the application for a permit or a license and:

The department may refuse to issue or renew a license or the commission may refuse to approve or renew a permit for any applicant if there is substantial evidence to find that the applicant:

(a) Has been suspended or ruled off a recognized course in another jurisdiction by the racing board or commission thereof.

(b) Has, when previously licensed or granted a permit, violated the racing laws of this state or of any other state or the regulations of the commission.

(d) If an individual, has been convicted of a felony or any crime involving moral turpitude, or, if a corporation, firm or association, is controlled or operated directly or indirectly by a person or persons who have been convicted of a felony or any crime involving moral turpitude.

(e) If an individual, is engaged in or has been convicted of wagering by other than the mutuel method or in pool selling or bookmaking in any state of the United States or foreign country where such other method, pool selling or bookmaking is illegal or, if a corporation, firm or association, is controlled or operated directly or indirectly by a person who is engaged in or has been convicted of wagering by other than the mutuel method or in pool selling or bookmaking in any state of the United States or foreign country where such other method, pool selling or bookmaking is illegal.

(f) Has wilfully violated any provision of this chapter or any of the rules and regulations of the commission.

(g) Should not, in the best interest of the safety, welfare, economy, health and peace of the people of the state, be granted a license or permit.

(h) Has entered into any contract or contracts that will not further the best interests of racing or be in the public interest or, in the case of permittees or applicants for permits to conduct racing meetings, has failed to file with the department a contract, as an addendum to an application for a permit to conduct a racing meeting, providing for food and beverage concession rights, if any, at that racing meeting. A food and beverage concessionaire contract filed with the department pursuant to this section shall be available to the public on request.

(i) Has failed to inform the department on or before May 15 of each year in writing of any material change, occurring during the immediately preceding year of the license or permit term, in the information supplied by the applicant in the application, for a license or permit. If a licensee or permittee fails to file such information, the department shall notify the licensee or permittee of the failure to file and the licensee or permittee shall have an additional fifteen days, after the notice is mailed to the last known address of the licensee or permittee, to file the information.

The commission may refuse to approve or renew a permit to conduct a racing meeting or a food and beverage concessionaire license for any ground set forth in paragraph 1 of this subsection or if there is substantial evidence to find that:

(a) The applicant is not possessed of or has not demonstrated financial responsibility sufficient to meet adequately the requirements of the enterprise proposed to be authorized.

(b) The applicant is not the true owner of the enterprise proposed to be granted a permit, that other persons have ownership in the enterprise and that fact has not been disclosed or, if the applicant is a corporation, that ten percent of the stock of the corporation is subject to a contract or option to purchase at any time during the period for which the permit is issued unless the contract or option was disclosed to the department and the department approved the sale or transfer during the period of the permit.

(c) The granting of a permit or license in the locality set out in the application is not in the public interest or convenience.

(d) The applicant, if a corporation or any holder of more than ten percent of the outstanding stock of any class, transferred, pledged or in any other way collateralized any of its stock after an application for a permit or license was filed with the department, without prior department approval. Subdivision (b) of this paragraph and this subdivision do not apply to day-to-day transfers of stock of a publicly held corporation unless the transfer, or a combination of transfers, involves a controlling interest in or affects the operational control of the corporation, or involves ten percent or more of any class of stock of the corporation owned by the controlling shareholders or the manager of any racing meeting.

(e) The applicant has, or if the applicant is a corporation, its officers, managerial employees, directors or substantial stockholders have, committed acts of moral turpitude in this state or have wilfully violated a material racing statute of this state or a material rule or regulation of the commission. If the commission makes such a finding, with respect to an officer, managerial employee, director or substantial stockholder, the applicant may be denied a permit only on the failure to remove the officer, managerial employee or director or the failure of the substantial stockholder to sell its stock interest. For purposes of this subdivision a substantial stockholder is one who owns ten percent of the issued and outstanding stock of the applicant.

The department may deny or refuse to renew a license or the commission may refuse to approve or renew a permit for any person who has made a knowingly false statement of a material fact to the department.
The department may deny or refuse to renew a license or the commission may refuse to approve or renew a permit to any applicant if the applicant has failed to meet any monetary obligation in connection with any racing meeting held in this state.
The department shall refuse to issue or renew a license or the commission shall refuse to approve or renew a permit for any applicant if there is substantial evidence to find that the applicant, if an individual, has been convicted within the last five years of a felony or any crime involving moral turpitude or, if a corporation, firm or association, is controlled or operated directly or indirectly by a person or persons who have been convicted within the last five years of a felony or any crime involving moral turpitude.

B. The department, in conducting the investigation referred to in this section, shall have the full cooperation of all state agencies and departments, including the department of public safety, and the agencies and departments shall make their personnel available to the department, on request.

C. If the commission determines that the applicant for a permit, whether such applicant is a lessee or an individual or corporate owner of the tracksite, meets the requirements prescribed by this article and the rules and regulations of the commission, it shall approve the permit. The permit shall be approved for a period of not more than three years. Any renewal of a permit shall be pursuant to subsection D of this section.

D. Except as provided by subsection C of this section, permits shall be renewed for successive periods of not more than three years unless the commission revokes the permit or refuses to renew the permit for any of the grounds enumerated in this section or section 5-108.03. The renewal of a permit shall be denied only after a full hearing and a finding of good cause for refusing renewal has been made by the commission.

E. The director shall suspend or revoke a license or the commission shall deny or revoke a permit of a person who intentionally provides false information to the department or any other governmental agency concerning the person's criminal history background. The director may suspend or revoke a license or the commission may deny or revoke a permit of a person who negligently or recklessly provides false information to the department or any other governmental agency concerning the person's criminal history background.

F. Except as provided by this subsection, the director may grant a license or the commission may approve a permit to engage in the racing industry in this state only after all necessary investigation of the background of the applicant required by this article has been completed. A temporary permit approved by the commission or a temporary license valid for a period of not more than ninety days may be issued by the director before the time the investigation of the background of the applicant for the license or permit has been completed. After a temporary license or permit has been issued, the director may suspend or revoke a temporary license or the commission may revoke a temporary permit for any reason that would be grounds to refuse to issue, approve or renew a license or permit under subsection A of this section.

§ 5-108.01 Hearing on application for or renewal of original permit; notice of hearing; decisions of commission and director; appeal; transfer of permit

A. The commission shall hold a public hearing on an original application for a racing permit or renewal of a current racing permit under this article. At least fifteen days' notice shall be given to all permittees holding a permit, and they may appear and be heard as parties in interest upon the hearing of an application.

B. The commission may provide by rule for rehearings of any final decision of the department in accordance with section 5-104, subsection D. Except as provided in section 41-1092.08, subsection H, the parties to the proceeding before the commission or department may commence an action in the superior court in Maricopa county after a decision of the commission or director has become final to review the decision pursuant to title 12, chapter 7, article 6. Pending determination of the appeal, the decision and order shall remain in full force and effect, and may not be superseded.

C. The commission shall not approve an original permit to conduct a horse racing, harness racing or dog racing meeting at any place, enclosure or track not used for racing purposes pursuant to permits actually issued as authorized by law prior to February 1, 1971, unless before the beginning of construction or preparation of the place, enclosure or track the commission determines that each of the following applies:

The conducting of horse, harness or dog racing meetings at such place will serve the public interest, convenience or necessity.
The plan of racing is economically feasible.
The issuance of a permit is in the best interest of racing and this state generally.

D. No place, enclosure or track used for horse, harness or dog racing on or before February 1, 1971 may be used for any other type of animal racing, except that in counties with a population of less than seven hundred thousand persons as shown by the last United States census, a place, enclosure or track used for one type of animal racing may be used for any other type of animal racing. In considering an application for a permit under this section, the commission shall give consideration to the number and location of existing tracks, the number of permits already granted and the economic effect the granting of a new permit may have on existing tracks and permittees and the revenues of this state.

E. If the owner or lessee of any place, enclosure or track used for racing purposes pursuant to permits issued as authorized by law on or before February 1, 1971 is obligated for any reason to abandon the use of the place, enclosure or track, the owner or lessee may transfer the use and rights to use the premises for racing purposes to any other location in the same county.

§ 5-108.02 Revocation of permits; penalties

A. The commission may revoke the permit of any permittee upon any of the grounds upon which the commission could refuse to approve a permit in section 5-108 or who has failed to pay the department all sums required under this chapter.

B. The commission may revoke the permit to hold a racing meeting of any corporate permittee which transfers ten per cent of its stock after a permit to hold a racing meeting is issued, and before the termination of the permit period, except as authorized in section 5-108, subsection A, paragraph 2, subdivision (d).

C. Revocation shall be made only after a hearing before the commission for which ten days' notice in writing by certified mail has been given to the permittee specifying the grounds for the proposed revocation.

D. At the hearing, the permittee shall be given an opportunity to be heard and present evidence in opposition to the proposed revocation.

E. When the grounds exist for the imposition of a civil penalty or revocation of a permit issued pursuant to this chapter the department may impose a civil penalty, not to exceed five thousand dollars per day nor more than a total of twenty-five thousand dollars, on the permittee in lieu of or in addition to revocation of the permit by the commission. The department in addition to any criminal penalties provided in this chapter may levy a civil penalty as to a permittee in an amount not to exceed five hundred dollars for violation of any provision of this chapter or rule or regulation adopted pursuant to this chapter which does not constitute grounds for revocation of a permit. All sums paid to the department pursuant to this subsection shall be deposited in the general fund.

§ 5-108.03 Restrictions on ownership of licenses, permits and tracks; exemptions; sale for fair market value

A. From and after December 31, 1978, no person, firm, partnership, corporation or association or any affiliate thereof shall simultaneously hold or have an ownership interest, direct or indirect, in permits to conduct racing meetings at more than four racetracks within this state. For the purpose of this chapter a person, firm, partnership, corporation or association holding or having an ownership interest, direct or indirect, in a place, enclosure or track at which a racing meeting is conducted in this state shall be considered as holding an ownership interest in the permit or permits issued for a racing meeting at that location. This subsection shall not apply with respect to a corporation unless the person, firm, partnership, corporation or association otherwise subject to the provisions of this subsection owns or controls ten per cent or more of any class of stock of the corporation.

B. From and after December 31, 1978, no person, firm, partnership, corporation or association or any affiliate thereof, which holds or has an ownership interest, direct or indirect, in a permit to conduct a racing meeting within a county having a population of seven hundred thousand persons, or more, as shown by the last United States decennial census, shall simultaneously hold or have any ownership interest, direct or indirect, in a permit to conduct the same kind of racing within any other county having a population of seven hundred thousand persons, or more, as shown by the last United States decennial census.

C. For the purposes of subsections A or B of this section, a person, firm, partnership, corporation or association shall be considered as itself holding or having any ownership interest held directly or indirectly by its affiliates. For the purposes of this chapter, one person, firm, partnership, corporation or association shall be considered the affiliate of another person, firm, partnership, corporation or association if any of the following applies:

They are either directly or indirectly under common control.
Any officer, director, manager, partner, supervisor, substantial stockholder, owner, trustee or administrator of one person, firm, partnership, corporation or association is an officer, director, manager, partner, substantial stockholder, owner, trustee or administrator of the other person, firm, partnership, corporation or association. For the purposes of this paragraph, a substantial stockholder is one who owns at least ten per cent of the issued and outstanding stock of a corporation.
They, at any time, within an immediately preceding three-year period, have each had a substantial ownership interest in the same permittee authorized to conduct a racing meeting in this state. For the purposes of this paragraph, the direct or indirect ownership of ten per cent or more of the equity of a permittee shall be considered a substantial ownership interest.

D. For purposes of determining interest in a permit or permittee, insofar as the determination is based on stock ownership:

Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be considered as being owned proportionately by its shareholders, partners or beneficiaries.
An individual shall be considered as owning the stock owned, directly or indirectly, by or for his family or by or for his partner. For purposes of this section, the family of an individual includes only his brothers and sisters, whether by the whole or half blood, spouse, ancestors and lineal descendants.
Stock constructively owned by a person by reason of the application of paragraph 1 of this subsection shall, for purposes of applying paragraph 1 or 2 of this subsection, be treated as actually owned by the person. Stock constructively owned by the person by reason of the application of paragraph 2 of this subsection shall not be treated as owned by the person for purposes of again applying paragraph 2 of this subsection in order to make another the constructive owner of the stock.

§ 5-108.04 Restrictions on loans; exemptions

A permittee or an affiliate of a permittee shall not borrow from or accept loans or guarantees of loans from any licensed food and beverage concessionaire or any affiliate of a concessionaire, or make payments pursuant to any such loans, except that a permittee may accept loans or guarantees of loans, and may make payments pursuant to such loans, from a food and beverage concessionaire that is an affiliate of such permittee.

§ 5-108.05 Revocation and suspension of licenses; probation; civil penalties; exception

A. Except as provided by subsections C and D of this section the department may revoke or suspend the license of a licensee or impose probation requirements or a civil penalty, or any combination of these sanctions, based on any of the grounds for which the department could refuse to issue a license pursuant to section 5-108 or for a violation of any provision of this article or the rules of the commission or department.

B. The department shall suspend or revoke a license only after a hearing before the department pursuant to rules adopted by the commission.

C. Except as provided in subsection E of this section, the department shall revoke for a period of not to exceed one year the license of any person who commits an initial violation of any provision of section 5-115. If the licensee is a corporation, the department shall revoke the license if the corporation is controlled or operated directly or indirectly by such a person.

D. Except as provided in subsection E of this section, the department shall revoke permanently the license of any person who commits a subsequent violation of any provision of section 5-115.

E. The department may impose a lesser penalty or sanction authorized by this article for a violation of a rule with respect to medication if the department finds by clear and convincing evidence that the permitted medication or medication which reduces exercise induced pulmonary hemorrhage which is revealed in a sample or test was administered to the animal in a lawful manner.

§ 5-109 Identification of animals; exemptions

A horse shall not take part in any race conducted under this article unless satisfactorily identified and registered by an association recognized by the department. A horse shall not be allowed to leave the racetrack premises unless it is accompanied by the certificate required by section 3-1335 unless:

An emergency situation requires immediate removal of the animal from the premises.
The director of the Arizona department of agriculture issues special permission in situations he determines to be in the best interest of the animal.

§ 5-109.01 Requirements of permittee regarding Arizona bred horses; powers of commission

A. A permittee, in addition to all other requirements, shall:

Admit to qualifying any horse that is foaled in this state or any dog that is whelped at a facility licensed by the department and that is:

(a) Of suitable racing age.

(b) Physically qualified and registered pursuant to department requirements.

(c) Owned by a resident of this state, who has been engaged for at least two consecutive years, in this state, in the business of breeding, racing, raising or training horses for racing purposes.

Adopt no rule that discriminates in any way against a resident of this state who is engaged in this state in the business of breeding, racing, raising or training horses for racing purposes.

B. Failure of a permittee to comply with subsection A of this section constitutes grounds for revocation of or refusal to renew any permit.

C. The commission may adopt rules to further the purposes of this section.

§ 5-110 Racing days, times and allocations; emergency transfer; county fairs; charity days

A. Permits for horse or harness racing meetings shall be approved and issued for substantially the same dates allotted to permittees for the same type of racing during the preceding year or for other dates that permittees request, provided that, in the event there is a conflict in dates requested between two or more permittees in the same county for the same kind of racing, the permittee whose application is for substantially the same dates as were allotted to the permittee in the preceding year shall be entitled to have preference over other permittees. In the event two or more permittees have agreed that the dates to be allotted to each of them each year shall be alternated from one year to the next, the commission shall recognize their agreement and those permittees may be accorded preference over any other permittee as to those dates to be allotted to those permittees on an alternating basis. Except as otherwise provided, the commission shall allot dates to the respective permittees after giving due consideration to all of the factors involved and the interests of permittees, the public and this state.

B. The commission may require by the terms of any permit that the permittee offer such number of races during any racing meeting as the commission shall determine, provided that the permittee shall be permitted to offer at least the same number of races each day as offered in the prior year. The commission shall require each horse racing permittee to conduct for a period of thirty days a number of races equal to an average of at least two races for each day of racing exclusively for quarter horses. If, in the opinion of the commission, the permittee is offering acceptable quarter horse races but an honest effort is not being put forth to fill these races by the horsemen, the commission may rescind the two race per day quarter horse requirement.

C. Live racing and wagering on simulcast races shall be permissible in either daytime or nighttime. Unless otherwise agreed by written contract that is submitted to the department between all the permittees in the same county, there shall be no wagering on simulcast dog races before 4:15 p.m., mountain standard time, on the same day that there is live daytime horse or harness racing in any county in which commercial horse or harness racing has been conducted before February 1, 1971. The hours during which any other harness or horse racing is to be conducted shall be determined by the commission. The application for a permit shall state the exact days on which racing will be held and the time of day during which racing will be conducted.

D. If the commission determines that an emergency has obligated or may obligate a permittee to discontinue racing at a location, the commission may authorize the permittee to transfer racing for the number of days lost to any other location.

E. A racing meeting, when operated by a county fair racing association or under lease during the county fair to any individual, corporation or association, shall not come under the limitation placed on days of racing in this section.

F. The department shall be the judge of whether a county fair racing meeting is being operated pursuant to this section. A county fair racing meeting conducted by an individual, corporation or association, other than the properly authorized county fair racing association, shall come under the general provisions of this article the same as a commercial meeting. Notwithstanding this subsection, a county fair racing meeting, whether conducted by a county fair racing association or by an individual, corporation or association other than a county fair racing association, is exempt from the requirement prescribed in section 5-111 to pay to the state a percentage of the pari-mutuel pool collected at the meeting.

G. The commission may allow a permittee, in addition to the days specified in this permit, to operate up to three racing days during any one meeting as charity days. From the amount deducted from the total handled in the pari-mutuel pool on charity days, the permittee shall deduct an amount equal to the purses and the cost of conducting racing on these days, and shall donate the balance to nonprofit organizations and corporations that benefit the general public, that are engaged in charitable, benevolent and other like work and that are selected by the permittee and approved by the department. The amount given to charity from charity racing days may not be less than the amount that otherwise would have gone to this state as this state's share on a noncharity racing day.

H. Notwithstanding any other law, live dog racing shall not be conducted in this state after December 31, 2016. Notwithstanding any other law, pari-mutuel wagering on simulcast dog racing shall not be conducted in this state on or after December 31, 2028. Notwithstanding any other law, pari-mutuel wagering on simulcasts of dog racing that originate outside of the continental United States are not allowed in this state on or after June 30, 2024. This subsection does not apply to nonprofit organizations that host lure coursing or similar events that test a dog's ability, stamina and breeding or training for such events. Notwithstanding any other provision of this article, any dog racing permittee that offered live dog racing in 2016 or that has offered live dog racing in eight out of ten calendar years from 1980 to 1990 in counties that have a population of less than five hundred thousand persons shall be considered as operating a racetrack enclosure for all purposes under this article and shall not be authorized or required to conduct live racing as a condition of that permittee's racing permit. Any permittee qualified under this subsection may conduct advance deposit wagering, wagering at additional wagering facilities that are owned or leased by that permittee and wagering on telecasts of races conducted at racetrack enclosures within this state or at racetrack enclosures outside this state without offering live racing at that permittee's racetrack enclosure.

§ 5-111 Wagering percentage to permittee and state; exemptions

A. The commission shall prescribe rules governing wagering on races under the system known as pari-mutuel wagering. Wagering shall be conducted by a permittee only by pari-mutuel wagering and only on the dates for which racing or dark day simulcasting has been authorized by the commission. Wagering for a licensed racing meeting shall be conducted by a commercial live-racing permittee only within an enclosure and, in counties having a population of less than five hundred thousand persons or at least one million five hundred thousand persons, at those additional facilities that are owned or leased by a permittee, that are approved by the commission and that are used by a permittee for handling wagering as part of the pari-mutuel system of the commercial live-racing permittee. In all other counties, wagering may also be conducted at additional facilities that are owned or leased by a commercial live-racing permittee who is licensed to conduct live racing in those counties or, until January 1, 2019, who has the consent of all commercial permittees currently licensed to conduct live racing in those counties, and that are used by a permittee for handling wagering and as part of the pari-mutuel system of the commercial live-racing permittee. Beginning January 1, 2019, consent of commercial permittees licensed to conduct live racing in those counties is not required. From and after December 31, 2016, any agreement concerning simulcasting that is executed between a permittee that conducted live dog racing in 2016 and a horse racing facility that is located in a county with a population of more than three million persons shall provide that twenty percent of the commission fee paid to a permittee that conducted live dog racing in 2016 under that agreement be distributed to the recognized horsemen's association that represents horsemen participating in race meets in this state. If the additional facilities have not been used for authorized racing before their use for handling wagering, a permittee shall not use the facilities for handling wagering before receiving approval for use by the governing body of the city or town, if located within the corporate limits, or by the board of supervisors, if located in an unincorporated area of the county. A permittee may televise any live or simulcast races received at the permittee's racing enclosure to the additional facilities at the times the races are conducted or received at the permittee's enclosure. For the purpose of section 5-110, subsection C only, a race on which wagering is permitted under this subsection shall be deemed to also occur at the additional facility in the county in which the additional facility is located, and shall be limited in the same manner as actual live racing in that county. For the purpose of subsection B of this section, the wagering at the additional facility shall be deemed to occur in the county in which the additional facility is located.

B. During the period of a permit for horse or harness racing, the permittee that conducts the meeting may deduct up to and including twenty-five percent of the total amount handled in the regular pari-mutuel pools and, at the permittee's option, may deduct up to and including thirty percent of the total amount handled in the exacta, daily double, quinella and other wagering pools involving two horses, and up to and including thirty-five percent of the total amount handled in the trifecta or other wagering pools involving more than two horses in one or more races. The amounts if deducted shall be distributed as prescribed in subsection C of this section and section 5-111.02 for horse or harness racing permittees.

C. During the period of a permit for horse or harness racing, the state shall receive two percent of the gross amount of the first one million dollars of the daily pari-mutuel pools and five percent of the gross amount exceeding one million dollars of the daily pari-mutuel pools. Notwithstanding any other provision of this subsection, the percentage paid by a permittee to the state does not apply to monies handled in a pari-mutuel pool for wagering on simulcasts of out-of-state races. The permittee shall retain the balance of the total amounts deducted pursuant to subsection B of this section. Of the amount retained by the permittee, minus the amount payable to the permittee for capital improvements pursuant to section 5-111.02, breakage distributed to the permittee pursuant to section 5-111.01 and other applicable state, county and city transaction privilege or other taxes, unless otherwise agreed by written contract, fifty percent shall be used for purses. Unless otherwise agreed by written contract, fifty percent of the revenues received by the permittee from simulcasting races as provided in section 5-112, net of costs of advertising, shall be utilized as a supplement to the general purse structure. All amounts that are deducted from the pari-mutuel pool for purses pursuant to this section and sections 5-111.01, 5-112 and 5-114 and revenues that are received from simulcasting and that are to be used as a supplement to the general purse structure pursuant to this subsection shall be deposited daily into a trust account for the payment of purse amounts.

D. Any county fair racing association may apply to the commission for one racing meeting each year and the commission shall set the number of days and the dates of the meetings. A racing meeting conducted under this subsection shall be operated in such manner so that all profits accrue to the county fair racing association, and the county fair racing association may deduct from the pari-mutuel pool the same amount as prescribed in subsection B of this section. All county fair racing meetings, whether conducted by county fair racing associations under this subsection or by an individual, corporation or association other than a county fair racing association, are exempt from the payment to the state of the percentage of the pari-mutuel pool prescribed by subsection C of this section and are also exempt from the provisions of section 5-111.01.

E. Monies from charity racing days are exempt from the state percentage of the pari-mutuel pool prescribed in this section.

F. Sums held by a permittee for payment of unclaimed pari-mutuel tickets are exempt from the revised Arizona unclaimed property act, title 44, chapter 3.

G. All of the amounts received by a permittee from the gross amount of monies handled in a pari-mutuel pool and all amounts held by a permittee for payment of purses pursuant to this section and sections 5-111.01, 5-112 and 5-114 are exempt from the provisions of title 42, chapter 5.

§ 5-111.01 Breakage; definition; tax; disposition

A. The term "breakage" means the odd cents by which the amount payable on each dollar wagered in a pari-mutuel pool exceeds a multiple of ten cents, except that in the case of minus pools breakage means the odd cents by which the amount payable exceeds a multiple of five cents. A person licensed under this chapter to conduct a racing meeting shall deduct the breakage from the pari-mutuel pool and such amounts shall be distributed as provided by law.

B. The breakage deducted by a horse racing or harness racing permittee shall be distributed as follows:

Fifty per cent shall be retained by the permittee.
Twenty-five per cent shall be retained by the permittee and used to supplement the general purse structure.
Twenty-five per cent shall be retained by the permittee to supplement purses in races in which Arizona bred horses are winners.

C. The breakage deducted by a dog racing permittee shall be retained by the dog racing permittee.

§ 5-111.02 Capital improvements at horse tracks; reduction in percentage to state; approval by commission; definition

A. 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 such improvements, the percentage paid by a permittee to the state as provided in section 5-111, subsection C shall be reduced by one percent of the total amount wagered in connection with all racing meetings conducted in counties having a population of five hundred thousand persons or more and by two percent of the total amount wagered in connection with all racing meetings conducted in all other counties for those permittees who make capital improvements to racetracks and such amount shall be retained by the permittees making such capital improvements. When a permittee other than the permittee making the capital improvements, such as a lessee, is authorized to conduct racing at the facility being improved, the percentage paid by such permittee to the state as provided in section 5-111, subsection C shall be reduced by one percent of the total amount wagered and such amount shall be paid by such permittee to the permittee making the capital improvements.

B. In order to qualify for the reduction in percentage, a permittee shall first apply to the commission in such form as the commission may require. The application shall contain, but is not limited to, full details of the proposed capital improvement and the cost and expenses to be incurred, economic justification for approval of the application by an estimate of the additional pari-mutuel revenues accruing to this state as the result of the proposed capital improvement, a description of any public safety concerns to be resolved by the proposed capital improvement and a management and construction plan for the indicated capital improvement, including:

The approach and structure of construction management.
Construction schedules and detailed cost estimates.
Construction progress and cost revision reporting systems.

C. More than one capital improvement at a horse track may be consolidated in one application. Following receipt of the application the commission shall either approve or disapprove the application within forty-five days thereafter and shall, within ten days after taking action on the application, transmit a copy of the application and notification of the action taken by the commission on the application to the president of the senate and speaker of the house of representatives. If the application submitted by the permittee is approved by the commission, the permittee qualifies for the decrease in percentage prescribed by subsection A of this section. The commission shall not approve an application submitted pursuant to this subsection unless the commission determines that the capital improvement will promote the safety of racing horses or increase the safety, convenience or comfort of the people and is in the best interest of horse racing and this state generally. If the commission approves an application submitted pursuant to this section, the director shall conduct periodic inspections of the capital improvement at least monthly during the construction period of the capital improvement in order to ascertain compliance with the permittee's application. In the event that such approved project has not commenced within one year following approval by the commission, unless such period is extended by the commission, the funds not expended pursuant to the approval of the commission shall revert to the general fund of the state and a decrease in the percentage paid to this state by reason of the approval of the commission shall terminate. The commission may suspend or revoke the authority of the permittee to expend capital improvement monies for failure to comply with the capital improvement application approved pursuant to subsection B of this section. The permittee shall notify the commission of the completion of construction on each capital improvement authorized pursuant to subsection B of this section.

D. Except as provided in subsection H of this section, the decrease in percentage paid to this state by the permittee pursuant to this section starts from the date horse racing is first conducted following the date of approval by the commission of the permittee's application for the funding of a capital improvement at the horse track and continues until sufficient funds have been obtained for completion of the capital improvement approved by the commission.

E. Following commission approval of an application for funding of a capital improvement at a horse track pursuant to this section, the permittee shall set aside in a separate capital improvement escrow or trust account all monies retained from the decrease in the state's share. The monies in the account and any interest on the monies may be used only for the capital improvement previously approved by the commission. The permittee shall provide to the commission quarterly reports on a form prescribed by the director that show for the previous calendar quarter:

Payments to and expenditures from each capital improvement or trust account established pursuant to this section.
The progress of construction on the capital improvement approved by the commission.

F. The cost of a capital improvement shall be determined by generally accepted accounting principles and verified on completion of the project by an audit of the permittee's records conducted by the auditor general acting at the instructions of the commission or an independent certified public accountant selected by the permittee and approved by the commission.

G. In this section, unless the context otherwise requires, "capital improvement" means an addition, replacement or remodeling of a racetrack facility involving an expenditure of at least fifty thousand dollars. Capital improvement also includes architectural and design expenses directly related to such addition, replacement or remodeling, whether incurred before or after project approval by the commission. Capital improvement does not include the cost of ordinary repairs and maintenance required to keep a racetrack facility in ordinary operating condition and does not include operational expenses, but may include the direct acquisition of water trucks and tractors.

H. In counties with a population of less than five hundred thousand persons, a decrease in the percentage paid to this state by the permittee pursuant to this section shall not begin until from and after June 30, 1995.

I. This section expires on June 30, 1992 for counties with a population of five hundred thousand persons or more. This section expires on June 30, 1999 for counties with a population of less than five hundred thousand persons. Projects approved prior to either of these dates may continue until their completion under the terms of this section and the decrease in percentage paid to the state by the permittee shall continue until sufficient funds have been obtained for completion of the approved capital improvement.

§ 5-111.04 Repayment of nonapproved expenditures of capital monies; judicial review

A. If it is determined by the commission, through the findings of the commission or through information provided to the commission by the department or the auditor general, that a permittee has retained monies for approved capital improvements pursuant to section 5-111.02 in excess of the amount approved for such capital improvements, the permittee shall repay the excess amount to this state within one year after notification of the determination by the commission. The commission shall determine the repayment method, and the repayment may be made directly by the permittee or through reductions in future entitlements for capital improvements which have been approved by the commission. This section shall not prohibit the use of capital expenditure monies received pursuant to section 5-111.02 for repayment of obligations of the permittee which directly relate to approved capital improvements.

B. Except as provided in section 41-1092.08, subsection H, final decisions of the commission are subject to judicial review pursuant to title 12, chapter 7, article 6.

§ 5-112 Wagering legalized; simulcasting of races; unauthorized wagering prohibited; classification; report; anticompetitive or deceptive practices prohibited

A. Except as provided in subsection J of this section, section 5-101.01, subsection F and title 13, chapter 33, any person within the enclosure of a racing meeting held pursuant to this article may wager on the results of a race held at the meeting or televised to the racetrack enclosure by simulcasting pursuant to this section by contributing money to a pari-mutuel pool operated by the permittee as provided by this article.

B. The department, on request by a permittee, may grant permission for electronically televised simulcasts of horse, harness or dog races to be received by the permittee. In counties with a population of one million five hundred thousand persons or more, the simulcasts shall be received at the racetrack enclosure where a horse or harness racing meeting is being conducted, provided that the simulcast may only be received during, immediately before or immediately after a minimum of nine posted races for that racing day. In counties with a population of five hundred thousand persons or more but less than one million five hundred thousand persons, the simulcasts shall be received at the racetrack enclosure where a horse or harness racing meeting is being conducted provided that the simulcast may only be received during, immediately before or immediately after a minimum of four posted races for that racing day. In all other counties, the simulcasts shall be received at a racetrack enclosure at which authorized racing has been conducted, whether or not posted races have been offered for the day the simulcast is received. The simulcasts are limited to horse, harness or dog races. The simulcasts are limited to the same type of racing as authorized in the permit for live racing conducted by the permittee. The department, on request by a permittee, may grant permission for the permittee to transmit the live race from the racetrack enclosure where a horse or harness racing meeting is being conducted to a facility or facilities in another state. All simulcasts of horse or harness races shall comply with the interstate horseracing act of 1978 (P.L. 95-515; 92 Stat. 1811; 15 United States Code chapter 57). All forms of pari-mutuel wagering are allowed on horse, harness or dog races, whether or not televised by simulcasting. All monies wagered by patrons on these horse, harness or dog races shall be computed in the amount of money wagered each racing day for the purposes of section 5-111.

C. Notwithstanding subsection B of this section, in counties with a population of one million five hundred thousand persons or more, simulcasts may be received at the racetrack enclosure, and the permittee may offer pari-mutuel wagering on the simulcast racing at any additional wagering facility used by a permittee for handling wagering as provided in section 5-111, subsection A during a permittee's racing meeting as approved by the commission, whether or not the simulcasts are televised to the additional wagering facilities and whether or not posted races have been conducted on the day the simulcast is received, if the permittee's racing permit requires the permittee to conduct a minimum of one hundred fifty-six days of live racing with an average of nine posted races on an average of five racing days each week at the permittee's racetrack enclosure during the period beginning on October 1 and ending on the first full week in May, unless otherwise agreed in writing by the permittee and the recognized horsemen's organization that represents the horsemen participating in the race meet at the racetrack enclosure, subject to approval by the department.

D. Notwithstanding subsection B of this section, in counties with a population of seven hundred thousand persons or more but less than one million five hundred thousand persons, simulcasts may be received at the racetrack enclosure, and the permittee may offer pari-mutuel wagering on the simulcast racing at any additional wagering facility used by a permittee for handling wagering as provided in section 5-111, subsection A during a permittee's racing meeting as approved by the commission, whether or not the simulcasts are televised to the additional wagering facilities and whether or not posted races have been conducted on the day the simulcast is received. The permittee may conduct wagering on dark day simulcasts for twenty days, provided the permittee conducts a minimum of seven posted races on each of the racing days mandated in the permittee's commercial racing permit. In order to conduct wagering on dark day simulcasts for more than twenty days, the permittee is required to conduct a minimum of seven posted races on one hundred forty racing days at the permittee's racetrack enclosure, unless otherwise agreed in writing by the permittee and the recognized horsemen's organization that represents the horsemen participating in the race meet at the racetrack enclosure, subject to approval by the department.

E. In an emergency and on a showing of good cause by a permittee, the commission may grant an exception to the minimum racing day requirements of subsections C and D of this section.

F. The minimum racing day requirements of subsections C and D of this section shall be computed by adding all racing days, including any county fair racing days operated in accordance with section 5-110, subsection F, allotted to the permittee's racetrack enclosure in one or more racing permits.

G. Simulcast signals or teletracking of simulcast signals does not prohibit live racing or teletracking of that live racing in any county at any time.

H. Except as provided in subsection J of this section, section 5-101.01, subsection F and title 13, chapter 33, any person within a racetrack enclosure or an additional facility authorized for wagering pursuant to section 5-111, subsection A may wager on the results of a race televised to the facility pursuant to section 5-111, subsection A by contributing to a pari-mutuel pool operated as provided by this article.

I. Except as provided in this article and in title 13, chapter 33, all forms of wagering or betting on the results of a race, including buying, selling, cashing, exchanging or acquiring a financial interest in pari-mutuel tickets, except by operation of law, whether the race is conducted in this state or elsewhere, are illegal.

J. A permittee shall not knowingly permit a person who is under twenty-one years of age to be a patron of the pari-mutuel system of wagering.

K. Except as provided in title 13, chapter 33, any person who violates this article with respect to any wagering or betting, whether the race is conducted in or outside this state, is guilty of a class 6 felony.

L. Simulcasting may only be authorized for the same type of racing authorized by a permittee's live racing permit.

M. In addition to pari-mutuel wagering otherwise authorized by this chapter, a commercial live-racing permittee or a commercial dog racing permittee that conducted live dog racing in 2016 may conduct advance deposit wagering as approved by the commission. The commission also may allow advance deposit wagering by an advance deposit wagering provider if a racing authority in the state where the advance deposit wagering provider is located approves the advance deposit wagering provider and, for horse racing, if the advance deposit wagering provider annually secures the approval of the commercial live horse racing permittees in a county where the advance deposit wagering provider or commercial live-racing permittee accepts advance deposit wagers for horse racing and of the organization that represents the majority of owners and trainers at each of the commercial live horse racing enclosures in each county. An advance deposit wagering provider that the commission approves shall pay source market fees on wagers placed on horse racing from this state to commercial live horse racing permittees in this state. The advance deposit wagering provider shall divide the source market fees on horse racing wagers on the basis of the proportion of the permittees' total live and simulcast handle during the previous year and the advance deposit wagering provider shall pay source market fees on wagers on dog racing from the county in which the live or simulcast racing is conducted to the commercial live racing permittee in that county. The advance deposit wagering provider shall divide the source market fees on dog racing from wagering in any other county as provided in a written agreement that is submitted to the department between all commercial dog racing permittees.

N. The commission may issue a permit to authorize an advance deposit wagering provider to accept advance deposit wagering on racing from persons in this state. The procedures for the approval of the permit must be similar to the procedures for the approval of racing permits under this article, subject to the following requirements:

The commission shall issue an advance deposit wagering permit only if the state agency that regulates racing in the state where the advance deposit wagering provider is located approves the permittee or provider to conduct advance deposit wagering.
An advance deposit wagering provider may accept advance deposit pari-mutuel wagers from natural persons in this state on racing conducted by a commercial live-racing permittee in this state or on racing conducted outside this state if the commercial live-racing permittee in this state at a racetrack enclosure in a county where live horse or live dog racing has been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure on which advance deposit wagering is accepted or that conducts a racing program with the same type of racing on which the advance deposit wagering is accepted enters into an agreement with the advance deposit wagering provider providing for the payment of a source market fee that is agreed to by the commercial live-racing permittee on all advance deposit wagering.
An advance deposit wagering provider shall pay source market fees in an amount that is agreed to by the commercial live-racing permittee on all advance deposit wagering by persons in this state on the same type of racing the commercial live-racing permittee conducts. Source market fees from wagers by persons in this state through an advance deposit wagering provider shall be allocated as provided in paragraph 7 of this subsection to a commercial live horse racing permittee at a racetrack enclosure in a county where live horse racing has been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure during the period of time that the commercial live-racing permittee conducts a racing program. Source market fees for dog racing from wagering through the advance deposit wagering provider from persons wagering in a county shall be allocated as provided in paragraph 7 of this subsection to a commercial dog racing permittee at a racetrack enclosure in a county where live dog racing had been conducted in 2016 or had been conducted for a period of at least forty days per year for at least twelve consecutive years beginning after 1992 or at a new racetrack enclosure in the same county that replaced the previously existing racetrack enclosure. Source market fees from wagers by persons in this state in all other counties for pari-mutuel wagering on dog racing through an advance deposit wagering provider shall be allocated as provided in paragraph 7 of this subsection.
Advance deposit wagering agreements that are executed between permittees in this state must contain the same or substantially equivalent terms and conditions, including provisions for revenue sharing, as the terms and conditions contained in simulcasting agreements that are executed between those same permittees in order to accept advance deposit wagering on horse racing from a county with a commercial dog racing permittee.
The advance wagering provider shall transmit daily a percentage determined by the department of the gross revenues generated by advance deposit wagers to the department for deposit in the racing regulation fund established by section 5-113.01.
The advance deposit wagering provider shall file the consent provided for in this subsection with the commission, and the consent is valid for a period of at least one year.
The source market fees are allocated, after deductions, as provided for in section 5-111, subsection C for horse racing for any fees or payments to the state, county and city for taxes or other fees, in the same manner as the proceeds of simulcast pari-mutuel wagering as provided in section 5-111, subsection C for horse racing. From the source market fees from advance deposit wagering on horse racing allocated for purses as provided in section 5-111, subsection C, five percent is paid to the department for deposit in the Arizona breeders' award fund account for distributions for Arizona bred horses as provided in section 5-114.

O. The owner of the advance deposit wagering account may make an advance deposit pari-mutuel wager only by telephone.

P. Only the advance deposit wagering provider may make an advance deposit wager, pursuant to wagering instructions the owner of the monies issues by telephone. The advance deposit wagering provider shall ensure the identification of the owner of the account by using methods and technologies approved by the commission. Any advance deposit wagering provider that accepts wagering instructions on races that are conducted in this state, or accepts wagering instructions originating in this state, shall provide a daily report that contains a full accounting and verification of the source of the wagers made, including the postal zip code of the source of the wagers and all pari-mutuel data, in a form and manner that is approved by the commission. All reasonable costs associated with the creation, provision and transfer of the data is the responsibility of the advance deposit wagering provider.

Q. Any person other than a permittee or any advance deposit wagering provider who is approved by the commission under this article and who accepts a wager or who bets on the results of a race, whether the race is conducted in or outside this state, including buying, selling, cashing, exchanging or acquiring a financial interest in a pari-mutuel ticket from a person in this state outside of a racing enclosure or an additional wagering facility that is approved by the commission and that is located in this state is guilty of a class 6 felony.

R. Pursuant to section 13-108, a pari-mutuel wager or a bet placed or made by a person in this state is deemed for all purposes to occur in this state.

S. The department and the attorney general shall enforce subsections Q and R of this section and shall submit an annual report that summarizes these enforcement activities to the governor, the speaker of the house of representatives and the president of the senate. The department and the attorney general shall provide a copy of this report to the secretary of state.

T. Each commercial live-racing permittee in this state shall enter into an agreement that complies with this subsection. Simulcasts that originate from a racetrack enclosure that conducts live racing in this state shall be offered to each commercial live-racing permittee in this state and additional wagering facility in this state. Each simulcast agreement executed pursuant to this subsection is subject to approval by the commission. The commission shall approve the simulcast agreement if the commission determines that the agreement is reasonable and complies with the requirements of this subsection. A permittee may not engage in any anticompetitive or deceptive practice in offering to send the permittee's simulcast to another commercial live-racing permittee or additional wagering facility in this state. For the purposes of this subsection, an anticompetitive or deceptive practice includes any of the following:

Any agreement to charge excessive or unreasonable fees for the right to receive the simulcasts. In determining whether a fee is excessive or unreasonable, the commission shall consider prevailing rates paid for comparable simulcast signals in the past, prevailing rates paid outside this state and whether any commonality of ownership or revenue sharing exists, partially or wholly, between the permittee in this state and the entity that receives the simulcast fee.
Any agreement, combination, trust or joint enterprise with any other racetrack or entity in which multiple simulcast signals are bundled together for the purpose of securing an excessive or unreasonable fee for one or more simulcast signals in the group in exchange for the right to receive any of the signals in that group.
Any other activity with the purpose or effect of artificially inflating prices beyond reasonable market rates.

U. Any simulcast of live racing into this state that originates from outside this state shall comply with this subsection. The simulcast must be offered to each commercial live-racing permittee in this state and additional wagering facility in this state. Each simulcast agreement executed pursuant to this subsection is subject to approval by the commission. The commission shall approve the simulcast agreement if the commission determines that the agreement is reasonable and complies with the requirements of this subsection. A provider of simulcasts originating from outside of this state may not engage in any anticompetitive or deceptive practice in offering to contract for the privilege to send any interstate simulcast to a commercial live-racing permittee or additional wagering facility in this state. For the purposes of this subsection, an anticompetitive or deceptive practice includes any of the following:

Any agreement to charge excessive or unreasonable fees for the right to receive the interstate simulcasts. In determining whether a fee is excessive or unreasonable, the commission shall consider prevailing rates paid for comparable simulcast signals in the past, prevailing rates paid outside this state and whether any commonality of ownership or revenue sharing exists, partially or wholly, between the permittee in this state and the entity receiving the simulcast fee.
Any agreement, combination, trust or joint enterprise with any other racetrack or entity in which multiple interstate signals are bundled together for the purpose of securing an excessive or unreasonable fee for one or more simulcast signals in the group in exchange for the right to receive any of the signals in that group.
Any other activity with the purpose or effect of artificially inflating prices beyond reasonable market rates.

§ 5-112.01 Defense to a charge of false arrest

Reasonable cause shall be a defense to a civil or criminal action brought for false arrest, false imprisonment or wrongful detention against a peace officer, employee or security personnel of the department or the permittee by a person suspected of wagering violations as provided pursuant to section 5-111, subsection A and section 5-112.

§ 5-113 Disposition of revenues and monies; funds; committee

A. All revenues derived from permittees, permits and licenses as provided by this article shall be deposited, pursuant to sections 35-146 and 35-147, in the racing regulation fund established by section 5-113.01. The commission shall further allocate all monies deposited in the Arizona breeders' award fund pursuant to this subsection to support incentives as authorized by subsection F of this section for thoroughbred and quarter horse breeds only.

B. The Arizona county fairs racing betterment fund is established under the jurisdiction of the department. The department shall distribute monies from the fund to the county fair association or county fair racing association of each county conducting a county fair racing meeting in a proportion that the department deems necessary for the promotion and betterment of county fair racing meetings. All expenditures from the fund shall be made on claims approved by the department. In order to be eligible for distributions from the fund, a county fair association must provide the department with an annual certification in the form required by the department supporting expenditures made from the fund. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.

C. The county fairs livestock and agriculture promotion fund is established under the control of the governor and shall be used for the purpose of promoting the livestock and agricultural resources of the state and for the purpose of conducting an annual Arizona national livestock fair by the Arizona exposition and state fair board to further promote livestock resources. The direct expenses less receipts of the livestock fair shall be paid from this fund, but this payment shall not exceed thirty percent of the receipts of the fund for the preceding fiscal year. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund. All expenditures from the fund shall be made on claims approved by the governor, as recommended by the livestock and agriculture committee, for the promotion and betterment of the livestock and agricultural resources of this state. The livestock and agriculture committee is established and shall be composed of the following members, at least three of whom are from counties that have a population of less than five hundred thousand persons, appointed by the governor:

Three members representing county fairs.
One member representing Arizona livestock fairs.
One member representing the university of Arizona college of agriculture.
One member representing the livestock industry.
One member representing the farming industry.
One member representing the governor's office.
One member representing the Arizona state fair conducted by the Arizona exposition and state fair board.
One member representing the general public.

D. The governor shall appoint a chairman from the members. Terms of members shall be four years.

E. Members of the committee are not eligible to receive compensation but are eligible to receive reimbursement for expenses pursuant to title 38, chapter 4, article 2.

F. The Arizona breeders' award fund is established under the jurisdiction of the department. The department shall distribute monies from the fund to the breeder, or the breeder's heirs, devisees or successors, of every winning horse or greyhound foaled or whelped in this state, as defined by section 5-114, in a manner and in an amount established by rules of the commission to protect the integrity of the racing industry and promote, improve and advance the quality of race horse and greyhound breeding within this state. The department may contract with a breeders' association to provide data, statistics and other information necessary to enable the department to carry out the purposes of this subsection. Persons who are not eligible to be licensed under section 5-107.01 or persons who have been refused licenses under section 5-108 are not eligible to participate in the Arizona greyhound breeders' award fund. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund. For the purposes of this subsection, "breeder" means the owner or lessee of the dam of the animal at the time the animal was foaled or whelped.

G. The Arizona stallion award fund is established under the jurisdiction of the department to promote, improve and advance the quality of stallions in this state. The department shall distribute monies from the fund to the owner or lessee, or the owner's or lessee's heirs, devisees or successors, of every Arizona stallion whose certified Arizona bred offspring, as prescribed in section 5-114, finishes first, second or third in an eligible race in this state. The department may contract with a breeders' association to provide data, statistics and other information necessary to enable the department to carry out the purposes of this subsection. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund. The commission shall adopt rules pursuant to title 41, chapter 6 to carry out the purposes of this subsection. The rules shall prescribe at a minimum:

The manner and procedure for distribution from the fund, including eligibility requirements for owners and lessees.
Subject to availability of monies in the fund, the amount to be awarded.
The requirements for a stallion registered with the jockey club, Lexington, Kentucky or with the American quarter horse association, Amarillo, Texas to be certified as an Arizona stallion.
The types and requirements of races for which an award may be made.

H. The retired racehorse adoption fund is established. The department shall administer the fund. All revenues derived from retired racehorse adoption surcharges collected pursuant to section 5-104, subsection G shall be deposited, pursuant to sections 35-146 and 35-147, in the fund. The fund also consists of any monies contributed to the fund by a nonprofit organization pursuant to subsection K of this section. The department shall distribute monies from the fund to provide financial assistance to nonprofit enterprises approved by the commission to promote the adoption of retired racehorses pursuant to section 5-104, subsection G in a manner and in an amount established by rules of the commission. Balances remaining in the fund at the end of a fiscal year do not revert to the state general fund.

I. The county fair racing fund is established. The department shall administer the fund. Monies in the fund are continuously appropriated. The department shall use fund monies for the administration of county fair racing. Any monies remaining unspent in the fund at the end of the fiscal year in excess of $75,000 shall revert to the state general fund.

J. The agricultural consulting and training trust fund is established for the exclusive purpose of implementing, continuing and supporting the agricultural consulting and training program established by section 3-109.01. The director of the Arizona department of agriculture shall administer the trust fund as trustee. The state treasurer shall accept, separately account for and hold in trust any monies deposited in the state treasury, which are considered to be trust monies as defined in section 35-310 and which shall not be commingled with any other monies in the state treasury except for investment purposes. On notice from the director, the state treasurer shall invest and divest any trust fund monies deposited in the state treasury as provided by sections 35-313 and 35-314.03, and monies earned from investment shall be credited to the trust fund. The beneficiary of the trust is the agricultural consulting and training program established by section 3-109.01. Surplus monies, including balances remaining in the trust fund at the end of a fiscal year, do not revert to the state general fund.

K. One percent of the in-state handle, none of which shall come from the amount paid to bettors, shall be allocated to the department on a monthly basis for distribution to a nonprofit organization that represents a majority of the horse breeders in this state, that maintains a financial bond and that has previously contracted with the department to provide data, statistics and other information. The nonprofit organization that receives monies pursuant to this subsection shall establish a separate fund for the receipt of these monies that shall be designated as the Arizona horse breeders' fund. The nonprofit organization shall add monies to purses and provide purse awards for the Arizona bred horses that finish in first, second or third place in races held in this state, provide awards to the breeders, owners or lessees or the breeders', owners' or lessees' heirs, devisees or successors, of the dams and sires whose certified Arizona bred offspring finish in first, second or third place in races held in this state and contribute not more than $25,000 of these monies each year to the retired racehorse adoption fund established by subsection H of this section. The nonprofit organization may spend a portion of these monies for administrative costs. For the purposes of this subsection, the breeder of a thoroughbred horse shall be considered the owner of the broodmare at the time that the foal is dropped. The nonprofit organization shall submit an annual report to the governor, the president of the senate and the speaker of the house of representatives that provides a detailed summary of the monies distributed pursuant to this subsection, including the amount spent for administrative costs. The nonprofit organization shall provide a copy of this report to the commission and the secretary of state. For the purposes of this subsection, "in-state handle" means the total amount of monies contributed on live races in this state to all pari-mutuel pools by bettors plus the total amount of monies contributed by bettors in this state on simulcast races that originate outside this state.

§ 5-113.01 Racing regulation fund; exemption

The racing regulation fund is established. All revenues derived from permittees, permits and licenses pursuant to this article and any grants or donations received by the department shall be deposited, pursuant to sections 35-146 and 35-147, in the racing regulation fund. The department shall administer the racing regulation fund. Monies in the racing regulation fund are subject to legislative appropriation and are to be used by the department to support the mission of the department. The racing regulation fund is exempt from the provisions of section 35-190 relating to lapsing of appropriations.

§ 5-114 Races exclusively for Arizona bred horses; breeders' awards; certification; fee

A. For the purpose of promoting and encouraging the breeding of Arizona bred horses, each meeting shall offer not less than one race each day of racing which shall be exclusively for Arizona bred horses. In the event such race does not fill with at least five Arizona bred horses, it shall be offered as an open race in which Arizona bred horses have a preference of entry.

B. To promote and improve the breeding of horses within this state, a sum of money equal to ten percent of the first money of every purse won by a horse bred in this state shall be paid by the permittee to the owner or lessee, or his heirs, devisees or successors, of the dam of the animal at the time the animal was foaled. Such amount shall be paid within thirty days after the close of the racing meeting. All claims or disputes as to the dam of a horse bred in this state shall be determined by the permittee, subject to review by the commission, and the decision of the commission shall be final and conclusive. A horse bred in this state means a horse foaled in this state and certified by the commission. To be eligible for Arizona bred certification, the horse must be physically present within this state for not less than six months during the period from the date he is foaled to the first anniversary date of his having been foaled.

C. The commission may contract with a breeders' association to certify that an animal is Arizona bred or is an Arizona stallion. The commission may authorize the association, racing organization or department to charge and collect a reasonable fee from a stallion owner to cover the cost of certification or transfer and verification that the animal is Arizona bred or an Arizona stallion.

§ 5-115 Violation; classification; civil penalties

A. At any racing meeting conducted under this article, a person is guilty of a class 4 felony, if the person:

Knowingly influences or has any understanding or connivance with any official, owner, jockey, trainer, groom, starter, assistant starter or other person associated with a stable, kennel or race in which any horse or dog participates to predetermine the result of a race.
Knowingly gives or offers a bribe in any form to any official, owner, trainer, jockey, driver or groom, starter or assistant starter or any other person licensed by the department or accepts or solicits a bribe in any form.
Knowingly has in the person's possession or in use, while riding or driving in any horse race, any mechanical or electric device capable of affecting a horse's performance other than an ordinary whip.
Knowingly commits any other corrupt or fraudulent practice in relation to racing that affects or may affect the result of a race.
For the purpose of selling or offering to sell predictions on horse races, harness races or dog races, advertises that he has predicted the outcome of any race that has been run in this state, unless the person has notified in writing the department or a representative of the department of his predictions at least three hours before the race involved on forms prescribed by the department. A person shall not advertise the fact that he has notified the department or use the name of the department in any way whatsoever to promote the activities described in this section. For the purposes of this paragraph, "advertise" means the use of any newspaper, magazine or other publication, book, notice, circular, pamphlet, letter, handbill, tip sheet, poster, bill, sign, placard, card, label, tag window display, store sign, radio or television announcement, or other means or methods now or hereafter employed to bring to the attention of the public information concerning the outcome of horse or dog races. Nothing contained in this paragraph applies to any daily newspaper of general circulation that is regularly entered in the United States mail, or any other daily publication carrying complete past performances of horses or dogs entered in races, or to any regularly published magazine or periodical devoted to racing news, that has been published for at least two years.

B. It is a class 4 felony for:

A trainer or owner to enter a horse in a race if the trainer or owner knows that the horse is drugged or desensitized and that the racing performance of the animal is affected.
A person to perform the drugging or desensitizing of a horse if the person knows that the horse will compete in a race while so drugged or desensitized and knows that the racing performance of the animal is affected.
A person to intentionally fail to notify a steward as soon as reasonably possible that a horse entered in a race is drugged or desensitized or that a horse was not properly made available for the required tests or inspections and knows that the racing performance of the animal may be affected.
A person to intentionally impair or alter the normal performance of a pari-mutuel wagering system with the intent to defraud or injure the state or a permittee. Alteration of the normal performance of a pari-mutuel system includes:

(a) Altering, changing or interfering with any equipment or device used in connection with pari-mutuel wagering.

(b) Causing any false, inaccurate, delayed or unauthorized data, impulse or signal to be fed into, transmitted over, registered in or displayed on any equipment or device used in connection with pari-mutuel wagering.

A person to impair or alter the normal operation of simulcast broadcasts by intentionally doing any of the following with the intent to defraud or injure the state or a permittee:

(a) Intercepting or decoding a transmission of a simulcast signal, either in whole or in part, which has been authorized in writing for the use of pari-mutuel wagering and that the director has not provided written authorization for the person to receive or decode.

(b) Without written authorization from the director, manufacturing, distributing or selling a device, a plan or a kit for a device capable of intercepting or decoding a transmission of a simulcast signal with the intent that the device, plan or kit be used for interception or decoding.

(c) Without written authorization from the director, possessing a device, a plan or a kit for a device capable of intercepting or decoding a transmission of a simulcast signal with the intent that the device, plan or kit be used for the interception or decoding.

C. The department, in addition to any criminal penalties provided in this chapter and in addition to suspension or revocation of a credential or a license, may levy a civil penalty as to a licensee or a holder of a credential as follows:

In an amount of not more than five thousand dollars for each violation of any provision of subsection A of this section.
In an amount of not more than two thousand five hundred dollars for each violation of any provision of this chapter that constitutes grounds for suspension or revocation of a credential or license, except for violation of those provisions contained in subsection A of this section. All sums paid to the department pursuant to this subsection shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

D. Any person who holds or conducts any racing meeting or operates an additional wagering facility without first complying with the provisions of this article, or any person who fails to submit to a drug test as directed by stewards or who violates any other provision of this article for which no other penalty is prescribed, is guilty of a class 2 misdemeanor.

E. A member of the commission or an employee of the department who at any time, directly or indirectly, knowingly receives any money, bribe, tip or other thing of value or service from any person connected with racing given with an intent to influence the member's or employee's official action, or any person connected with racing who, directly or indirectly, knowingly gives money, a bribe, a tip or any other thing of value or service to a member of the commission or an employee of the department with intent to influence the member's or employee's official action, is guilty of a class 4 felony.

F. A person who knowingly removes or alters, either directly or indirectly, any tattoo, other marking, device, coloration or special characteristic that is required by the department for the purpose of identifying a greyhound used or bred for racing purposes or a person who knowingly subjects a greyhound used or bred for racing purposes regulated under this chapter to grossly inhumane conditions or severe mistreatment is guilty of a class 6 felony. For the purposes of this subsection:

"Grossly inhumane conditions" means conditions arising from a person's reckless indifference to the consequences of an act or omission if the person, without any actual intent to injure, is aware from the person's knowledge of existing circumstances and conditions that the person's conduct will inevitably or probably result in injury to a greyhound used or bred for racing purposes.
"Severe mistreatment" means the infliction of physical pain, suffering or death on a greyhound used or bred for racing purposes in a manner that is either wanton or with reckless indifference to pain or suffering.

§ 5-116 Prohibition of automatic teller machine or point-of-sale terminal that accepts electronic benefit transfer cards on premises; penalties; violation; classification

A. It is unlawful for a permittee, licensee or facility for commercial horse racing or dog racing licensed pursuant to this title to operate on the licensed premises an automatic teller machine or a point-of-sale terminal that accepts electronic benefit transfer cards issued pursuant to title 46, chapter 2, article 5 or that processes electronic benefit transfer card transactions.

B. On or before February 1, 2014, a permittee, licensee or facility for commercial horse racing or dog racing licensed pursuant to this title shall disable the ability of every automatic teller machine and point-of-sale terminal operated on the premises to accept the electronic benefit transfer card or process an electronic benefit transfer card transaction.

C. Failure to comply with this section is a license violation subject to licensing action. The commission shall ensure compliance with the requirements of this section and enforce the continued prohibition on the use of electronic benefit transfer cards.

D. A person who violates subsection A of this section is guilty of a class 1 misdemeanor.

§ 5-117 Ejection or exclusion from racing meeting or racetrack enclosure; due process; rules

A. Any person who is licensed pursuant to this chapter may be ejected or excluded from any racing meeting or racetrack enclosure in this state or any portion of a racing meeting or portion of a racetrack enclosure in this state if the track stewards issue a ruling that the person's participation in the racing meeting or presence at the racetrack enclosure is detrimental to the integrity of horse racing or would interfere with the orderly conduct of horse racing. A licensee may appeal the ruling to the director within five days.

B. If the director determines that the person's participation in the racing meeting or presence at the racetrack enclosure is detrimental to the integrity of horse racing or would interfere with the orderly conduct of horse racing, the ejection or exclusion shall remain in effect. The director shall make a determination within three days after the appeal is filed. Any party may appeal the determination to the commission within five days.

C. If the commission determines by majority vote in a public meeting that the person's participation in the racing meeting or presence at the racetrack enclosure is detrimental to the integrity of horse racing or would interfere with the orderly conduct of horse racing, the ejection or exclusion shall remain in effect. The commission shall make a determination within seven days after the appeal is filed. If the commission makes a determination in favor of the licensee, the licensee may return to the race meeting or racetrack enclosure.

D. The commission shall adopt rules to carry out the purposes of this section. The rules shall include procedures to ensure the due process and property rights of all parties that are involved in a determination conducted pursuant to this section, a hearing conducted pursuant to this section or an administrative review conducted pursuant to title 41, chapter 6, article 10.

§ 5-118 Authorization to own or lease new additional wagering facilities; written consent

A. A permittee that is authorized to conduct live racing may own or lease new additional wagering facilities.

B. A permittee that is authorized to conduct live racing in a county with a population of seven hundred thousand persons or more but less than one million five hundred thousand persons may not own or lease an additional wagering facility within sixty miles of a racetrack enclosure located in a county with a population of two hundred thousand persons or more but less than five hundred thousand persons or in a county with a population of more than three million persons without the prior written consent of the racetrack enclosure.

Article 2 Interstate Compact on Licensure of Participants in Live Racing with Pari-Mutuel Wagering

§ 5-131 Compact; authority to join

The department of gaming and the racing commission may join with other states in an interstate compact on licensure of participants in live racing with pari-mutuel wagering as follows:

Article I

Rights and Responsibilities of Each Party State

Section 1. Rights and responsibilities of each party state.

A. By enacting this compact, each party state:

Agrees to accept the decisions of the compact committee regarding the issuance of compact committee licenses to participants in live racing pursuant to the committee's licensure requirements.
Agrees not to treat a notification to an applicant by the compact committee that the compact committee will not be able to process the application further as the denial of a license, or to penalize such an applicant in any other way based solely on such a decision by the compact committee.
Reserves the right:

(a) To charge a fee for the use of a compact committee license in that state.

(b) To apply its own standards in determining whether, on the facts of a particular case, a compact committee license should be suspended or revoked.

(c) To apply its own standards in determining licensure eligibility, under the laws of that party state, for categories of participants in live racing that the compact committee determines not to license and for individual participants in live racing who do not meet the licensure requirements of the compact committee.

(d) To establish its own licensure standards for the licensure of nonracing employees at pari-mutuel racetracks and employees at separate satellite wagering facilities.

B. Any party state that suspends or revokes a compact committee license, through its racing commission or its equivalent or otherwise, shall promptly notify the compact committee of that suspension or revocation.

C. A party state shall not be held liable for the debts or other financial obligations incurred by the compact committee.

D. The department of gaming may adopt rules to carry out the purposes of this section.

Article II

Construction and Severability

Section 2. Construction and severability.

This compact shall 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 party 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 affected thereby. If all or some portion of this compact is held to be contrary to the constitution of any party state, the compact shall remain in full force and effect as to the remaining party states and in full force and effect as to the state affected as to all severable matters.

Article III

Definitions

For the purposes of this compact:

"Compact committee" means the organization of officials from the party states that is authorized and empowered by the compact to carry out the purposes of this compact.
"Official" means the appointed, elected, designated or otherwise duly elected representative of a racing commission or the equivalent thereof in a party state who represents that party as a member of the compact committee.
"Participants in live racing" means participants in live racing with pari-mutuel wagering in the party states.
"Party state" means each state that has enacted this compact.
"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.

Chapter 2 Boxing and Mixed Martial Arts

Article 2 Arizona State Boxing and Mixed Martial Arts Commission

§ 5-221 Definitions

In this article, unless the context otherwise requires:

"Boxing":

(a) Means the act of attack and defense with the fists, using padded gloves, that is practiced as a sport.

(b) Includes kickboxing, if applicable.

"Combatant" means any person who practices the sport of unarmed combat.
"Commission" means the Arizona state boxing and mixed martial arts commission.
"Contest" means any boxing or mixed martial arts bout, event, contest, match or exhibition between two combatants.
"Department" means the department of gaming.
"Director" means the director of the department.
"Executive director" means the executive director of the commission.
"Kickboxing" means a form of boxing, including muay thai pursuant to rules and regulations of the United States muay thai association or another muay thai sanctioning body that is approved by the commission, in which blows are delivered with any part of the arm below the shoulder, including the hand, and any part of the leg below the hip, including the foot.
"Mixed martial arts" means any form of competition or contest, other than boxing or kickboxing, in which blows are delivered and in which the combatants use any combination of tactics, including boxing, wrestling, striking, kicking, martial arts and submission techniques.
"Professional" means any person who competes for any money prize or a prize that exceeds the value of $35 or teaches, pursues or assists in the practice of boxing or mixed martial arts as a means of obtaining a livelihood or pecuniary gain.
"Tough man contest":

(a) Means any boxing match that consists of one-minute rounds between two or more persons who use their hands, wearing padded gloves that weigh at least twelve ounces, or their feet, or both, in any manner.

(b) Does not include kickboxing or any recognized martial arts competition.

§ 5-222 Application of this chapter

A. This chapter does not apply to any amateur boxing or mixed martial arts contest conducted by the following:

Any school, community college, college or university or an association or organization composed exclusively of schools, community colleges, colleges or universities if each combatant is a student enrolled in a school, community college, college or university. For the purposes of this paragraph, "school, community college, college or university" means every school, community college, college or university and every other school, community college, college or university determined by the state board of education, community college districts as defined in section 15-1401 or the Arizona board of regents to be maintained primarily for the giving of general academic education.
A government unit or agency of the United States, this state or a political subdivision of this state or a unit of the United States armed forces or the national guard if all combatants are members of that unit of the armed forces or the national guard.
An amateur athletic program that is authorized by and sanctioned under the rules, regulations and policies of a national governing body that is recognized by the United States olympic committee in which all combatants are amateur combatants.
Kickboxing events that are sanctioned by and conducted under the direct supervision of the United States muay thai association or another muay thai sanctioning body that is approved by the commission if all combatants are amateur combatants.
Any bona fide private school whose primary purpose is instruction and training in the martial arts, if:

(a) The contests held in conjunction with the instruction and training are amateur.

(b) The contests are of a sparring nature with no official decisions awarded.

(c) At least one combatant in each contest has been a member in good standing of the sponsoring private school for at least sixty continuous days before the contest.

(d) An admission fee or a mandatory donation or other form of payment is not charged for attendance.

Any bona fide private school whose primary purpose is instruction in karate, if the contests held in conjunction with the instruction are amateur.

B. An amateur mixed martial arts combatant shall not be licensed as a professional mixed martial arts combatant until the person has completed five or more verified amateur contests that are regulated by the commission or by a sanctioning body that is approved by the commission. The five-contest requirement prescribed by this subsection may be waived by the commission or by the executive director.

§ 5-223 Arizona state boxing and mixed martial arts commission; appointment; terms; compensation; conflict of interest; emergency ringside meetings

A. The Arizona state boxing and mixed martial arts commission consists of three members appointed by the governor pursuant to section 38-211. The term of office of commissioners is three years. The term of one member shall expire on the third Monday in January each year.

B. Two members of the commission constitute a quorum for conducting business. A concurrence of two members is necessary to render a decision by the commission. Emergency ringside meetings held immediately prior and subsequent to a scheduled contest for the purpose of determining whether there has been a violation of the rules and regulations of the commission or this chapter are exempt from the provisions of title 38, chapter 3, article 3.1.

C. The commissioners shall receive compensation as determined pursuant to section 38-611 for each day they act in their official capacity, not to exceed one hundred days each year.

D. A commissioner shall not during the commissioner's term of office promote, sponsor or have any financial interest in a combatant, a boxing contest or in the premises leased for a boxing contest.

§ 5-224 Division of boxing and mixed martial arts regulation; powers and duties

A. A division of boxing and mixed martial arts regulation is established in the department to provide staff support for the Arizona state boxing and mixed martial arts commission. Subject to title 41, chapter 4, article 4, the director of the department shall appoint an executive director to perform the duties prescribed in this article. The resources for the Arizona state boxing and mixed martial arts commission shall come from monies appropriated to the department from the racing regulation fund established by section 5-113.01 or from other sources prescribed in section 5-225, subsection D.

B. The commission shall obtain from a physician licensed to practice in this state rules and standards for the physical examination of combatants and referees. A schedule of fees to be paid physicians by the promoter or matchmaker for the examination shall be set by the commission.

C. The commission may adopt and issue rules pursuant to title 41, chapter 6 to carry out the purposes of this chapter.

D. The commission shall hold regular meetings at least quarterly and in addition may hold special meetings. Except as provided in section 5-223, subsection B, all meetings of the commission shall be open to the public and reasonable notice of the meetings shall be given pursuant to title 38, chapter 3, article 3.1.

E. The commission shall:

Make and maintain a record of the acts of the division, including the issuance, denial, renewal, suspension or revocation of licenses.
Keep records of the commission open to public inspection at all reasonable times.

F. The commission may enter into intergovernmental agreements with Indian tribes, tribal councils or tribal organizations to provide for the regulation of boxing and mixed martial arts contests on Indian reservations. This chapter does not diminish the authority of the department.

§ 5-225 Regulation of boxing contests, tough man contests and mixed martial arts; fees

A. All boxing contests are subject to this chapter and to rules adopted pursuant to this chapter. The commission, for every contest that is subject to regulation by the commission, shall:

Direct a person authorized by the commission or by the executive director to be present.
Direct the person authorized to report results, including suspensions, to a national registry.

B. All tough man contests, including amateur tough man contests, are subject to this chapter. Every combatant in a tough man contest shall wear headgear approved by the commission.

C. Mixed martial arts, including amateur mixed martial arts, are subject to this chapter and to rules adopted pursuant to this chapter, including rules adopted for boxing that are not inconsistent with specific mixed martial arts contest provisions and rules. Combatants in mixed martial arts shall not strike other combatants in the spinal column or in the back of the head. The commission may use rules for mixed martial arts that are consistent with the mixed martial arts unified rules adopted by a boxing commission or any alternative rules of mixed martial arts approved by another jurisdiction within the United States. This subsection does not prevent a promoter of a mixed martial arts event in this state from adopting more restrictive rules for that particular event than would otherwise be allowed. In addition to any applicable provisions of the mixed martial arts rules adopted by the commission, amateur mixed martial arts bouts shall consist of three rounds of three minutes per round and the amateur combatants shall not strike with elbows to the head of a grounded opponent, use twisting leg submissions, use linear kicks to the knee joint or use foot stomps. Amateur mixed martial arts bouts shall be clearly designated as such in all promotional materials and at the event.

D. The commission may establish a uniform nonrefundable fee for mixed martial arts and boxing events in an amount determined by the commission that shall be paid to the commission by a promoter when submitting an event application. In determining the amount of the fee, the executive director may consider factors, including whether the event is televised, whether the event will be transmitted on pay-per-view, the amount of time likely to be expended in processing the event application and the complexity of the application. The commission may establish a nonrefundable fee that shall be paid to the commission by a promoter if the promoter submits a request to change a previously approved event date. Monies that are derived from the fees charged pursuant to this subsection and monies derived from intergovernmental tribal agreements shall be available to the commission for the administration and regulation of mixed martial arts and boxing, and those monies are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

E. Weigh-ins for all contests shall not be more than one calendar day before the scheduled time of the event or less than three hours before the scheduled time of the event. A representative of the commission shall attend and supervise all weigh-ins.

§ 5-226 Levy of tax on gross receipts; disposition; verification and financial audit; definition

A. Any person who promotes a boxing contest in this state pursuant to this article shall comply with rules adopted pursuant to this article and shall within ten days after the contest pay to the department four percent of the gross receipts, after the deduction of city, state and federal taxes, of the match or exhibition.

B. The department shall verify the gross receipts of a contest. The director may require a person licensed under this article to supply a certified financial audit to the department. The director shall adopt rules that require each person licensed under this article to select a certified public accountant to conduct the financial audit. The financial statements prepared pursuant to this section shall be prepared in accordance with generally accepted accounting principles and shall include any additional schedules the director requires. A person subject to a financial audit under this section shall afford reasonable and needed facilities and make returns and exhibits to the department in the form and at the time prescribed by the director.

C. The department of gaming shall establish an unarmed combat subaccount within the racing regulation fund established by section 5-113.01. At the end of each month the director of the department of gaming shall report to the department of administration the total amount received under this chapter from all sources, including license fees, and shall deposit that amount, pursuant to sections 35-146 and 35-147, in the unarmed combat subaccount of the racing regulation fund.

D. A promoter may issue complimentary tickets that are exempt from taxation pursuant to this title. If a promoter issues complimentary tickets, the exemption from taxation applies to two percent of the total number of tickets issued for the event or seventy-five tickets, whichever is greater.

E. The department shall collect and account for revenues for the commission, including license fees required by section 5-230, the levy of the tax on gross receipts imposed by this section and the cash bond or surety bond deposited pursuant to section 5-229. The director shall report and deposit all revenues collected pursuant to this subsection, from whatever source, pursuant to subsection C of this section. The director shall adopt rules as necessary to accomplish the purposes of this section.

F. For the purposes of this section, "gross receipts" means all receipts from the face value of tickets sold.

§ 5-227 Jurisdiction of commission

A. The commission shall:

Except for the financial and accounting functions delegated to the director pursuant to section 5-226, have sole direction, management, control and jurisdiction over all boxing and mixed martial arts contests held within this state unless exempt from the application of this chapter by section 5-222.
Have sole control, authority and jurisdiction over all licenses required by this chapter.

B. The commission shall grant a license to an applicant if in the judgment of the commission the financial responsibility, experience, character and general fitness of the applicant are such that the applicant's participation is consistent with the public interest, convenience or necessity and the best interests of boxing and in conformity with the purposes of this chapter. The commission may delegate the commission's licensing authority to the commission's executive director.

§ 5-228 Persons required to procure licenses; requirements; background information; fee; bond; examination results

A. All referees, judges, matchmakers, promoters, trainers, ring announcers, timekeepers, ringside physicians, inspectors, mixed martial arts combatants, boxers, managers and seconds are required to be licensed by the commission. The commission shall not allow any of these persons to participate in holding any contest unless the person has first procured a license.

B. Before participating in holding any boxing or mixed martial arts contest, a corporation, its officers and directors and any person that holds twenty-five percent or more of the ownership of the corporation shall obtain a license from the commission. Such a corporation must be authorized to do business under the laws of this state.

C. The commission shall require referees, judges, matchmakers, promoters and managers to furnish fingerprints and background information pursuant to section 41-1750, subsection G before licensure. The commission shall charge a fee for fingerprints and background information in an amount determined by the commission. The commission may require referees, judges, matchmakers, promoters and managers to furnish fingerprints and background information pursuant to section 41-1750, subsection G before license renewal if the commission determines the fingerprints and background information are necessary. The fee may include a reasonable charge for expenses incurred by the commission or the department of public safety. For such purpose, the commission and the department of public safety may enter into an intergovernmental agreement pursuant to title 11, chapter 7, article 3. The fee shall be credited pursuant to sections 35-148 and 41-1750.

D. Before the commission issues a license to a promoter, matchmaker or corporation, the applicant shall:

Provide the commission with a copy of any agreement between any combatant and the applicant that binds the applicant to pay the combatant a certain fixed fee or percentage of the gate receipts.
Show on the application the owner or owners of the applicant entity and the percentage interest if they hold twenty-five percent or more interest in the applicant.
Provide the commission with a copy of the latest financial statement of the entity.
Provide the commission with a copy of the insurance contract required by this chapter.

E. Before the commission issues a license to a promoter, the applicant shall deposit with the department a cash bond or surety bond in an amount set by the commission. The bond shall be executed in favor of this state and shall be conditioned on the faithful performance by the promoter of the promoter's obligations pursuant to this chapter and the rules adopted pursuant to this chapter.

F. Before the commission issues a license to a referee or combatant, the applicant shall submit to the commission the results of a current medical examination performed by a physician licensed in the United States on forms furnished or approved by the commission. In addition to the medical examination, the following information must be submitted:

The results of an ophthalmological examination that is recorded on forms furnished or approved by the commission.
For combatants, negative test results for the human immunodeficiency virus, the hepatitis B surface antigen and the hepatitis C antibody.
For combatants who are at least thirty-eight years of age, the results of a stress test that is administered by a physician licensed in the United States and that is accompanied by a clearance letter and the results of an electrocardiogram that demonstrates normal cardiovascular function. These results shall be completed within twenty-four months before the person submits the license application.
For combatants who are at least forty years of age, if recommended by an examining physician, the results of a brain magnetic resonance imaging scan.
For female combatants, a pregnancy test that demonstrates a negative result. A pregnancy test that demonstrates a negative result shall also be submitted to the commission by a female combatant before each weigh-in.
Any other examination or testing ordered by the commission.

G. All medical examinations and tests, license applications, national identification card applications, photographs and any other required documents must be completed and received by the commission staff not later than 4:30 p.m. on the day that begins forty-eight hours before the scheduled event. An exception to the forty-eight-hour requirement prescribed in this subsection may be granted by the executive director if a person is a late substitute or is traveling from outside this state and demonstrates good cause for not meeting the forty-eight-hour requirement.

§ 5-229 Promoters; licenses; bond; proof of financial responsibility

A. The commission may in its discretion withhold the granting of a license to a promoter until the applicant furnishes proof of his financial responsibility to promote contests in accordance with section 5-226, subsection B and the rules adopted by the director. The commission may issue a license to conduct, hold or give boxing contests to any qualified person or to a corporation duly authorized to do business under the laws of this state.

B. In addition to the cash bond or surety bond required pursuant to section 5-228, subsection E, the commission may require a promoter to deposit with the department prior to each contest a cash bond or surety bond in an amount set by the commission as a guarantee for the fulfillment of the promoter's contract obligations for that contest, the payment of licenses and taxes on gross receipts of that contest and reimbursement to ticket purchasers if the contest is not held as advertised.

§ 5-230 License fees; expiration; renewal; medical examinations

A. The commission may establish and issue annual licenses and may establish and collect fees for those licenses. The commission shall deposit the license fees in the unarmed combat subaccount in the racing regulation fund established by section 5-226.

B. A license expires at midnight three hundred sixty-five days after the date of issuance and may be renewed on filing an application for renewal of a license with the commission and payment of the license fee prescribed in subsection A of this section. The application for renewal of a license shall be on a form provided by the commission. There is a thirty-day grace period during which a license may be renewed if a late filing penalty fee equal to the license fee is submitted with the regular license fee. A licensee that files late shall not conduct any activity regulated by this chapter until the commission has renewed the license. If the licensee fails to apply to the commission within the thirty-day grace period, the licensee must apply for a new license pursuant to subsection A of this section.

C. The results of all combatant medical examinations expire three hundred sixty-five days after the date the medical examination is performed. The commission may grant a grace period of up to fifteen days to align with the licensing period.

§ 5-231 Financial interest in combatant prohibited

A person shall not have, either directly or indirectly, any financial ownership interest in a combatant competing on premises owned or leased by the person, or in which the person is otherwise interested.

§ 5-232 Age of participants

A person who is under eighteen years of age shall not participate in any boxing or mixed martial arts contest.

§ 5-233 Combatants and referees; physical examination; attendance of physician; payment of fees; insurance

A. All boxers, mixed martial arts combatants and referees shall be examined by a physician licensed pursuant to title 32, chapter 13 or 17 before entering the ring, and the examining physician shall immediately file with the commission a written report of the examination. The physician's report of the examination shall include specific mention as to the condition of the boxer's or mixed martial arts combatant's heart and general physical condition. The physician's report may include specific mention as to the condition of the boxer's or mixed martial arts combatant's nerves and brain as required by the commission. The cost of the examination is payable by the person conducting the contest or exhibition. All boxers and mixed martial arts combatants shall receive a post-bout physical examination from a physician licensed pursuant to title 32, chapter 13 or 17 and may be suspended from participation in additional contests for a period of time based on the evaluation by the examining physician.

B. Every person holding or sponsoring any contest shall have in attendance at every contest regulated by the commission at least one physician who is licensed pursuant to title 32, chapter 13 or 17 and who is assigned by the commission or the executive director. The commission may establish a schedule of fees to be paid to each physician by the person or by the promoter.

C. The commission shall:

Require insurance coverage for a combatant to provide for medical, surgical and hospital care for injuries sustained in the ring in an amount of $20,000 with $25 deductible and payable to the combatant as beneficiary. Insurance coverage required pursuant to this paragraph is the primary insurance and shall be exhausted before a combatant uses any other form of insurance.
Require life insurance for a combatant in the amount of $50,000 payable in case of accidental death resulting from injuries sustained in the ring.

D. The cost of the insurance required by this section and any deductible amount of more than $25 is payable by the promoter.

§ 5-234 Attendance by peace officers; duty of chief of police or sheriff; private security

If a contest is held within the corporate limits of a city or town, the promoter shall request that the chief of police assign not less than one officer to attend the contest, and if a contest is held outside the corporate limits of a city or town, the promoter shall request that the county sheriff assign not less than one of the sheriff's deputies to attend. The officer or deputy shall be charged with the duty of preventing disturbances amounting to breach of the peace by spectators. The cost of providing such officer or deputy shall be paid by the promoter. If law enforcement officers or sheriff's deputies are not available to attend the contest, the commission may grant the promoter permission to use private security services to attend the contest.

§ 5-235.01 Disciplinary action; grounds; civil penalty; emergency suspension; injunction

A. The commission may take any one or a combination of the following disciplinary actions:

Revoke a license.
Suspend a license.
Impose a civil penalty in an amount of not more than $1,000 per violation of this chapter.

B. The commission may take disciplinary action or refuse to issue or renew a license for any of the following causes:

Committing an act involving dishonesty, fraud or deceit with the intent to substantially benefit oneself or another or substantially injure another.
Advertising by means of known false, misleading, deceptive or fraudulent statements through any communication medium.
Violating this chapter or any rule adopted pursuant to this chapter.
Making oral or written false statements to the commission.
Failing to complete the license application as prescribed by the commission.

C. The commission may conduct tests for the use of alcohol and drugs determined by the commission to impair combatants. Notwithstanding any other provision of this article, the commission may immediately suspend the license of, immediately revoke the license of or immediately impose a civil penalty of not more than $500 against a combatant, or any combination of these actions, if the combatant tests positive for alcohol and drugs, refuses or fails to take a test for alcohol and drugs under rules adopted by the commission or refuses or fails to take a test for alcohol and drugs after a test is requested by the commission or the executive director. All civil penalties assessed pursuant to this subsection shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund. The rules adopted pursuant to this subsection may include appropriate definitions for drugs determined by the commission to impair combatants.

D. In case of emergency, a member of the commission, on the member's own motion or on the verified complaint of any person charging a violation of this chapter or of the rules adopted by the commission, may suspend for a period of not to exceed ten days any license until final determination by the commission, if in the member's opinion the action is necessary to protect the public welfare and the best interests of boxing.

E. The commission, the attorney general or a county attorney may apply to the superior court in the county in which acts or practices of any person that constitute a violation of this chapter or the rules adopted pursuant to this chapter are alleged to have occurred for an order enjoining those acts or practices.

§ 5-236 Violations; classification

A. A person is guilty of a class 1 misdemeanor and may be subject to license revocation, denial or suspension if the person conducts, holds, sponsors, sanctions or gives boxing or other contests that are subject to regulation by the commission without first procuring an appropriate license or approval as prescribed in this article.

B. A person is guilty of a class 2 misdemeanor and may be subject to license revocation, denial or suspension if the person does either of the following:

Participates in any contest that is subject to regulation by the commission without first procuring an appropriate license or approval as prescribed in this article.
Violates this chapter or any rule or regulation adopted pursuant to this chapter.

§ 5-237 Selection of referees

The commission shall select and assign referees. The matchmaker may protest the assignment of a referee and request a referee reassignment. In such an event the commission shall make a reasonable effort to grant the request for referee reassignment.

§ 5-238 Sham contest; withholding a purse

A. The commission may withhold all or part of a purse or other monies payable to any combatant, manager or second if in the judgment of the commission a combatant is participating in a sham or fake contest or is otherwise not competing honestly or to the best of the combatant's ability.

B. If the commission withholds a purse or part of a purse or other monies, the commission shall give notice to all interested parties and hold a hearing on the matter within ten days.

C. If the commission determines that a combatant, manager or second is not entitled to a purse, part of a purse or other monies, the promoter shall turn such monies over to the director to be applied pursuant to section 5-226, subsection C.

§ 5-239 Judicial review

Except as provided in section 41-1092.08, subsection H, final decisions of the commission are subject to judicial review pursuant to title 12, chapter 7, article 6.

§ 5-240 Reciprocity

Notwithstanding section 5-228, a person is entitled to receive a license under this chapter if he complies with the requirements of each of the following:

Submits to the commission under oath an application for a license on a form supplied by the commission.
Is licensed in another state in which the licensing requirements are at least substantially equivalent to those of this state and which grants similar reciprocal privileges to persons licensed under this chapter.
Pays the prescribed fees.

Chapter 3 Boating and Water Sports

Article 1 General Provisions

§ 5-301 Definitions

In this chapter, unless the context otherwise requires:

"Commercial motorized watercraft" means a motorized watercraft that carries passengers or property for a valuable consideration that is paid to the owner, charterer, operator or agent or to any other person interested in the watercraft.
"Commission" means the Arizona game and fish commission.
"Department" means the Arizona game and fish department.
"Documented watercraft" means any watercraft currently registered as a watercraft of the United States pursuant to 46 Code of Federal Regulations part 67.
"Domicile" means a person's true, fixed and permanent home and principal residence, proof of which may be demonstrated as prescribed by rules adopted by the commission.
"Launch" means any motorized watercraft that carries a coach and that is used to follow and monitor rowing shells during practice, training or competitive rowing events.
"Motorboat" means any watercraft that is not more than sixty-five feet in length and that is propelled by machinery whether or not such machinery is the principal source of propulsion.
"Motorized watercraft" means any watercraft that is propelled by machinery whether or not the machinery is the principal source of propulsion.
"Nonresident" means a citizen of the United States or an alien person who is not domiciled in this state and who is not a resident as defined in this section.
"Operate" means to operate or be in actual physical control of a watercraft while on public waters.
"Operator" means a person who operates or is in actual physical control of a watercraft.
"Person" includes any individual, firm, corporation, partnership or association, and any agent, assignee, trustee, executor, receiver or representative thereof.
"Public waters" means any body of water that is publicly owned or that the public is allowed to use without permission of the owner on which a motorized watercraft can be navigated, including that part of waters that is common to interstate boundaries and that is within the boundaries of this state.
"Resident" means a person who is either:

(a) A member of the armed forces of the United States on active duty and stationed in this state for a period of thirty days immediately before the date of application for a watercraft decal.

(b) A member of the armed forces of the United States on active duty and stationed in another state or another country and who lists this state as that member's home of record at the time of an application for a watercraft decal.

(c) Domiciled in this state for at least six consecutive months immediately before the date of the application for a watercraft decal and who does not claim residency for any purpose in any other state or country.

"Revocation" means invalidating the certificate of number, numbers and annual validation decals issued by the department to a watercraft and prohibiting the operation of the watercraft on the waters of this state during a period of noncompliance with this chapter.
"Rowing shell" means a manually propelled watercraft that is recognized by a national racing association for use in practice, training or competitive rowing.
"Sailboard" means any board of less than fifteen feet in length that is designed to be propelled by wind action on a sail for navigation on the water by a person operating the board.
"Special anchorage area" means an area set aside and under the control of a federal, state or local governmental agency, or by a duly authorized marina operator or concessionaire for the mooring, anchoring or docking of watercraft.
"State of principal operation" means the state where a watercraft is primarily used, navigated or employed.
"Underway" means a watercraft that is not at anchor, is not made fast to the shore or is not aground.
"Undocumented watercraft" means any watercraft that does not have and is not required to have a valid marine document as a watercraft of the United States.
"Wakeless speed" means a speed that does not cause the watercraft to create a wake, but in no case in excess of five miles per hour.
"Watercraft" means any boat designed to be propelled by machinery, oars, paddles or wind action on a sail for navigation on the water, or as may be defined by rule of the commission.
"Waterway" means any body of water, public or private, on which a watercraft can be navigated.

§ 5-302 Application of chapter

A. This chapter applies to all watercraft operating on all of the waterways of this state, including that part of waters that is common to interstate boundaries and that is within the boundaries of this state, excluding vessels owned by agencies of the federal government in performance of their official duties.

B. Section 5-391, subsections G and H and sections 5-392 and 5-393 apply to all watercraft in this state, whether or not operating on waterways of this state, and includes watercraft operating on waterways that are part of water that is common to interstate boundaries and that is within the boundaries of this state.

Article 2 Powers and Duties

§ 5-311 Powers and duties of the commission

A. The commission may:

Make rules and regulations required to carry out in the most effective manner all the provisions of this chapter.
Modify the equipment requirements in conformity with the provisions of the federal navigation laws or with the navigation regulations promulgated by the United States coast guard.
Prescribe additional equipment requirements not in conflict with federal navigation laws or regulations.
Provide for a uniform waterway marking system and establish, operate and maintain aids to navigation and regulatory markers on the waters of this state.
Make regulations for the registration and operation of watercraft.
Prescribe regulations for the issuance of permits for motor boat races, regattas or other watercraft events.
Administer the law enforcement and boating safety program on the state level, and accept federal grants for the purpose of boating safety and related enforcement.

B. Regulations established under this section shall not be in conflict with those prescribed by the United States coast guard.

Article 3 Registration and Taxation of Watercraft

§ 5-321 Numbering; registration fees; exemption from taxation; penalty; procedures

A. Except as provided in section 5-322, the owner of each motorized watercraft requiring numbering by this state shall file an application for a registration number with the department, or its agent, on forms approved by the department. Except as provided by rule adopted by the commission, the application shall be signed by the owner of the motorized watercraft and shall be accompanied by a registration fee. After the effective date of this amendment to this section, the commission shall establish by rule a registration fee for each motorized watercraft requiring numbering by this state.

B. Pursuant to article IX, section 16, Constitution of Arizona, watercraft are exempt from ad valorem property tax and from license taxes in lieu of property tax.

C. The length of the motorized watercraft shall be measured from the most forward part of the bow excluding the bowsprit or jibboom, over the centerline to the rearmost part of the transom excluding sheer, outboard motor, rudder, handles or other attachments.

D. The commission may assess an additional registration fee, to be collected at the same time and in the same manner as the registration fee imposed by subsection A of this section. The amount of the additional fee shall be determined by the commission and may be imposed in different amounts with respect to resident and nonresident owners. An additional registration fee under this subsection is to be used solely for the purpose of the lower Colorado river multispecies conservation program under section 48-3713.03.

E. On receipt of the application in approved form with the applicable fees, the department or its agent shall enter the application on the records of its office and issue to the applicant two current annual decals and a certificate of number stating the number issued to the watercraft and the name and address of the owner. The owner shall display the assigned number and the current annual decals in such manner as may be prescribed by rules of the commission. The number and decals shall be maintained in legible condition. The certificate of number or commission approved proof of valid certificate of number, except as provided in section 5-371, shall be available at all times for inspection by a peace officer whenever the watercraft is in operation. No number issued by another state or the United States coast guard, unless granted exemption or exception pursuant to this chapter, shall be displayed on the watercraft.

F. No person may operate a motorized watercraft on the waterways of this state unless the watercraft displays the assigned number and current annual decals or the person is in possession of a valid thirty-day temporary registration as prescribed by this article.

G. No motorized watercraft shall be purchased, sold or otherwise transferred without assignment by the owner of the current numbering certificate or other documentation as may be prescribed by rules of the commission. Within fifteen days after such transfer, the person to whom such transfer is made shall make application to the department to have the motorized watercraft registered in the person's name by the department, for which the department shall charge a transfer fee as prescribed in rule by the commission. The department shall not issue or transfer a numbering certificate for a motorized watercraft to a person who is subject to the use tax under title 42, chapter 5, article 4 unless the applicable tax has been paid as shown by a receipt from the collecting officer. Persons doing business as marine dealers and licensed as such by this state are not required to register in their name any watercraft in their possession that may be offered for resale.

H. In the event of the loss or destruction of the certificate of number or annual decal, the department shall issue a duplicate to the owner on payment of a fee as prescribed in rule by the commission.

I. The department may issue any certificate of number directly or may authorize any person to act as agent for the issuance of the certificate of number in conformity with this chapter and with any rules of the commission. An agent that contracts with the commission to renew certificates of number by telecommunication may impose additional fees for the services as provided in the contract.

J. The owner shall furnish to the department notice of the transfer of all or any part of the owner's interest other than the creation of a security interest in a motorized watercraft numbered in this state pursuant to this chapter or of the destruction or abandonment of such watercraft within fifteen days. Such transfer, destruction or abandonment shall terminate the certificate of number of such watercraft, except that in the case of a transfer of a part interest that does not affect the owner's right to operate such watercraft, the transfer shall not terminate the certificate of number.

K. Any holder of a certificate of number shall notify the department within fifteen days if the holder's address no longer conforms to the address appearing on the certificate and, as a part of such notification, shall furnish the department with the holder's new address. The commission may provide in its rules for the surrender of the certificate bearing the former address and its replacement with a certificate bearing the new address or the alteration of an outstanding certificate to show the new address of the holder.

L. On renewal of any motorized watercraft registration that has not been renewed by the current expiration date, the department shall assess a penalty unless the watercraft ownership has been transferred and the watercraft was not registered subsequent to the expiration date. The commission shall establish the penalty by rule. If more than twelve months have lapsed since the expiration date of the last registration or renewal, the penalty and back fees are waived.

§ 5-321.01 Staggered watercraft registration; rules

A. The commission shall establish a system of staggered registration on a monthly basis in order to distribute the work of registering watercraft as uniformly as practicable throughout the twelve months of the calendar year.

B. All watercraft registrations provided for in this article expire in accordance with the schedules established by the commission. The commission may set the number of renewal periods within a month from one each month to one each day depending on which system is most economical and best accommodates the public.

C. The commission, in order to initiate the staggered registration system, may register a watercraft for a period of greater or less than twelve months up to a period of thirty-six months. If a registration period is set for a period other than twelve months the commission may prorate the registration fee.

D. The commission shall adopt rules necessary to accomplish the purposes of this section.

§ 5-322 Motorized watercraft to be numbered; exceptions

A. All motorized watercraft whether underway, moored or anchored on the waters within the boundaries of the state shall be numbered in accordance with this chapter or rules of the commission in accordance with the federally approved numbering system except:

Foreign watercraft temporarily using the waters of the state.
Military or public vessels of the United States, except recreational type public vessels.
Watercraft used solely as lifeboats.
Undocumented watercraft operating under a valid temporary certificate issued pursuant to rules adopted by the commission.
Documented watercraft numbered in accordance with the regulations of the United States coast guard.

B. Motorized watercraft owned and operated exclusively by the state or by any political subdivision of the state shall be numbered, but no registration fee shall be paid on the watercraft.

C. All owners of motorized watercraft when in the course of interstate operation displaying a current and valid number issued under an approved federal numbering system of the United States coast guard, a state, the Commonwealth of Puerto Rico, the Virgin Islands, Guam or the District of Columbia shall register such watercraft with the department before the expiration of the reciprocity period prescribed by rules of the commission.

D. All motorized watercraft, when in the course of interstate operation and not required to be numbered in their state of principal operation, shall comply with the requirements of subsection C of this section.

E. When this state becomes the new state of principal operation of a motorized watercraft displaying a current number issued under a federally approved numbering system, the validity of such number shall be recognized for a period of ninety days. On expiration of the ninety-day period and before any subsequent use, the owner shall number any motorized watercraft pursuant to section 5-321.

F. Each dealer or manufacturer in this state engaged in the sale of motorized watercraft using the watercraft for demonstration shall obtain one or more dealer watercraft certificates of number with the current validating decals. Applications, fees for each certificate of number and accompanying current decals, renewal and display of certificates of number shall be as prescribed in this chapter or by rules of the commission.

§ 5-323 Disposition of fees

Each month monies received from the registration and infrastructure fees received under this chapter for the numbering of watercraft shall be deposited, pursuant to sections 35-146 and 35-147, in the watercraft licensing fund. Each month, the department shall distribute the monies as follows:

All revenues collected pursuant to section 5-321, subsection A and section 5-326 shall be allocated as follows:

(a) Sixty-five per cent shall be deposited in the watercraft licensing fund. The watercraft licensing fund is to be used by the department for administering and enforcing this chapter, providing an information and education program relating to boating and boating safety and administering any aquatic invasive species program established under this title or title 17. These monies are subject to legislative appropriation.

(b) Thirty-five per cent of such revenues shall be further allocated as follows:

(i) Fifteen per cent to the state lake improvement fund to be used as prescribed by section 5-382.

(ii) Eighty-five per cent to the law enforcement and boating safety fund to be used as prescribed by section 5-383.

All revenues collected from any additional registration fees collected pursuant to section 5-321, subsection C shall be paid to an account designated by a multi-county water conservation district established under title 48, chapter 22 to be used solely for the lower Colorado river multispecies conservation program and for no other purpose.

§ 5-324 Public records; identification of requester; supplying information by mail; records custodians; certification of records

A. All records of the department made or kept pursuant to this article are public records.

B. The department shall furnish information or copies from the records kept pursuant to this section subject to sections 39-121.01 and 39-121.03.

C. Persons requesting a copy of a public record pursuant to this section shall identify themselves and state the reason for making the request. The department shall verify the name and address of the person making the request by requiring the person to produce necessary information to ensure that the information given is true and correct.

D. The department shall not divulge any information from a watercraft registration record unless the person requesting the information provides the following:

The name of the owner.
The hull identification number of the watercraft.
The department-issued number assigned to the watercraft.

E. The procedures required by subsections C and D of this section do not apply to:

This state or any of its departments, agencies or political subdivisions.
A court.
A law enforcement officer.
A licensed private investigator.
Financial institutions and enterprises under the jurisdiction of the department of insurance and financial institutions or a federal monetary authority.
The federal government or any of its agencies.
An attorney admitted to practice in this state who alleges the information is relevant to any pending or potential court proceeding.
An operator of a self-service storage facility located in this state who alleges both of the following:

(a) That the watercraft on which the operator is requesting the record is in the operator's possession.

(b) That the record is requested to allow the operator to notify the registered owner and any lienholders of record of the operator's intent to foreclose its lien and to sell the watercraft.

A towing company located in this state that alleges both of the following:

(a) That the watercraft on which the towing company is requesting the record is in the towing company's possession.

(b) That the record is requested to allow the towing company to notify the registered owner and any lienholders of record, if known, of the towing company's intent to sell the watercraft.

An insurance company.

F. The department may supply the requested information by mail or telecommunications.

G. The director may designate as custodian of the department's public records those department employees the director deems necessary. If a public record of the department has been certified by a records custodian and authenticated as required under proof of records (records of public officials), rules of civil procedure and the rules of evidence for courts in this state, it is admissible in evidence without further foundation.

H. Notwithstanding subsection D of this section, information may be supplied for commercial purposes, as defined in section 39-121.03, if the information is transmitted in a machine-readable form such as computer magnetic tape to the person making the request.

I. The department shall maintain for a period of at least one year a file of requests for information that shall be maintained by the name of the person whose record was requested, except those requests made by government agencies.

§ 5-325 Investment of temporary monies; earned interest

On notice from the commission, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.

§ 5-326 Nonresidents; registration; payment of fees; exemption

A. A nonresident owner of a watercraft who establishes this state as the state of principal operation shall register and number that watercraft pursuant to this article and pay an additional boating safety infrastructure fee assessed pursuant to section 5-327 before placing that watercraft on the waterways of this state.

B. A member of the armed forces of the United States who is on active duty and stationed in this state for a period of at least thirty days immediately before applying for watercraft registration is exempt from this section.

C. The owner shall carry and display proof of payment of the fee required by this section in a manner prescribed by the commission while the watercraft is underway, moored or anchored on the waterways of this state.

D. Subsection A of this section does not apply to nonrecreational or commercial motorized watercraft.

§ 5-327 Nonresident boating safety infrastructure fees

A. In accordance with section 5-326, the commission shall assess a nonresident boating safety infrastructure fee for each watercraft registered in this state by a nonresident as defined in section 5-301. The fees assessed pursuant to this section shall be paid in addition to the fees required pursuant to section 5-321.

B. For the purposes of section 5-326, subsection A, the commission shall establish nonresident boating safety infrastructure fees. After the effective date of this amendment to this section, the commission shall establish by rule a nonresident boating safety infrastructure fee for each watercraft registered in this state by a nonresident.

C. The length of the motorized watercraft shall be measured in the same manner prescribed in section 5-321, subsection C.

D. Unless the person or watercraft qualifies for an exemption pursuant to section 5-326, no person who is subject to this section shall operate or grant permission to operate a watercraft within the boundaries of this state unless that watercraft displays a valid nonresident boating safety infrastructure decal in conformance with the rules adopted pursuant to section 5-326.

Article 4 Required Equipment

§ 5-331 Personal flotation devices; requirements; exceptions

A. All watercraft, except sailboards, shall carry United States coast guard approved personal flotation devices of the type and category prescribed by regulations of the commission. There shall be one such device in good and serviceable condition for each person on board and so placed as to be readily accessible for immediate use.

B. Any person who is being towed behind a watercraft shall wear a wearable personal flotation device while being towed except for a performer who is engaged in a professional exhibition.

C. A child who is twelve years of age or under and who is on board a watercraft shall wear a properly fitting United States coast guard approved wearable personal flotation device whenever the watercraft is underway.

D. Subsection C of this section does not apply to either of the following:

Small passenger vessels that are not for hire on navigable waters, that maintain a coast guard certificate of inspection and that are being operated by United States coast guard licensed pilots within a distance of one-fourth mile from the nearest shore as a means of transporting passengers and when the duration of time the vessel is underway on the water does not exceed ten minutes.
Rowing shells that are being used for the purposes of practice, training or rowing competitions if all of the following conditions are met:

(a) The rowing practice, training or competition is being supervised by a coach who is certified by a nationally recognized rowing association and who is in a launch in close proximity to the rowing shell.

(b) The launch complies with the requirements of a nationally recognized rowing association and carries lifesaving equipment on board.

(c) The operator of the rowing shell has successfully passed a swimming test that is certified by a nationally recognized rowing association.

§ 5-332 Fire extinguishers

A. All watercraft, unless exempted by the commission, carrying as fuel any volatile liquid having a flash point of one hundred ten degrees Fahrenheit or less shall have aboard a readily accessible United States coast guard approved fire extinguisher in a condition available for immediate and effective use.

B. All watercraft over twenty-six feet in length and carrying as fuel any volatile liquid having a flash point of one hundred ten degrees Fahrenheit or less shall have aboard such fire extinguishers as may be prescribed or approved by the regulations of the United States coast guard.

§ 5-333 Classification of watercraft; lights

A. Watercraft subject to the provisions of this chapter shall be divided into four classes as follows:

Class A. Less than sixteen feet in length.
Class 1. Sixteen feet or over and less than twenty-six feet in length.
Class 2. Twenty-six feet or over and less than forty feet in length.
Class 3. Forty feet or over and not more than sixty-five feet in length.

B. Every motorboat, in all weather from sunset to sunrise, shall carry and exhibit the following lights when underway and, during such time, no other lights which may be mistaken for those prescribed shall be exhibited:

Every motorboat of classes A and 1 shall carry the following lights:

(a) A bright white light aft to show all around the horizon.

(b) A combined light in the fore part of the watercraft and lower than the white light aft, showing green to starboard and red to port, so fixed as to throw the light from right ahead to two points (22 1/2 o) abaft the beam on their respective sides.

Every motorboat of classes 2 and 3 shall carry the following lights:

(a) A bright white light in the fore part of the watercraft as near the stem as practicable, so constructed as to show the unbroken light over an arc of the horizon of twenty points (225 o) of the compass, so fixed as to throw the light ten points (112 1/2 o) on each side of the watercraft, namely, from right ahead to two points (22 1/2 o) abaft the beam on either side.

(b) A bright white light aft, mounted higher than the white light forward, to show all around the horizon.

(c) On the starboard side a green light so constructed as to show an unbroken light over an arc of the horizon of ten points (112 1/2 o) of the compass, so fixed as to throw the light from right ahead to two points (22 1/2 o) abaft the beam on the starboard side. On the port side a red light so constructed as to show an unbroken light over an arc of the horizon of ten points (112 1/2 o) of the compass, so fixed as to throw the light from right ahead to two points (22 1/2 o) abaft the beam on the port side. The side lights shall be fitted with inboard screens so set as to prevent these lights from being seen across the bow.

Motorboats of classes A and 1 when propelled by sail alone shall exhibit the combined light prescribed by paragraph 1 of this subsection and a twelve point (135 o) white light aft. Motorboats of classes 2 and 3, when so propelled, shall exhibit the colored side lights, suitably screened as prescribed by paragraph 2 of this subsection and a twelve point (135 o) white light aft.
Every white light prescribed by this section shall be of such character as to be visible at a distance of at least two miles. Every colored light prescribed by this section shall be of such character as to be visible at a distance of at least one mile. The word "visible" in this subsection, when applied to lights, shall mean visible on a dark night with clear atmosphere.
When propelled by sail and machinery, every motorboat shall carry the lights required by this section for a motorboat propelled by machinery only.
All other watercraft over sixty-five feet in length and those propelled solely by wind effect on the sail shall display lights prescribed by the federal regulations.

C. Manually propelled watercraft shall carry, ready at hand, a lantern or flashlight showing a white light which shall be exhibited in sufficient time to avert collision. Manually propelled watercraft used on the waters of this state where power driven watercraft are prohibited are exempt from the provisions of this section.

D. Any watercraft may carry and exhibit the lights required by the international rules of the road as adopted by the federal regulations for preventing collisions at sea, 1960, federal act of September 24, 1963, (33 USC 1051-1053 and 1061-1064) as amended, in lieu of the lights required by subsection B of this section.

E. All watercraft, when anchored, other than in a special anchorage area, shall, from sunset to sunrise, carry and display a steady white light visible all around the horizon for a distance of no less than two miles.

F. No watercraft may display a blue light of any size or type unless it is either an authorized law enforcement watercraft of the federal, state or local government actually engaged in the enforcement of this chapter or an emergency watercraft.

§ 5-334 Flame arrestor

All watercraft using gasoline as fuel, except outboard motors, shall attach to the carburetor or carburetors a backfire flame arrestor that is approved for marine use and suitably secured to the air intake with flame tight connections, or any attachment to the carburetor or the engine air induction system by means of which flames caused by engine backfire will be dispersed to the atmosphere outside the watercraft in such a manner that the flames will not endanger the watercraft, persons on board or nearby watercraft and structures. All attachments shall be of a metallic construction with flame tight connections and firmly secured to withstand vibration, shock and engine backfire.

§ 5-335 Ventilation

A. All watercraft, except open boats, using as fuel any liquid of a volatile nature shall be provided with such means for properly and efficiently ventilating the bilges of the engine and fuel tank compartments so as to remove any explosive or flammable gases.

B. The regulations for ventilation shall be as prescribed by the United States coast guard or as otherwise provided by the commission.

§ 5-336 Muffling devices

A. Every motor driven watercraft shall at all times be equipped with effective equipment, in good working order and in constant operation, to prevent excessive or unusual noise except as provided in subsection C.

B. It is not the intent of this section to prohibit the use of any type of exhaust system or exhaust device, including those systems and devices which do not discharge water with the exhaust gases, if such system or device complies with subsection A of this section.

C. All watercraft actually competing in a regatta, boat race or official trials for speed records, and within the time limits authorized by the sanctioning body of such event are exempt from this section. Permits designating place and time limits are required and shall be issued by the department prior to the testing of watercraft on the water when sufficient evidence is provided by the applicant that such watercraft is actually entered in an event sanctioned by a national or regional organization having jurisdiction over the event.

Article 5 Operation of Watercraft

§ 5-341 Negligent operation of watercraft or water skis; restriction in operation of watercraft; violation; classification

A. No person shall operate a watercraft in a careless, reckless or negligent manner.

B. A person shall not operate a watercraft while allowing a person to ride on the gunwales, the transom or the decked over bow of a watercraft propelled by machinery operating in excess of wakeless speed except if:

That portion of the watercraft was designed and constructed for the purpose of carrying passengers at all speeds.
The watercraft is being maneuvered for anchoring, mooring or casting off moorings.

C. No watercraft shall be operated with a passenger or passengers on the bow in such a manner as to obstruct the view of the operator.

D. No person on water skis, a surfboard or a similar contrivance shall behave in a careless, reckless or negligent manner.

E. Except in case of emergency no person under the age of twelve years may operate a watercraft propelled by a motor of greater than eight horsepower unless the person's parent or legal guardian or at least one person who is eighteen years of age or older is present on the watercraft.

F. Except as provided in subsection E, it is unlawful for any person to allow another person under the age of twelve to operate a motor-powered watercraft.

G. A person violating subsection A, B, C or D is guilty of a class 2 misdemeanor.

§ 5-343 Speed restrictions; excessive wake

No person shall operate a watercraft in excess of the posted limit or at a speed greater than is reasonable and prudent under the conditions and having regard to the actual and potential hazards then existing. In every event, speed shall be so controlled as may be necessary to avoid colliding with any person or other watercraft, swamping other watercraft or otherwise endangering the lives or property of other persons.

§ 5-344 Overloading

A. No watercraft shall be loaded and operated with passengers or cargo beyond its safe carrying capacity or the limitations on the manufacturer's load capacity plate.

B. All new watercraft twenty feet in length and under designed to carry two or more persons and to be propelled by machinery or oars, offered for sale or manufactured in the state after January 1, 1971, shall have affixed permanently thereto a manufacturer's load capacity plate in a location easily observed from the position designed or intended to be occupied by the operator. Canoes and sailboats shall be exempt from the provisions of this section.

C. The load capacity plate shall be certified by a licensed manufacturer or the United States coast guard.

§ 5-345 Navigation rules

A. The operator of a watercraft under power shall yield right-of-way to any craft not under power, unless such nonpowered watercraft is overtaking a power craft.

B. The area from a point directly ahead to one hundred twelve and one-half degrees of the compass to the starboard side of the watercraft shall be designated the danger zone. Operators of the watercraft shall yield the right-of-way to any other watercraft occupying or entering into this danger zone which may result in collision.

C. Operators of watercraft may pass on either side of any other watercraft overtaken, but the passing operator shall be responsible for the wake of the watercraft which might cause damage to overtaken watercraft or danger to occupants of overtaken watercraft. The overtaken watercraft shall maintain course and speed until such time as the overtaking watercraft is clear. Watercraft approaching head-on shall pass port side to port side where practical to do so.

D. Normal traffic on the waterways of this state shall be counterclockwise. Watercraft shall approach shoreline areas from the right and leave to the left as observed from a point on the water looking toward the shore. Watercraft leaving the shoreline area shall yield right-of-way to watercraft approaching the shoreline area, notwithstanding the provisions of subsection B of this section.

E. Subsections A through D of this section shall not apply on any waterways of this state where power driven watercraft are prohibited.

F. In every case, the operator of any watercraft shall use due caution to avoid an accident or collision with another watercraft or person.

§ 5-346 Water skiing

A. No watercraft which has in tow a person or persons on water skis, a surfboard or similar contrivance shall be operated in or upon any waterway unless such watercraft shall be occupied by at least two persons, an operator and an observer.

B. The operator shall observe other watercraft traffic, swimmers and hazards and shall not tow a person or persons on water skis, a surfboard or similar contrivance so close to other watercraft, swimmers or structures as to constitute a hazard to life or limb of any person.

C. The observer shall continuously observe the person or persons being towed and shall display a flag immediately after the towed person or persons falls into the water and during the time preparatory to skiing while the person or persons are still in the water. Such flag shall be a bright or brilliant orange or red color, measuring no less than twelve inches on each side, mounted on a handle and displayed as to be visible from every direction.

D. No watercraft operator shall have in tow a person or persons on water skis, a surfboard or similar contrivance during the hours between sunset and sunrise.

§ 5-347 Interference with navigation or launching areas

A. No person shall unreasonably or unnecessarily interfere with other watercraft, with the free and proper use of the waterways of the state or with areas used for launching watercraft onto such waterways. Anchoring or swimming in heavily traveled channels or launching areas shall constitute such interference.

B. No person shall camp or park any vehicle on any boat launching area or otherwise restrict or prevent free access to any area.

§ 5-348 Dumping refuse, rubbish or debris on waterways

No person shall dump, deposit, place, throw or leave refuse, rubbish, debris, filthy or odoriferous objects, substances or other trash on any waterways or the shorelines of any waterways of the state.

§ 5-349 Watercraft casualties; violation; classification

A. The operator of a watercraft involved in a collision, accident or other casualty, to the extent the operator can do so without serious danger to the operator's own watercraft or persons aboard, shall:

Immediately stop the watercraft at the scene of the collision, accident or other casualty or as close to the scene of the collision, accident or other casualty as possible but shall immediately return to the scene.
Render all practical and necessary assistance to persons affected to save them from danger caused by the collision, accident or other casualty.
Remain at the scene of the collision, accident or other casualty until the operator has complied with subsection B of this section.

B. The operator of a watercraft involved in a collision, accident or other casualty shall give the operator's name and address and the identification of the operator's watercraft to any person injured and to the owners of any property damaged.

C. Whenever death or injury results from any watercraft collision, accident or other casualty, a written report shall be submitted within forty-eight hours. For every other collision, accident or other casualty involving property damage exceeding five hundred dollars, a report shall be submitted within five days after the incident by the operator or owner of the watercraft involved. Written reports shall be submitted directly to the department for use in statistical studies for casualty prevention. Reports shall not be used as evidence in any trial, civil or criminal, arising from any collision, accident or other casualty. On request, a report shall be forwarded to the United States coast guard or other authorized federal agency to be used in statistical studies for casualty prevention.

D. To maintain uniformity, watercraft casualty reports shall be on a form approved by the commission.

E. Every peace officer who, in the regular course of duty, investigates any watercraft collision, accident or other casualty involving death or personal injury or involving property damage exceeding five hundred dollars shall prepare and transmit a report to the department pursuant to subsection C of this section.

F. If the operator of a watercraft is involved in a collision or accident that results in death or serious physical injury, as defined in section 13-105, and the operator fails to stop or comply with the requirements of subsection A of this section, the operator is guilty of a class 5 felony. If the operator of a watercraft is involved in a collision or accident that results in injury other than death or serious physical injury and the operator fails to stop and comply with the requirements of subsection A of this section, the operator is guilty of a class 6 felony. If the operator of a watercraft is involved in a collision or accident that results only in damage to property of another or another watercraft, and the operator fails to stop and comply with the requirements of subsection B of this section, the operator is guilty of a class 3 misdemeanor.

§ 5-350 Personal watercraft; requirements for operation; definition

A. A person shall not operate a personal watercraft unless each person aboard is wearing a wearable personal flotation device that is approved by the United States coast guard.

B. A person who operates a personal watercraft that is equipped by the manufacturer with a lanyard type engine cutoff switch shall attach the lanyard to his body, clothing or personal flotation device as appropriate for the specific watercraft.

C. A person shall not operate or knowingly allow another person to operate a personal watercraft under his ownership or control in a reckless or negligent manner endangering the life or property of another person. Prima facie evidence of reckless operation exists if the person commits two or more of the following acts simultaneously:

Operates the personal watercraft within a zone of proximity to another watercraft closer than sixty feet unless both are leaving a flat wake or are traveling at a speed of five nautical miles per hour or less.
Operates the personal watercraft within the vicinity of a motorboat in a manner that obstructs the visibility of either operator.
Heads into the wake of a motorboat that is within a zone of proximity closer than sixty feet and causes one-half or more of the length of the personal watercraft to leave the water.
Within a zone of proximity to another watercraft closer than sixty feet, maneuvers quickly, turns sharply or swerves, unless the maneuver is necessary to avoid a collision.

D. If equipped by the manufacturer, a person shall not operate a personal watercraft without a functioning spring-loaded throttle mechanism that immediately returns the engine to an idle speed on release of the operator's hand from the control or without any other engine cutoff feature that is installed by the manufacturer.

E. A personal watercraft shall not be loaded and operated with passengers or cargo beyond its safe carrying capacity or the manufacturer's recommended limits.

F. A person who owns, leases or hires a personal watercraft or who has charge or control over a personal watercraft shall not authorize or knowingly permit the personal watercraft to be operated in violation of this section.

G. This section does not apply to a performer who engages in a professional exhibition or to a person who participates in an officially sanctioned regatta, race, marine parade, tournament or exhibition.

H. For purposes of this section, "personal watercraft" means a watercraft that is less than sixteen feet long, propelled by machinery powering a water jet pump and designed to be operated by a person who sits, stands or kneels on rather than sitting or standing inside the watercraft.

Article 6 Uniform Waterway Marking System

§ 5-361 Uniform navigational marking of waters; intergovernmental agreements

A. No city, county or person shall mark the waters of this state in any manner in conflict with the uniform navigational marking standards of waters as prescribed by the commission or the United States coast guard.

B. On waters where the uniform state waterway marking system has been established and maintained by a governmental agency, the commission may, upon request of such agency, enter into agreements to assist with the maintenance of the system.

§ 5-362 Diver flag

A red flag with white diagonal stripe from staffhead to opposite corner shall be recognized as a diver flag and shall be displayed when a person or persons are actually diving below the water surface and are equipped with apparatus to allow such person or persons to breathe under water.

Article 7 Boat Liveries

§ 5-371 Boat liveries; requirements

A. The owner of a boat livery shall keep or cause to be kept a record of the name and address of the person or persons hiring any watercraft which is designed or permitted by him to be operated as a watercraft, the identification number thereof, the departure date and time and the expected and actual time of return. Such record shall be preserved for at least three months.

B. Neither the owner of a boat livery nor his agent or employee shall permit any watercraft to be operated from his premises unless it shall have been provided, either by the owner or renter, with the equipment required by this chapter.

C. The certificate of number for a watercraft less than twenty-six feet in length that is leased or rented to a person for noncommercial use of less than twenty-four hours may be retained on shore by the owner or his representative at the place from which the watercraft departs or returns to the possession of the owner or his representative. A watercraft which does not have the certificate of number on board shall be identified while in use as may be prescribed by the regulations of the commission.

Article 8 Lake Improvement and Boating Safety Funds

§ 5-382 State lake improvement fund; administration; report

A. The state lake improvement fund is established. Monies deposited in the fund shall be used only as provided in this section.

B. All monies in the state lake improvement fund are appropriated to the Arizona state parks board solely for the purposes provided in this section. Interest earned on monies in the fund shall be credited to the fund. Monies in the state lake improvement fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

C. The Arizona state parks board shall use the monies in the fund as follows:

To fund staff support to plan and administer the state lake improvement fund in conjunction with other administrative tasks and recreation plans of the board.
To fund projects on waters where gasoline-powered boats are allowed, limited to the following:

(a) Public launching ramps.

(b) Public piers, marinas or marina stadia.

(d) Public picnic tables and facilities.

(e) Public parking areas.

(f) Lake construction or improvement.

(g) Marking buoys and other safety facilities.

(h) Watercraft.

(i) Public campgrounds.

(j) Acquisition of real and personal property through purchase, lease, agreement or otherwise for the purpose of providing access to waters where boating is permitted.

(k) Design and engineering projects.

To fund the purchase of drones to clean plastic, algae, biomass and other floating trash from lakes and waterways. The drones shall be equipped with the following specifications:

(a) Time stamped and GPS locating data sensors to provide constant monitoring of lakes and waterways.

(b) Collision avoidance.

To fund the purchase of drones by law enforcement agencies and fire service agencies for the purposes of search, rescue and recovery operations and training in the use and operation of the drones.

D. Projects involving expenditure of monies from the fund may be accomplished by the Arizona state parks board, by the Arizona game and fish commission, by the board of supervisors of any county, by the governing body of a city or town or by the governing body of a fire district if the projects do not interfere with any vested water rights or the operation or maintenance of water projects, including domestic, municipal, irrigation district, drainage district, flood control district or reclamation projects. The Arizona outdoor recreation coordinating commission, established by section 41-518, shall examine applications for eligible projects, determine the amount of funding, if any, for each project and submit a list of projects, subject to prior review by the joint committee on capital review, to the Arizona state parks board for allocation from the fund. The board shall annually report to the legislature the expenditures made for such projects in conjunction with the report required by section 41-511.12.

E. State lake improvement fund monies may be used on projects if matching funds are made available.

§ 5-383 Law enforcement and boating safety fund; boating law enforcement, personnel, equipment and training funding to counties

A. A law enforcement and boating safety fund is established that consists of monies distributed to the fund pursuant to sections 5-323, 5-395.01, 5-395.03, 5-396 and 5-397. The monies are subject to legislative appropriation.

B. Only a board of supervisors of a county that has a law enforcement and boating safety program that was in existence before July 1, 1990 shall be eligible to receive law enforcement and boating safety fund monies.

C. The state treasurer shall administer the fund. Using an allocation formula as determined annually by the commission, the state treasurer shall distribute monies monthly from the law enforcement and boating safety fund to eligible counties as prescribed in subsection B of this section.

D. In determining the allocation formula, the commission may consider the following:

The adequacy of existing county boating safety programs that include accident investigations.
The number of recreational days of use on water within the jurisdiction of the counties in areas of administrative authority.
The surface acreage of water within the jurisdiction of the counties in areas of administrative authority.
The county water safety record.
The ability of the county to constructively use additional monies.
The ratio of boating use to water surface within the jurisdiction of the counties in areas of administrative authority.
The ability of participating counties to provide continued funding of the program.
Annual input and feedback from the county boards of supervisors receiving funds.
Boat accident data for the waterways within the jurisdiction of the county.

E. The monies distributed to a county board of supervisors shall be used by the law enforcement agencies of the county solely for boating law enforcement, personnel, equipment and training.

Article 9 Violations and Penalties

§ 5-391 Enforcement; violation; classification

A. Any person who violates any provision of this chapter, except section 5-341, subsection A, B, C or D, section 5-349, section 5-350, subsection C, section 5-393, 5-395, 5-396 or 5-397 and subsection C, D, G or H of this section or any rule issued thereunder, is guilty of a petty offense. Any person who violates section 5-350, subsection C is guilty of a class 2 misdemeanor.

B. All peace officers of the state, counties and cities shall enforce the provisions of this chapter and all laws and rules relating to the operation of watercraft.

C. In the enforcement of this chapter, the operator of the watercraft on being hailed by any peace officer shall stop immediately and lay to, or maneuver in such a way as to permit the peace officer to come aboard or alongside. The operator may be ordered ashore to correct any unlawful condition, issued a written warning or written repair order or issued a citation for any violation of this chapter.

D. An operator of a watercraft who wilfully flees or attempts to elude a pursuing law enforcement officer issuing an order pursuant to subsection C of this section is guilty of a class 5 felony. The law enforcement watercraft shall be appropriately marked to show that it is an official law enforcement watercraft.

E. In the enforcement of this chapter, sections 13-2506 and 13-3903 apply.

F. Each failure to obey an order or to comply with a warning order issued under subsection C of this section shall constitute a separate offense punishable as a separate violation of this chapter.

G. A person is guilty of a class 6 felony who knowingly removes, defaces, obliterates, changes, alters or causes to be removed, defaced, obliterated, changed or altered a factory, engine, serial, outdrive, lower unit, power trim or hull identification number or mark on a watercraft.

H. A person is guilty of a class 2 misdemeanor who:

Knowingly displays or has in the person's possession a fictitious, stolen, revoked or altered certificate of number, department issued number or annual decal.
Lends to or knowingly permits the use of the person's certificate of number, department issued number or annual decal on a watercraft for which those items have not been issued.

I. On receipt of notice of conviction of a person under subsection G or H of this section, the department may revoke the numbers and decals issued to the watercraft that was involved in the violation and any other watercraft owned by the person convicted.

§ 5-392 Seizure and forfeiture of watercraft

A. Peace officers, in the manner provided in title 13, chapter 39:

May seize any watercraft and its trailer if the watercraft displays a fictitious, falsified or altered number or annual decal, or an annual decal from which the accountability or expiration numbers have been intentionally removed or partially removed. This paragraph does not apply to a boat owner or an authorized agent who removes decals or boat numbers for routine maintenance or repair.
May seize for forfeiture any watercraft which has had a manufacturer's hull identification number, mark or label or any engine, outdrive, lower unit or power trim number intentionally removed, partially removed, falsified or altered.

B. Allocation of watercraft seized for forfeiture pursuant to subsection A, paragraph 2 of this section shall follow the provisions of section 13-4315, except that if the forfeited property is sold by public or otherwise commercially reasonable sale the expenses of keeping and selling the property and the amount of all valid interests established by claimants shall first be paid out of the proceeds of the sale and the balance shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

§ 5-393 Inspection for stolen watercraft; violation; classification

A. For purposes of enforcing this chapter or locating stolen watercraft or parts of watercraft, peace officers may inspect watercraft to examine the hull identification number, manufacturer's label, outdrive, lower unit or power trim number, or the annual decal or state issued number in a public marina, a storage, repair, sales, leasing or rental lot or facility or a salvage yard or other similar location or establishment and may inspect the registration, title and certificate of number of the watercraft to establish the rightful ownership or possession of the watercraft.

B. Inspections shall be conducted at a time and in a manner so as to minimize any unreasonable interference with or delay of the use of the watercraft or the operation of the business where the watercraft is located.

C. A person who refuses to permit an inspection under this section is guilty of a class 1 misdemeanor.

Article 10 Boating While Intoxicated

§ 5-395 Operating or in actual physical control of a motorized watercraft while under the influence; violation; classification; definition

A. It is unlawful for any person to operate or be in actual physical control of a motorized watercraft that is underway within this state under any of the following circumstances:

While under the influence of intoxicating liquor, any drug, a vapor releasing substance containing a toxic substance or any combination of liquor, drugs or vapor releasing substances if the person is impaired to the slightest degree.
If the person has an alcohol concentration of 0.08 or more within two hours of operating or being in actual physical control of the motorized watercraft and the alcohol concentration results from alcohol consumed either before or while operating or being in actual physical control of the motorized watercraft.
While there is any drug as defined in section 13-3401 or its metabolite in the person's body.
If the motorized watercraft is a commercial motorized watercraft and the person has an alcohol concentration of 0.04 or more.

B. It is not a defense to a charge of a violation of subsection A, paragraph 1 of this section that the person is or has been entitled to use the drug under the laws of this state.

C. A person using a drug prescribed by a medical practitioner who is licensed pursuant to title 32 and who is authorized to prescribe the drug is not guilty of violating subsection A, paragraph 3 of this section.

D. The state shall not dismiss a charge of violating this section for either of the following:

In return for a plea of guilty or no contest to any other offense by the person charged with the violation of this section.
For the purpose of pursuing any other misdemeanor or a petty offense, including those arising out of the same event or course of conduct, unless there is clearly an insufficient legal or factual basis to pursue the charge of violating this section.

E. In any prosecution for a violation of this section the state, for the purpose of classification and sentencing pursuant to section 5-395.01 or 5-396, shall allege all prior convictions of violating this section occurring within the past eighty-four months, unless there is clearly an insufficient legal or factual basis to do so.

F. In a trial, action or proceeding for a violation of this section or section 5-396 other than a trial, action or proceeding involving operating or being in actual physical control of a commercial motorized watercraft, the defendant's alcohol concentration within two hours of the time of operating or being in actual physical control as shown by analysis of the defendant's blood, breath or other bodily substance gives rise to the following presumptions:

If there was at that time 0.05 or less alcohol concentration in the defendant's blood, breath or other bodily substance, it may be presumed that the defendant was not under the influence of intoxicating liquor.
If there was at that time in excess of 0.05 but less than 0.08 alcohol concentration in the defendant's blood, breath or other bodily substance, such fact shall not give rise to any presumption that the defendant was or was not under the influence of intoxicating liquor, but such fact may be considered with other competent evidence in determining the guilt or innocence of the defendant.
If there was at that time 0.08 or more alcohol concentration in the defendant's blood, breath or other bodily substance, it may be presumed that the defendant was under the influence of intoxicating liquor.

G. Subsection F of this section shall not be construed as limiting the introduction of any other competent evidence bearing on the question of whether or not the defendant was under the influence of intoxicating liquor.

H. If a blood test is administered, only a physician, a registered nurse or another qualified person may withdraw blood for the purpose of determining the alcohol concentration or drug content. The qualifications of the individual withdrawing the blood and the method used to withdraw the blood are not foundational prerequisites for the admissibility of any blood alcohol content determination made pursuant to this subsection.

I. If a law enforcement officer administers a duplicate breath test and the person tested is given a reasonable opportunity to arrange for an additional test pursuant to subsection J of this section, a sample of the person's breath does not have to be collected or preserved.

J. The person tested shall be given a reasonable opportunity to arrange for any physician, registered nurse or other qualified person of the tested person's own choosing to administer a test or tests in addition to any administered at the direction of a law enforcement officer. The failure or inability to obtain an additional test by a person does not preclude the admission of evidence relating to the test or tests taken at the direction of a law enforcement officer.

K. If a person under arrest refuses to submit to a test or tests under section 5-395.03, whether or not a sample was collected pursuant to subsection L of this section or a search warrant, evidence of refusal is admissible in any civil or criminal action or other proceeding. The issue of refusal shall be an issue of fact to be determined by the trier of fact in all cases.

L. Notwithstanding any other law, if a law enforcement officer has probable cause to believe that a person has violated this section and a sample of blood, urine or any other bodily substance is taken from that person for any reason a portion of that sample sufficient for analysis shall be provided to a law enforcement officer if requested for law enforcement purposes. A person who fails to comply with this subsection is guilty of a class 1 misdemeanor.

M. A person who collects blood, urine or any other bodily substance under this section or any hospital, laboratory or clinic employing or using the services of the person does not incur any civil liability as a result of this activity if requested by a law enforcement officer to collect blood, urine or any other bodily substances unless the person, while performing the activity, acts with gross negligence.

N. A statement by the defendant that the defendant was operating a motorized watercraft that was underway and that was involved in an accident resulting in injury to or death of any person is admissible in any criminal proceeding without further proof of corpus delicti if it is otherwise admissible.

O. At the arraignment, the court shall inform the defendant that the defendant may request a trial by jury and that the request, if made, shall be granted.

P. For the purposes of this section, "alcohol concentration" means grams of alcohol per one hundred milliliters of blood or grams of alcohol per two hundred ten liters of breath.

§ 5-395.01 Operating or in actual physical control of a motorized watercraft while under the influence; classification; penalties

A. A person who is convicted of a violation of section 5-395 is guilty of a class 1 misdemeanor. The person:

Shall be sentenced to serve not less than ten consecutive days in jail and is not eligible for probation or suspension of execution of sentence unless the entire sentence is served.
Shall pay a fine of not less than two hundred fifty dollars.
May be ordered by a court to perform community restitution.
Shall pay an additional assessment of five hundred dollars to be deposited by the state treasurer in the prison construction and operations fund established by section 41-1651. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.
Shall pay an additional assessment of five hundred dollars to be deposited by the state treasurer in the law enforcement and boating safety fund established by section 5-383. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.

B. In addition to any other penalties under this section, the judge shall order the person to complete alcohol or other drug screening that is provided by a facility approved by the department of health services, the United States department of veterans affairs or a probation department. If a judge determines that the person requires further alcohol or other drug education or treatment, the person may be required pursuant to court order to obtain alcohol or other drug education or treatment under the court's supervision from an approved facility. The judge may review an education or treatment determination at the request of the state or the defendant or on the judge's own initiative. The person shall pay the costs of the screening, education or treatment unless the court waives part or all of the costs. If a person is referred to a screening, education or treatment facility, the facility shall report to the court whether the person has successfully completed the screening, education or treatment program.

C. Notwithstanding subsection A, paragraph 1 of this section and except as provided in section 5-398.01, the judge may either:

Suspend any imposed sentence for a first violation of section 5-395 if the person completes a court ordered alcohol or other drug screening, education or treatment program. If the person fails to complete the court ordered alcohol or other drug screening, education or treatment program and has not been placed on probation, the court shall issue an order to show cause to the defendant as to why the remaining jail sentence should not be served.
Suspend all but twenty-four consecutive hours of the sentence if the person completes a court ordered alcohol or other drug screening, education or treatment program and if the court determines the person recklessly endangered another person with a substantial risk of physical injury. If the person fails to complete the court ordered alcohol or other drug screening, education or treatment program and has not been placed on probation, the court shall issue an order to show cause to the defendant as to why the remaining jail sentence should not be served.

D. If within a period of eighty-four months a person is convicted of a second violation of section 5-395 or is convicted of a violation of section 5-395 and has previously been convicted of an act in another jurisdiction that if committed in this state would be a violation of section 5-395, the person:

Shall be sentenced to serve not less than ninety days in jail, thirty days of which shall be served consecutively, and is not eligible for probation or suspension of execution of sentence unless the entire sentence has been served.
Shall pay a fine of not less than five hundred dollars.
Shall be ordered by the court to perform at least thirty hours of community restitution. If the person fails to complete the community restitution ordered pursuant to this paragraph, the court may order alternative sanctions if the court determines that alternative sanctions are more appropriate.
Shall pay an additional assessment of one thousand two hundred fifty dollars to be deposited by the state treasurer in the prison construction and operations fund established by section 41-1651. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.
Shall pay an additional assessment of one thousand two hundred fifty dollars to be deposited by the state treasurer in the law enforcement and boating safety fund established by section 5-383. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.

E. Notwithstanding subsection D, paragraph 1 of this section, at the time of sentencing, except if the court determines the person recklessly endangered another person with a substantial risk of physical injury, the judge may suspend all but thirty days of the sentence if the person completes a court ordered alcohol or other drug screening, education or treatment program. If the person fails to complete the court ordered alcohol or other drug screening, education or treatment program and has not been placed on probation, the court shall issue an order to show cause as to why the remaining jail sentence should not be served.

F. In applying the eighty-four month provision of subsection D of this section, the dates of the commission of the offense shall be the determining factor irrespective of the sequence in which the offenses were committed.

G. A second violation for which a conviction occurs as provided in this section shall not include a conviction for an offense arising out of the same series of acts.

H. Any political subdivision processing or utilizing the services of a person ordered to perform community restitution pursuant to this section does not incur any civil liability to the person ordered to perform community restitution as a result of these activities unless the political subdivision or its agent or employee acts with gross negligence.

I. After a person who is sentenced pursuant to subsection A of this section has served twenty-four consecutive hours in jail or after a person who is sentenced pursuant to subsection D of this section has served forty-eight consecutive hours in jail and after receiving confirmation that the person is employed or is a student, the court, on pronouncement of any jail sentence under this section, may provide in the sentence that the person may be permitted, if the person is employed or is a student and can continue the person's employment or studies, to continue such employment or studies for not more than twelve hours per day nor more than five days per week, and the remaining day, days or parts of days shall be spent in jail until the sentence is served. The person shall be allowed out of jail only long enough to complete the actual hours of employment or studies and no longer.

J. A person who is sentenced pursuant to this section is eligible for a home detention program pursuant to section 9-499.07, subsections L through R or section 11-459, subsections K through Q.

K. The court shall allow the allegation of a prior conviction or other pending charge of a violation of section 5-395 filed twenty or more days before the date the case is actually tried and may allow the allegation of a prior conviction or other pending charge of a violation of section 5-395 filed any time before the date the case is actually tried, provided that when the allegation is filed this state must make available to the defendant a copy of any information obtained concerning the prior conviction or other pending charge. Any conviction may be used to enhance another conviction irrespective of the dates on which the offenses occurred within the eighty-four month provision.

L. If a person is placed on probation for violating section 5-395, the probation shall be supervised unless the court finds that supervised probation is not necessary or the court does not have supervisory probation services.

§ 5-395.02 Admissibility of breath test or other records

A. The results of a breath test administered for the purpose of determining a person's alcohol concentration as defined in section 5-395 are admissible as evidence in any trial, action or proceeding on establishing the following foundational requirements:

The test was performed using a quantitative breath testing device approved by the department of public safety. A properly authenticated certification by the department of public safety or judicial notice of department of public safety rules is sufficient to establish this requirement.
The operator who conducted the test possessed a valid permit issued by the department of health services or the department of public safety to operate the device used to conduct the test.
Duplicate tests were administered and the test results were within 0.02 alcohol concentration of each other and an operator observed the person charged with the violation for fifteen minutes immediately preceding the administration of the test.
The operator who conducted the test followed an operational checklist approved by the department of public safety for the operation of the device used to conduct the test. The testimony of the operator is sufficient to establish this requirement.
The device used to conduct the test was in proper operating condition. Records of periodic maintenance that show that the device was in proper operating condition are admissible in any proceeding as prima facie evidence that the device was in proper operating condition at the time of the test. Calibration checks with a standard alcohol concentration solution bracketing each person's duplicate breath test are one type of records of periodic maintenance that satisfies the requirements of this section. The records are public records.

B. Compliance with subsection A of this section is the only requirement for the admission in evidence of a breath test result.

C. The inability of any person to obtain manufacturer's schematics and software for a quantitative breath testing device that is approved as prescribed in subsection A of this section shall not affect the admissibility of the results of a breath test pursuant to this section.

D. Records that may be obtained or are otherwise maintained pursuant to section 28-1327 are admissible as evidence in any trial, action or proceeding.

§ 5-395.03 Test for alcohol concentration or drug content; refusal; civil penalty

A. Any person who operates a motorized watercraft that is underway within this state gives consent, subject to section 4-244, paragraph 35, section 5-395 or section 5-396, to a test or tests of the person's blood, breath, urine or other bodily substance for the purpose of determining alcohol concentration or drug content if the person is arrested for any offense arising out of acts alleged to have been committed in violation of this chapter or section 4-244, paragraph 35 while the person was operating or in actual physical control of a motorized watercraft that was underway while under the influence of intoxicating liquor or drugs. The test or tests chosen by the law enforcement agency shall be administered at the direction of a law enforcement officer having reasonable grounds to believe the person to have been operating or in actual physical control of a motorized watercraft that is underway within this state while under the influence of intoxicating liquor or drugs, or if the person is under twenty-one years of age, with spirituous liquor in the person's body.

B. Following an arrest a violator shall be requested to submit to and successfully complete any test or tests prescribed by subsection A of this section, and, if the violator refuses to submit to or complete the test or tests, the violator shall be informed that the violator is subject to a civil penalty. The case shall proceed as provided in title 28, chapter 5, article 4.

C. A person who refuses any test or tests prescribed by subsection A of this section is subject to a civil penalty of seven hundred fifty dollars and:

An additional civil penalty of five hundred dollars to be deposited by the state treasurer in the prison construction and operations fund established by section 41-1651. The civil penalty authorized pursuant to this paragraph is not subject to any surcharge. If the civil penalty authorized pursuant to this paragraph is imposed by the superior court or a justice court, the court shall transmit the amount collected to the county treasurer. If the civil penalty authorized pursuant to this paragraph is imposed by a municipal court, the court shall transmit the amount collected to the city treasurer. The city or county treasurer shall transmit the monies received pursuant to this paragraph to the state treasurer.
If the person is convicted or adjudicated of any offense arising out of acts committed in violation of this chapter or section 4-244, paragraph 35 while the person was operating or in actual physical control of a motorized watercraft that was underway while under the influence of intoxicating liquor or drugs, an additional assessment of five hundred dollars to be deposited by the state treasurer in the law enforcement and boating safety fund established by section 5-383. The assessment imposed pursuant to this paragraph is not subject to any surcharge. If the conviction or adjudication occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction or adjudication occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received pursuant to this paragraph to the state treasurer.

D. If a person under arrest refuses to submit to the test designated by the law enforcement agency as provided in subsection A of this section none shall be given, except as provided in section 5-395, subsection L or pursuant to a search warrant.

§ 5-395.04 Preliminary breath tests; authority

A. A law enforcement officer who has reasonable suspicion to believe that a person has committed a violation of section 5-395 may request that the person submit to a preliminary breath test or tests before an arrest.

B. In addition to a breath test or tests the officer may require that the person submit to further testing pursuant to section 5-395.03.

C. The director of the department of public safety shall adopt rules prescribing the approval of quantitative preliminary breath testing devices.

§ 5-396 Aggravated operating or actual physical control of motorized watercraft while under the influence of intoxicating liquor or drugs; classification

A. A person is guilty of aggravated operating or actual physical control of a motorized watercraft that is underway while under the influence of intoxicating liquor or drugs if the person does any of the following:

Within a period of eighty-four months commits a third or subsequent violation of section 5-395 or 5-397 or this section or is convicted of a violation of section 5-395 or 5-397 or this section and has previously been convicted of any combination of convictions of section 5-395 or 5-397 or this section or acts committed in another jurisdiction that if committed in this state would be a violation of section 5-395 or 5-397 or this section.
While a person under fifteen years of age is aboard the motorized watercraft, commits a violation of either:

(a) Section 5-395.

(b) Section 5-397.

B. The dates of the commission of the offenses are the determining factor in applying the eighty-four month provision provided in subsection A, paragraph 1 of this section regardless of the sequence in which the offenses were committed. For the purposes of this section, a third or subsequent violation for which a conviction occurs does not include a conviction for an offense arising out of the same series of acts. The time that a probationer is found to be on absconder status or the time that a person is incarcerated in any state, federal, county or city jail or correctional facility is excluded when determining the eighty-four month period provided in subsection A, paragraph 1 and subsection D of this section.

C. A person who is convicted under subsection A, paragraph 1 of this section and who within an eighty-four month period has been convicted of two prior violations of section 5-395 or 5-397 or this section, or acts committed in another jurisdiction that if committed in this state would be a violation of section 5-395 or 5-397 or this section, is not eligible for probation, pardon, commutation or suspension of sentence or release on any other basis until the person has served not less than four months in prison.

D. A person who is convicted under subsection A, paragraph 1 of this section and who within an eighty-four month period has been convicted of three or more prior violations of section 5-395 or 5-397 or this section, or acts committed in another jurisdiction that if committed in this state would be a violation of section 5-395 or 5-397 or this section, is not eligible for probation, pardon, commutation or suspension of sentence or release on any other basis until the person has served not less than eight months in prison.

E. A person who is convicted under subsection A, paragraph 2, subdivision (a) of this section shall serve at least the minimum term of incarceration required pursuant to section 5-395.01.

F. A person who is convicted under subsection A, paragraph 2, subdivision (b) of this section shall serve at least the minimum term of incarceration required pursuant to section 5-397.

G. A person who is convicted of a violation of this section and who is placed on probation shall attend and complete alcohol or drug screening, counseling and education from an approved facility and, if ordered by the court, treatment from an approved facility. If the person fails to comply with this subsection, in addition to section 13-901 the court may order that the person be incarcerated as a term of probation as follows:

For a person sentenced pursuant to subsection C of this section, for an individual period of not more than four months and a total period of not more than one year.
For a person sentenced pursuant to subsection D of this section, for an individual period of not more than eight months and a total period of not more than two years.

H. The time that a person spends in custody pursuant to subsection G of this section shall not be counted toward the sentence imposed if the person's probation is revoked and the person is sentenced to prison following revocation of probation.

I. On conviction for a violation of this section, the court:

Shall order the person to pay a fine of not less than seven hundred fifty dollars.
In addition to any other penalty prescribed by law, shall order the person to pay an additional assessment of two hundred fifty dollars. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer. The state treasurer shall deposit the monies received in the driving under the influence abatement fund established by section 28-1304. Any fine imposed for a violation of this section and any assessments, restitution and incarceration costs shall be paid before the assessment prescribed in this paragraph.
In addition to any other penalty prescribed by law, shall order the person to pay an additional assessment of one thousand five hundred dollars to be deposited by the state treasurer in the prison construction and operations fund established by section 41-1651. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.
In addition to any other penalty prescribed by law, shall order the person to pay an additional assessment of one thousand five hundred dollars to be deposited by the state treasurer in the law enforcement and boating safety fund established by section 5-383. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.

J. Aggravated operating or actual physical control of a motorized watercraft that is underway while under the influence of an intoxicating liquor or drugs committed under:

Subsection A, paragraph 1 of this section is a class 4 felony.
Subsection A, paragraph 2 of this section is a class 6 felony.

§ 5-396.01 Aggravated operating or actual physical control of a motorized watercraft while under the influence of intoxicating liquor or drugs; forfeiture of motorized watercraft; disposition

A. If a person is convicted of violating section 5-396 the court, in addition to any other penalty imposed by law, shall order the motorized watercraft owned and operated by the person at the time of the offense forfeited in the same manner as provided under title 13, chapter 39.

B. A motorized watercraft used by any person as a common carrier in the transaction of business as a common carrier is not subject to forfeiture unless it appears that the owner or other person in charge of the vehicle consented to or was privy to a violation described in subsection A of this section.

C. Any property that is subject to forfeiture and all interests in property that are forfeited under this section shall be disposed of and allocated in the same manner as provided in title 13, chapter 39, except that all monies that are obtained as a result of forfeiture under this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

§ 5-397 Operating or in actual physical control of a motorized watercraft while under the extreme influence of intoxicating liquor; trial by jury; sentencing; classification; definition

A. It is unlawful for a person to operate or be in actual physical control of a motorized watercraft that is underway within this state if the person has an alcohol concentration as follows within two hours of operating or being in actual physical control of the motorized watercraft and the alcohol concentration results from alcohol consumed either before or while operating or being in actual physical control of the motorized watercraft:

0.15 or more but less than 0.20.
0.20 or more.

B. A person who is convicted of a violation of this section is guilty of operating or being in actual physical control of a motorized watercraft while under the extreme influence of alcohol.

C. At the arraignment, the court shall inform the defendant that the defendant may request a trial by jury and that the request, if made, shall be granted.

D. A person who is convicted of a violation of this section:

Shall be sentenced to serve not less than thirty consecutive days in jail and is not eligible for probation or suspension of execution of sentence unless the entire sentence is served if the person is convicted of a violation of subsection A, paragraph 1 of this section. A person who is convicted of a violation of subsection A, paragraph 2 of this section shall be sentenced to serve not less than forty-five consecutive days in jail and is not eligible for probation or suspension of execution of sentence unless the entire sentence is served.
Shall pay a fine of not less than two hundred fifty dollars, except that a person who is convicted of a violation of subsection A, paragraph 2 of this section shall pay a fine of not less than five hundred dollars. The fine prescribed in this paragraph and any assessments, restitution and incarceration costs shall be paid before the assessment prescribed in paragraph 3 of this subsection.
Shall pay an additional assessment of two hundred fifty dollars. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer. The state treasurer shall deposit the monies received in the driving under the influence abatement fund established by section 28-1304.
May be ordered by a court to perform community restitution.
Shall pay an additional assessment of one thousand dollars to be deposited by the state treasurer in the prison construction and operations fund established by section 41-1651. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.
Shall pay an additional assessment of one thousand dollars to be deposited by the state treasurer in the law enforcement and boating safety fund established by section 5-383. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.

E. Notwithstanding subsection D, paragraph 1 of this section, at the time of sentencing if the person is convicted of a violation of subsection A, paragraph 1 of this section, the judge may suspend all but ten days of the sentence if the person completes a court ordered alcohol or other drug screening, education or treatment program. If the person fails to complete the court ordered alcohol or other drug screening, education or treatment program and has not been placed on probation, the court shall issue an order to show cause to the defendant as to why the remaining jail sentence should not be served.

F. If within a period of eighty-four months a person is convicted of a second violation of this section or is convicted of a violation of this section and has previously been convicted of a violation of section 5-395 or 5-396 or an act in another jurisdiction that if committed in this state would be a violation of this section or section 5-395 or 5-396, the person:

Shall be sentenced to serve not less than one hundred twenty days in jail, sixty days of which shall be served consecutively, and is not eligible for probation or suspension of execution of sentence unless the entire sentence has been served if the person is convicted of a violation of subsection A, paragraph 1 of this section. A person who is convicted of a violation of subsection A, paragraph 2 of this section shall be sentenced to serve not less than one hundred eighty days in jail, ninety of which shall be served consecutively, and is not eligible for probation or suspension of execution of sentence unless the entire sentence has been served.
Shall pay a fine of not less than five hundred dollars, except that a person who is convicted of a violation of subsection A, paragraph 2 of this section shall pay a fine of not less than one thousand dollars. The fine prescribed in this paragraph and any assessments, restitution and incarceration costs shall be paid before the assessment prescribed in paragraph 3 of this subsection.
Shall pay an additional assessment of two hundred fifty dollars. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer. The state treasurer shall deposit the monies received in the driving under the influence abatement fund established by section 28-1304.
Shall be ordered by a court to perform at least thirty hours of community restitution. If the person fails to complete the community restitution ordered pursuant to this paragraph, the court may order alternative sanctions if the court determines that alternative sanctions are more appropriate.
Shall pay an additional assessment of one thousand two hundred fifty dollars to be deposited by the state treasurer in the prison construction and operations fund established by section 41-1651. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.
Shall pay an additional assessment of one thousand two hundred fifty dollars to be deposited by the state treasurer in the law enforcement and boating safety fund established by section 5-383. This assessment is not subject to any surcharge. If the conviction occurred in the superior court or a justice court, the court shall transmit the assessed monies to the county treasurer. If the conviction occurred in a municipal court, the court shall transmit the assessed monies to the city treasurer. The city or county treasurer shall transmit the monies received to the state treasurer.

G. Notwithstanding subsection F, paragraph 1 of this section, at the time of sentencing, if the person is convicted of a violation of subsection A, paragraph 1 of this section, the judge may suspend all but sixty days of the sentence if the person completes a court ordered alcohol or other drug screening, education or treatment program. If the person fails to complete the court ordered alcohol or other drug screening, education or treatment program and has not been placed on probation, the court shall issue an order to show cause as to why the remaining jail sentence should not be served.

H. In applying the eighty-four month provision of subsection F of this section, the dates of the commission of the offense shall be the determining factor, irrespective of the sequence in which the offenses were committed.

I. A second violation for which a conviction occurs as provided in this section shall not include a conviction for an offense arising out of the same series of acts.

J. A person who is convicted of a violation of this section is guilty of a class 1 misdemeanor.

K. For the purposes of this section, "alcohol concentration" means grams of alcohol per one hundred milliliters of blood or grams of alcohol per two hundred ten liters of breath.

§ 5-398 Reimbursement of incarceration costs

A. The court shall order a person who is sentenced to a term of incarceration for a violation of this article to reimburse the political subdivision that is responsible for the costs of the person's incarceration for those incarceration costs.

B. The court may determine the amount of incarceration costs to be paid based on the following factors:

The per diem per person cost of incarceration incurred by the political subdivision that incarcerates the person.
The person's ability to pay part or all of the incarceration costs.

§ 5-398.01 Waiver of fine, surcharge or assessment

Notwithstanding any other law, the court shall not waive a fine or assessment imposed pursuant to this article or a surcharge imposed pursuant to section 12-116.01 or 12-116.02 for a conviction of an offense listed in this article.

§ 5-398.02 Records of convictions and judgments; abstract of record; reports

A. Each magistrate, judge or hearing officer of a court shall:

Keep or cause to be kept a record of each violation of this article deposited with or presented to the court.
Keep a record of each official action by the court in reference to each violation of this article deposited with or presented to the court, including but not limited to a record of:

(a) Each conviction, forfeiture of bail or deposit or judgment of acquittal.

(b) The amount of the penalty, fine or forfeiture resulting from each complaint deposited with or presented to the court.

B. Within ten days after the conviction, judgment or forfeiture of bail or deposit of a person on a charge of violating this article, each magistrate of the court or clerk of the court of record in which the conviction or judgment was had or bail or deposit was forfeited shall prepare and immediately forward to the department of transportation an abstract of the record of the court covering the case in which the person either:

Was convicted.
Was adjudicated to have committed a violation.
Forfeited bail or deposit.

C. The person required to prepare the abstract shall certify that it is true and correct.

D. The abstract shall be made on a form furnished or in a manner prescribed by the department of transportation and shall include:

The name and address of the party charged.
The number, if any, of the driver license, permit or identification license of the party charged.
The nature of the offense or violation.
The disposition or whether bail or deposit was forfeited.
The amount of the fine, penalty or forfeiture.

E. The department of transportation shall keep all abstracts received under this section for inspection as required by law.

Article 11 Towing of Watercraft

§ 5-399 Towing companies

A. If a towing company tows a watercraft, the towing company shall provide written notification by mail to the owner and lienholder, if known, of the watercraft's location. The towing company shall obtain the owner and lienholder information pursuant to section 5-324.

B. If the watercraft's owner or lienholder, if known, does not remove the watercraft from the towing company's premises within fifteen days of mailing of notice under subsection A of this section, the towing company shall:

Report the watercraft on forms prescribed by the director of the Arizona game and fish department.
Submit the report to the director of the Arizona game and fish department.

§ 5-399.01 Abandoned watercraft; notice of intent to transfer ownership

A. On receipt of a report as required by this article, the director shall determine the names and addresses of the owner and lienholder, if known, or any other person identified on the department's record who may have an interest in the watercraft by either:

Searching the department records.
Asking the watercraft registration agency of another state if the watercraft is registered in that state.

B. On receipt of information from reports pursuant to section 5-399 and after determining the names and addresses of the owner and lienholder, if known, or any other person identified on the department's record who may have an interest in the watercraft, the director shall notify all interested persons by mail within five business days for a watercraft with a record in this state or within thirty days for all other watercraft. The notice shall include:

A complete description of the watercraft.
A notice of intent to transfer ownership of the watercraft to the towing company in possession of the watercraft if within thirty days from the date indicated in the notification by the department the owner or lienholder, if known, or a person who has an interest in the watercraft does not notify the department of the owner's, lienholder's, if known, or person's interest in the watercraft and claim the watercraft.
The watercraft's hull identification number.
The state issued registration number assigned to the watercraft.
The place from which and date the watercraft was towed.
The storage location of the watercraft.

C. If the records of the department or out of state jurisdiction do not disclose the names and addresses of the owner and lienholder, if any, or any other person identified on the department's record who may have an interest in the watercraft, or if the notice is returned marked unclaimed or address unknown, the department shall publish a notice of the intent of the director to transfer ownership of the towed watercraft pursuant to this article once in a newspaper or other publication of general circulation in the county in which the watercraft was towed. The published notice shall include a statement of the intent of the director to transfer ownership of the watercraft after ten days of the published notice and the department shall make available to the public a complete description of abandoned watercraft subject to transfer of ownership.

D. The towing company that filed the report shall notify the director within twenty-four hours and in the manner prescribed by the director if the watercraft is released or returned to or redeemed or repossessed by the lawful owner or lienholder, if any, or any other known person who is identified on the department's record who may have an interest in the watercraft.

§ 5-399.02 Unclaimed watercraft; transfer of ownership; violation; classification

A. If a watercraft remains unclaimed at the expiration of the deadlines prescribed in section 5-399.01, subsections B and C, the director shall make an inquiry to determine if the watercraft is stolen. On receiving notice that the watercraft has not been reported stolen, the director may transfer ownership of the watercraft to the towing company free and clear of all liens or encumbrances on compliance with this article.

B. An application for transfer of ownership shall be completed and signed by the towing company or authorized agent of the towing company and shall contain a certified statement that includes the following:

As of the date of application, no person has presented proof of ownership or proof of interest in the watercraft and entered into an agreement for the release or return of the watercraft.
The towing company is currently in possession of the watercraft.

C. This state and its agencies, employees and agents are not liable for relying in good faith on the contents of the reports or affidavits as prescribed by this article.

D. If a towing company complies with this article, the towing company in possession of a watercraft is not liable for obtaining a transfer of ownership of the watercraft.

E. A towing company that obtains watercraft pursuant to this article shall maintain records of all of the following:

The request made pursuant to section 5-324.
The notification provided pursuant to section 5-399.
The application for transfer of ownership pursuant to this section.
Any documents pertaining to ownership transfer of abandoned watercraft that the director deems necessary.

F. A towing company shall maintain the records prescribed by subsection E of this section for three years from the date the ownership of the watercraft is transferred. The records may be audited by any law enforcement officer or employee of the department during normal business hours.

G. A tower who fails to maintain records as prescribed in this section is guilty of a class 2 misdemeanor.

§ 5-399.03 Abandoned watercraft processing rules; fees

The department may:

Adopt rules to carry out the requirements of this article.
Establish fees to implement this article.

Chapter 4 Games of Bingo

Article 1 General Provisions

§ 5-401 Definitions

In this chapter, unless the context otherwise requires:

"Adjusted gross receipts" means the receipts remaining after deducting the monies paid for prizes from gross receipts.
"Applicant" means a person, a group of persons or an organization that submits an application to the licensing authority for a license required under this chapter.
"Assistant" means a person who is not a manager, supervisor or proceeds coordinator, who assists in conducting bingo games and who is designated as an assistant in the application for a license.
"Auxiliary" means a formally organized body formed for the purpose of assisting a qualified organization in accomplishing its primary purposes and recognized by a licensee in writing to the licensing authority as the licensee for the purposes of this chapter.
"Charitable organization" means any organization including not more than one auxiliary of the organization, not for pecuniary profit, which is operated for charitable purposes within this state and which has been so engaged for two years prior to making application for a license under this article.
"Chartered branch or lodge or chapter of a national or state organization" means any branch or lodge or chapter of a national or state qualified organization.
"Equipment" means the receptacle and numbered objects drawn from it, the master board upon which such objects are placed as drawn, the cards or sheets bearing numbers or other designations to be covered and the objects used to cover them, the board or signs, however operated, used to announce or display the numbers or designations as they are drawn, the public address system, and all other articles essential to the operation, conduct and playing of bingo.
"Fraternal organization" means any organization within this state, except college and high school fraternities, not for pecuniary profit, which is a branch or lodge or chapter of a national or state organization and exists for the common business, brotherhood or other interests of its members and which national or state organization has so existed for two years in Arizona prior to making application for a license under this article. Fraternal organization shall also include not more than one auxiliary of such organization.
"Gross receipts" means the total of the following:

(a) The receipts from the sale of shares, tickets or rights in any manner connected with participation in a game of bingo or the right to participate therein, including any admission fee, charge for cards, daubers or other devices, the sale of equipment or supplies and all other miscellaneous receipts, excluding sales of food or beverages or other products which are not required to play bingo games.

(b) Interest collected on the special account or interest bearing accounts established pursuant to section 5-407.

"Homeowners association" means a nonprofit corporation or association that is established to own, lease or manage common, limited access lots, parcels, areas, grounds or streets of a real estate development and that has continuously engaged in those activities in this state for at least two years immediately before applying for a license.
"Lawful purposes" means the expenditure of net proceeds of a game of bingo exclusively by a licensee for the purposes of carrying out its mission and its aims or for the purpose of charity.
"Lawful use" means the devotion of the entire net proceeds of a game of bingo exclusively to a lawful purpose or to lawful purposes.
"License" means a license issued by the licensing authority pursuant to this article.
"Licensee" means any person or qualified organization to which a license has been issued by the licensing authority.
"Licensing authority" means the department of revenue.
"Local governing body" means the governing body of a city or town or the board of supervisors of the county for locations outside a city or town.
"Manager" means a person who has overall responsibility for conducting bingo games by a licensee and is designated as a manager in the application for a license.
"Member" means an individual who has qualified for membership in a qualified organization or its auxiliary pursuant to its bylaws, articles of incorporation, charter, rules or similar written instrument and who has been a member in good standing for at least two years.
"Net proceeds" means the receipts less such expenses, charges, fees and deductions as are specifically authorized under this article.
"New member" means an individual who has qualified and been approved by the appropriate parent organization or state or national organization for membership in a qualified organization including auxiliaries pursuant to its bylaws, articles of incorporation, charter, rules or similar written instrument and who has been a member in good standing for at least thirty days but less than two years.
"Occasion" means a gathering at which bingo games are played.
"Person" means a natural person, firm, association, corporation or other legal entity.
"Premises" means any room, hall, building, enclosure or outdoor area used for the purpose of playing a game of bingo. Premises shall not be subdivided to provide multiple premises.
"Proceeds coordinator" means a person who has primary responsibility for the use of bingo game proceeds in accordance with law and for all checks issued from bingo game proceeds and is designated as the proceeds coordinator in the application for a license.
"Qualified organization" means a homeowners association or any bona fide charitable, fraternal, religious, social, veterans' organization or volunteer firefighters organization, or nonprofit ambulance service as defined in section 41-1831 or any chartered branch or lodge or chapter of such national or state organization which operates without profit to its members and which has been in existence continuously for a period of two years in Arizona immediately before applying for a license under this article, and may include not more than one identified auxiliary of any such organization.
"Religious organization" means any organization, church, body of communicants or group, not for pecuniary profit, gathered in common membership for regular worship and religious observances and which organization has been so gathered or united for two years prior to making application for a license under this article. Religious organization shall also include not more than one auxiliary of the organization.
"Reporting period" means the applicable reporting period prescribed in section 5-413.
"Revocation" means the disciplinary termination of bingo license activity.
"Supervisor" means a person who is primarily responsible for the conduct of bingo games on each occasion including the supervision of all activities and the making of any report required by the licensing authority for the occasion.
"Suspension" means the disciplinary termination of bingo license activity for a period of less than five years.
"Veterans' organization" means any congressionally chartered organization within this state, or any branch, lodge or chapter of a national or state organization within this state, not for pecuniary profit, the membership of which consists of individuals who were members of the armed services or forces of the United States, which has been in existence for two years prior to making application for a license under this article. Veterans' organization shall also include not more than one auxiliary of such organization.
"Volunteer firefighters organization" means any organization within this state, not for pecuniary profit, established pursuant to title 48, chapter 5 which has been in existence continuously for two years immediately before applying for a license under this article.

§ 5-402 Licensing authority; powers; duties

The department of revenue is designated as the "licensing authority" of this article. The department of revenue shall be in charge of enforcement of the terms and provisions of this article and, as state licensing authority, it shall:

Grant or refuse licenses under this article. In addition, the licensing authority shall have the power on its own motion based on reasonable grounds or on a complaint made and after an investigation and public hearing, at which the licensee shall be afforded an opportunity to be heard, to suspend or revoke any license issued by the licensing authority for any violation by the licensee or any officer, director, agent, member or employee of such licensee of the provisions of this article or any rule authorized under this article. Notice of suspension or revocation, as well as notice of such hearing, shall be given by certified mail to the licensee at the address contained in such license. The licensing authority may suspend the operation of a game pending a hearing, in which case, the hearing shall be held within ten days after such notice. Proceedings to suspend or revoke a license shall be held pursuant to title 41, chapter 6, article 10.
Supervise the administration of this article and adopt, amend and repeal rules governing the holding, operating and conducting of games of bingo, the rental or purchase of premises and the purchase of equipment and providing that games of bingo shall be held, operated and conducted only by licensees for the purposes and in conformity with the provisions of this article.
Keep records of all actions and transactions of the licensing authority.
Report on request to the governor or the legislature respecting the administration of this article and make such recommendations in regard to legislation as the licensing authority shall deem necessary and proper.

§ 5-403 Qualification for license; renewal; transfer

A. A person shall not conduct or assist in conducting activity for which a license is required under this article unless the person conducting the activity first obtains the specific class of license for the activity.

B. A license prescribed by this article shall not be issued to an applicant qualified under this article until the licensing authority receives an original or certified copy of the application from the local governing body and the nonrefundable license fee prescribed in section 5-414 is paid to the licensing authority. The license expires one year from the date it is issued and may be renewed upon the filing with the licensing authority of an application for renewal of the license provided by the licensing authority and the payment of the license fee prescribed in section 5-414. A thirty day grace period shall be allowed during which the license may be renewed if a late filing penalty equal to the license fee is submitted with the regular license fee. A licensee filing late shall not conduct occasions of bingo until the licensing authority has renewed the license for the next one year period. If the licensee fails to apply to the licensing authority within the thirty day grace period the licensee must reapply for a new license under section 5-404.

C. If a license is revoked the licensing authority shall not issue a new license to the licensee for a period of five years from the effective date of the revocation.

D. A license issued pursuant to this article is not transferable to another person.

E. The licensing authority shall not issue more than one license to an applicant or licensee.

§ 5-403.01 License location transfers

A licensee shall not transfer the location for which a license is issued unless the governing body of the city or town or the board of supervisors of the county to which the license is proposed to be transferred gives prior written approval after a public hearing. The licensee shall transmit the approval document from the local governing body and its existing license to the licensing authority, and, upon a determination that the transfer would not result in a violation of any provision of this article, the licensing authority shall issue a new license identifying the new location. The transfer is not effective until the new license is issued. Temporary transfers of location are prohibited.

§ 5-404 Application for license

A. Each applicant for an initial license to be issued pursuant to this section shall submit to the local governing body the local governing body fee and the license fee prescribed in section 5-414 together with a written application that is in the form prescribed by the licensing authority, that is duly executed and verified and that states:

The name, telephone number and address of the applicant.
Sufficient facts to enable the licensing authority to determine whether or not the applicant is qualified for the specific class of license for which the applicant is applying.
If the applicant is a qualified organization, the names and addresses of its officers.
The place where and day and time when such games of bingo are to be held, operated and conducted by the applicant, under the license applied for.
The items of expense intended to be incurred or paid in connection with holding, operating and conducting such games of bingo and the names and addresses of the persons to whom, and the purposes for which, they are to be paid.
The specific projected use of the net proceeds.
Such other information as deemed advisable by the licensing authority.

B. The applicant shall designate in the application:

One or two persons who will serve as manager.
One person who will serve as proceeds coordinator.
At least one person who will serve as supervisor.
At least one person who will serve as assistant.

C. A person who is designated as a manager, proceeds coordinator or supervisor on a license shall not serve in any of these positions under any other license.

D. The applicant shall attach affidavits to the application that are executed by each manager and state that the manager:

Will conduct all bingo games in compliance with the license, this article and the rules of the licensing authority.
Has never been convicted of a misdemeanor involving moral turpitude or a felony.

E. The applicant shall attach an affidavit to the application that is executed by the proceeds coordinator and states that the proceeds coordinator:

Will use the net proceeds in compliance with the terms of the license, this article and the rules of the licensing authority.
Has never been convicted of a misdemeanor involving moral turpitude or a felony.

F. A person may serve as supervisor for more than one occasion for the same licensee. The supervisor shall be continuously present on the premises during the bingo games and until all associated activities have been completed. The applicant shall attach affidavits to the application that are executed by each supervisor and state that the supervisor:

Will comply with the terms of the license, this article and the rules of the licensing authority in supervising each occasion.
Has never been convicted of a misdemeanor involving moral turpitude or a felony.

G. Except in an application for a class A license, the applicant shall attach affidavits to the application that are executed by each assistant and state that the assistant:

Will comply with the terms of the license, this article and the rules of the licensing authority in assisting in the conduct of all bingo games.
Has never been convicted of a misdemeanor involving moral turpitude or a felony.

H. If any premises are to be leased or rented in connection with holding, operating or conducting any game of bingo pursuant to this article, an affidavit by the lessor shall accompany the application stating the lessor's name and address, the amount of rent, stated in a specific dollar amount and not relating to any percentage or portion of gross or net revenue, that will be paid for such premises and that the lessor has, or its officers and directors have, not been convicted of any misdemeanor involving moral turpitude or a felony.

I. The local governing body, on receipt of the application, shall immediately set a hearing on the application to be held within forty-five days.

J. Following the receipt of the application and the hearing, the local governing body shall recommend approval or disapproval of the application and forward the original or a certified copy of the application endorsed with its approval or disapproval to the licensing authority. If the application is disapproved by the local governing body, the endorsement shall contain the specific reasons for disapproval.

§ 5-405 Form of license; display

A. Each license shall contain a statement of the name and address of the licensee, the name of the manager and the place where bingo games are to be held.

B. Each license issued for the conduct of any game or games of bingo shall be conspicuously displayed at the place where any game is to be conducted at all times during any game.

§ 5-406 Persons allowed to conduct games; premises; equipment; expenses; compensation

A. A person shall not hold, operate or conduct any game of bingo under any license issued pursuant to this article unless the person has submitted affidavits as required in section 5-404 and has received prior written approval from the licensing authority. Persons seeking to replace a manager, proceeds coordinator, supervisor or assistant or to serve as an additional manager, supervisor or assistant shall submit the appropriate affidavit to the licensing authority as required in section 5-404.

B. Except as provided in section 5-413, only contractors, members and new members of a licensee or an applicant may participate or apply to participate in conducting any bingo game held by the licensee.

C. Except for a class A licensee, a person shall not hold, operate, conduct or assist in conducting any game or games of bingo under any license if the person or the person's spouse has a proprietary, equitable or credit interest, or is an officer, director, agent or employee of an individual or company that has a proprietary, equitable or credit interest, in the licensee.

D. Bookkeepers or accountants need not be members of the organization.

E. An item of expense shall not be incurred or paid in connection with holding, operating or conducting any game of bingo held, operated or conducted pursuant to any license issued under this article, except bona fide expenses in a reasonable amount for purposes described in section 5-407, subsection G. A game of bingo shall not be conducted with any equipment except equipment owned solely by the licensee or jointly by not more than six licensees. No portion of the ownership of such equipment may be held by any person or organization not licensed pursuant to this chapter. A game of bingo shall not be conducted with rented equipment. This subsection does not apply to technological aids for bingo games that function only as electronic substitutes for bingo cards or a contractor's personnel who are needed to operate technological aids prescribed in subsection X of this section.

F. An applicant or a licensee shall not enter into any purchase agreement other than a bona fide purchase agreement. The seller may repurchase equipment only on default of the buyer and then only at a price equal to or greater than ninety percent of any money paid for equipment from buyer to seller. The seller may repurchase a building only on default of the buyer at a fair market value per licensee.

G. A licensee shall not conduct or operate more than five occasions of bingo during any calendar week. Not more than twelve hours of bingo shall be conducted in any building or on any premises during any calendar day.

H. The entire net proceeds of any game shall be devoted to a lawful use or uses. In addition to other unlawful uses, the following are not considered lawful uses under this subsection:

Compensation and expenses of directors, officers and management personnel.
Fees or commissions of consultants.
Compensation paid for legal services incurred by a licensee unsuccessfully defending against charges of violations of this article.
Donations to other than national, state or local nonprofit parent organizations in excess of five percent of the net proceeds except with the permission of the licensing authority.
Donations or any payment from the lessor to the lessee.

I. The premises where any game of bingo is being held, operated or conducted, where it is intended that any game of bingo shall be held, operated or conducted or where it is intended that any equipment shall be used shall at all times be open to inspection by the licensing authority, its agents and employees and peace officers of any political subdivision of the state.

J. When any merchandise prize is awarded in a game of bingo, its value shall be its current retail price. A merchandise prize shall not be redeemable or convertible into cash directly or indirectly.

K. Equipment, prizes and supplies for games of bingo shall not be purchased or sold at prices in excess of one hundred fifteen percent of the average price paid by other licensees as reported in the reports submitted to the licensing authority during the prior six-month period by licensees having the same class of license. A licensee shall not enter into any contract or purchase agreement whereby it agrees to limit its source of supplies.

L. An alcoholic beverage shall not be offered or given as a prize in any such game.

M. The net profits derived from the holding of games of bingo must be devoted within one year after the date such profits were earned to the lawful purposes of the organization allowed to conduct such games. Any organization desiring to hold the net profits of games of bingo for a period longer than one year after the date such profits were earned must apply to the licensing authority for special permission and on good cause shown the authority may grant the request.

N. Any licensee that does not report during any one-year period the amount of its net profits, if any, shall be required to show cause before the licensing authority why its license to conduct games of bingo should not be revoked.

O. The licensing authority shall require a licensee that does not conduct bingo games during any one-year period to show cause why its license to conduct games of bingo should not be cancelled.

P. Except as otherwise provided by this section, a prize greater in amount or value than $1,000 shall not be offered or given in any single game of bingo conducted under any such license, and total prizes shall not exceed an amount or value greater than $3,000 for any occasion. Door prizes, discounts or other inducements with a value exceeding $250 per occasion shall not be offered or given away.

Q. Except for a class A licensee, on application to the licensing authority by the licensee the licensing authority may authorize one special bonus game to be played at weekly consecutive occasions with a quarterly prize limit of $12,000. A weekly consecutive occasion is an occasion played on the same day of each week during the quarter. The special bonus game may be played at each weekly consecutive occasion subject to the rules adopted by the licensing authority. The special bonus game is not subject to the prize limits prescribed by subsection P of this section.

R. The equipment used in playing bingo and the method of play shall be such that each card shall have an equal opportunity to be a winner. The objects or balls to be drawn shall be essentially the same as to size, shape, weight, balance and all other characteristics that may influence their selection. All objects or balls shall be present in the receptacle before each game is begun. All numbers announced shall be plainly and clearly audible or visible to all the players present. Where more than one room is used for any one game, the receptacle, the person calling the numbers as they are drawn and the person removing the objects or balls from the receptacle must be present in the room where the greatest number of players is present and all numbers announced shall be plainly audible or visible to the players in that room and also audible or visible to the players in the other room or rooms. The cards or sheets of the players shall be part of a deck, group or series of cards, no two of which shall be alike and which shall not be so prepared or arranged as to prefer any card. A licensee may provide braille cards for legally blind persons or allow legally blind persons to supply their own braille cards. A legally blind person supplying the person's own cards shall pay a fee to the licensee equal to the fee that would be charged if the legally blind person obtained the cards from the licensee. The bingo game activity shall be conducted and recorded in a manner as prescribed by the licensing authority to verify the gross receipts from each occasion.

S. The receptacle, the person calling the numbers as they are drawn and the person removing the objects or balls from the receptacle must be visible to all the players at all times except where more than one room is used for any one game and subsection R of this section applies.

T. The particular arrangement of numbers required to be covered in order to win the game and the amount of the prize shall be clearly and audibly or visibly described and announced to the players immediately before each game is begun.

U. Any players shall be entitled to call for a verification of all numbers drawn at the time a winner is determined and for a verification of the objects or balls remaining in the receptacle and not yet drawn. The verification shall be made in the immediate presence of the supervisor and in full view of any player requesting the verification.

V. A person who is not physically present on the premises where the game is actually conducted shall not be allowed to participate as a player in the game.

W. A person who holds, operates or conducts, or assists in holding, operating or conducting, a game of bingo shall not play at any occasion at which such person works unless the game of bingo is conducted pursuant to a class A license.

X. The operator of a bingo game shall offer assistance to players with disabilities, subject to the following:

The operator of a bingo game may offer players technological aids for bingo games that function only as electronic substitutes for bingo cards and shall reserve at least two of these technological aids for use by players with disabilities. If no requests are made for the use of these technological aids within fifteen minutes after the scheduled start of a game of bingo, these reserved technological aids may be made available to any other player.
If the operator of a bingo game, or any other person that is involved in the conduct of a bingo game, charges players a fee for the use of technological aids for bingo games that function only as electronic substitutes for bingo cards or requires players to comply with a minimum purchase requirement for the use of these technological aids, players with disabilities may not be required to pay that fee or to comply with that minimum purchase requirement. This paragraph does not prohibit the operator of a bingo game or any other person that is involved in the conduct of a bingo game from requiring a player with a disability to comply with a minimum purchase requirement that is imposed on all players.
The operator of a bingo game that offers technological aids for bingo games that function only as electronic substitutes for bingo cards shall allow players with disabilities to claim prizes by presenting a printout or other evidence of a winning card.
The operator of a bingo game shall allow players to use a form of visual or audio signal to notify the operator of a winning pattern or bingo, which may include a flag, paddle, light, horn, bell or whistle or any other mechanical or electronic means.
If a player's disability restricts the player's ability to mark cards, use technological aids for bingo games that function only as electronic substitutes for bingo cards or announce bingo, the operator of a bingo game shall allow another person to assist the player with a disability in the bingo game.
A person with a disability who is employed by a bingo operator may use technological aids for bingo games that function only as electronic substitutes for bingo cards to properly carry out the person's job functions as those functions apply to the conduct of bingo games.

§ 5-407 Statement of receipts; expenses; penalty

A. On or before the twentieth day after the end of every reporting period designated for the class of the license each licensee shall file with the licensing authority on forms prescribed by the licensing authority a financial report that is signed and sworn to by the proceeds coordinator showing the amount of the gross receipts derived during the reporting period from games of bingo, the expenses paid, a brief description of the classification of such expenses, the ratio of net proceeds to the adjusted gross receipts received by the licensee during the reporting period, the name and address of each person to whom has been paid $300 or more and the purpose of such expenditure, the net proceeds derived from each such game of bingo and the uses to which such net proceeds have been or are to be applied. Each licensee shall maintain and keep such books and records as may be necessary to substantiate the particulars of each such report.

B. Except for class A licensees, if the net proceeds derived from the games of bingo for any six consecutive months do not amount to at least fifty percent of adjusted gross receipts for those months in total, it shall be presumed that the expenses incurred for goods, wares, merchandise and services rendered are not bona fide and reasonable, and the operation of the game is deemed to be against public policy. If the net proceeds of the games operated by a licensee are less than fifty percent of the adjusted gross receipts in any six consecutive months, the license may be revoked.

C. The failure to file reports within forty-five days after their due date, or filing reports that are not fully, accurately and truthfully completed, may be the basis of the revocation of the license. If the licensee fails to make and file a return on or before the due date, unless the failure is due to reasonable cause, a penalty equal to five percent of the amount found to be due or remaining due under subsection I of this section shall be added to that amount for each month or fraction of a month between the due date of the return and the date on which the return is filed, plus interest at a rate determined pursuant to section 42-1123. The total penalty shall not exceed twenty-five percent of the amount found to be remaining due. The penalty is due and payable on notice and demand from the licensing authority. If an action has been filed by the licensing authority for revocation of a license, the court shall award reasonable attorney fees to the licensing authority as a part of the proceedings if the licensing authority prevails in the proceedings.

D. Except for a class A licensee, all monies collected or received from the sale of admission, extra regular cards, special game cards, sale of supplies and all other receipts from the games of bingo shall be deposited in a special account of the licensee that shall contain only such money. Except for a class A licensee, all expenses for bingo games, except cash prizes in the amount of less than $1,100, shall be withdrawn from the licensee's special account by consecutively numbered checks duly signed by a specified officer or officers of the licensee or the supervisor and payable to a specific person or organization. Class A licensees shall pay all bingo game prizes, except cash prizes in an amount less than $1,100, by check duly signed by a specified person or persons or the supervisor. A check shall not be drawn to "cash" or a fictitious payee. A check drawn on a licensee's special account shall not be payable to the licensee. Checks drawn against the net proceeds in the special account shall be drawn only for lawful uses and purposes. The licensee may establish interest bearing accounts that shall contain only monies transferred from the licensee's special account, but all monies, interest and other proceeds shall be redeposited to the special account before being used for lawful uses and purposes.

E. A licensee shall maintain a permanent record containing the signature of each player who receives a cash prize from such licensee and the amount of the cash prize awarded to such player.

F. The net profits after they have been given over to another organization shall not be used by the donee organization to pay any person for services rendered or materials purchased in connection with the conducting of bingo by the donor organization.

G. Expenses shall not be incurred or paid in connection with holding, operating or conducting any game of bingo pursuant to any license, except bona fide expenses of a reasonable amount. Expenses may be incurred only for the following purposes:

The purchase of goods, wares and merchandise furnished.
Payment for services rendered.
Rent.
Accountants' fees.
License fees.
Utility expenses.
Security guards.
Compensation not to exceed the current federal minimum wage plus twenty percent.
Mortgage payments when a nonprofit charitable organization licensee is using the building or premises for both bingo and for the licensee's bona fide charity.
Advertising.

H. For the purposes of subsection G of this section:

"Goods, wares and merchandise" means prizes, equipment and articles of a minor nature such as pencils, crayons, tickets, envelopes, paper clips and coupons necessary for the conduct of games of bingo.
"Services rendered" means repair to equipment, reasonable compensation to bookkeepers or accountants, not more than two in the aggregate, for services in preparing financial reports and a reasonable amount for janitorial service and security guards. Services rendered do not include and no item of expense may be incurred or paid for service of any nature whatever rendered by a member or new member, including, without limitation except as provided by subsection G, paragraph 8 of this section, equipment repair, bookkeeping, accounting, janitorial service, security guard service or operating, conducting or managing a bingo game or providing any professional or consultation service related to bingo.

I. In lieu of the taxes collected under title 42, chapter 5, article 1 there shall be paid to the licensing authority a tax in the amount prescribed in section 5-414. The taxes collected pursuant to this section shall be deposited in the state general fund. All administrative receipts, including license fees, penalties and interest, collected by the state pursuant to this article shall be deposited in the state general fund.

J. Each licensee, at the time each financial report is submitted to the licensing authority, shall pay to the order of the licensing authority the amount of tax provided in subsection I of this section.

K. For reporting periods beginning from and after December 31, 2019, or when the licensing authority has established an electronic filing program, whichever is later, each licensee shall file electronically any report or return required under this chapter. The report or return is considered to be filed and received by the licensing authority on the date of the electronic postmark pursuant to section 42-1105.02.

§ 5-408 Examination of books and records

The licensing authority and its agents shall have power to examine or cause to be examined the books, records and bingo paper inventory of any licensee to which any such license is issued so far as they may relate to any transactions connected with the holding, operating and conducting of any game of bingo. Such records shall be maintained and available to the licensing authority for a period of three years.

§ 5-409 Forfeiture of license; ineligibility to apply for license; classification

Any person who knowingly makes any false statement in any application for any license pursuant to this article or in any statement annexed to the application or fails to keep sufficient books and records to substantiate the financial reports required under section 5-407 or knowingly falsifies any books or records so far as they relate to any transaction connected with the holding, operating and conducting of any game of bingo under any license or violates any of the provisions of this article or of any term of a license is guilty of a class 2 misdemeanor and shall, if convicted, in addition to suffering any other penalties which may be imposed, forfeit any license issued to it pursuant to this article and shall be ineligible to apply for a license pursuant to this article for at least five years thereafter.

§ 5-410 Violation; classification

Every licensee and every officer, agent or employee of the licensee and every other person or corporation who knowingly violates any provision of this article is guilty of a class 3 misdemeanor unless another classification is specifically prescribed in this article. Any person who knowingly files a false report under this article is guilty of a class 6 felony.

§ 5-411 Credentials and authority of employees of the licensing authority

Each employee designated by the licensing authority to investigate compliance with this chapter shall, for identification purposes, possess credentials signed by the chief administration officer of the licensing authority and countersigned by the governor. When bearing such credentials the employee has the authority of a peace officer for the limited purposes of enforcing this chapter but does not thereby participate in the public safety personnel retirement system.

§ 5-412 Preemption by state of bingo taxation

Excise taxation of bingo is preempted by the state, and a county, city, town or other political subdivision of this state shall not levy an excise tax on bingo.

§ 5-413 License classification; requirements

A. A class A license may be issued to a person for the conduct of bingo games for which the gross receipts do not exceed $75,000 per year. A class A license shall not be issued to a person who holds a license issued pursuant to title 4 except a club license issued pursuant to section 4-205. For a class A license:

Any person may apply as prescribed in this article.
The manager, proceeds coordinator, supervisor and assistant are not required to be members or new members.
The reporting period is one year, coinciding with the term of the license.

B. A class B license may be issued to a qualified organization for the conduct of bingo games for which the gross receipts do not exceed $500,000 per year. For a class B license:

Only a qualified organization may apply.
The manager and supervisor shall be members of the licensee.
The proceeds coordinator shall be an officer or director and a member of the licensee and is responsible for completion of the required financial report.
An assistant shall be a member or new member of the licensee.
There are four reporting periods coinciding with the quarters of the term of the license.

C. A class C license may be issued to a qualified organization for the conduct of bingo games for which the gross receipts exceed $500,000 per year. For a class C license:

Only a qualified organization may apply.
The manager and supervisor shall be members of the licensee.
The proceeds coordinator shall be an officer or director and a member of the licensee and is responsible for completion of the required financial report.
An assistant shall be a member or new member of the licensee.
There are twelve reporting periods coinciding with each month of the term of the license.

§ 5-414 Fees; tax

The following fees and tax shall be assessed as prescribed in this article for the different license classes:

Local Governing

License Class Body Fee License Fee Bingo Tax

A $ 5.00 $ 10.00 2.5% of adjusted gross receipts

B 25.00 50.00 1.5% of gross receipts

C 50.00 200.00 2.0% of gross receipts

§ 5-415 Excessive gross receipts; change of license class

A. If a licensee's gross receipts exceed the limit set for the licensee's class of license, the licensee:

Shall immediately notify the licensing authority that the limit has been exceeded.
Shall submit any additional documents and meet any additional requirements for the new class of license applicable to the level of gross receipts.
Shall pay to the licensing authority the fee for the appropriate class of the license less the amount originally submitted for the previous class of the license.
Is liable for tax at the rate applicable to the new class of license and shall pay to the licensing authority the tax computed at this higher rate on the gross receipts for the expired portion of the term of the previous license less the taxes previously paid for gross receipts earned during this period.

B. The new class of license shall be issued for the remainder of the term of the previous license. At the expiration of this term the licensee may renew its new class of license or apply for another class of license if it has a good faith belief that it will qualify for the other class of license.

Chapter 5.1 State Lottery

Article 1 Revenue Bonds

§ 5-531 Definitions

In this article, unless the context otherwise requires:

"Bond related expenses" means any expenses incurred by the director to issue and administer the bonds, including underwriting fees and costs, trustee fees, financial consultant fees, printing and advertising costs, paying agent fees, transfer agent fees, legal, accounting, feasibility consultant and other professional fees and expenses, bond insurance or other credit enhancements or liquidity facilities, attorney and accounting fees and expenses related to credit enhancement, bond insurance or liquidity enhancement, remarketing fees, rating agency fees and costs, travel and telecommunications expenses and all other fees considered necessary by the director in order to market and administer the bonds.
"Bond related obligations" means any agreement or contractual relationship between the director and any bank, trust company, insurance company, surety bonding company, pension fund or other financial institution providing increased credit on, or security for, the bonds or liquidity for secondary market transactions and any agreement to fund or replenish reserves for the bonds.
"Bonds" means any bonds issued pursuant to this article.
"Department" means the department of administration.
"Director" means the director of the department of administration.

§ 5-532 Authorization of state lottery revenue bonds

A. The director shall issue state lottery revenue bonds pursuant to this article in an amount sufficient to provide monies to:

Deposit in the state general fund by December 31, 2010 an amount of not more than four hundred fifty million dollars.
Pay bond related expenses.
Pay fees, charges and expenses incurred with respect to bond related obligations.
Fully or partially fund any reserves or sinking accounts for debt service on the bonds established by the bond documents.

B. The director shall authorize the bonds by an appropriate document signed by the director. The bond authorizing document shall prescribe:

The fixed or variable rate or rates of interest, the date or dates on which interest is payable and the denominations of the bonds.
The date or dates of the bonds and maturity, within twenty years after the date of issuance.
The form of the bonds.
The manner of executing the bonds.
The medium and place of payment.
The terms of redemption, which may provide for a premium for early redemption.

C. The bonds issued pursuant to this article shall be known as state lottery revenue bonds.

D. The director shall notify the joint legislative budget committee of the bond's proposed terms and conditions at least ten days before an initial public offering document is released.

§ 5-533 Issuance and sale of bonds; state lottery revenue bond proceeds fund; use of bond proceeds

A. The state lottery revenue bonds shall be sold at public or private sale at the price and on the terms prescribed by the director at, above or below par. The first four hundred fifty million dollars of proceeds received from the issuance of state lottery revenue bonds shall be deposited in the state general fund.

B. The state lottery revenue bond proceeds fund is established. Except as provided in subsection A, the fund shall consist of the net proceeds received from the sale of any state lottery revenue bonds issued by the director pursuant to this article. The department shall administer the fund.

C. The director may use monies in the state lottery revenue bond proceeds fund only for the purposes provided in section 5-532, subsection A, paragraphs 2, 3 and 4. The monies in the fund are exempt from the provisions of section 35-190 relating to the lapsing of appropriations.

§ 5-534 State lottery revenue bond debt service fund

A. The state lottery revenue bond debt service fund is established. The fund shall consist of monies transferred pursuant to law. The department shall administer and account for the state lottery revenue bond debt service fund.

B. If the director issues state lottery revenue bonds:

Amounts distributable to the state general fund from the state lottery fund pursuant to section 5-522 shall be transferred first to the state lottery bond debt service fund until the state lottery bond debt service fund contains monies sufficient to meet all requirements for the current period as required by the bond documents and, after the requirements for the current period as required by the bond documents have been satisfied, shall be transferred to the state general fund.
After payment of the state lottery operating expenses, amounts distributable from the state lottery fund pursuant to section 5-572 shall be transferred first to the state lottery bond debt service fund until the state lottery bond debt service fund contains monies sufficient to meet all requirements for the current period as required by the bond documents and, after the requirements for the current period as required by the bond documents have been satisfied, shall be transferred in accordance with section 5-572.

C. Monies in the state lottery revenue bond debt service fund may be used only for the purposes authorized by this article.

§ 5-535 Securing principal and interest; refunding bonds

A. In connection with issuing state lottery revenue bonds authorized by this article and to secure the principal and interest on the bonds, the director may:

Segregate the state lottery revenue bond debt service fund into one or more accounts and subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the state lottery revenue bond debt service fund or into any account or subaccount in the fund.
Provide that the bonds issued under this article are secured by a first lien on the monies paid into the state lottery revenue bond debt service fund and paid into the state lottery fund to be placed in the state lottery bond debt service fund as provided in this article and pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the state lottery revenue bond debt service fund, in any account or subaccount in the state lottery revenue bond debt service fund or in the state lottery revenue bond proceeds fund as is necessary to secure and pay the principal, the interest and any premium on the bonds as they come due.
Establish priorities among bondholders based on criteria adopted by the director.
Set aside, regulate and dispose of reserves and sinking accounts.
Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given.
Provide for payment of bond related expenses from the proceeds of the sale of the bonds or other revenues authorized by this article and available to the director.
Provide for the services of trustees, cotrustees, agents and consultants and other specialized services with respect to the bonds.
Take any other action that in any way may affect the security and protection of the bonds or interest on the bonds.
Refund any bonds issued by the director by issuing new bonds, if these bonds are secured from the same source of revenues as the bonds authorized by this article.
Issue bonds partly to refund outstanding bonds and partly for any other purpose consistent with this article.

B. If state lottery revenue bonds are issued, the director shall provide to the state lottery commission a schedule of the amount needed to pay each fiscal year's debt service on outstanding state lottery revenue bonds, including sinking fund and reserve fund deposits pursuant to the terms of the bonds, bond related expenses and amounts payable with respect to bond related obligations.

§ 5-536 Lien of pledge

A. Any pledge made under this article in connection with state lottery revenue bonds is valid and binding from the time the pledge is made.

B. The monies pledged and received by the state lottery revenue bond debt service fund and by the state lottery fund to be placed in the state lottery revenue bond debt service fund are immediately subject to the lien of the pledge without any future physical delivery or further act. Any lien of any pledge is valid and binding against all parties that have claims of any kind against the state, regardless of whether the parties have notice of the lien. The official resolution or trust indenture or any instrument by which this pledge is created when adopted by the director, is notice to all concerned of the creation of the pledge, and those instruments need not be recorded in any other place to perfect the pledge.

§ 5-537 Bond purchase; cancellation

The director may purchase bonds for cancellation out of any monies available for the purchase, at a price of not more than either of the following:

If the bonds are redeemable at the time of the purchase, the applicable redemption price plus accrued interest to the next interest payment date on the bonds.
If the bonds are not redeemable at the time of the purchase, the applicable redemption price on the first date after the purchase on which the bonds become subject to redemption plus accrued interest to that date.

§ 5-538 Payment of bonds

The state lottery revenue bonds shall be paid solely from monies from the state lottery revenue bond debt service fund established by section 5-534.

§ 5-539 Investment of monies; funds

A. The director may authorize the state treasurer or bond trustee to invest monies in the state lottery revenue bond proceeds fund and the state lottery revenue bond debt service fund.

B. The order directing an investment may state a specified time when the monies invested will be used. The state treasurer or bond trustee shall make the investment in such a way as to mature at the specified date.

C. All monies earned as interest or otherwise derived from the investment of the monies in the state lottery revenue bond proceeds fund and the state lottery revenue bond debt service fund shall be credited to the state lottery revenue bond debt service fund established by section 5-534.

D. At the direction of the director, the state treasurer or bond trustee may invest or reinvest monies in the state lottery revenue bond proceeds fund and the state lottery revenue bond debt service fund in investments authorized by section 35-313. The purchase of the securities shall be made by the state treasurer or bond trustee on authority of the director. The treasurer or bond trustee shall act as custodian of all securities purchased. The securities may be sold on an order of the director.

§ 5-540 Characteristics of bonds; negotiable; exemption from taxation; obligation; legal investments

A. State lottery revenue bonds issued under this article are fully negotiable within the meaning and for all purposes of the uniform commercial code, subject only to any provisions for registration, regardless of whether the bonds actually constitute negotiable instruments under the uniform commercial code.

B. The bonds, the transfer of the bonds and the income from the bonds are at all times free from taxation in this state.

C. State lottery revenue bonds:

Are payable only according to their terms.
Are not general, special or other obligations of this state.
Do not constitute a debt of this state.
Are not enforceable against this state nor is the payment of the bonds enforceable out of any monies other than the revenue pledged and assigned to, or in trust for the benefit of, the holder or holders of the bonds.
Are securities in which public officers and bodies of this state and of municipalities and political subdivisions of this state, all companies, associations and other persons carrying on an insurance business, all financial institutions, investment companies and other persons carrying on a banking business, all fiduciaries and all other persons who are authorized to invest in government obligations may properly and legally invest.
Are securities that may be deposited with public officers or bodies of this state and municipalities and political subdivisions of this state for purposes that require the deposit of government bonds or obligations.

§ 5-541 Effect of changing circumstances of bonds; agreement of state

A. An amendment of any provision of this article does not diminish or impair the validity of bonds issued under this article or the remedies and rights of bondholders.

B. This state pledges to and agrees with the holders of the bonds authorized by this article that this state will not limit, alter or impair the rights and remedies of the bondholders, until all bonds issued under this article, together with interest on the bonds, interest on any unpaid installments of principal or interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders, are fully met and discharged. The director, as agent for this state, may include this pledge and undertaking in its resolutions and indentures authorizing and securing the bonds.

§ 5-542 Validity of bonds

A. This article constitutes full authority for authorizing and issuing state lottery revenue bonds without reference to any other law of this state. No other law with regard to authorizing or issuing obligations or that in any way impedes or restricts performing the acts authorized by this article may be construed to apply to any proceedings taken or acts done pursuant to this article.

B. The validity of bonds issued under this article does not depend on and is not affected by the legality of any proceeding relating to any action relating to application of the proceeds of the bonds.

C. The bonds shall recite that they are regularly issued pursuant to this article. That recital constitutes prima facie evidence of the legality and validity of the bonds. From and after the sale and delivery of the bonds, they are incontestable by the director or this state.

§ 5-543 State officials to comply with agreements

Notwithstanding any other law, all state officials shall comply with all agreements made by the director with or for the benefit of the owners of its state lottery revenue bonds. The executive director of the state lottery commission shall provide assistance and information as requested by the director of the department of administration to accomplish the purposes of this article and the issuance, sale and administration of the bonds.

Article 2 General Provisions

§ 5-551 Definitions

In this chapter, unless the context otherwise requires:

"Commission" means the Arizona state lottery commission.
"Director" means the executive director of the Arizona state lottery commission.
"Lottery" or "state lottery" means the lottery created and operated pursuant to this chapter.

§ 5-552 Arizona state lottery commission; membership; appointment; term; chairman; removal; reimbursement of expenses

A. There is established the Arizona state lottery commission consisting of five members who shall be citizens and residents of this state and appointed by the governor pursuant to section 38-211. No more than three members may be from the same political party. The term of members appointed to the commission is five years. The commission members shall annually elect one of the members to serve as chairman of the commission.

B. At least one member of the commission shall have a minimum of five years' experience in law enforcement.

C. At least one member of the commission shall have a minimum of five years' experience as a certified public accountant.

D. At least one member of the commission shall have a minimum of five years' experience in marketing or advertising, or both.

E. At least one member of the commission shall have a minimum of five years' experience in convenience store, minimart or grocery retailing.

F. Any member of the commission may be removed from office by the governor for cause upon notice and opportunity to be heard at a public hearing.

G. Members of the commission are eligible to receive compensation pursuant to section 38-611.

H. The commission shall hold at least one meeting each quarter.

I. No commission member may have a pecuniary interest in any contract or agreement to which the commission is a party.

J. No action of the commission is binding unless taken at a meeting with at least three members present voting in favor of the action in question.

§ 5-553 Executive director; appointment

A. An executive director appointed by the governor pursuant to section 38-211 shall exercise immediate supervision over the lottery. The director shall be a person qualified by training and experience to administer the state lottery. The director shall be appointed by the governor and shall serve at the pleasure of the governor.

B. The director shall devote his entire time and attention to the administration of the state lottery and shall not be engaged in any other profession or occupation. The director is eligible to receive compensation pursuant to section 38-611.

§ 5-554 Commission; director; powers and duties; definitions

A. The commission shall meet with the director not less than once each quarter to make recommendations and set policy, receive reports from the director and transact other business properly brought before the commission.

B. The commission shall oversee a state lottery to produce the maximum amount of net revenue consonant with the dignity of the state. To achieve these ends, the commission shall authorize the director to adopt rules in accordance with title 41, chapter 6. Rules adopted by the director may include the following:

Subject to the approval of the commission, the types of lottery games and the types of game play-styles to be conducted.
The method of selecting the winning tickets or shares for noncomputerized online games, except that a method may not be used that, in whole or in part, depends on the results of a dog race, a horse race, any gaming activity conducted pursuant to the 2021 tribal-state gaming compact amendments or any sports event or other event.
The manner of payment of prizes to the holders of winning tickets or shares, including providing for payment by the purchase of annuities in the case of prizes payable in installments, except that the commission staff shall examine claims and may not pay any prize based on altered, stolen or counterfeit tickets or based on any tickets that fail to meet established validation requirements, including rules stated on the ticket or in the published game rules, and confidential validation tests applied consistently by the commission staff. No particular prize in a lottery game may be paid more than once, and in the event of a binding determination that more than one person is entitled to a particular prize, the sole remedy of the claimants is the award to each of them of an equal portion of the single prize.
The method to be used in selling tickets or shares, except that no elected official's name may be printed on the tickets or shares. The overall estimated odds of winning some prize or some cash prize, as appropriate, in a given game shall be printed on each ticket or share.
The licensing of agents to sell tickets or shares, except that a person who is under eighteen years of age shall not be licensed as an agent.
The manner and amount of compensation to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public, including provision for variable compensation based on sales volume.
Matters necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.
The licensing of authorized keno locations, including the persons that control the business or other activity conducted at an authorized keno location.

C. The commission shall authorize the director to issue orders and shall approve orders issued by the director for the necessary operation of the lottery. Orders issued under this subsection may include the following:

The prices of tickets or shares in lottery games.
The themes, game play-styles, and names of lottery games and definitions of symbols and other characters used in lottery games, except that each ticket or share in a lottery game shall bear a unique distinguishable serial number.
The sale of tickets or shares at a discount for promotional purposes.
The prize structure of lottery games, including the number and size of prizes available. Available prizes may include free tickets in lottery games and merchandise prizes.
The frequency of drawings, if any, or other selections of winning tickets or shares, except that:

(a) All drawings shall be open to the public.

(b) The actual selection of winning tickets or shares may not be performed by an employee or member of the commission.

Requirements for eligibility for participation in grand drawings or other runoff drawings, including requirements for the submission of evidence of eligibility within a shorter period than that provided for claims by section 5-568.
Incentive and bonus programs designed to increase sales of lottery tickets or shares and to produce the maximum amount of net revenue for this state.
The method used for the validation of a ticket, which may be by physical or electronic presentation of a ticket.

D. Notwithstanding title 41, chapter 6 and subsection B of this section, the director, subject to the approval of the commission, may establish a policy, procedure or practice that relates to an existing online game or a new online game that is the same type and has the same type of game play-style as an online game currently being conducted by the lottery or may modify an existing rule for an existing online game or a new online game that is the same type and has the same type of game play-style as an online game currently being conducted by the lottery, including establishing or modifying the matrix for an online game by giving notice of the establishment or modification at least thirty days before the effective date of the establishment or modification.

E. The commission shall maintain and make the following information available for public inspection at its offices during regular business hours:

A detailed listing of the estimated number of prizes of each particular denomination expected to be awarded in any instant game currently on sale.
After the end of the claim period prescribed by section 5-568, a listing of the total number of tickets or shares sold and the number of prizes of each particular denomination awarded in each lottery game.
Definitions of all play symbols and other characters used in each lottery game and instructions on how to play and how to win each lottery game.

F. Any information that is maintained by the commission and that would assist a person in locating or identifying a winning ticket or share or that would otherwise compromise the integrity of any lottery game is deemed confidential and is not subject to public inspection.

G. The commission, in addition to other games authorized by this article, may establish multijurisdictional lottery games to be conducted concurrently with other lottery games authorized under subsection B of this section. The monies for prizes, for operating expenses and for payment to the state general fund shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. The monies shall be derived from the revenues of multijurisdictional lottery games.

H. The commission, in addition to other games authorized by this article, shall establish special instant ticket games with play areas protected by paper tabs designated for use by charitable organizations. The monies for prizes and for operating expenses shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. Monies saved from the revenues of the special games, by reason of operating efficiencies, shall become other revenue of the lottery commission and revert to the state general fund, except that the commission shall transfer the proceeds from any games that are sold from a vending machine in an age-restricted area to the state treasurer for deposit in the following amounts:

Nine hundred thousand dollars each fiscal year in the internet crimes against children enforcement fund established by section 41-199.
One hundred thousand dollars each fiscal year in the victims' rights enforcement fund established by section 41-1727.
Any monies in excess of the amounts listed in paragraphs 1 and 2 of this subsection, in the state lottery fund established by section 5-571.

I. The commission or director shall not establish or operate any online or electronic keno game or any game played on the internet, except for the electronic keno game and the mobile draw game authorized in subsection J of this section.

J. From and after the date on which the conditions prescribed in sections 5-1213 and 5-1321 are met, the commission or director, in addition to any other game authorized in this section, may establish and operate a single electronic keno game and a single mobile draw game on a centralized computer system controlled by the lottery that allows a player to place wagers, view the outcome of a game and receive winnings over the internet, including on personal electronic devices.

K. An electronic keno game conducted pursuant to subsection J of this section may be operated only within an authorized keno location. If the electronic keno game is authorized to be played on personal electronic devices, players shall be geographically restricted by means of geofencing to authorized keno locations. Electronic keno game draws may not be conducted more frequently than once every four minutes. The number of authorized keno locations may not exceed the number published annually by the director, which is equal to the total number of establishments licensed by the department of gaming to allow wagering on live horse races and simulcast wagering pursuant to section 5-107, plus the total number of class 14 liquor licenses that the department of liquor licenses and control issued to fraternal organizations or veterans' organizations as of January 1, 2021. The total number of authorized keno locations shall be automatically increased by two percent every two years.

L. A mobile draw game conducted pursuant to subsection J of this section may offer players multiple game play styles and wagering options. Players of the mobile draw game may not play or win a prize more frequently than once per hour.

M. An electronic keno game or mobile draw game conducted pursuant to this section may not present the player with a user interface depicting spinning reels or that replicates a slot machine, blackjack, poker, roulette, craps or any other casino-style game other than traditional keno or a traditional lottery draw game.

N. Except as provided in subsections J, K, L and M of this section, the commission or director shall not establish or operate any lottery game or any type of game play-style, either individually or in combination, that uses gaming devices or video lottery terminals as those terms are used in section 5-601.02, including monitor games that produce or display outcomes or results more than once per hour.

O. The director shall print, in a prominent location on each lottery ticket or share, a statement that help is available if a person has a problem with gambling and a toll-free telephone number where problem gambling assistance is available. The director shall require all licensed agents to post a sign with the statement that help is available if a person has a problem with gambling and the toll-free telephone number at the point of sale as prescribed and supplied by the director.

P. For the purposes of this section:

"Additional wagering facility" has the same meaning prescribed in section 5-101.
"Authorized keno location" means a physical facility located at least five miles from an Indian gaming facility that is licensed by the director in the same manner as licenses issued pursuant to section 5-562 but only to a fraternal organization or veterans' organization or to a racetrack enclosure or additional wagering facility where pari-mutuel wagering on horse races is conducted.
"Charitable organization" means any nonprofit organization, including not more than one auxiliary of that organization, that has operated for charitable purposes in this state for at least two years before submitting a license application under this article.
"Electronic keno game" means a house banking game in which:

(a) A player selects from one to twenty numbers on a card that contains the numbers one through eighty.

(b) The lottery randomly draws twenty numbers.

(d) The lottery pays all winners, if any, and collects from all losers.

"Fraternal organization" has the same meaning prescribed in section 5-401.
"Game play-style" means the process or procedure that a player must follow to determine if a lottery ticket or share is a winning ticket or share.
"Matrix" means the odds of winning a prize and the prize payout amounts in a given game.
"Mobile draw game" conducted pursuant to subsection J of this section, means a lottery draw game offered to players over the internet, including on mobile devices, in which:

(a) A combination of numbers, symbols or characters is selected.

(b) A computer system authorized by the lottery randomly selects a winning combination of numbers, symbols or characters.

"Other event" has the same meaning prescribed in section 5-1301.
"Sports event" has the same meaning prescribed in section 5-1301.
"Veterans' organization" has the same meaning prescribed in section 5-401.

§ 5-555 Apportionment of revenue

A. Not more than eighteen and one-half per cent of the total annual revenues accruing from the sale of lottery tickets or shares and from all other sources and not more than thirty-five per cent of the total annual revenues from the sale of special instant games authorized under section 5-554, subsection H shall be deposited in the state lottery fund established by section 5-571 to be expended for the following:

The payment of costs incurred in the operation and administration of the lottery, including the expenses of the commission and the costs resulting from any contract or contracts entered into for consulting or operational services.
Independent audits, which shall be performed annually in addition to the audits required by section 5-574.
Incentive programs for lottery sales agents and lottery employees.
Payment of compensation to licensed sales agents necessary to provide for the adequate availability of tickets or services to prospective buyers and for the convenience of the public. Except as otherwise provided in this subsection, compensation of licensed sales agents shall be at least five and one-half per cent but not more than eight per cent of the price of each ticket or share that a retail sales agent sells in instant games and online games, less the price of any tickets or shares that are voided.
The payment of reasonable fees to redemption agents as authorized by section 5-569.
The purchase or lease of lottery equipment, tickets and materials.
Compensation of a licensed sales agent who is designated as a charitable organization as defined in section 5-554. Compensation shall be twenty per cent of the price of each ticket from a special instant game authorized under section 5-554, subsection H and shall be an offset against the sale of the ticket.

B. Not less than fifty per cent of the total annual revenues accruing from the sale of lottery tickets or shares shall be deposited in the state lottery prize fund established by section 5-573 for payment of prizes to the holders of winning tickets or shares or for other purposes provided for in section 5-568.

C. All other revenues accruing from the sale of lottery tickets or shares in online games or instant games shall be deposited in the state lottery fund established by section 5-571 to be used as prescribed by section 5-572.

D. Monies expended under subsection A of this section shall be subject to legislative appropriation.

§ 5-556 Powers and duties of director

In addition to other powers and duties prescribed in this chapter, the director shall:

Supervise and administer the operation of the lottery in accordance with this chapter and the rules adopted under this chapter, subject to the continuous duty to take into account the particularly sensitive and responsible nature of the commission's functions.
Enforce this chapter and the rules adopted under this chapter. The director shall accept allegations of any violations of the laws of this state or rules pertaining to the conduct of the lottery.
Pursuant to this chapter and the rules adopted by the commission, license as agents to sell lottery tickets such persons as will best serve the public convenience and promote the sale of tickets or shares.
Subject to title 41, chapter 4, article 4, hire such professional, clerical, technical and administrative personnel as may be necessary to carry out this chapter. The director shall conduct background checks of prospective employees, and, in all employment decisions, shall take into account the particularly sensitive and responsible nature of the operation of the state lottery.
Act as secretary and executive officer of the commission.
Confer regularly as necessary or desirable and not less than once every quarter with the commission on the operation and administration of the lottery.
Make available for inspection by the commission, upon request, all books, records, files and other information and documents of the commission.
Advise the commission and recommend matters as are necessary and advisable to improve the operation and administration of the lottery.
Suspend or revoke any license issued pursuant to this chapter or the rules adopted pursuant to this chapter, subject to appeal to the commission.
Within thirty days after receiving an allegation of a violation of the laws of this state or rules pertaining to the conduct of the lottery by a licensed agent and evidence substantiating the allegation, determine whether the agent has violated the rules or if a criminal investigation is warranted.

§ 5-557 Monthly reports; annual reports

A. The director shall make a monthly report to the commission, the governor, the speaker of the house of representatives and the president of the senate. The monthly report shall include the total lottery revenue, prize disbursements and other expenses for the preceding month.

B. The commission shall make an annual report to the governor, the speaker of the house of representatives and the president of the senate. The annual report shall include a full and complete statement of lottery revenues, prize disbursements and other expenses for the preceding years, and recommendations for amendments to this chapter as the commission deems necessary or desirable.

§ 5-558 Studies and investigations

A. The director shall conduct an ongoing study and investigation of the lottery for the following purposes:

To ascertain any defects in this chapter or in the rules through which any abuses in the administration and operation of the lottery or any evasion of this chapter or the rules may arise or be practiced.
To formulate recommendations for changes in this chapter.
To guard against the use of this chapter and the rules as a cloak for organized gambling and crime.
To insure that this chapter and the rules are in a form and are administered to serve the true purposes of this chapter.

B. The director shall conduct an ongoing study and investigation of the operation and the administration of lottery laws in effect in other states or countries, any literature on the subject that may be published or available, any federal laws that may affect the operation of the lottery and the reaction of citizens to existing and potential features of the lottery with a view to recommending or effecting changes that will tend to serve the purposes of this chapter.

§ 5-559 Contracts; limitation; restrictions

A. Notwithstanding any other statute, the director may:

Directly solicit bids and contract for the design and operation of the lottery or the purchase of lottery equipment, tickets and related materials.
Contract to effectuate the purposes of this chapter and the rules adopted pursuant to this chapter.
Acquire administrative office facilities and related facilities and equipment for the use of the commission by lease, purchase or lease-purchase.

B. Procurement pursuant to this section shall be performed as prescribed in section 41-2501, subsection H. Bids received under this section may be deemed confidential in whole or in part by the director if required on account of the sensitive and responsible nature of the commission's functions and the paramount considerations of security and integrity.

C. Any award made by the director pursuant to this section becomes effective and binding on the commission unless it is rejected by the commission at a meeting held within fourteen calendar days after the award is communicated to the members of the commission.

D. A contract awarded or entered into by the director pursuant to this section shall not be assigned by the holder except by specific approval of the director. In all awards of contracts pursuant to this section, the director shall take particular account of the sensitive and responsible nature of the commission's functions and the paramount considerations of security and integrity.

§ 5-560 Security operations; powers; peace officer status

A. The state lottery commission shall maintain operations responsible for security. The director shall appoint a security officer to supervise the security operations of the commission.

B. The security operations of the state lottery commission shall be a law enforcement agency and the supervising security officer is designated a peace officer. Such law enforcement agency and peace officer status shall be for the limited purpose of receiving investigative information from law enforcement agencies pertaining to investigations of lottery activities.

C. No employee of the lottery commission is eligible for participation in the public safety personnel retirement system.

§ 5-561 Department of public safety; investigation; authority; payment

The director of the department of public safety shall order an investigation into any violation of a statute of this state which pertains to the conduct of the state lottery. The director shall include in the commission's overhead expenses and pay, upon certified invoice submitted by the director of the department of public safety, any charges for actual expenses as a result of investigations and related law enforcement activities, or for any activity directly or indirectly related to the lottery operation. The charges may include costs for personnel, supplies, materials, equipment and travel within or without the state.

§ 5-562 Licenses to sell tickets or shares; fee; conditions; definitions

A. A license as an agent to sell lottery tickets or shares shall not be issued to any person to engage in business exclusively as a lottery sales agent. Before issuing a license as a lottery sales agent to any person, the director shall consider factors such as the financial responsibility and security of the person and the nature of the person's business activity, the person's background, the accessibility of the person's place of business or activity to the public, the accessibility of existing licensees to serve the public convenience and the volume of expected sales.

B. A person that is lawfully engaged in nongovernmental business on state property may be licensed as a lottery sales agent.

C. The director may establish by rule and collect a fee for a license issued pursuant to this section.

D. A license is not assignable or transferrable.

E. A licensed agent or licensed agent's employee may sell lottery tickets or shares only on the premises stated in the license of the agent.

F. The director may purchase a blanket bond covering the activities of licensed agents.

G. A licensed agent shall display the licensed agent's license or a copy of the license conspicuously in accordance with the rules prescribed by the director.

H. If a licensed agent sells lottery tickets or shares on leased premises and all or part of the agent's rental payments are based on the total volume of sales made at the premises, the compensation paid by the state lottery commission to the agent for the sale of tickets and shares is the amount of the sale for the purposes of determining the agent's rental payments. This subsection does not apply if the lease agreement expressly provides that the total volume of sales made at the premises includes sales of lottery tickets or shares.

I. The commission shall adopt rules to establish penalties for a licensed agent who violates section 5-565 or 5-565.01. The penalty for a subsequent violation within any twelve-month period shall be more severe than the penalty for a prior violation.

J. The director shall not require a licensed agent, as a condition of securing or continuing to hold a license to sell lottery tickets or shares to the public, to sell such tickets or shares through or by the use of a self-service vending machine at the licensed agent's premises.

K. For the purposes of this section, acts or omissions of an employee at the premises of a licensed agent or sales of tickets or shares by a self-service vending machine in violation of section 5-565 or 5-565.01 shall be deemed acts or omissions of the licensed agent only at the premises where the acts, omissions or sales occurred.

L. For the purposes of this section:

"Person":

(a) Means an individual, association, corporation, club, trust, estate, society, company, joint stock company, receiver, trustee or referee, any other person acting in a fiduciary or representative capacity who is appointed by a court, or any combination of individuals.

(b) Includes any department, commission, agency or instrumentality of this state, including any county, city or town and any agency or instrumentality of this state or of a county, city or town.

"Premises" means the physical location and address listed on the license of the licensed agent where lottery tickets or shares may be sold.

§ 5-562.01 Prosecution; payment of costs

A. The attorney general and county attorneys have concurrent prosecution authority for any offense arising out of or in connection with the formation, management, operation or conduct of the state lottery.

B. The director shall include, as an expense of the commission, all costs incurred by the attorney general or a county attorney as a result of prosecution of a person for a violation of the provisions of this article or for any violation directly or indirectly related to the state lottery operation. The director shall authorize reimbursement of prosecution costs on presentation of a certified invoice signed by the attorney general or a county attorney.

C. As used in this section prosecution costs may include but are not limited to costs for personnel, expenses, fees and other costs necessary in the preparation and prosecution of a person charged with a violation of the provisions of this article.

§ 5-563 Right to prize not assignable; exceptions

A. The right of any person to a prize is not assignable, except that:

Payment of any prize drawn or the remainder of any annuity purchased may be paid to any of the following:

(a) The estate of a deceased prize winner.

(b) The beneficiary of a deceased prize winner.

Payments to winners in an amount of six hundred dollars or more are subject to setoff pursuant to section 5-575.
In the event of a voluntary assignment, the remainder of any annuity, or a portion of the remainder of the annuity, may be assigned by a prize winner pursuant to an appropriate judicial order if all of the following conditions are met:

(a) The prize winner provides an affidavit to the court to the effect that the affiant is of sound mind, is not acting under duress and has received independent financial and tax advice concerning the assignment.

(b) The assignee pays the prize winner a lump sum for all amounts that are due to the prize winner under the assignment agreement on or before the date that the assignment takes effect.

(c) The parties to the assignment pay a fee to the commission to defray the expenses incurred by the commission in processing the assignment. The commission shall determine the amount of the fee. Monies collected by the commission pursuant to this subdivision shall be deposited in the state lottery fund established by section 5-571.

B. On receipt of a court order that meets the requirements of subsection A, paragraph 3 of this section, the director shall make the voluntary assignment.

C. The commission and director shall be discharged of all further liability upon payment of a prize pursuant to this section.

§ 5-564 Sale at unauthorized price or by unauthorized persons; violation; classification

A. A person shall not sell a ticket or share at a price greater than that fixed by rule. A person other than a licensed lottery sales agent or any employee of an agent acting within the scope of his employment shall not sell lottery tickets or shares. This section does not prohibit a person from giving lottery tickets or shares to another person as a gift.

B. A person who violates this section is guilty of a class 1 misdemeanor.

§ 5-565 Sale of tickets or shares to underage persons; violation; classification

A. It is unlawful for a person to sell or offer to sell a lottery ticket or share to any person who is under the age of twenty-one years.

B. A person who violates this section is guilty of a class 3 misdemeanor.

§ 5-565.01 Sale to persons using state issued electronic benefits transfer cards; violation; classification

A. It is unlawful for a licensed agent to sell a lottery ticket or share to a person who uses either a public assistance voucher issued by any public entity or an electronic benefits transfer card issued by the department of economic security to purchase the ticket or share.

B. It is unlawful for a licensed agent to sell a lottery ticket or share during the same transaction in which a person uses either a public assistance voucher issued by any public entity or an electronic benefits transfer card issued by the department of economic security.

C. A person who violates this section is guilty of a class 3 misdemeanor.

§ 5-565.02 Purchase of lottery tickets or shares by minors

It is unlawful for a person under twenty-one years of age to purchase a lottery ticket or share.

§ 5-566 Alteration of lottery tickets; violation; classification

Any person who, with intent to defraud, falsely makes, alters, forges, utters, passes or counterfeits a state lottery ticket or share is guilty of a class 3 felony.

§ 5-567 Purchase of tickets and receipt of prizes by certain persons prohibited

A. A lottery ticket or share may not be purchased by and a prize may not be paid to an officer or employee of the commission or to any spouse, child, brother, sister or parent residing as a member of the same household in the principal place of residence of such officer or employee.

B. A lottery ticket or share may not be purchased by and a prize may not be paid to any of the following persons:

An officer or employee of any person contracting with the commission to supply gaming equipment or lottery tickets, advertising or consulting services or to draw or otherwise select winning tickets or shares if the officer or employee is involved in the direct provision of goods or services to the commission or has access to information made confidential by the commission.
A spouse, child, brother, sister or parent residing as a member of the same household in the principal place of residence of a person described in paragraph 1.
The immediate supervisor of a person described in paragraph 1.

§ 5-568 Disposition of unclaimed prize money

Unclaimed prize money for the prize on a winning ticket or share shall be retained for the person entitled to the prize for one hundred eighty days after the drawing in which the prize was won in the case of a drawing prize and for one hundred eighty days after the announced end of the game in question in the case of a prize determined in any manner other than by means of a drawing. If a claim is not made for the money within the applicable period, the money shall be transferred in the following amounts:

Fifty-five percent of the prize money shall be held in the state lottery prize fund for use as additional prizes in future games, except that if the amount of monies transferred by the commission pursuant to section 5-554, subsection H, paragraph 1 is less than $900,000 each fiscal year, the difference shall be transferred to the internet crimes against children enforcement fund established by section 41-199 and if the amount of monies transferred by the commission pursuant to section 5-554, subsection H, paragraph 2 is less than $100,000 each fiscal year, the difference shall be transferred to the victims' rights enforcement fund established by section 41-1727.
Thirty percent shall be transferred quarterly to the court appointed special advocate and vulnerable persons fund established by section 8-524.
Fifteen percent shall be transferred monthly to the tribal college dual enrollment program fund established by section 15-244.01. The amount transferred may not exceed $325,000 in any fiscal year.

§ 5-569 Lottery redemption agents

The director may make arrangements for redemption agents to perform functions, activities or services in connection with the operation of the lottery, including direct payment of prizes not exceeding five thousand dollars, as he deems advisable pursuant to this chapter and the rules promulgated under this chapter. The director may make arrangements for payment of reasonable fees for such services. Notwithstanding any other statute, such functions, activities or services constitute lawful functions, activities and services of banks, savings and loan associations and credit unions.

§ 5-570 Award of prize to certain persons prohibited

No prize may be paid on any winning ticket or share to any person who is under twenty-one years of age.

§ 5-571 State lottery fund

The state lottery fund is established consisting of all revenues received from the sale of lottery tickets or shares, including revenues from games authorized pursuant to section 5-554, subsection G, the fees, if any, charged pursuant to section 5-554 and all other monies credited or transferred from any other fund or source pursuant to statute, with the exception of those monies apportioned for payment of prizes and deposited as provided in section 5-573.

§ 5-572 Use of monies in state lottery fund; report

(L24, Ch. 210, sec. 2. Eff. until 7/1/27)

A. If there are any bonds or bond related obligations payable from the state lottery revenue bond debt service fund, the state lottery revenue bond debt service fund shall be secured by a first lien on the monies in the state lottery fund after the payment of operating costs of the lottery, as prescribed in section 5-555, subsection A, paragraph 1, until the state lottery bond debt service fund contains sufficient monies to meet all the requirements for the current period as required by the bond documents. Debt service for revenue bonds issued pursuant to this chapter shall be paid first from monies that would have otherwise been deposited pursuant to this section in the state general fund. After the requirements for the current period have been satisfied as required by the bond documents, the monies in the state lottery fund shall be expended for the expenses of the commission incurred in carrying out its powers and duties and in the operation of the lottery.

B. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsection A of this section, $10,000,000 shall be deposited in the Arizona game and fish commission heritage fund established by section 17-297.

C. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A and B of this section, $5,000,000 shall be allocated to the department of child safety for the healthy families program established by section 8-481, $4,000,000 shall be allocated to the Arizona board of regents for the Arizona area health education system established by section 15-1643, $3,000,000 shall be allocated to the department of health services to fund the teenage pregnancy prevention programs established in Laws 1995, chapter 190, sections 2 and 3, $2,000,000 shall be allocated to the department of health services for the health start program established by section 36-697, $2,000,000 shall be deposited in the disease control research fund established by section 36-274 and $1,000,000 shall be allocated to the department of health services for the federal women, infants and children food program. The allocations in this subsection shall be adjusted annually according to changes in the GDP price deflator as defined in section 41-563, and the allocations are exempt from the provisions of section 35-190 relating to lapsing of appropriations. If there are not sufficient monies available pursuant to this subsection, the allocation of monies for each program shall be reduced on a pro rata basis.

D. If the state lottery director determines that monies available to the state general fund may not equal $84,150,000 in a fiscal year, the director shall not authorize deposits to the Arizona game and fish commission heritage fund pursuant to subsection B of this section until the deposits to the state general fund equal $84,150,000 in a fiscal year.

E. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through D of this section, $1,000,000 or the remaining balance in the fund, whichever is less, is appropriated to the department of economic security for grants to nonprofit organizations, including faith-based organizations, for homeless emergency and transitional shelters and related support services. The department of economic security shall submit a report on the amounts, recipients, purposes and results of each grant to the governor, the speaker of the house of representatives and the president of the senate on or before December 31 of each year for the prior fiscal year and shall provide a copy of this report to the secretary of state.

F. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through E of this section, and after a total of at least $99,640,000 has been deposited in the state general fund, $1,750,000 shall be deposited in the Arizona competes fund established by section 41-1545.01. The balance in the state lottery fund remaining after deposits into the Arizona competes fund shall be deposited in the university capital improvement lease-to-own and bond fund established by section 15-1682.03, up to a maximum of eighty percent of the total annual payments of lease-to-own and bond agreements entered into by the Arizona board of regents.

G. All monies remaining in the state lottery fund after the appropriations and deposits authorized in this section shall be deposited in the state general fund.

H. Except for monies expended for debt service of revenue bonds as provided in subsection A of this section, monies expended under subsection A of this section are subject to legislative appropriation.

I. The commission shall transfer monies prescribed in this section on a quarterly basis.

§ 5-572 (Version 2) Use of monies in state lottery fund; report

(L24, Ch. 210, sec. 3. Eff. 7/1/27)

F. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through E of this section, and after a total of at least $99,640,000 has been deposited in the state general fund, $3,500,000 shall be deposited in the Arizona competes fund established by section 41-1545.01. The balance in the state lottery fund remaining after deposits into the Arizona competes fund shall be deposited in the university capital improvement lease-to-own and bond fund established by section 15-1682.03, up to a maximum of eighty percent of the total annual payments of lease-to-own and bond agreements entered into by the Arizona board of regents.

G. All monies remaining in the state lottery fund after the appropriations and deposits authorized in this section shall be deposited in the state general fund.

I. The commission shall transfer monies prescribed in this section on a quarterly basis.

§ 5-573 State lottery prize fund; setoff for state debts; notification to department of economic security; prizewinner confidentiality

A. The state lottery prize fund is established. That portion of the gross proceeds that is apportioned pursuant to section 5-555, subsection B shall be deposited, pursuant to sections 35-146 and 35-147, directly in the state lottery prize fund as the commission receives such proceeds and are available for payment of prizes to the holders of winning tickets or shares or for the other purposes provided for in section 5-568. Procedures for payments to winners from this fund shall be established by rule or order of the commission. Notwithstanding any other statute, transfers or payments to or from the state lottery prize fund are not appropriations by the legislature, and deposits in the state lottery prize fund are not subject to appropriation by the legislature.

B. Payments to winners that are payable by the commission or lottery redemption agents pursuant to this section in an amount of $600 or more are subject to setoff under section 5-575.

C. The commission shall furnish the department of economic security with the names and the social security numbers of persons who are paid lottery prizes or winnings in an amount of $600 or more pursuant to this section for the purposes prescribed by section 41-1965. The department of economic security shall pay the commission for the costs of furnishing the information.

D. Except as provided in subsections B and C of this section, the name of a person or legally formed entity that is paid a lottery prize or winnings of $100,000 or more is confidential on request of the prizewinner and, if confidentiality is requested, is not a public record under title 39, chapter 1, article 2. If a prizewinner does not make a request, the name of the person or legally formed entity is confidential for ninety days from the date the prize is awarded and is not a public record under title 39, chapter 1, article 2 during this ninety-day period. Information regarding the prizewinner's city and county of residence is not confidential. A prizewinner may waive the confidentiality provisions of this subsection by voluntarily consenting to the disclosure of the prizewinner's name.

§ 5-574 Audit of accounts

The certified public accountant hired to perform the annual audit under section 5-555, subsection A, paragraph 2 shall conduct postaudits of all accounts and transactions of the commission for each lottery game. The certified public accountant conducting an audit under this chapter shall have access and authority to examine any and all records of the commission, its redemption agents and its licensees.

§ 5-575 Prizes; setoff for debts to state agencies; definitions

A. The commission shall establish a liability setoff program by which state lottery prize payments pursuant to section 5-573 may be used to satisfy debts which a person owes this state. The program shall comply with the standards and requirements prescribed by this section.

B. If a person owes an agency a debt, an agency may notify the commission, furnishing at least the state agency or program identifier, the first name, last name, middle initial and social security number of the debtor, and the amount of the debt. This information shall be in the form the commission prescribes. Each agency shall certify the information and update the information monthly. No information may be transmitted by the department of revenue to the commission if the transmission would violate title 42, chapter 2, article 1.

C. The commission shall match the information submitted by the agency with persons who are entitled to a state lottery prize payment in an amount of six hundred dollars or more. If there is a match, the commission shall set off the amount of the debt from the prize due and notify the person of the person's right to appeal to the appropriate court, or to request a review by the agency pursuant to agency rule. The person shall make such a request or appeal within thirty days after the setoff. If the setoff accounts for only a portion of the prize due, the remainder of the prize shall be paid to the person. The commission shall promptly transfer the setoff, less the amount of the commission's fee, to the agency.

D. If a person requests a review by the agency or provides the agency with proof that an appeal has been taken to the appropriate court within thirty days after the setoff and it is determined that the setoff was made in error under this section, the agency shall reimburse the person with interest as determined pursuant to section 42-1123.

E. The basis for a request for review shall not include the validity of the claim if its validity has been established at an agency hearing, by judicial review in a court of competent jurisdiction in this or any other state or by final administrative decision and shall state with specificity why the person claims the obligation does not exist or why the amount of the obligation is incorrect.

F. The commission may prescribe a fee to be collected from each agency utilizing the setoff procedure. The amount of the fee shall reasonably reflect the actual cost of the service provided.

G. If agencies have two or more delinquent accounts for the same person, the commission shall apportion the prize equally among them, except that a setoff to the department of economic security for overdue support has priority over all other setoffs.

H. If the prize is insufficient to satisfy the entire debt, the remainder of the debt may be collected by the agency as provided by law or resubmitted for setoff against any other prize awarded.

I. An agency shall not enter into an agreement with a debtor for the assignment of any prospective prize to the agency in satisfaction of the debt.

J. In this section:

"Agency" means a department, agency, board, commission or institution of this state. Agency also means a corporation under contract with this state that provides a service that would otherwise be provided by a department, agency, board, commission or institution of this state if the contract specifically authorizes participation in the liability setoff program and the attorney general's office has reviewed the contract and approves of such authorization. The participation in the liability setoff program is limited to debts related to the services the corporation provides for or on behalf of this state.
"Debt" means an amount over one hundred dollars owed to an agency by a person and may include interest, penalties, charges, costs, fees or any other amount. Debt also includes monies owed by a person for overdue support and referred to the department of economic security for collection.
"Overdue support" means a delinquency in court ordered payments for support or maintenance of a child or for spousal maintenance to the parent with whom the child is living if child support is also being enforced pursuant to an assignment or application filed under 42 United States Code section 654(6).

§ 5-576 Lottery; advertising; professional sports; prohibition

(L21, Ch. 405, sec. 2)

The lottery may not, directly or indirectly, spend, allocate or direct any monies under the control of the lottery to advertise the lottery at a professional sporting event or in conjunction with any professional sports team or franchise.

Chapter 6 Gambling on Indian Reservations

Article 1 General Provisions

§ 5-601 Gambling on Indian reservations; tribal-state compacts; tribal-state compact fund

A. Notwithstanding any other law, this state, through the governor, may enter into negotiations and execute tribal-state compacts with Indian tribes in this state pursuant to the Indian gaming regulatory act of 1988 (P.L. 100-497; 102 Stat. 2467; 25 United States Code sections 2701 through 2721 and 18 United States Code sections 1166 through 1168). Notwithstanding the authority granted to the governor by this subsection, this state specifically reserves all of its rights, as attributes of its inherent sovereignty, recognized by the tenth and eleventh amendments to the United States Constitution. The governor shall not execute a tribal-state compact which waives, abrogates or diminishes these rights.

B. Tribal-state gaming compacts shall prohibit persons under twenty-one years of age from wagering on gaming activities conducted pursuant to the compact as follows:

Beginning on June 1, 2003, any tribal-state gaming compact that is executed, modified, extended or renewed pursuant to this section shall include a provision that prohibits persons who are under twenty-one years of age from wagering on gaming activities.
Any tribal-state gaming compact that is executed, modified, extended or renewed pursuant to this section from and after July 18, 2000 but before June 1, 2003 shall include a provision that prohibits persons who are under twenty-one years of age from wagering on gaming activities, except that the provision shall not take effect until June 1, 2003.

C. The governor shall not concur in any determination by the United States secretary of the interior that would permit gaming on lands acquired after October 17, 1988 pursuant to 25 United States Code section 2719.

D. The department of gaming is authorized to carry out the duties and responsibilities of the state gaming agency in compacts executed by the state and Indian tribes of this state pursuant to the Indian gaming regulatory act.

E. In carrying out its duties under tribal-state gaming compacts, the department of gaming is exempt from the rule making requirements of title 41, chapter 6.

F. Indian tribes of this state that have executed compacts with the state shall pay to the department of gaming their share of the regulatory costs necessary to carry out the duties required by any executed tribal-state compact authorized by the Indian gaming regulatory act. The department of gaming shall collect from each of the tribes that have executed a compact with the state their share of the costs incurred by the department pursuant to this chapter. The dates and methods of payment shall be as specified in the tribal-state compacts.

G. A permanent tribal-state compact fund is established consisting of monies received pursuant to subsection F of this section and other monies received pursuant to this chapter. The department of gaming shall administer the fund. The director of the department of gaming shall make an annual report to the governor, the president of the senate, the speaker of the house of representatives and each tribe which has executed a compact with the state disclosing in detail the activities of the department of gaming pursuant to this chapter, including a full and complete statement of revenues deposited in and expenditures from the permanent tribal-state compact fund. The director shall provide a copy of this report to the secretary of state. Monies paid by the tribes shall only be used for reimbursement of administrative and regulatory expenses incurred by the department pursuant to this chapter.

H. Monies deposited in the permanent tribal-state compact fund are subject to legislative appropriation. Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

I. Any tribal-state gaming compact that is executed, modified, extended or renewed pursuant to this section shall include provisions that do all of the following:

Establish guidelines on automated teller machine use and on the use of credit cards or other forms of credit in gaming facilities.
Require the Indian tribe to post at all public entrances and exits to the gaming facilities signs that state that help is available if a person has a problem with gambling and the statewide toll-free crisis hotline telephone number, established by the Arizona state lottery commission.
Prohibit gaming facility advertising and marketing that specifically appeal to minors. The provisions shall include guidelines for determining acceptable advertising and marketing.
Establish guidelines for the effective treatment and prevention of problem and pathological gambling.
Establish guidelines for voluntary ban procedures from all gaming facilities in the state, including but not limited to prohibiting the use of check cashing services, automatic teller machines, credit cards or other forms of credit offered at a gaming facility. A third person may not request a ban on behalf of another person.

§ 5-601.02 New standard form of tribal-state gaming compact; effects

(Caution: 1998 Prop 105 applies)

A. Notwithstanding any other law, within 30 days after receipt of a timely written request by the governing body of an Indian tribe, the state, through the governor, shall enter into the new standard form of tribal-state gaming compact with the requesting Indian tribe by executing the new compact and forwarding it to the United States department of the interior for any required approval.

B. The state, through the governor, may only enter into a new compact with an Indian tribe with a pre-existing compact if the Indian tribe requests a new compact pursuant to subsection A during the first 30 days after the effective date of this section. The state, through the governor, shall serve a timely notice of nonrenewal of a pre-existing compact on any Indian tribe that does not request a new compact during the first 30 days after the effective date of this section. Any Indian tribe without a pre-existing compact on the effective date of this section may request a new compact at any time.

C. Notwithstanding any other law, an Indian tribe may conduct the following forms of gambling as regulated gambling, as defined in section 13-3301, if the gambling is conducted in accordance with the terms of a tribal-state gaming compact: gaming devices, keno, offtrack pari-mutuel wagering, pari-mutuel wagering on horse racing, pari-mutuel wagering on dog racing, blackjack, poker (including jackpot poker), and lottery.

D. The department of gaming shall administer and carry out its responsibilities under the procedures for the transfer and pooling of unused gaming device allocations described in section 3(d) of the new compact.

E. The state, through the governor, is authorized to negotiate and enter into amendments to new compacts that are consistent with this chapter and with the policies of the Indian gaming regulatory act.

F. At the request of any Indian tribe for which paragraph 6 of subsection I does not specify a possible additional devices allocation, the state, through the governor, shall negotiate with the Indian tribe for a possible additional devices allocation. This allocation shall not be less than the smallest or greater than the largest possible additional devices allocation provided to an Indian tribe with an equal number of devices in the current device allocation column set forth in the new compact. At the option of the Indian tribe, the possible additional devices allocation shall be included in either the Indian tribe's new compact or an amendment to such new compact.

G. The authority and obligations of the state, through the governor, to negotiate additional compact terms pursuant to subsections E and F are independent of and separate from the obligations of the state pursuant to subsection A, and shall not constitute grounds for any delay by the state in carrying out its obligations to execute and forward new compacts to the United States department of the interior as required in subsection A.

H. The Arizona benefits fund is established consisting of monies paid to the state by Indian tribes pursuant to section 12(c) of new compacts and interest earned on those monies. An Indian tribe with a new compact satisfies the requirements of subsection F of section 5-601. Tribal contributions paid to the state pursuant to a new compact shall be deposited in the Arizona benefits fund, not the permanent tribal-state compact fund pursuant to subsection G of section 5-601.

The department of gaming shall administer the Arizona benefits fund. The department of gaming shall make an annual report to the governor, the president of the senate, the speaker of the house of representatives and each Indian tribe with a new compact within 90 days after the end of the state's fiscal year. This report shall be separate from any other report of the department of gaming. The report shall include a statement of aggregate gross gaming revenue for all Indian tribes, aggregate revenues deposited in the Arizona benefits fund, including interest thereon, expenditures made from the Arizona benefits fund, and aggregate amounts contributed by all Indian tribes to cities, towns and counties pursuant to paragraph 4 of this subsection. The department of gaming shall provide a copy of this report to the secretary of state and the director of the Arizona state library, archives and public records.
Except for monies expended by the department of gaming as provided in subdivision (a) of paragraph 3 of this subsection, which shall be subject to appropriation, the Arizona benefits fund is not subject to appropriation, and expenditures from the fund are not subject to outside approval notwithstanding any statutory provision to the contrary. Monies paid to the state by Indian tribes pursuant to a new compact shall be deposited directly with the Arizona benefits fund. On notice from the department of gaming, the state treasurer shall invest and divest monies in the Arizona benefits fund as provided by section 35-313, and monies earned from investment shall be credited to the fund. Monies in the Arizona benefits fund shall be expended only as provided in paragraph 3 of this subsection, and shall not revert to any other fund, including the state general fund. Monies in the Arizona benefits fund are exempt from the provisions of section 35-190 relating to the lapsing of appropriations.
Monies in the Arizona benefits fund, including all investment earnings, shall be allocated as follows:

(a)(i) Eight million dollars or nine percent, whichever is greater, shall be used for reimbursement of administrative and regulatory expenses, including expenses for development of and access to any online electronic game management systems and for law enforcement activities incurred by the department of gaming pursuant to this chapter. Any monies that are allocated pursuant to this subsection 3(a) that are not appropriated to the department of gaming shall be deposited in the instructional improvement fund established by section 15-979.

(ii) Two percent shall be used by the department of gaming to fund state and local programs for the prevention and treatment of, and education concerning, problem gambling.

(b) Of the monies in the Arizona benefits fund that are not allocated pursuant to subdivision (a):

(i) Fifty-six percent shall be deposited in the instructional improvement fund established by section 15-979 for use by school districts for classroom size reduction, teacher salary increases, dropout prevention programs, and instructional improvement programs.

(ii) Twenty-eight percent shall be deposited in the trauma and emergency services fund established by section 36-2903.07.

(iii) Eight percent shall be deposited in the Arizona wildlife conservation fund established by section 17-299.

(iv) Eight percent shall be deposited in the tourism fund account established by paragraph 4 of subsection A of section 41-2306 for statewide tourism promotion.

In addition to monies contributed to the Arizona benefits fund, twelve percent of tribal contributions pursuant to new compacts shall be contributed by Indian tribes to cities, towns and counties as defined in title 11, Arizona Revised Statutes, for government services that benefit the general public, including public safety, mitigation of impacts of gaming, and promotion of commerce and economic development.

(a) An Indian tribe may distribute such funds directly to cities, towns and counties for these purposes. The amount of monies so distributed by each Indian tribe shall be reported to the department of gaming in the quarterly report required by the new compact.

(b) Any monies comprising the twelve percent not so distributed by an Indian tribe shall be deposited in the Arizona commerce authority local communities fund established by section 41-1505.12 for grants to cities, towns and counties.

The deposit of monies required by subdivision (b) of paragraph 3 of this subsection shall be made on a quarterly basis, or more frequently if practicable.

I. For the purposes of this section:

"Gaming devices" means gaming devices as defined in subdivision (b)(i) of paragraph 6 of this subsection.
"Indian gaming regulatory act" means the Indian gaming regulatory act of 1988 (P.L. 100-497; 102 Stat. 2467; 25 United States Code sections 2701 through 2721 and 18 United States Code sections 1166 through 1168).
"Indian lands" means lands as defined in 25 United States Code section 2703(4)(a) and (b), subject to the provisions of 25 United States Code section 2719.
"Indian tribe" means:

(a) The Cocopah Indian tribe.

(b) The Fort Mojave Indian tribe.

(d) The Tonto Apache tribe.

(e) The Yavapai-Apache nation.

(f) The Yavapai-Prescott Indian tribe.

(g) The Colorado River Indian tribes.

(h) The San Carlos Apache tribe.

(i) The White Mountain Apache tribe.

(j) The Ak-Chin Indian community.

(k) The Fort Mcdowell Yavapai nation.

(l) The Salt River Pima-Maricopa Indian community.

(m) The Gila River Indian community.

(n) The Pascua Yaqui tribe.

(o) The Tohono O'odham nation.

(p) The Havasupai tribe.

(q) The Hualapai tribe.

(r) The Kaibab-Paiute tribe.

(s) The Hopi tribe.

(t) The Navajo nation.

(u) The San Juan Southern Paiute tribe.

(v) Any Indian tribe, as defined in 25 United States Code section 2703(5), with Indian lands in this state.

"Pre-existing compact" means an Indian tribe's tribal-state gaming compact and amendments thereto as approved by the United States department of the interior, and all appendices thereto, as of the effective date of this section.
"New standard form of tribal-state gaming compact" or "new compact" means:

(a) For an Indian tribe without a pre-existing compact, a tribal-state gaming compact that contains the provisions of the most recent tribal-state gaming compact entered into by the state and an Indian tribe and approved by the United States secretary of the interior, and its appendices, prior to the effective date of this section, modified to include the provisions described in subdivision (b)(i) through (xi) of this paragraph.

(b) For an Indian tribe with a pre-existing compact, a tribal-state gaming compact that contains the provisions of the Indian tribe's pre-existing compact, modified as follows, with any cross references in a pre-existing compact to be conformed accordingly:

(i) The following definition shall replace the corresponding definition in section 2 of the pre-existing compact:

""Gaming device" means a mechanical device, an electro-mechanical device or a device controlled by an electronic microprocessor or another manner, whether that device constitutes class II gaming or class III gaming, that allows a player or players to play games of chance, whether or not the outcome also is affected in some part by skill, and whether the device accepts coins, tokens, bills, coupons, ticket vouchers, pull tabs, smart cards, electronic in-house accounting system credits or other similar forms of consideration and, through the application of chance, allows a player to become entitled to a prize, which may be collected through the dispensing of coins, tokens, bills, coupons, ticket vouchers, smart cards, electronic in-house accounting system credits or other similar forms of value. Gaming device does not include any of the following:

(1) Those technological aids for bingo games that function only as electronic substitutes for bingo cards.

(2) Devices that issue and validate paper lottery products and that are directly operated only by Arizona state lottery licensed retailers and their employees.

(3) Devices that are operated directly by a lottery player and that dispense paper lottery tickets, if the devices do not identify winning or losing lottery tickets, display lottery winnings or disburse lottery winnings.

(4) Devices that are operated directly by a lottery player and that validate paper lottery tickets for a game that does not have a predetermined number of winning tickets, if:

(a) The devices do not allow interactive gaming;

(b) The devices do not allow a lottery player to play the lottery for immediate payment or reward;

(d) The devices are not video lottery terminals.

(5) Player activated lottery terminals."

(ii) The following definitions shall be added to section 2 of the pre-existing compact:

"(mm) "Additional gaming devices" means the number of additional gaming devices allocated to the tribe in column (2) of the tribe's row in the table.

(nn) "Card game table" means a single table at which the tribe conducts the card game of poker or blackjack.

(oo) "Class II gaming device" means a gaming device which, if operated on Indian lands by an Indian tribe, would be class II gaming.

(pp) "Class III gaming device" means a gaming device which, if operated on Indian lands by an Indian tribe, would be class III gaming.

(qq) "Class III net win" means gross gaming revenue, which is the difference between gaming wins and losses, before deducting costs and expenses.

(rr) "CPI adjustment rate" shall mean the quotient obtained as follows: the CPI index for the sixtieth (60th) calendar month of the applicable five-year period for which the wager limitations are being adjusted shall be divided by the CPI index for the calendar month in which the effective date occurs. The CPI index for the numerator and the denominator shall have the same base year. If the CPI index is no longer published, or if the format of the CPI index has changed so that this calculation is no longer possible, then another substantially comparable index shall be substituted in the formula by agreement of the tribe and the state so that the economic effect of this calculation is preserved. If the parties cannot agree on the substitute index, the substitute index shall be determined by arbitration in accordance with section 15.

(ss) "CPI index" means the "United States city average (all urban consumers) - all items (1982-1984 = 100)" index of the consumer price index published by the bureau of labor statistics, United States department of labor.

(tt) "CPR" means the CPR institute for dispute resolution.

(uu) "Current gaming device allocation" means the number of class III gaming devices allocated to the tribe in column (1) of the tribe's row in the table as adjusted under section 3(c)(4).

(vv) "Effective date" means the day this compact goes into effect after all of the following events have occurred:

(1) It is executed on behalf of the state and the tribe;

(2) It is approved by the secretary of the interior;

(3) Notice of the secretary of the interior's approval is published in the federal register pursuant to the act; and

(4) Each Indian tribe with a gaming facility in Maricopa, Pima or Pinal counties has entered into a new compact as defined in A.R.S. section 5-601.02(I)(6), each of which has been approved by the secretary of the interior, and notice of the secretary of the interior's approval has been published in the federal register pursuant to the act, unless the governor of the state waives the requirements of this section 2(vv)(4).

(ww) "Forbearance agreement" means an agreement between the state and an Indian tribe in which the Indian tribe that is transferring some or all of its gaming device operating rights waives its rights to put such gaming device operating rights into play during the term of a transfer agreement.

(xx) "Gaming device operating right" means the authorization of an Indian tribe to operate class III gaming devices pursuant to the terms of a new compact as defined in A.R.S. section 5-601.02(I)(6).

(yy) "Maximum devices per gaming facility" means the total number of class III gaming devices that the tribe may operate within a single gaming facility.

(zz) "Multi-station device" means an electronic class III gaming device that incorporates more than one player station and contains one central processing unit which operates the game software, including a single random number generator that determines the outcome of all games at all player stations for that class III gaming device.

(aaa) "Player activated lottery terminal" means an on-line computer system that is player activated, but that does not provide the player with interactive gaming, and that uses the terminal for dispensing purposes only, in which:

(1) The terminal algorithm is used for the random generation of numbers;

(2) The tickets dispensed by the terminal do not allow the player the means to play directly against the terminal;

(3) The player uses the dispensed ticket to participate in an off-site random drawing; and

(4) The player's ability to play against the terminal for immediate payment or reward is eliminated.

(bbb) "Player station" means a terminal of a multi-station device through which the player plays an electronic game of chance simultaneously with other players at other player stations of that multi-station device, and which:

(1) Has no means to individually determine game outcome;

(2) Cannot be disconnected from the gaming device central processing unit that determines the game outcomes for all player stations without rendering that terminal inoperable; and

(3) Does not separately contain a random number generator or other means to individually determine the game outcome.

(ccc) "Population adjustment rate" means the quotient obtained as follows: the state population for the calendar year immediately preceding the calendar year in which the sixtieth (60th) calendar month of the applicable five-year period for which the applicable figure or amount is being adjusted occurs divided by the state population for the calendar year immediately preceding the calendar year in which the effective date occurs. If the state population is no longer published or calculated by the Arizona department of economic security, then another substantially comparable agency of the state shall be substituted by agreement of the tribe and the state so that the effect of this calculation is preserved. If the parties cannot agree on the substitute agency of the state to provide the state population, the substitute agency or person shall be determined by arbitration in accordance with section 15.

(ddd) "Previous gaming facility allocation" means the number of facilities allocated to the tribe in column (3) of the tribe's row in the table.

(eee) "Revised gaming facility allocation" means the number of facilities allocated to the tribe in column (4) of the tribe's row in the table or by section 3(c)(6).

(fff) "Rules" means the CPR rules for non-administered arbitration (2000 rev.).

(ggg) "State population" means the population of the state as determined using the most recent estimates published by the Arizona department of economic security.

(hhh) "Table" means the gaming device allocation table set out at section 3(c)(5).

(iii) "Transfer agreement" means a written agreement authorizing the transfer of gaming device operating rights between the tribe and another Indian tribe.

(jjj) "Transfer notice" means a written notice that the tribe must provide to the state gaming agency of its intent to acquire or transfer gaming device operating rights pursuant to a transfer agreement.

(kkk) "Wager" means:

(1) In the case of a gaming device, the sum of money placed into the gaming device in cash, or cash equivalent, by the player which will allow activation of the next random play of the gaming device.

(2) In the case of poker, the sum of money placed into the pot and onto the card game table by the player in cash, or cash equivalent, which entitles the player to an initial deal of cards, a subsequent deal of a card or cards, or which is required to be placed into the pot and onto the card game table by the player entitling the player to continue in the game.

(3) In the case of blackjack, the sum of money in cash, or cash equivalent, placed onto the card game table by the player entitling the player to an initial deal of cards and to all subsequent cards requested by the player."

(iii) Section 3 of the pre-existing compact shall be replaced with the following:

"Section 3. Nature, size, and conduct of class III gaming.

(a) Authorized class III gaming activities. Subject to the terms and conditions of this compact, the tribe is authorized to operate the following gaming activities: (1) class III gaming devices, (2) blackjack, (3) jackpot poker, (4) keno, (5) lottery, (6) off-track pari-mutuel wagering, (7) pari-mutuel wagering on horse racing, and (8) pari-mutuel wagering on dog racing.

(b) Appendices governing gaming.

(1) Technical standards for gaming devices. The tribe may only operate class III gaming devices, including multi-station devices, which comply with the technical standards set forth in appendix A to this compact. The tribal gaming office shall require each licensed and certified manufacturer and distributor to verify under oath, on forms provided by the tribal gaming office, that the class III gaming devices manufactured or distributed by them for use or play at the gaming facilities meet the requirements of this section 3(b)(1) and appendix A. The tribal gaming office and the state gaming agency by mutual agreement may require the testing of any class III gaming device to ensure compliance with the requirements of this section 3(b)(1) and appendix A. Any such testing shall be at the expense of the licensed manufacturer or distributor.

(2) Operational standards for blackjack and jackpot poker. The tribe shall conduct blackjack and jackpot poker in accordance with an appendix, which shall consist of the minimum internal control standards of the commission as set forth in 25 C.F.R. part 542 as published in 64 Fed. Reg. 590 (Jan. 5, 1999) as may be amended from time to time, without regard to the commission's authority to promulgate the standards, until an appendix setting forth the operational standards, specifications, regulations and any limitations governing such gaming activities is agreed to by the tribe and the state.

(3) Additional appendices.

(a) Except as provided in sections 3(b)(1) and (2), the tribe may not conduct any gaming activities authorized in this compact without a mutually agreed-upon appendix setting forth the operational standards, specifications, regulations and any limitations governing such gaming activities. For purposes of this subsection, promotional activity conducted as a lottery is a gaming activity for which an appendix shall be required. Any disputes regarding the contents of such appendices shall be resolved in the manner set forth in section 15.

(b) The gaming facility operator shall conduct its gaming activities under an internal control system that implements the minimum internal control standards of the commission as set forth in 25 C.F.R. part 542 as published in 64 Fed. Reg. 590 (Jan. 5, 1999) as may be amended from time to time, without regard to the commission's authority to promulgate the standards.

(c) The tribal gaming office and the state gaming agency may agree to amend appendices to this compact in order to continue efficient regulation and address future circumstances. A change in an appendix or the addition of a new appendix shall not be considered an amendment to this compact.

(4) Security and surveillance requirements. The tribe shall comply with the security and surveillance requirements set forth in appendix C to this compact.

(a) If the gaming facility operator operates the surveillance system, the manager of the surveillance department may report to management of the gaming facility operator regarding administrative and daily matters, but must report to a person or persons independent of the management of the gaming facility operator (e.g., the gaming facility operator's management board or a committee thereof, the tribe's council or a committee thereof, or the tribe's chairperson, president, or governor) regarding matters of policy, purpose, responsibility, authority, and integrity of casino management.

(b) If the tribal gaming office operates the surveillance system, the manager of its surveillance department must report directly to the executive director of the tribal gaming office.

(5) Online electronic game management system. Each gaming facility must have an online electronic game management system that meets the requirements of appendix A.

(a) If the tribe is Ak-Chin Indian community, Ft. McDowell Yavapai nation, Gila River Indian community, Pascua Yaqui tribe, Salt River Pima-Maricopa Indian community, or Tohono O'odham nation, then the gaming facility operator shall provide the state gaming agency with real time read-only electronic access to the online electronic game management system for each gaming facility of the tribe that is located within forty (40) miles of a municipality with a population of more than four hundred thousand (400,000), to provide the state gaming agency a more effective and efficient means of regulating gaming devices and tracking revenues.

The state gaming agency's real time read-only electronic access shall be limited to the following data maintained by the online electronic game management system, provided that the data is available in real-time and providing real-time access does not result in the loss of accumulation of data elements: coin in; coin out; drop (bills and coins); individual bills denomination; vouchers; theoretical hold; variances; jackpots; machine fills; ticket in; ticket out; slot door opening; drop door opening; cash box opening; ticket in opening; ticket out opening; and no-communication. If providing this data in real-time would result in the loss of accumulation of data elements, the gaming facility operator must provide the state gaming agency with access to the data via end-of-day reports containing the required data.
The state gaming agency shall phase in the system to provide it with real time read-only access to the online electronic game management system over a three year period. The state gaming agency shall pay the cost of:

A. Constructing and maintaining a dedicated telecommunications connection between the gaming facility operator's server room and the state gaming agency's offices;

B. Obtaining, installing, and maintaining any hardware or software necessary to interface between the gaming facility operator's online electronic game management system and the dedicated telecommunications connection; and

C. Obtaining, installing, and maintaining any hardware or software required in the state gaming agency's offices.

The state gaming agency's dedicated telecommunications connection from its offices to each gaming facility must meet accepted industry standards for security sufficient to minimize the possibility of any third-party intercepting any data transmitted from the gaming facility operator's online electronic game management system over the connection. The state gaming agency's system security policy must meet accepted industry standards to assure that data received from the gaming facility operator's online electronic game management system will not be accessible to unauthorized persons or entities.

(b) The state gaming agency (and its officers, employees, and agents) are prohibited from:

Using any information obtained from the gaming facility operator's online electronic game management system for any purpose other than to carry out its duties under this compact; and
Disclosing any information obtained from the gaming facility operator's online electronic game management system to any person outside the state gaming agency, except as provided in section 7(b) and section 12(c).

(1) Number of gaming devices. The tribe's gaming device operating rights are equal to the sum of its current gaming device allocation, plus any rights to operate additional gaming devices acquired by the tribe in accordance with and subject to the provisions of section 3(d). The tribe may operate one class III gaming device for each of the tribe's gaming device operating rights.

(2) Class II gaming devices. The tribe may operate up to forty (40) class II gaming devices in a gaming facility without acquiring gaming device operating rights under section 3(d), but such class II gaming devices shall be counted against the tribe's number of additional gaming devices. Each class II gaming device in excess of forty (40) that the tribe operates within its Indian lands shall be counted against the tribe's current gaming device allocation.

(3) Number of gaming facilities and maximum devices per gaming facility. The tribe may operate gaming devices in the number of gaming facilities in column (3) or (4) of the tribe's row in the table, whichever is lower, but shall not operate more than its maximum devices per gaming facility in any one gaming facility. The maximum devices per gaming facility for the tribe is the sum of the tribe's current gaming device allocation (including automatic periodic increases under section 3(c)(4)), plus the tribe's additional gaming devices, except if the tribe is Salt River Pima-Maricopa Indian community, Gila River Indian community, Pascua Yaqui tribe, Tohono O'odham nation, or Navajo nation, then the maximum devices per gaming facility is the same number as the maximum devices per gaming facility for Ak-Chin Indian community and Ft. McDowell Yavapai nation. If the tribe is the Tohono O'odham nation, and if the tribe operates four (4) gaming facilities, then at least one of the four (4) gaming facilities shall:

(i) Be at least fifty (50) miles from the existing gaming facilities of the tribe in the Tucson metropolitan area as of the effective date;

(ii) Have no more than six hundred forty-five (645) gaming devices; and

(iii) Have no more than seventy-five (75) card game tables.

(4) Periodic increase. During the term of this compact, the tribe's current gaming device allocation shall be automatically increased (but not decreased), without the need to amend this compact on each five-year anniversary of the effective date, to the number equal to the current gaming device allocation specified in the table multiplied by the population adjustment rate (with any fractions rounded up to the next whole number).

(5) Gaming device allocation table.

Gaming device allocation table

(1) (2) (3) (4)

Current Additional Previous Revised

Listed tribe gaming gaming gaming gaming

device devices facility facility

allocation allocation allocation

The Cocopah Indian tribe 475 170 2 2

Fort Mojave Indian tribe 475 370 2 2

Quechan tribe 475 370 2 2

Tonto Apache tribe 475 170 2 1

Yavapai-Apache nation 475 370 2 1

Yavapai-Prescott tribe 475 370 2 2

Colorado River Indian tribes 475 370 2 2

San Carlos Apache tribe 900 230 3 2

White Mountain Apache tribe 900 40 3 2

Ak-Chin Indian community 475 523 2 1

Ft. McDowell Yavapai nation 475 523 2 1

Salt River Pima-Maricopa

Indian community 700 830 3 2

Gila River Indian community 1400 1020 4 3

Pascua Yaqui tribe 900 670 3 2

Tohono O'odham nation 1400 1020 4 4

Subtotal 10,475 38 29

Non-gaming tribes

(as of 5/1/02)

Havasupai tribe 475 2

Hualapai tribe 475 2

Kaibab-Paiute tribe 475 2

Hopi tribe 900 3

Navajo nation 2400 4

San Juan Southern Paiute

tribe 475 2

Subtotal 5,200 15

State total 15,675 53

(6) If the tribe is not listed on the table, the tribe's current device allocation shall be four hundred seventy-five (475) gaming devices and the tribe's revised gaming facility allocation shall be two (2) gaming facilities.

(7) Multi-station devices. No more than two and one-half percent (2.5%) of the gaming devices in a gaming facility (rounded off to the nearest whole number) may be multi-station devices.

(d) Transfer of gaming device operating rights.

(1) Transfer requirements. During the term of this compact, the tribe may enter into a transfer agreement with one or more Indian tribes to acquire gaming device operating rights up to the tribe's number of additional gaming devices or to transfer some or all the tribe's gaming device operating rights up to the tribe's current gaming device allocation, except that if the tribe is Navajo nation, then the tribe may transfer only up to 1400 gaming devices of its current gaming device allocation. The tribe's acquisition or transfer of gaming device operating rights is subject to the following conditions:

(a) Gaming compact. Each Indian tribe that is a party to a transfer agreement must have a valid and effective new compact as defined in A.R.S. section 5-601.02(I)(6) that contains a provision substantially similar to this section 3(d) permitting transfers of the Indian tribe's gaming device operating rights.

(b) Forbearance agreement. If the tribe enters into a transfer agreement to transfer some or all of its gaming device operating rights the tribe shall also execute a forbearance agreement with the state. The forbearance agreement shall include:

A waiver of all rights of the tribe to put into play or operate the number of gaming device operating rights transferred during the term of the transfer agreement;
An agreement by the tribe to reduce its gaming facility allocation during the term of the transfer agreement as follows:

Number of transferred Reductions in gaming

gaming device operating facility allocation

rights

1 - 475 1

476 - 1020 2

1021 - 1400 3

(i) If the tribe's number under column (4) of the table is lower than the tribe's number under column (3), then the tribe shall be credited for the reduction, if the tribe enters into a transfer agreement.

(ii) The numbers in the column under number of transferred gaming device operating rights shall be increased on each five-year anniversary of the effective date by multiplying each such number, other than one (1), by the population adjustment rate.

(iii) Reductions in the gaming facility allocation will be based on the cumulative total number of gaming device operating rights transferred by the tribe under all transfer agreements that are in effect.

(iv) If the tribe is the Navajo nation, then the tribe's gaming facility allocation shall be two (2), even if the tribe transfers up to 1400 gaming device operating rights.

(c) Gaming facility not required. The tribe may transfer unused gaming device operating rights whether or not it has a gaming facility allocation.

(d) Current operation. The tribe must operate gaming devices at least equal to its current gaming device allocation before, or simultaneously with, the tribe acquiring the right to operate additional gaming devices by a transfer agreement. The tribe is not required to utilize any gaming device operating rights it acquires, or to utilize them prior to acquiring additional gaming device operating rights.

(e) Transfer of acquired gaming device operating rights prohibited. The tribe shall not at any time simultaneously acquire gaming device operating rights and transfer gaming device operating rights pursuant to transfer agreements.

(2) Transfer agreements. Transfers of gaming device operating rights may be made pursuant to a transfer agreement between two Indian tribes. A transfer agreement must include the following provisions:

(a) Number. The number of gaming device operating rights transferred and acquired.

(b) Term. The duration of the transfer agreement.

(c) Consideration. The consideration to be paid by the Indian tribe acquiring the gaming device operating rights to the Indian tribe transferring the gaming device operating rights and the method of payment.

(d) Dispute resolution. The dispute resolution and enforcement procedures, including a provision for the state to receive notice of any such proceeding.

(e) Notice. A procedure to provide quarterly notice to the state gaming agency of payments made and received, and to provide timely notice of disputes, revocation, amendment, and termination.

(3) Transfer notice. At least thirty (30) days prior to the execution of a transfer agreement, the tribe must send to the state gaming agency a transfer notice of its intent to acquire or transfer gaming device operating rights. The transfer notice shall include a copy of the proposed transfer agreement, the proposed forbearance agreement and a copy of the tribal resolution authorizing the acquisition or transfer.

(4) State gaming agency denial of transfer. The state gaming agency may deny a transfer as set forth in a transfer notice only if:

(i) The proposed transfer violates the conditions set forth in section 3(d)(1), or

(ii) The proposed transfer agreement does not contain the minimum requirements listed in section 3(d)(2). The state gaming agency's denial of a proposed transfer must be in writing, must include the specific reason(s) for the denial (including copies of all documentation relied upon by the state gaming agency to the extent allowed by state law), and must be received by the tribe within thirty (30) days of the state gaming agency's receipt of the transfer notice. If the tribe disputes the state gaming agency's denial of a proposed transfer, the tribe shall have the right to have such dispute resolved pursuant to section 15.

(5) Effective date of transfer. If the tribe does not receive a notice of denial of the transfer from the state gaming agency within the time period specified above, the proposed transfer agreement shall become effective on the later of the thirty-first (31st) day following the state gaming agency's receipt of the transfer notice or the date set forth in the transfer agreement.

(6) Use of brokers. The tribe shall not contract with any person to act as a broker in connection with a transfer agreement. No person shall be paid a percentage fee or a commission as a result of a transfer agreement, nor shall any person receive a share of any financial interest in the transfer agreement or the proceeds generated by the transfer agreement. Any person acting as a broker in connection with a transfer agreement is providing gaming services.

(7) Revenue from transfer agreements. The tribe agrees that:

(i) All proceeds received by the tribe as a transferor under a transfer agreement are net revenues from tribal gaming as defined by the act and that such proceeds shall be used for the purposes permitted under the act; and

(ii) The tribe shall include the proceeds in an annual audit and shall make available to the state that portion of the audit addressing proceeds from transfer agreements.

(8) Agreed upon procedures report. The tribe agrees to provide to the state gaming agency, either separately or with the other party to the transfer agreement, an agreed upon procedures report from an independent certified public accountant. The procedures to be examined and reported upon are whether payments made under the transfer agreement were made in the proper amount, made at the proper time, and deposited in an account of the Indian tribe transferring gaming device operating rights.

(9) State payment. Proceeds received by the tribe as a transferor under a transfer agreement from the transfer of gaming device operating rights are not subject to any payment to the state under this compact or otherwise.

(10) Compact enforcement; effect on transfer agreements. If the tribe acquires gaming device operating rights under a transfer agreement, no dispute between the state and the other party to the transfer agreement shall affect the tribe's rights under the transfer agreement or the tribe's obligations to make the payments required under the transfer agreement. If the tribe transfers gaming device operating rights under a transfer agreement, no dispute between the state and the other party to the transfer agreement shall affect the tribe's rights under the transfer agreement or the obligations of the other party to the transfer agreement to make the payments required under the transfer agreement. These provisions shall not apply to a dispute among the state and both parties to a transfer agreement regarding the validity of a transfer agreement or to a dispute between the parties to a transfer agreement regarding a breach of the transfer agreement.

(11) Access to records regarding transfer agreement. The state gaming agency shall have access to all records of the tribe directly relating to transfer agreements and forbearance agreements under section 7(b).

(12) Transfer and acquisition of pooled gaming devices.

(a) The tribe is authorized to join with other Indian tribes to periodically establish a pool to collect gaming device operating rights from Indian tribes that desire to transfer gaming device operating rights and transfer them to Indian tribes that desire to acquire gaming device operating rights. If the tribe is operating all of its current gaming device allocation and, after making reasonable efforts to do so, the tribe is not able to acquire additional gaming devices pursuant to an agreement described in section 3(d)(2), the tribe may acquire additional gaming devices up to the number specified in the table for the tribe from a transfer pool under procedures agreed to by Indian tribes participating in the transfer pool and the state.

(b) The tribe and the state are authorized to establish a pooling mechanism, under procedures agreed to by the tribe and the state, by which the rights to operate gaming devices that are not in operation may be acquired by an Indian tribe through an agreement with the state. If the tribe is operating all of its current gaming device allocation and, after making reasonable efforts to do so, the tribe is not able to acquire additional gaming devices pursuant to an agreement described in section 3(d)(2) or from any transfer pool established pursuant to section 3(d)(12)(a) within 90 days after the opening of a transfer pool established pursuant to section 3(d)(12)(a), the tribe may acquire additional gaming devices from the state up to the number specified in the table for the tribe at a price that is at least one hundred percent (100%) of the highest price paid to date for the transfer of at least one hundred (100) gaming device operating rights for a term of at least five (5) years. The monies paid by an Indian tribe to acquire additional gaming devices under an agreement pursuant to this section 3(d)(12)(b) shall benefit Indian tribes that have the right to operate gaming devices that are eligible to be transferred and are not in operation. The state shall provide Indian tribes that are eligible to enter into an agreement with the state pursuant to this section 3(d)(12)(b) the opportunity to participate in the pool pursuant to the procedures agreed to by the tribe and the state.

(c) Prior to agreeing to any procedures with any Indian tribe pursuant to sections 3(d)(12)(a) or (b), the state shall provide notice to the tribe of the proposed procedures.

(e) Number of card game tables.

(1) Number of card game tables; number of players per game. Subject to the terms and conditions of this compact, the tribe is authorized to operate up to seventy-five (75) card game tables within each gaming facility that is located more than forty (40) miles from any municipality with a population of more than four hundred thousand (400,000) persons; and up to one hundred (100) card game tables within each gaming facility that is located within forty (40) miles of a municipality with a population of more than four hundred thousand (400,000) persons. Each blackjack table shall be limited to no more than seven (7) available player positions plus the dealer. Each poker table shall be limited to no more than ten (10) available player positions plus the dealer. The tribe agrees that it will not operate card games outside of a gaming facility.

(2) Periodic increases in the number of card game tables. The number of card game tables that the tribe is authorized to operate in each gaming facility shall be automatically increased (but not decreased), without the need to amend this compact on each five-year anniversary of the effective date, to the number that is equal to the number of card game tables the tribe is authorized to operate in each gaming facility set forth in section 3(e)(1) multiplied by the applicable population adjustment rate (with any fraction rounded up to the next whole number).

(f) Number of keno games. Subject to the terms and conditions of this compact, the tribe is authorized to operate no more than two (2) keno games per gaming facility.

(g) Inter-tribal parity provisions.

(1) Gaming devices. Except as provided in section 3(g)(5), if, during the term of this compact:

(a) An Indian tribe listed on the table is authorized or permitted to operate in the state:

More class III gaming devices than the total number of that Indian tribe's current gaming device allocation in column (1) of the table, plus the number of that Indian tribe's additional gaming devices in column (2) of the table; or
More class III gaming devices than that Indian tribe's current gaming device allocation in column (1) of the table without acquiring gaming device operating rights pursuant to and in accordance with section 3(d); or
More class III gaming devices within a single gaming facility than that Indian tribe's maximum devices per gaming facility (as adjusted in accordance with section 3(c)(3)); or

(b) Any Indian tribe not listed on the table is authorized or permitted after the effective date to operate in the state more than four hundred seventy-five (475) class III gaming devices, or more than five hundred twenty-three (523) additional gaming devices under terms other than section 3(d); then

(c) The following remedies shall be available to the tribe to elect, as the tribe may determine in its sole discretion, from time to time:

The tribe shall automatically be entitled to a greater number of gaming device operating rights, without the need to amend this compact and without the need to acquire any gaming device operating rights under section 3(d). The greater number of gaming device operating rights is the product of a ratio (which is the total number of class III gaming devices the other Indian tribe is in fact authorized or permitted to operate following the occurrence of any of the events specified in subsections (a) or (b) of this section 3(g)(1) divided by the total number assigned to the other Indian tribe under column (1) plus column (2) of the table) multiplied by the total number assigned to the tribe in column (1) plus column (2) of the table. If the tribe is not listed on the table, then the ratio described in the previous sentence is multiplied by the tribe's total number of gaming devices authorized in the compact; and
The tribe shall automatically be entitled to immediately reduce its obligations to make contributions to the state under section 12. Instead of the amounts payable under section 12(b), the tribe shall make quarterly contributions to the state equal to seventy-five hundredths of one percent (.75%) of its class III net win for the prior quarter. This remedy will not be available after any Indian tribe with a new compact as defined in A.R.S. section 5-601.02(I)(6) enters its final renewal period as described in section 23(b)(3).

(2) Contribution terms. If, during the term of this compact any other Indian tribe is authorized or permitted to operate gaming devices in the state and the terms of the other Indian tribe's obligation to make contributions to the state are more favorable to the other Indian tribe than the obligation of the tribe to make contributions to the state under the terms of section 12, then the tribe may elect to have section 12 automatically amended to conform to those more favorable terms.

(3) Additional class III gaming. Except as provided in section 3(g)(5), if during the term of this compact, any Indian tribe is authorized to operate:

(a) A form of class III gaming in the state that is not listed in section 3(a), then the tribe shall be entitled to operate the additional form of gaming that the other Indian tribe is authorized to operate, without the need to amend this compact.

(b) Blackjack on more card game tables per gaming facility than authorized under this compact, then the tribe shall be entitled to operate blackjack on the additional number of card game tables that the other Indian tribe is authorized to operate, without the need to amend this compact.

(4) Wager limits. Except as provided in section 3(g)(5), if, during the term of this compact, any Indian tribe is authorized or permitted to operate in the state any class III gaming devices or card game tables with higher wager limits than the wager limits specified in section 3, then the tribe is also authorized to operate its gaming devices and/or card game tables with the same higher wager limits, without the need to amend this compact.

(5) Exceptions. The provisions of section 3(g) shall not be triggered:

(a) By the automatic periodic increases in:

(i) The current gaming device allocation provided in section 3(c)(4), or the resulting increase in the maximum device per gaming facility;

(ii) The number of authorized card game tables provided in section 3(e)(2); or

(iii) The authorized wager limits for gaming devices or card game tables provided in section 3(m)(4);

(b) If the state enters into a compact with an Indian tribe listed as a non-gaming tribe on the table that provides a number of additional gaming devices that is no greater than the largest number of additional gaming devices shown on the table for another Indian tribe with the same current gaming device allocation as shown on the table for such non-gaming tribe; and

(h) Additional gaming due to changes in state law with respect to persons other than Indian tribes.

(1) If, on or after May 1, 2002, state law changes or is interpreted in a final judgment of a court of competent jurisdiction or in a final order of a state administrative agency to permit either a person or entity other than an Indian tribe to operate gaming devices; any form of class III gaming (including video lottery terminals) that is not authorized under this compact, other than gambling that is lawful on May 1, 2002 pursuant to A.R.S. section 13-3302; or poker, other than poker that is lawful on May 1, 2002 pursuant to A.R.S. section 13-3302, then, upon the effective date of such state law, final judgment, or final order:

(a) The tribe shall be authorized under this compact to operate class III gaming devices without limitations on the number of gaming devices, the number of gaming facilities, or the maximum gaming devices per gaming facility, and without the need to amend this compact;

(b) The tribe shall be authorized under this compact to operate table games, without limitations on the number of card game tables, on wagers, or on the types of games, and without the need to amend this compact, subject to the provisions of 3(b)(3); and

(c) In addition to sections 3(h)(1)(a) and (b), the tribe's obligation under section 12 to make contributions to the state shall be immediately reduced. Instead of the amounts payable under section 12(b), the tribe shall make quarterly contributions to the state equal to seventy-five hundredths of one percent (.75%) of its class III net win for the prior quarter.

(2) The provisions of this section 3(h) shall not apply to casino nights operated by non-profit or charitable organizations pursuant to and qualified under A.R.S. section 13-3302(b); to social gambling as defined in A.R.S. section 13-3301(7); to any paper product lottery games, including ticket dispensing devices of the nature used prior to May 1, 2002, by the Arizona lottery; or to low-wager, non-banked recreational pools or similar activities operated by and on the premises of retailers licensed under title 4, Arizona Revised Statutes, as may be authorized by state law.

(i) Notice. Prior to the tribe obtaining rights under sections 3(g) or (h), either the tribe or the state must first give written notice to the other describing the facts which the tribe or the state contend either do or may satisfy the elements of sections 3(g) or (h). The receiving party shall serve a written response on the other party within thirty (30) days of receipt of the notice. If the parties do not agree on whether sections 3(g) or (h) have been triggered, the dispute may be submitted to dispute resolution under section 15 by either the tribe or the state.

(j) Location of gaming facility.

(1) All gaming facilities shall be located on the Indian lands of the tribe. All gaming facilities of the tribe shall be located not less than one and one-half (1 1/2) miles apart unless the configuration of the Indian lands of an Indian tribe makes this requirement impracticable. The tribe shall notify the state gaming agency of the physical location of any gaming facility a minimum of thirty (30) days prior to commencing gaming activities at such location. Gaming activity on lands acquired after the enactment of the act on October 17, 1988 shall be authorized only in accordance with 25 U.S.C. § 2719.

(2) Notice to surrounding communities. The tribe shall notify surrounding communities regarding new or substantial modifications to gaming facilities and shall develop procedures for consultation with surrounding communities regarding new or substantial modifications to gaming facilities.

(k) Financial services in gaming facilities. The tribe shall enact a tribal ordinance establishing responsible restrictions on the provision of financial services at gaming facilities. At a minimum, the ordinance shall prohibit:

(1) Locating an automatic teller machine ("ATM") adjacent to, or in close proximity to, any gaming device;

(2) Locating in a gaming facility an ATM that accepts electronic benefit transfer cards issued pursuant to a state or federal program that is intended to provide for needy families or individuals;

(3) Accepting checks or other non-cash items issued pursuant to a state or federal program that is intended to provide for needy families or individuals; and

(4) The gaming facility operator from extending credit to any patron of a gaming facility for gaming activities.

(l) Forms of payment for wagers. All payment for wagers made for gaming activities conducted by the tribe on its Indian lands, including the purchase of tokens for use in wagering, shall be made by cash, cash equivalent, credit card or personal check. Automatic teller machines (ATMs) may be installed at a gaming facility.

(m) Wager limitations.

(1) For gaming devices. The maximum wager authorized for any single play of a gaming device is twenty five dollars ($25.00).

(2) For blackjack. The maximum wager authorized for any single initial wager on a hand of blackjack by each individual player shall be (a) five hundred dollars ($500.00) at up to ten (10) card game tables per gaming facility, and (b) two hundred and fifty dollars ($250.00) for all other card game tables in a gaming facility. The foregoing maximum wager limits shall apply to each subsequent wager that an individual player shall be entitled to make on the same hand as the result of "splits" and/or "doubling down" during the play of such hand.

(3) For poker. The wager limits for a hand of poker shall be (a) $75.00/$150.00 at up to ten (10) card game tables per gaming facility, and (b) $20.00/$40.00 for all other card game tables in a gaming facility.

(4) Periodic increases in wager limitations. During the term of this compact, the wager limitations set forth in this section 3(m) shall each be automatically increased (but not decreased) without the need to amend this compact on each five-year anniversary of the effective date to an amount equal to the wager limitations specified in sections 3(m)(1), (2) and (3) multiplied by the CPI adjustment rate (with all amounts rounded up to the next whole dollar). The tribe will notify the state gaming agency of such wager limitation adjustments as soon as reasonably possible after the CPI adjustment rate has been determined.

(n) Hours of operation. The tribe may establish by ordinance or regulation the permissible hours and days of operation of gaming activities; provided, however, that with respect to the sale of liquor the tribe shall comply with all applicable state liquor laws at all gaming facilities.

(o) Ownership of gaming facilities and gaming activities. The tribe shall have the sole proprietary interest in the gaming facilities and gaming activities. This provision shall not be construed to prevent the tribe from granting security interests or other financial accommodations to secured parties, lenders, or others, or to prevent the tribe from entering into leases or financing arrangements.

(p) Prohibited activities. Any class III gaming not specifically authorized in this section 3 is prohibited. Except as provided herein, nothing in this compact is intended to prohibit otherwise lawful and authorized class II gaming upon the tribe's Indian lands or within the gaming facilities.

(q) Operation as part of a network. Gaming devices authorized pursuant to this compact may be operated to offer an aggregate prize or prizes as part of a network, including a network:

(1) With the gaming devices of other Indian tribes located within the state that have entered into tribal-state gaming compacts with the state, or

(2) Beyond the state pursuant to a mutually-agreed appendix containing technical standards for wide area networks.

(r) Prohibition on firearms. The possession of firearms by any person within a gaming facility shall be strictly prohibited. This prohibition shall not apply to certified law enforcement officers authorized to be on the premises as well as any private security service retained to provide security at a gaming facility, or armored car services.

(s) Financing. Any third-party financing extended or guaranteed for the gaming operation and gaming facilities shall be disclosed to the state gaming agency, and any person extending such financing shall be required to be licensed by the tribe and annually certified by the state gaming agency, unless said person is an agency of the United States or a lending institution licensed and regulated by the state or the United States.

(t) Record-keeping. The gaming facility operator or the tribal gaming office, whichever conducts surveillance, shall maintain the following logs as written or computerized records which shall be available for inspection by the state gaming agency in accordance with section 7(b): a surveillance log recording all material surveillance activities in the monitoring room of the gaming facilities; and a security log recording all unusual occurrences investigated by the tribal gaming office. The gaming facility operator or the tribal gaming office, whichever conducts surveillance, shall retain video recordings made in accordance with appendix C for at least seven (7) days from the date of original recording.

(u) Barred persons. The tribal gaming office shall establish a list of persons barred from the gaming facilities because their criminal history or association with career offenders or career offender organizations poses a threat to the integrity of the gaming activities of the tribe. The tribal gaming office shall employ its best efforts to exclude persons on such list from entry into its gaming facilities. To the extent not previously provided, the tribal gaming office shall send a copy of its list on a monthly basis to the state gaming agency, along with detailed information regarding why the person has been barred and, to the extent available, the barred person's photograph, driver's license information, and/or fingerprints, to the extent these items are in the possession of the tribal gaming office. The state gaming agency will establish a list which will contain the names, and to the extent available, photographs of, and other relevant information regarding, persons whose reputations, conduct, or criminal history is such that their presence within a gaming facility may pose a threat to the public health, safety, or welfare. Such persons will be barred from all tribal gaming facilities within the state. The tribe agrees that the state gaming agency may disseminate this list, which shall contain detailed information about why each person is barred, to all other tribal gaming offices.

(v) Problem gambling.

(1) Signage. At all public entrances and exits of each gaming facility, the gaming facility operator shall post signs stating that help is available if a person has a problem with gambling and, at a minimum, provide the statewide toll free crisis hotline telephone number established by the Arizona state lottery commission.

(2) Self-exclusion. The state gaming agency and the tribe shall comply with the following provisions:

(a) The state gaming agency shall establish a list of persons who, by acknowledging in a manner to be established by the state gaming agency that they are problem gamblers, voluntarily seek to exclude themselves from gaming facilities. The state gaming agency shall establish procedures for the placement on and removal from the list of self-excluded persons. No person other than the person seeking voluntary self-exclusion shall be allowed to include any person's name on the self-exclusion list of the state gaming agency.

(b) The tribe shall establish procedures for advising persons who inquire about self-exclusion about the state gaming agency's procedures.

(c) The state gaming agency shall compile identifying information concerning self-excluded persons. Such information shall contain, at a minimum, the full name and any aliases of the person, a photograph of the person, the social security or driver's license number of the person, and the mailing address of the person.

(d) The state gaming agency shall, on a monthly basis, provide the compiled information to the tribal gaming office. The tribe shall treat the information received from the state gaming agency under this section as confidential and such information shall not be disclosed except to other tribal gaming offices for inclusion on their lists, or to appropriate law enforcement agencies if needed in the conduct of an official investigation or unless ordered by a court of competent jurisdiction.

(e) The tribal gaming office shall add the self-excluded persons from the list provided by the state gaming agency to their own list of self-excluded persons.

(f) The tribal gaming office shall require the gaming facility operator to remove all self-excluded persons from all mailing lists and to revoke any slot or player's cards. The tribal gaming office shall require the gaming facility operator to take reasonable steps to ensure that cage personnel check a person's identification against the state gaming agency's list of self-excluded persons before allowing the person to cash a check or complete a credit card cash advance transaction.

(g) The tribal gaming office shall require the gaming facility operator to take reasonable steps to identify self-excluded persons who may be in a gaming facility and, once identified, promptly escort the self-excluded person from the gaming facility.

(h) The tribal gaming office shall prohibit the gaming facility operator from paying any hand-paid jackpot to a person who is on the tribal or state gaming agency self-exclusion list. Any jackpot won by a person on the self-exclusion list shall be donated by the gaming facility operator to an Arizona-based non-profit charitable organization.

(i) Neither the tribe, the gaming facility operator, the tribal gaming office, nor any employee thereof shall be liable to any self-excluded person or to any other party in any proceeding and neither the tribe, the gaming facility operator, nor the tribal gaming office shall be deemed to have waived its sovereign immunity with respect to any person for any harm, monetary or otherwise, which may arise as a result of:

The failure of the gaming facility operator or the tribal gaming office to withhold or restore gaming privileges from or to a self-excluded person; or
Otherwise permitting a self-excluded person to engage in gaming activity in a gaming facility while on the list of self-excluded persons.

(j) Neither the tribe, the gaming facility operator, the tribal gaming office, nor any employee thereof shall be liable to any self-excluded person or to any other party in any proceeding, and neither the tribe, the gaming facility operator, nor the tribal gaming office shall be deemed to have waived its sovereign immunity with respect to any person for any harm, monetary or otherwise, which may arise as a result of disclosure or publication in any manner, other than a willfully unlawful disclosure or publication, of the identity of any self-excluded person or persons.

(k) Notwithstanding any other provision of this compact, the state gaming agency's list of self-excluded persons shall not be open to public inspection.

(w) Restriction on minors.

(1) Until May 31, 2003, no person under 18 years of age shall be permitted to place any wager, directly or indirectly, in any gaming activity.

(2) Prior to May 31, 2003, the tribe shall enact, as tribal law, a requirement that beginning June 1, 2003, no person under 21 years of age shall be permitted to place any wager, directly or indirectly, in any gaming activity.

(3) If, during the term of the compact, the state amends its law to permit wagering by persons under 21 years of age in any gaming activity by a person or entity other than an Indian tribe, the tribe may amend tribal law to reduce the lawful gaming age under this compact to correspond to the lawful gaming age under state law.

(4) No person under 18 years of age shall be employed as a gaming employee. No person under 21 years of age shall be employed in the service of alcoholic beverages at any gaming facility, unless such employment would be otherwise permitted under state law.

(x) Advertising.

(1) Right to advertise. The state and the tribe recognize the tribe's constitutional right to engage in advertising of lawful gaming activities and nothing in this compact shall be deemed to abrogate or diminish that right.

(2) Prohibition on advertising directed to minors. The gaming facility operator shall not advertise or market gaming activities in a manner that specifically appeals to minors.

(3) Advertising guidelines. Within thirty days after the effective date, the gaming facility operator shall adopt guidelines for the advertising and marketing of gaming activities that are no less stringent than those contained in the American gaming association's general advertising guidelines.

(4) Content of advertising. In recognition of the tribe's constitutional right to advertise gaming activities, the specific content of advertising and marketing materials shall not be subject to the provisions of section 15 of this compact.

(y) Internet gaming. The tribe shall not be permitted to conduct gaming on the internet unless persons other than Indian tribes within the state or the state are authorized by state law to conduct gaming on the internet.

(z) Lottery products. The tribe will not offer paper lottery products in competition with the Arizona lottery's pick or powerball games.

(aa) Annual statement. The tribe shall submit to the state gaming agency either an annual statement of compliance with the act regarding the use of net gaming revenues or a copy of its current gaming ordinance requiring that net gaming revenues be used according to the act."

(iv) The following provisions shall replace the corresponding provisions in section 4 of the pre-existing compact:

"(b) Gaming employees. Every gaming employee shall be licensed by the tribal gaming office and every employee of the tribal gaming office shall be licensed by the tribe. Any gaming employee or tribal gaming office employee that is not an enrolled tribal member shall also be certified by the state gaming agency prior to commencement of employment, and annually thereafter, subject to the temporary certification provided in section 5(n). Enrolled tribal members are not required to be certified by the state as a condition of employment. Gaming employees that hold the following positions are also not required to be certified by the state, so long as they do not have unescorted access to secure areas such as gaming device storage and repair areas, count rooms, vaults, cages, change booths, change banks/cabinets, security offices and surveillance rooms, revenue accounting offices, and rooms containing information systems that monitor or control gaming activities (or, as may be agreed to by the state gaming agency and the tribal gaming office in a separate agreement delineating the secure areas in the tribe's gaming facilities):

(1) Food and beverage service personnel such as chefs, cooks, waiters, waitresses, bus persons, dishwashers, food and beverage cashiers, and hosts;

(2) Gift shop managers, assistant managers, cashiers, and clerks;

(3) Greeters;

(4) Landscapers, gardeners, and groundskeepers;

(5) Maintenance, cleaning, and janitorial personnel;

(6) Stewards and valets;

(7) Wardrobe personnel;

(8) Warehouse personnel; and

(9) Hotel personnel.

(d) Manufacturers and suppliers of gaming devices and gaming services. Each manufacturer and distributor of gaming devices, and each person providing gaming services, within or without the gaming facility, shall be licensed by the tribal gaming office and shall be certified by the state gaming agency prior to the sale or lease of any gaming devices or gaming services. The tribe shall provide to the state gaming agency a list of the names and addresses of all vendors providing gaming services on a periodic basis at the time of the meetings required pursuant to section 6(h) of this compact. Utilities which are the sole available source of any particular service to a gaming facility are not required to be certified. A vendor licensed and regulated by another governmental agency may submit a supplement to the application on file with the other agency. The state gaming agency may waive the requirement that a vendor be certified if it determines that certifying the vendor is not necessary to protect the public interest."

(v) The following provision shall replace the corresponding provisions in section 5 of the pre-existing compact:

"(p) State administrative process; certifications. Any applicant for state certification agrees by making such application to be subject to state jurisdiction to the extent necessary to determine the applicant's qualification to hold such certification, including all necessary administrative procedures, hearings and appeals pursuant to the administrative procedures act, title 41, chapter 6, Arizona Revised Statutes and the administrative rules of the state gaming agency.

(q) Administrative process; licenses.

(1) Any person applying for licensure by the tribal gaming office acknowledges that by making such application, the state gaming agency, as set forth herein, may be heard concerning the applicant's qualifications to hold such license. If the state recommends revocation, suspension, or denial of a license, and the tribal gaming office revokes, suspends, or denies the license based on the state gaming agency's recommendation, the person may appeal that action to the tribe, to the extent any such right exists.

(2) If the tribal gaming office takes any action with respect to a license despite a state recommendation to the contrary, the tribal gaming office shall afford the state an opportunity for a hearing before an appropriate tribal forum to contest the tribal gaming office licensing decision. The decision of the tribal forum shall be final, except as provided in section 5(q)(4).

(3) The tribal gaming office shall afford the state gaming agency the opportunity to be heard in an appropriate tribal forum on its recommendation to suspend or revoke the license of any person in the same manner as if the state gaming agency had recommended denial of the license in the first instance.

(4) Independent tribunal review of tribal forum.

(a) Tribunal appointment and process. If the tribal forum upholds a decision not to follow a gaming employee license recommendation, the state gaming agency may appeal to an independent three member tribunal by providing written notice to the tribal gaming office within ten (10) days after receiving the tribal forum's decision. Within twenty (20) days thereafter, the CPR or a similar dispute resolution service acceptable to the parties (the "dispute resolution service"), shall select the tribunal members, except that upon agreement by the parties, in lieu of selection by the dispute resolution service, each party may select a tribunal member, and the two members shall select a third member. If, within five (5) days after their appointment, the tribunal members appointed by the parties have not agreed upon a third tribunal member, the dispute resolution service shall select the third member. All tribunal members, whether appointed by the dispute resolution service or the parties, shall be (a) impartial, (b) licensed by and in good standing with a state bar association, and (c) independent from the state, the state gaming agency, the tribe, and the tribal gaming office. The tribunal shall hold a hearing and issue its decision within ninety (90) days after the state gaming agency delivers its written notice of appeal to the tribal gaming office.

(b) Tribunal authority. The tribunal's sole authority shall be to review the decision of the tribal forum and determine whether the decision is supported by substantial evidence based on the record as a whole. The tribunal's hearing shall be conducted in a fair and impartial manner. The hearing shall be held on the administrative record presented to the tribal forum. The tribunal's decision shall be final and not subject to further appeal or to section 15 dispute resolution procedures. If the tribunal determines the employee should not be licensed, the tribal gaming office shall promptly revoke the disputed license. The cost of the tribunal and the hearing shall be borne equally between the state and the tribe."

(vi) The following provision shall be added to section 7 of the pre-existing compact:

"(g) Compact compliance review. The state gaming agency is authorized to conduct an annual, comprehensive compact compliance review of the gaming operation, gaming facilities, and the gaming activities of the gaming facility operator to monitor compliance with this compact, any amendments or appendices to this compact, and other agreements relating to this compact."

(vii) Section 12 of the pre-existing compact shall be replaced with the following:

Section 12. Payment of regulatory costs; tribal contributions

(a) Payment of regulatory costs. The tribe agrees to pay the state the necessary costs incurred by the state as a result of the state's performance of its rights or duties under the terms of this compact. The tribe's contributions under this section 12 shall satisfy the agreement to pay those costs.

(b) Tribal contributions. In consideration for the substantial exclusivity covenants by the state in section 3(h), the tribe shall contribute for the benefit of the public a percentage of the tribe's class III net win for each fiscal year of the gaming facility operator as follows:

(1) One percent (1%) of the first twenty-five million dollars ($25,000,000.00);

(2) Three percent (3%) of the next fifty million dollars ($50,000,000.00);

(3) Six percent (6%) of the next twenty-five million dollars ($25,000,000.00); and

(4) Eight percent (8%) of class III net win in excess of one hundred million dollars ($100,000,000.00).

(c) Arizona benefits fund. The tribe shall make eighty-eight percent (88%) of its total annual contribution under section 12(b) to the Arizona benefits fund established by A.R.S. 5-601.02(H). The state agrees that the Arizona benefits fund shall be used for the purpose of administering the contributions made by the tribe to the state in accordance with the provisions of section 12(b). All contributions to the state from the tribe pursuant to this section 12(c), and all contributions to the state from other Indian tribes that have entered into tribal-state gaming compacts with the state that contain similar provisions, shall be deposited in the Arizona benefits fund administered by the state gaming agency. The state agrees to invest all monies in the Arizona benefits fund in accordance with A.R.S. section 35-313; monies earned from such investment may only be credited to the Arizona benefits fund. The state agrees that contributions paid to the state by the tribe under this section 12(c) shall only be distributed as provided in A.R.S. section 5-601.02, as adopted by the people of the state at the November 5, 2002 election, and the state shall not impose any tax, fee, charge, or other assessment upon the tribe's gaming operations.

(d) Distributions by tribe to cities, towns and counties. The tribe shall make twelve percent (12%) of its total annual contribution under section 12(b) in either or both of the following forms:

(1) Distributions to cities, towns or counties for government services that benefit the general public, including public safety, mitigation of impacts of gaming, or promotion of commerce and economic development;

(2) Deposits to the Arizona commerce authority local communities fund established by A.R.S. section 41-1505.12.

(e) Contribution schedule.

(1) Tribal contributions pursuant to section 12(b) shall be paid quarterly to the state gaming agency, other than the amounts distributed or deposited to benefit cities, towns and counties under section 12(d). The contributions shall be calculated based on the tribe's class III net win for each quarter of the gaming facility operator's fiscal year. Contributions shall be made no later than twenty-five (25) days after the last day of each fiscal quarter.

(2) At the time each quarterly contribution is made, the tribe shall submit to the state gaming agency a report indicating the class III net win by gaming activity for the quarter, and the amounts paid under sections 12(c) and (d).

(3) The tribe's first quarterly contribution will be calculated based on the tribe's class III net win for the first full fiscal quarter after the effective date.

(4) Following the state gaming agency's receipt of the annual audit pursuant to section 11(c), any overpayment of monies by the tribe pursuant to this section shall be credited to the tribe's next quarterly contribution. Any underpayment of monies shall be paid by the tribe within thirty (30) days of the state gaming agency's receipt of the annual audit.

(f) Reduction of tribal contributions. In the event that tribal contributions are reduced pursuant to sections 3(g) or (h), the tribe shall make the reduced contributions under the terms of this section 12, and these monies shall be used in the manner set forth in A.R.S. section 5-601.02(H)(3)(a) as adopted by the people of the state at the November 5, 2002 election."

(viii) The following provisions shall replace the corresponding provisions, or be added to the provisions, as the case may be, in section 13 of the pre-existing compact:

"(b) Emergency service accessibility. The tribe shall require the gaming facility operator to make provisions for adequate emergency accessibility and service. Mutual aid and emergency response service agreements will be entered as needed with entities from the surrounding communities.

(e) Law enforcement. The tribe shall implement a written law enforcement services plan that provides a comprehensive and effective means to address criminal and undesirable activity at the gaming facilities. This plan shall provide that sufficient law enforcement resources are available twenty-four hours a day seven days per week to protect the public health, safety, and welfare at the gaming facilities. The tribe and the state shall investigate violations of state gambling statutes and other criminal activities at the gaming facilities. To accommodate investigations and intelligence sharing, the tribe will provide that a police officer holding current Arizona police officer standards and training (POST) certification is employed by the gaming facility operator, tribal gaming office, or tribal police department, and assigned to handle gaming-related matters when they arise. Intelligence liaisons will be established at the tribal police department or tribal gaming office and also at the state gaming agency. There will be federal, tribal, and state cooperation in task force investigations. The state gaming agency's intelligence unit will gather, coordinate, centralize, and disseminate accurate and current intelligence information pertaining to criminal and undesirable activity that may threaten patrons, employees, or assets of the gaming industry. The state and the tribe will coordinate the use of resources, authority, and personnel of the state and the tribe for the shared goal of preventing and prosecuting criminal or undesirable activity by players, employees, or businesses in connection with tribal gaming facilities. Violations of state criminal gambling statutes on tribal lands may be prosecuted as federal crimes in federal court."

(ix) Section 15 of the pre-existing compact shall be replaced with the following:

"Section 15. Dispute resolution

(a) Notice/negotiation. If either the tribe or the state believes the other has failed to comply with the requirements set forth in this compact, or if a dispute arises as to the proper interpretation of those requirements, then either party may serve a written notice on the other identifying the specific provision or provisions of the compact in dispute and specifying in detail the factual bases for any alleged non-compliance and/or the interpretation of the provision of the compact proposed by the party providing notice. Within ten (10) days following delivery of the written notice of dispute, the executive director of the tribal gaming office and the director of the state gaming agency shall meet in an effort to voluntarily resolve the compliance or interpretation dispute through negotiation. If those negotiations fail to resolve the dispute, the executive director of the tribal gaming office, the director of the state gaming agency, and representatives designated by the governor of Arizona and the chairman of the tribe shall meet in a further effort to voluntarily resolve the dispute through further negotiation.

(b) Mediation. If the tribe and the state are unable to resolve by negotiation any dispute regarding compliance with the requirements of the compact, or the proper interpretation of those requirements, within thirty (30) days after delivery of the written notice of dispute, the tribe and the state shall, upon the request of either party, endeavor to settle the dispute in an amicable manner by non-binding mediation administered by the CPR under its mediation procedures dated April 1, 1998 (unless otherwise agreed to by the parties), and the procedures set forth below. Although the parties shall be required to participate in the mediation process if requested, a request for mediation shall not preclude either party from pursuing any other available remedy.

(1) Selection of mediator. If the parties agree upon a mediator, that person shall serve as the mediator. If the parties are unable to agree on a mediator within ten (10) days of a request for mediation, then the CPR (i) shall select an attorney from the CPR panel of distinguished neutrals to be the mediator or (ii) if requested by the parties, shall select the mediator from a list of potential mediators approved by the parties.

(2) Conduct of mediation. The mediator shall control the procedural aspects of the mediation and shall be guided by the mediation procedures promulgated by the CPR.

(3) Costs of mediation. The costs of mediation shall be borne equally by the parties, with one-half (1/2) of the expenses charged to the tribe and one-half (1/2) of the expenses charged to the state.

(c) Arbitration. If the tribe and the state fail to resolve such a dispute regarding compliance with the requirements of the compact or the proper interpretation of those requirements through negotiation or mediation under sections 15(a) or (b) within thirty (30) days after delivery of the written notice of dispute, upon a demand by either party, the dispute shall be settled through binding arbitration at a neutral location and, unless otherwise agreed to by the parties, the arbitration shall be conducted in accordance with the rules, as modified by the following:

(1) Demand for arbitration. No earlier than thirty (30) days after the delivery of the notice required under section 15(a), either party may serve on the other a written demand for arbitration of the dispute, in accordance with CPR rule 3. The demand shall contain a statement setting forth the nature of the dispute and the remedy sought. The other party shall file a notice of defense and any counterclaim within twenty (20) days, in accordance with CPR rule 3. Failure to provide a notice of defense shall not delay the arbitration. In the absence of a notice of defense, all claims set forth in the demand shall be deemed denied.

(2) Arbitrators. Unless the parties agree in writing to the appointment of a single arbitrator, the arbitration shall be conducted before a panel of three (3) arbitrators. In the absence of an agreement to a single arbitrator, within twenty (20) days of the defending party's receipt of the demand, each party shall select an arbitrator. As soon as possible thereafter, but in no event more than forty (40) days following delivery of the demand, the party-appointed arbitrators shall discuss and select a third (3rd) arbitrator from the panel of distinguished neutrals, who shall chair the tribunal. Alternatively, if the parties have agreed upon a list of arbitrators acceptable to both parties, the CPR shall select the third (3rd) arbitrator from that list. Unless the parties agree otherwise, at least one (1) of the arbitrators on the tribunal shall be an attorney or retired judge knowledgeable about the act, federal Indian law, and jurisdiction within Indian country. If the parties do not appoint an arbitrator with those qualifications, the party-appointed arbitrators or the CPR shall do so. Once the tribunal is impaneled, there shall be no ex parte contact with the arbitrators, except for contacts with the office of the tribunal chair regarding scheduling or other purely administrative matters that do not deal with substantive matters or the merits of the issues.

(3) Selection of arbitrator(s) by the CPR. If a party fails to appoint an arbitrator, or if the party-appointed arbitrators have failed to appoint a third (3rd) arbitrator within the time period provided in section 15(c)(2), either party may request appointment of the arbitrator by the CPR. The request shall be made in writing and served on the other party. CPR shall fill any vacancies on the tribunal within ten (10) days of a request in accordance with CPR rule 6.

(4) Neutrality of the arbitrators. All arbitrators shall be independent and impartial. Upon selection, each arbitrator shall promptly disclose in writing to the tribunal and the parties any circumstances that might cause doubt regarding the arbitrator's independence or impartiality. Such circumstances may include, but shall not be limited to, bias, interest in the result of the arbitration, and past or present relations with a party or its counsel. Following such disclosure, any arbitrator may be challenged in accordance with CPR rule 7.

(5) Cost of arbitration. The costs of arbitration shall be borne equally by the parties, with one-half (1/2) of the expenses charged to the tribe and one-half (1/2) of the expenses charged to the state.

(6) Preliminary conference/hearing. The tribunal shall hold an initial pre-hearing conference no later than thirty (30) days following the selection of the members of the tribunal and shall permit discovery and make other applicable decisions in accordance with CPR rules 9 through 12. Unless the parties agree otherwise, or unless the tribunal determines that compelling circumstances exist which demand otherwise, the arbitration shall be completed within one hundred and eighty (180) days of the initial pre-hearing conference.

(7) Discovery.

(a) Documents. Consistent with the expedited nature of arbitration, each party will, upon the written request of the other party, promptly provide the other with copies of documents relevant to the issues raised by any claim or counterclaim or on which the producing party may rely in support of or in opposition to any claim or defense. Except as permitted by the tribunal, all written discovery shall be completed within ninety (90) days following the initial pre-hearing conference. Any dispute regarding discovery, or the relevance or scope thereof, shall be determined by the tribunal, whose determination shall be conclusive.

(b) Depositions. Consistent with the expedited nature of arbitration and unless the parties agree otherwise, a party, upon providing written notice to the other party, shall have the right to take the depositions of up to five (5) witnesses, each of which shall last no longer than one (1) day. Unless the parties agree otherwise, additional depositions shall be scheduled only with the permission of the tribunal and for good cause shown. A party's need to take the deposition of a witness who is not expected to be available for an arbitration hearing shall be deemed to be good cause. Except as permitted by the tribunal, all depositions shall be concluded within one hundred and twenty (120) days following the initial pre-hearing conference. All objections that might be raised to deposition testimony shall be reserved for the arbitration hearing, except for objections based on privilege, proprietary or confidential information, and objections to form or foundation that could be cured if raised at the deposition.

(8) Injunctive relief in aid of arbitration. The tribe or the state may seek in a court of competent jurisdiction (a) provisional or ancillary remedies, including preliminary injunctive relief, pending the outcome of an arbitration proceeding, or (b) permanent injunctive relief to enforce an arbitration award.

(9) Arbitration hearing.

(a) Notice/transcript. Unless the parties agree otherwise, the tribunal shall provide the parties with at least sixty (60) days notice of the date of the arbitration hearing. Unless the parties agree otherwise, there shall be a stenographic record made of the hearing, with the cost to be shared by the tribe and the state. The transcript shall be the official record of the proceeding.

(b) Last, best offer format. The arbitrators shall conduct each arbitration proceeding using the "last, best offer" format, unless any party to an arbitration proceeding opts out of the "last, best offer" arbitration format in the manner set forth in section 15(c)(9)(c).

No later than forty (40) days before the arbitration hearing (or forty (40) days before the date the dispute is to be submitted to the tribunal for decision if oral hearings have been waived), each party shall submit to the other party or parties to the arbitration a preliminary last, best offer for those issues that will be decided using the last, best offer format.
No later than twenty (20) days before the arbitration hearing (or twenty (20) days before the date the dispute is to be submitted to the tribunal for decision if oral hearings have been waived), each party shall submit to the tribunal and the other party or parties to the arbitration its pre-hearing last, best offer for those issues that will be decided using the last, best offer format.
No later than ten (10) days after the conclusion of the arbitration hearing (or ten (10) days before the date the dispute is to be submitted to the tribunal for decision if oral hearings have been waived), each party shall submit to the tribunal and the other party or parties to the arbitration its final last, best offer for those issues that will be decided using the last, best offer format.
Except as otherwise provided in this section 15(c)(9)(b)(4), for each issue to be decided using the last, best offer format, the tribunal shall, for its decision on the issue, adopt one of the last, best offers submitted under section 15(c)(9)(b)(3) and no other remedy (excepting only remedies in aid of the tribunal's decision). If the tribunal expressly determines that a last, best offer submitted by a party with respect to an issue or issues is not consistent with or does not comply with the act and/or the compact, as they may be amended and as they are interpreted by courts of competent jurisdiction, then the tribunal shall reject that last, best offer and shall not consider it in rendering its decision. If the tribunal expressly determines that all the last, best offers submitted by the parties with respect to an issue or issues are not consistent with or do not comply with the act and/or the compact, as they may be amended and as they are interpreted by courts of competent jurisdiction, then the tribunal shall reject all the last, best offers and shall decide the related issue or issues as if the parties had elected to have the issue or those issues decided without using the "last, best offer" format. In addition, the tribunal shall have no authority to award money damages against either party, regardless of whether a last, best offer proposes an award of damages.

(c) Opting out of last, best offer format. Unless the parties agree otherwise, a party desiring to opt out of the "last, best offer" arbitration format shall serve a written notice of its election no later than fifty (50) days before the arbitration hearing (or fifty (50) days before the date the dispute is to be submitted to the tribunal for decision if oral hearings have been waived). The notice shall:

Identify with specificity the issue or issues that the arbitrators will decide without using the "last, best offer" arbitration format, or
State that the arbitrators will not use the "last, best offer" arbitration format.

(10) Decision of the tribunal. The decision of the tribunal shall be in writing, setting forth detailed findings of fact and conclusions of law and a statement regarding the reasons for the disposition of each claim. If the tribunal determines that a last, best offer is not consistent with or does not comply with the act and/or the compact, the decision of the tribunal shall set forth detailed findings of fact and conclusions of law and a statement regarding the reasons for the tribunal's determination. The written decision of the tribunal shall be made promptly and, unless otherwise agreed to by the parties, no later than forty (40) days from the date of the closing of the hearing or, if oral hearings have been waived, no later than forty (40) days from the date the dispute is submitted to the tribunal for decision. The tribunal may take additional time to render its decision if the tribunal determines that compelling circumstances require additional time. The tribunal may issue awards in accordance with CPR rule 13, to the extent that rule is consistent with section 15(c). The decision of the majority of the arbitrators shall be final, binding, and non-appealable, except for a challenge to a decision on the grounds set forth in 9 U.S.C. § 10. The failure to comply with a judgment upon the award of the arbitrators shall be a breach of this compact.

(11) Governing law/jurisdiction. Title 9 of the United States Code (the United States arbitration act) and the rules shall govern the interpretation and enforcement of section 15(c), but nothing in section 15(c) shall be interpreted as a waiver of the state's tenth amendment or eleventh amendment immunity or as a waiver of the tribe's sovereign immunity. The tribunal shall resolve the disputes submitted for arbitration in accordance with, and every decision of the tribunal must comply and be consistent with, the act and the compact, as they may be amended and as they are interpreted by courts of competent jurisdiction. The tribunal shall have no authority to award money damages against either party.

(12) Judicial confirmation. Judgment upon any award rendered by the tribunal may be entered in any court having competent jurisdiction.

(d) Injunctive relief. The parties acknowledge that, although negotiation followed by mediation and arbitration are the preferred methods of dispute resolution, compact section 15 shall not impair any rights to seek in any court of competent jurisdiction injunctive relief pursuant to 25 U.S.C. § 2710(d)(7)(a)(ii), or a judgment upon an award rendered by an arbitration tribunal in accordance with sections 15(c)(10) and 15(c)(11). In an action brought by the tribe against the state, one court of competent jurisdiction is the Arizona superior court. In an action brought by the state against the tribe, one court of competent jurisdiction is the United States district court for the district of Arizona. Nothing in this compact is intended to prevent either party from seeking relief in some other court of competent jurisdiction, or to constitute an acknowledgement that the state courts have jurisdiction over the tribe or the tribal courts have jurisdiction over the state."

(x) Section 17 of the pre-existing compact shall be replaced with the following:

"Section 17. Amendments

(a) Proposed compact amendments. To continue to ensure the fair and honest operation of Indian gaming, no later than one hundred eighty (180) days after the effective date, the state or the tribe may propose amendments to enhance the following regulatory provisions of this compact:

(1) The process for tribal judicial review of disputes regarding the nonpayment of alleged winnings to patrons;

(2) Compliance with United States public health service requirements regarding food and beverage handling;

(3) Compliance with building codes and fire safety standards in the construction of new gaming facilities and significant modifications to existing gaming facilities;

(4) The availability of adequate police, fire and emergency medical services to serve each gaming facility;

(5) Remedies for violations of this compact, the gaming ordinance, federal law, or state rules for certification holders;

(6) Liability insurance for gaming facilities and procedures for the disposition of tort claims that arise from personal injuries or property damage suffered at gaming facilities by patrons of the gaming facilities;

(7) Standards for background investigations, licensing and certification of gaming employees by the tribe or the state gaming agency, or both;

(8) Standards for background investigations, licensing, and certification by the tribe or the state gaming agency, or both, of persons or entities that provide gaming goods or services on a significant basis;

(9) Reports and audits of revenue from gaming activities to allow tracking and confirmation of such revenue;

(10) Minimum internal control standards, technical standards, testing procedures, and inspection procedures for class III gaming devices and the online electronic game management systems to which they are linked;

(11) Minimum internal control standards, operational standards, specifications, and regulations for other gaming activities permitted under this compact, including rules for game play and dealing procedures for blackjack and poker; and

(12) Surveillance requirements.

(b) Negotiations/mediation. Within ninety (90) days of receipt by the tribe or the state of proposed amendments described in section 17(a), the tribe and the state shall enter into good faith negotiations regarding the proposed amendments. If good faith negotiations fail to result in a mutually-agreed upon amendment to this compact regarding any of the issues listed in section 17(a), the parties shall participate in good faith in a mediation conducted in accordance with the provisions of section 15(b) in an effort to resolve their differences. The remaining provisions of section 15 shall not apply to sections 17(a) or (b). Within thirty (30) days after the conclusion of a mediation, the parties shall conclude negotiations and document any amendments consistent with section 17(c).

(c) Effect. Any amendment to this compact shall be in writing and signed by both parties. The terms and conditions of this compact shall remain in effect until amended, modified, or terminated."

(xi) Section 23 of the pre-existing compact shall be replaced with the following:

"Section 23. Effective date and duration

(a) Replacement of other gaming compacts. On the effective date, this compact shall replace and supersede any other tribal-state gaming compact between the state and the tribe. The tribe and the state shall execute an acknowledgement of the effective date.

(b) Duration.

(1) The initial term of this compact shall commence on the effective date. The initial term of this compact shall be the remainder of the term under section 23(b)(1) of the tribe's pre-existing compact as defined in A.R.S. section 5-601.02(I)(5), if any, provided that such pre-existing compact was in effect on May 1, 2002, plus ten (10) years.

(2) This compact shall thereafter be extended for a renewal term of ten (10) years, unless the state or the tribe notifies the other in writing, not less than one hundred eighty (180) days prior to the expiration of the initial term, that it does not intend to renew the compact because of substantial non-compliance.

(3) This compact shall thereafter be extended for an additional renewal term of three (3) years in order to provide the parties with an opportunity to negotiate new or amended compact terms, unless the state or the tribe notifies the other in writing, not less than one hundred eighty (180) days prior to the expiration of the renewal term, that it does not intend to renew the compact because of substantial non-compliance.

(4) For purposes of this section 23, substantial non-compliance means the willful failure or refusal to reasonably comply with the material terms of a final, non-appealable court order, or a final, non-appealable award of an arbitrator or arbitrators under section 15. Substantial non-compliance does not include technical inadvertence or non-material variations or omissions in compliance with any such award or judgment. If either party contends that the other is in substantial non-compliance, the party so contending shall provide immediate written notice to the other, including the specific reason(s) for the contention and copies of all documentation relied upon to the extent allowed by law.

(5) A dispute over whether the state or the tribe has engaged in substantial non-compliance shall be resolved under section 15. The compact shall remain in effect until the dispute has been resolved by a final, non-appealable decision under section 15. In any section 15 proceeding to determine substantial non-compliance, the burden of proof shall be on the party alleging substantial non-compliance.

(6) The tribe may operate class III gaming only while this compact, or any extension thereof, is in effect. Prior to the end of the final renewal term of this compact, the state and the tribe shall negotiate under 25 U.S.C. section 2710(d)(3)(a), or other applicable federal law, for a successor compact or other similar agreement."

§ 5-602 Gaming certification and enforcement; powers; duties; deputy director

A. The department of gaming shall certify, as provided in tribal-state compacts, prospective gaming employees, facility support employees, tribal gaming office employees, financiers, management contractors, providers of gaming services and manufacturers and distributors of gaming devices to ensure that unsuitable individuals or companies are not involved in Indian gaming permitted under the tribal-state compacts. In carrying out the duties prescribed in this section, the department shall seek to promote the public welfare and public safety and shall seek to prevent corrupt influences from infiltrating Indian gaming.

B. Certification pursuant to this chapter is a privilege and not a right.

C. The department of gaming shall execute the duties of this state under the tribal-state compacts in a manner that is consistent with this state's desire to have extensive, thorough and fair regulation of Indian gaming permitted under the tribal-state compacts.

D. The department of gaming shall establish a certification and enforcement unit charged with the investigative duties relevant to tribal-state compacts, including applications for certification, investigations and enforcement, and such other duties as the director of the department of gaming prescribes.

E. To determine the suitability of prospective applicants for any tribal gaming license or state certification, each applicant shall furnish a full set of fingerprints and such fingerprints shall be submitted to the department of public safety for a criminal records check. Each applicant's fingerprints shall also be submitted by the department of public safety to the federal bureau of investigation for a federal criminal records check. The department of gaming is authorized to receive criminal records information from the department of public safety and from the federal bureau of investigation for the purpose of evaluating the fitness of applicants for any tribal gaming license, state certification or renewal.

F. Hearings shall be conducted pursuant to title 41, chapter 6, article 10. Except as provided in section 41-1092.08, subsection H, any party who is aggrieved by a final order or decision of the director of the department of gaming may seek judicial review pursuant to title 12, chapter 7, article 6.

G. The director of the department of gaming may issue subpoenas for the attendance of witnesses and the production of books, records and documents necessary for the enforcement of this article and the tribal-state compacts. These subpoenas shall be served and enforced in a manner consistent with title 41, chapter 6, article 10.

H. The director of the department of gaming may establish the position of deputy director of the department of gaming. The deputy director of the department of gaming position is exempt from title 41, chapter 4, articles 5 and 6. Persons holding the position of deputy director of the department of gaming are eligible to receive compensation pursuant to section 38-611.

I. The director of the department of gaming may enter into a contract or agreement with any public agency for any joint and cooperative action as provided in title 11, chapter 7, article 3.

J. The department of gaming may investigate violations of section 13-3306 that occur on non-Indian lands in this state and may cooperate with appropriate law enforcement authorities and prosecutorial agencies in the investigation and prosecution of these violations.

§ 5-602.01 Rules; civil penalties

A. The department of gaming may adopt rules to carry out the purposes of this chapter. The rules shall be consistent with the provisions contained in tribal-state compacts.

B. The department may impose a civil penalty not to exceed five thousand dollars per day and not to exceed a total of twenty-five thousand dollars against a certificate holder in lieu of or in addition to revocation of the certificate. The department may impose a civil penalty against a certificate holder in an amount not to exceed five hundred dollars for a violation of any rule adopted pursuant to this section if the violation does not constitute grounds for revocation of the certificate. In determining the amount of the civil penalty, the department shall consider the seriousness of the violation and the financial impact that the penalty will have on the certificate holder. All civil penalties collected by the department pursuant to this section shall be transferred to the state treasurer for deposit in the state general fund.

C. At the director's request, the attorney general shall file an action in superior court to recover civil penalties imposed pursuant to this section.

§ 5-603 Department of gaming investigators; peace officer status

An investigator who is regularly employed and paid by the department of gaming and who is certified by the Arizona peace officer standards and training board has the authority of a peace officer.

§ 5-604 Department of gaming; director; qualifications; term; conflict of interest; grounds for dismissal

A. The department of gaming is established.

B. The governor shall appoint a director of the department of gaming pursuant to section 38-211. The director serves at the pleasure of the governor. To be eligible for appointment as director, a person shall not have a financial interest in a gambling operation or in the gambling industry in this state during the term of appointment. The governor may appoint an acting director if there is a vacancy in the office.

C. The director and all other employees of the department are subject to title 41, chapter 4, article 4. The director is eligible to receive compensation pursuant to section 38-611.

D. The employment or financial interest of any relative to the first degree of consanguinity or affinity to the director or any other employee of the department in the gambling industry in this state is grounds for the dismissal of the director or employee of the department.

§ 5-605 Tribal-state compacts; 2021 compact trust fund; annual report; definition

A. The 2021 compact trust fund is established for the exclusive purposes of mitigating impacts to Indian tribes from gaming authorized by the 2021 gaming compact amendment and providing economic benefits to beneficiary tribes, including those with an effective gaming compact that includes the 2021 amendments and do not engage in gaming. The trust fund consists of contributions from Indian tribes designated in the 2021 gaming compact amendments. The trust fund shall not include tribal contributions made pursuant to section 5-601.02, subsection H.

B. The department of gaming shall administer the 2021 compact trust fund as trustee in accordance with the terms of section 12.1 of the 2021 gaming compact amendment. The state treasurer shall accept, separately account for and hold in trust any monies deposited in the state treasury, which are considered to be trust monies as defined by section 35-310 and which shall not be commingled with any other monies in the state treasury except for investment purposes. On notice from the director of the department of gaming, the state treasurer shall invest and divest any trust fund monies deposited in the state treasury as provided by sections 35-313 and 35-314.03, and monies earned from the investment shall be credited to the trust fund.

C. The beneficiaries of the trust fund are federally recognized Indian tribes with a 2021 gaming compact amendment that are eligible to receive payments from the trust fund according to the terms of the 2021 gaming compact amendment.

D. Monies in the trust fund shall be disbursed exclusively for the purposes prescribed in this article and in accordance with the 2021 gaming compact amendment. Surplus monies, including any unexpended and unencumbered balance at the end of the fiscal year, shall be carried forward to the following year and shall not revert or be transferred to any other fund, including the state general fund. Monies in the trust fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

E. On or before September 30 of each year, the department of gaming shall issue a report to the governor, the president of the senate, the speaker of the house of representatives and each tribe that has executed a 2021 gaming compact amendment that discloses all monies deposited in and disbursed from the trust fund during the prior fiscal year.

F. For the purposes of this section, "2021 gaming compact amendment" means a tribal-state gaming compact amendment that becomes effective after January 1, 2021.

Chapter 7 Skiing

Article 1 General Provisions

§ 5-701 Definitions

In this chapter, unless the context otherwise requires:

"Base area lift" means a passenger tramway that skiers ordinarily use without first using another passenger tramway.
"Chair lift" means a type of transportation on which passengers are carried on chairs suspended in the air and attached to a moving cable, chain or link belt supported by trestles or towers with one or more spans.
"Competitor" means a skier actually engaged in competition or in practice for competition with the permission of a ski area operator on any slope or trail or portion of any slope or trail designated for competition by the ski area operator.
"Conditions of ordinary visibility" means daylight and, if applicable, nighttime in nonprecipitating weather.
"Inherent dangers and risks of skiing" means those dangers or conditions that are an integral part of the sport of skiing, excluding acts of ordinary or gross negligence, or reckless or intentional conduct on the part of the ski area operator. Inherent dangers and risks of skiing include:

(a) Changing weather conditions.

(b) Existing and changing snow surface conditions, such as ice, hard pack, powder, packed powder, wind pack, corn, crust, slush, cut-up and machine-made snow.

(c) Surface or subsurface conditions, whether marked or unmarked, such as bare spots, forest growth, rocks, stumps, streambeds, trees or other natural objects.

(d) Impacts with lift towers, signs, posts, fences or other enclosures, hydrants, water pipes or other man-made structures and their components, whether marked or unmarked.

(e) Variations in steepness or terrain, including roads, catwalks and other terrain modifications, whether natural or as a result of slope design, snowmaking or grooming operations.

(f) Collisions with other skiers.

(g) The failure of skiers to ski within their own abilities.

"Passenger tramway" means a device used to transport passengers uphill on skis or in cars on tracks or suspended in the air by the use of steel cables, chains, belts or ropes, usually supported by trestles or towers with one or more spans.
"Rope tow" means a mode of transportation that pulls a skier riding on skis as the skier grasps the rope with the skier's hands.
"Ski area" means all ski slopes and trails or other places within the boundary of a ski area operator's property, administered as a single enterprise in this state.
"Ski area operator" means any corporation, company, partnership, firm, association or other commercial entity, including a natural person, and its employees, agents, members, successors in interest, affiliates and assigns that have responsibility for the operations of a ski area.
"Ski slopes and trails" means those areas designated by a ski area operator for use by skiers for any of the purposes listed in paragraph 11.
"Skier" means a person using a ski area for the purpose of skiing or sliding downhill on snow or ice on skis, a toboggan, sled, tube, skibob or snowboard or any other device, using any of the facilities of a ski area, including ski slopes and trails, or observing any activities in a ski area as a sightseer or visitor.
"Surface lift" means a mode of transportation that pulls skiers riding on skis by means of attachment to an overhead cable supported by trestles or towers. Surface lift includes a J-bar, a T-bar, a platter pull and any similar device.

§ 5-702 Posting passenger information signs

A. A ski area operator shall maintain a sign system with concise, simple and pertinent information for the protection and instruction of people on a passenger tramway.

B. A ski area operator shall prominently display signs that are readable in conditions of ordinary visibility and, if applicable, that are adequately lighted for nighttime passengers, as follows:

At or near the loading point of each passenger tramway, rope tow and surface lift advising that any person not familiar with the operation of the tramway, rope tow or surface lift should ask ski area personnel for assistance and instruction.
In a conspicuous place at the loading area of each two-car or multicar passenger tramway that states the maximum capacity in pounds of the car and the maximum number of persons allowed in the car.
In the interior of each car in a two-car or multicar passenger tramway that states the maximum capacity in pounds of the car and the maximum number of persons allowed in the car and that gives instructions for procedures in the case of emergencies.
At all chair lifts stating the following:

(a) "Check for loose clothing and equipment", which shall be posted ahead of the "prepare to unload" sign described in subdivision (c) of this paragraph.

(b) "Keep ski tips up" or "keep tips up", which shall be posted ahead of any point where skis may come in contact with a platform or the snow surface while a skier is seated in the chair lift.

(d) "Remove pole straps from wrists", which shall be posted where applicable.

(e) "Stop gate", which shall be posted where applicable.

(f) "Unload here", which shall be posted at the point designated for unloading.

At all rope tows and surface lifts stating the following:

(a) "Check for loose clothing and equipment", which shall be posted ahead of the "prepare to unload" sign described in subdivision (b) of this paragraph.

(b) "Prepare to unload", which shall be posted at least fifty feet ahead of each unloading area.

(d) "Safety gate", "stay in tracks" or "stop gate", which shall be posted where applicable.

(e) "Unload here", which shall be posted at the point designated for unloading or where applicable.

C. At the operator's discretion a ski area operator may post additional signs not required by subsection B.

D. Before opening a passenger tramway to the public each day, a ski area operator shall inspect the tramway for the presence of the signs required by subsection B or that are posted pursuant to subsection C.

E. The extent of the responsibility of a ski area operator under this section is to post and maintain the signs required by subsection B and to maintain any signs posted pursuant to subsection C. It is a rebuttable presumption that all passengers and skiers saw and understood the signs if evidence exists that the signs required by subsection B or that are posted pursuant to subsection C were posted and the signs were maintained.

§ 5-703 Posting ski information signs

A. A ski area operator shall maintain a sign and marking system with concise, simple and pertinent information for the protection and instruction of skiers. The signs required by this section shall be readable in conditions of ordinary visibility and, if applicable, that are adequately lighted for nighttime skiers.

B. A ski area operator shall place a sign that depicts and explains signs and symbols that skiers may encounter in the ski area in a position where all skiers who are proceeding to the uphill loading point of each base area lift will see the sign. The sign shall depict and explain at least the following signs and symbols:

A green circle and the word "easier", which designates the least difficult ski slopes and trails of the ski area.
A blue square and the words "more difficult", which designates the ski slopes and trails of the ski area that have a degree of difficulty between the least difficult and most difficult slopes and trails.
A black diamond and the words "most difficult", which designates the most difficult ski slopes and trails of the ski area.
A figure in the shape of a skier with a band running diagonally from corner to corner of the sign with the word "closed" printed beneath the emblem.

C. If applicable, a ski area operator shall place a sign at or near the loading point of a passenger tramway that states one of the following:

If the tramway transports passengers only to the more difficult or most difficult ski slopes and trails in the ski area, the sign shall state: "WARNING: This lift services 'more difficult' (blue square emblem) and 'most difficult' (black diamond emblem) slopes and trails only.".
If the tramway transports passengers only to the most difficult ski slopes and trails in the ski area, the sign shall state: "WARNING: This lift services 'most difficult' (black diamond emblem) slopes and trails only.".

D. If a ski area operator closes a ski slope or trail or a portion of a ski slope or trail to the public, the operator shall place a sign notifying skiers that the slope or trail or portion of the slope or trail is closed at each identified entrance to the slope or trail or closed portion of the slope or trail. In lieu of placing a sign at each identified entrance, the ski area operator may close off the entrance with rope or fences.

E. A ski area operator shall place a sign at or near the beginning of each ski slope or trail that contains the appropriate symbol of the relative degree of difficulty of that slope or trail as set forth in subsection B. The requirements of this subsection do not apply to a ski slope or trail that is designated "easier" if a skier may substantially view the slope or trail in its entirety before beginning to ski the slope or trail.

F. A ski area operator shall mark the ski area boundaries that are designated on the trail map.

G. A ski area operator shall mark all ski lift tickets and season passes that the operator sells or makes available to skiers with the following in clearly readable print:

Warning: Under Arizona law, a skier accepts the risk of any injury to person or property resulting from any of the inherent dangers and risks of skiing, including changing weather conditions, existing and changing snow surface conditions, surface or subsurface conditions, whether marked or unmarked, collisions with natural or man-made objects, whether marked or unmarked and the failure of skiers to ski within their own abilities.

H. A ski area operator shall post and maintain signs where ski lift tickets and ski school lessons are sold and in a location that is clearly visible to skiers who are proceeding to the uphill loading point of each base area lift that state the following in clearly readable print:

Warning--important: Under Arizona law, a skier accepts the risk of any injury to person or property resulting from any of the inherent dangers and risks of skiing. Some of these risks are listed on your lift ticket or season pass. Please review your ticket or pass and ask the ski area personnel for more information.

§ 5-704 Additional duties of ski area operators

A. If maintenance equipment is being used to maintain or groom any ski slope or trail that a ski area operator has not designated as closed pursuant to section 5-703, subsection D, the ski area operator shall place a conspicuous notice at or near the beginning of the slope or trail and at any entrance points to the slope or trail that notifies skiers about the presence of the equipment.

B. All snowmobiles operated on the ski slopes or trails of a ski area shall be equipped with at least the following:

One lighted head lamp.
One lighted red tail lamp.
A red or orange flag that is at least forty square inches in size and that is mounted at least five feet above the bottom of the tracks.

C. A ski area operator has no duties to any skier who skis beyond the designated boundaries of the ski area.

§ 5-705 Duties of skiers in any action against the ski area operator

In any civil action brought by a skier against a ski area operator, the duties of a skier shall be as follows:

At all times a skier has the sole responsibility to know the range of the skier's own ability to negotiate a ski slope or trail and to ski within the limits of that ability. A skier expressly accepts the total risk of and all legal responsibility for injury to person or property resulting from any of the inherent dangers and risks of skiing.
Before using a chair lift, passenger tramway, rope tow or surface lift, a skier shall have the knowledge and ability to safely load, ride and unload from the device.
A skier shall maintain control of the skier's speed and course at all times when skiing and shall maintain a proper lookout to enable the skier to avoid collisions with other skiers and with natural and man-made objects, whether marked or unmarked.
A skier shall avoid snow maintenance and grooming equipment, vehicles, lift towers, signs and other equipment located on ski slopes and trails.
A skier shall heed all posted information, signs and other warnings and shall refrain from acting in a manner that may cause or contribute to the injury of the skier or other persons or property. A skier is presumed to have seen and understood all signs and notices posted pursuant to sections 5-702, 5-703 and 5-704. Under conditions of decreased visibility, the duty rests on the skier to locate and ascertain the meaning of all the signs and notices.
A skier shall only use skis, snowboards and other equipment that have been equipped with a functional strap or other device designed to reduce the risk of runaway equipment.
A skier shall not ski on a ski slope or trail or a portion of a ski slope or trail that a ski area operator has designated as closed pursuant to section 5-703, subsection D.
A skier shall not begin to ski from a stationary position or enter a ski slope or trail from the side unless the skier is able to avoid colliding with moving skiers already on the ski slope or trail.
A skier shall not cross the uphill track or place any object in the uphill track of a rope tow or surface lift except at locations that have been designated for crossing by a ski area operator.
A skier shall not move uphill on any passenger tramway or use any ski slope or trail while the skier's ability to do so is impaired by the consumption of alcohol or by the use of any narcotic or other drug.
A skier involved in a collision with another skier that results in an injury shall not leave the vicinity of the collision before giving the skier's name and current address to an employee of the ski area operator or a member of a paid or voluntary ski patrol. This paragraph does not prohibit a skier from leaving the scene of a collision to secure first aid for a person who is injured in the collision. If a skier leaves the scene of a collision to secure first aid, the skier shall leave the skier's name and current address as required by this paragraph after securing the first aid.
A skier shall not knowingly enter the public or private lands of an adjoining ski area if the owner of that land has closed that land to skiers and the landowner or the ski area operator has designated the adjoining land as closed.

§ 5-706 Release of liability

In any action brought by a skier against a ski area operator, if the ski area operator proves that the skier signed a valid release, the ski area operator's liability shall be determined by the terms of the release.

§ 5-707 Competition

A. Before the beginning of any competition, a ski area operator shall allow any competitor a reasonable visual inspection of the course or area where the competition is to be held.

B. A competitor accepts the risk of all course conditions, including weather and snow conditions, course construction or layout and obstacles that a visual inspection immediately before the run could have revealed.

C. In any action brought by a competitor against any ski area operator, if the ski area operator proves that the participant in the competition signed a valid release, the ski area operator's liability shall be determined by the terms of the release.

Chapter 8 Tourism and Sports Authority

Article 1 General Provisions

§ 5-801 Definitions

In this chapter, unless the context otherwise requires:

"Authority" means the tourism and sports authority.
"Board" means the board of directors of the authority.

3. "Indian tribe" means any organized Indian nation, tribe, band or community that is recognized as an Indian tribe by the United States department of the interior.

"Multipurpose facility" means any facility that is suitable to be used to accommodate professional football franchises, major college football bowl sponsors, other sporting events and entertainment, cultural, civic, meeting, trade show or convention events or activities and may include a stadium, on-site infrastructure, parking garages and lots and related commercial uses within the facility.

5. "Site host" means any of the following entities that owns all or part of the multipurpose facility site at the time the site is provided to the authority pursuant to section 5-807:

(a) This state or any agency of this state.

(b) The county in which the authority is located.

(d) Any Indian tribe if all or part of the tribe's reservation is located in that county.

§ 5-802 Formation of authority

A. The tourism and sports authority is established. The boundaries of the authority are the boundaries of any county that has a population of more than two million persons.

B. The authority is a corporate and political body and, except as otherwise limited, modified or provided by this chapter, has all of the rights, powers and immunities of municipal corporations, including the power of eminent domain.

C. The board of directors and the authority do not have the power to levy or otherwise impose any tax or assessment, other than charges for the use of facilities owned by the authority. The qualified electors residing in the authority may levy a tax or surcharge for the fiscal needs of the authority as provided by this chapter, but the board of directors has no independent authority to impose or collect a tax or assessment. Subject to that limitation, the authority is considered to be a tax levying public improvement district for the purposes of article XIII, section 7, Constitution of Arizona.

D. The authority is regarded as performing a governmental function in carrying out the purposes of this chapter. The property acquired or constructed by the authority, the activities of the authority in maintaining and caring for the property and the monies derived by the authority from operating the property are exempt from state and local income and property taxation.

§ 5-803 Board of directors

A. The authority is governed by a board of directors consisting of the following members who must reside in the county in which the authority is established:

Five members appointed by the governor pursuant to section 38-211. No more than three of these members may be from the same political party. Of these members, the governor shall appoint:

(a) One member from the tourism industry in the authority.

(b) One member from the hotel and motel industry located in the authority.

(d) One member representing a major league baseball spring training organization in the authority.

Two members who are appointed by the president of the senate and who are not of the same political party.
Two members who are appointed by the speaker of the house of representatives and who are not of the same political party.

B. No member of the board may simultaneously hold any state or local elective public office. The governor, president of the senate and speaker of the house of representatives shall make appointments to produce a general geographically diverse representation of areas in the authority. Members of the board shall be appointed for terms of five years. A member may be reappointed for one full subsequent term.

C. Members of the board are eligible for compensation as provided by section 38-611.

§ 5-804 Administrative powers and duties

A. The board of directors, on behalf of the authority, may:

Adopt and use a corporate seal.
Sue and be sued.
Enter into contracts, including intergovernmental agreements under title 11, chapter 7, article 3, as necessary to carry out the purposes and requirements of this chapter.

4. Enter into an intergovernmental agreement under title 11, chapter 7, article 3 with the Arizona exposition and state fair board for the joint use of properties and facilities, sharing administration, personnel and resources and other matters that are beneficial to the purposes of the multipurpose facility and the state fair.

Adopt administrative rules as necessary to administer and operate the authority and any property under its jurisdiction.
Acquire by any lawful means and operate, maintain, encumber and dispose of real and personal property and interests in property.
Retain legal counsel and other consultants as necessary to carry out the purposes of the authority.
Enter into contracts with a professional football league for its championship game or with a nonprofit community based organization that operates or administers an intercollegiate national championship game that provide for the payment to the league or organization of transaction privilege tax revenues derived pursuant to section 42-5073, subsection G, paragraph 1 from sales of admissions to these championship games if the authority has fully paid the current year's required principal and interest payments on any outstanding authority bonds for which these revenues were pledged pursuant to article 3 of this chapter.
Enter into contracts with a nonprofit community based organization that sponsors an intercollegiate national championship game that provide for the payment to the organization of a ticket surcharge or facility user fee associated with parking if the authority has fully paid the current year's required principal and interest payments on any outstanding authority bonds for which these revenues were pledged pursuant to article 3 of this chapter.

B. The board of directors shall:

Appoint from among its members a chairman, a secretary and such other officers as may be necessary to conduct its business.
Employ an executive director and prescribe the terms and conditions of employment.
Keep and maintain a complete and accurate record of all of its proceedings. The board is a public body for purposes of title 38, chapter 3, article 3.1 and title 39, chapter 1.
Provide for the use, maintenance and operation of the properties and interests owned or controlled by the authority.

5. On or before September 12, 2002, approve a site for the construction of the multipurpose facility proposed at any time before that date by site hosts.

§ 5-805 Executive director; duties

A. The executive director is responsible for managing, administering and supervising the activities of the authority.

B. The executive director shall negotiate, make, execute, acknowledge and perform contracts and other agreements in the interest of the authority or to carry out or accomplish the purposes of this chapter, including construction contracts and agreements with users of the multipurpose facility, all of which are subject to approval by the board.

C. The executive director shall:

Employ a treasurer to serve as fiscal agent to deposit, hold, invest and disburse the authority’s monies.
Employ administrative and clerical employees and prescribe the terms and conditions of their employment as necessary to carry out the purposes of the authority. Employees of the authority are considered to be public employees for purposes of title 38.
Recommend the employment of consultants by the board, including outside counsel and a professional facility management company.
Direct the activities of outside consultants.

§ 5-806 Gift ban; principals and lobbyists; exemptions

A. A principal or lobbyist or any other person acting on behalf of a principal or lobbyist shall not give a gift to any board member or employee of the board and a board member or employee of the board shall not accept a gift from a principal or lobbyist.

B. For the purpose of this section, a gift does not include any of the following:

Salary, compensation or employer reimbursed expenses lawfully paid to a board member or employee.
A family gift.
An award or prize that is given to competitors in a contest or event that is open to the public including a random drawing.
Any discount or other benefit that is offered to a board member or employee on the same conditions as to the public, to a class consisting of all board members and employees or to a group or class in which membership is unrelated to being a board member or employee.
An educational event or speaking engagement.
Expenses relating to a special event or function to which all members of the board are invited and that are properly reported.
Flowers.
Food and beverage.
Informational material, including a book, calendar, pamphlet, periodical, report or video.
An item that is not used and that is returned within fifteen days of receipt to the donor or that is delivered within fifteen days of receipt to a charitable organization and that is not claimed as a charitable contribution for state or federal income tax purposes.
An item that is given to a board member or employee if the board member or employee gives an item of approximately the same value to the giver of the item at the same time that the item is given or on a similar occasion as the one that prompted the original item to be given.
An item of a personal nature that was customarily received by an individual from the donor before the individual became a board member or employee.
An item that is given to the general public at an event.
An item of nominal value such as a greeting card, baseball cap, t-shirt, mug or pen.
Nonrecreational travel or lodging, or both.
Personal hospitality.
A plaque or other form of recognition similar to a plaque to a board member or employee to signify the honorary recognition of a service or other notable accomplishment.
Professional or consulting services rendered on matters directly related to holding a position on the board or employee of the board and that are not rendered to obtain a benefit for any registered principal, public body, lobbyist, designated public lobbyist or authorized public lobbyist or the clients of a principal or lobbyist.

§ 5-807 Constructing and operating multipurpose facility

A. The authority shall construct, finance, furnish, maintain, improve, operate, market and promote the use of a multipurpose facility and do all things necessary or convenient to accomplish those purposes. One or more site hosts shall provide the land, infrastructure and parking facilities associated with the multipurpose facility. The authority shall own the multipurpose facility, subject only to liens and other security interests of record. The authority may own or lease the land on which the multipurpose facility is located.

B. The executive director shall:

Recommend to the board for its approval a contractor and architect, unless the architect will be employed directly by the contractor.
Work with the users, contractor and architect to prepare a design for the multipurpose facility and submit the design to the board for its approval.
Prepare the construction budget and schedule for the multipurpose facility and submit them to the board for its approval.
Prepare the annual operating budget for the multipurpose facility and submit it to the board for its approval.
Negotiate use agreements with parties that will use the multipurpose facility on a regular basis, including parties that will make a contribution toward the construction of the facility, and submit the agreements to the board for its final action. Any such agreement that grants naming or other advertising rights must include a provision requiring the multipurpose facility name and other advertising to comply with community decency standards.
Negotiate agreements with the contractor and architect, unless the architect will be employed directly by the contractor, and submit the agreements to the board for its final action.
Review construction change order requests and submit them to the board with recommendations for final action.
Arrange for capital and operating financing, as needed, and submit the transactions to the board for its final action.
Analyze and recommend to the board potential sites for the multipurpose facility proposed at any time before September 13, 2002 by a site host.
Negotiate agreements with site hosts, including intergovernmental agreements pursuant to title 11, chapter 7, article 3 if a site host is a public agency, as defined in section 11-951, concerning the land, infrastructure and parking to be provided by the site host and submit the agreements to the board for its final action. All agreements must:

(a) Provide that the site host shall indemnify and hold harmless the authority and this state from any liability to the extent resulting from the negligent or intentional acts or omissions of the site host, its representatives and agents or employees resulting from any access ways provided by the site host and reasonably used by the public for ingress and egress to the land, infrastructure and parking facilities provided by the site host for use in connection with the multipurpose facility.

(b) Require any site host to maintain insurance or an adequate self-insurance plan for any liability of the site host, with a waiver of sovereign immunity if necessary.

In consultation with the users of the multipurpose facility, negotiate a contract with a management firm to operate, promote and market the multipurpose facility and submit the contract to the board for its final action.
In consultation with the users of the multipurpose facility, negotiate contracts with concessionaires and other providers for food, beverage and other services at the multipurpose facility and submit the contracts to the board for its final action.
Take other actions that are necessary to ensure that the multipurpose facility is constructed according to the schedule and budget approved by the board.

C. Title 34 applies to the authority, except that regardless of the funding source for design and construction of facilities and structures and notwithstanding title 41, chapter 23, the authority may establish alternative systems and procedures, including the use of the design-build method of construction and the use of qualifications-based selection of contractors with experience in stadium design or construction, by either direct selection or by public competition, to expedite the design and construction of any of its facilities or structures or any facilities or structures leased to it or used by it pursuant to an intergovernmental agreement. For purposes of this subsection:

"Design-build" means a process of entering into and managing a contract between the authority and another party in which the other party agrees to both design and build any structure, facility or other items specified in the contract.
"Qualifications-based selection" means a process of entering into and managing a contract between the authority and another party in which the other party is selected by the authority on the basis of the party's qualifications and experience in designing or constructing facilities, structures or other items similar to those the authority is authorized to construct or lease.

D. The plans and specifications for the multipurpose facility are subject to review and approval by the board. The board shall inspect and approve construction of the facility, if it conforms to the plans and specifications and applicable engineering standards. Throughout the life of the multipurpose facility, the board is responsible and shall monitor and take action as necessary to ensure the appropriate maintenance and operation of the facility.

E. To assure that a site host has the financial capability to perform its obligations under any agreements with the authority, before entering into an agreement with any site host, the authority shall either:

1. Cause a review of the financial books and records of the site host by an independent certified public accountant selected by the authority who shall prepare for the authority, and attest to, a report setting forth the results of that review.

2. Provide in the agreement with the site host another method for assuring the payment of the obligations of the site host. The alternative methods for assuring payment may include:

(a) Deposits in a construction trust account in an amount equal to the site host's estimated obligations to the authority.

(b) Posting a bond in an amount equal to the site host's estimated obligations to the authority.

(c) Providing the authority with a letter of credit in an amount equal to the site host's estimated obligations to the authority.

(d) Other similar financial assurance.

F. The authority shall provide in any agreements between the authority and a site host that is an Indian tribe:

A waiver of sovereign immunity to allow the enforcement by the authority of the agreements entered into between the authority and the Indian tribe.
A consent to the jurisdiction of state and federal courts by the Indian tribe.
A waiver of the right to require the authority to exhaust tribal remedies before bringing an action in state or federal courts.
That state and federal law will govern the interpretation of any agreements entered into between the authority and the Indian tribe.
An agreement that the Indian tribe will levy, collect and pay to the authority a charge or other imposition equivalent to the taxes provided in section 5-840 for any hotel located within a development area to be defined by agreement between the authority and the Indian tribe around the multipurpose facility.

6. An agreement that the Indian tribe will provide for an annual disclosure of gross proceeds of sales or gross income as determined for purposes of a tax base under the transient lodging transaction privilege tax classification under section 42-5070 and contributions made to the authority equal to the taxes as provided by section 5-840.

§ 5-808 Major league baseball spring training facilities; local financial participation

A. From monies in the cactus league promotion account established by section 5-837, the authority may:

Acquire land or construct, finance, furnish, improve, market or promote the use of existing or proposed major league baseball spring training facilities that are located in the authority and other structures, utilities, roads, parking areas or buildings necessary for full use of the training facilities for sports and other purposes.
Do all things necessary or convenient to accomplish those purposes.

B. Monies in the cactus league promotion account:

May be used for the purposes of:

(a) Attracting major league baseball spring training operations to locations in the authority.

(b) Retaining major league baseball spring training operations in their current locations in the authority.

Shall not be used to facilitate the relocation of a major league baseball spring training operation from one location in this state to another location in this state unless either:

(a) Another major league baseball team has made contractual commitments to assure the relocation of its spring training operations from a location outside this state to the vacated facility.

(b) The relocation is to a facility located in the authority from another facility in this state that was shared with another major league baseball team.

C. The board shall require that any project undertaken pursuant to this section include financial participation from the county or municipality in which the project is located, from a private party or from any combination of these entities that equals or exceeds one-half of the amount to be spent or distributed by the authority. Capital improvement monies spent by a county, municipality or private party for a purpose authorized by this section may be considered to be financial participation with respect to any project the authority may undertake.

D. For purposes of financing, designing or constructing facilities or structures, the authority is not the agent of any other party participating in the funding of the facility or structure.

E. Before undertaking the planning or construction of the first new facility under this section, the board may consider the costs of anticipated required renovations of existing facilities and shall consider such costs for subsequent new facilities.

§ 5-809 Community youth and amateur sports and recreational facilities; local financial participation

A. From monies in the youth and amateur sports facilities account established by section 5-838, the authority may:

Acquire land or construct, finance, furnish, maintain, improve, operate, market or promote the use of community youth and amateur sports facilities, recreational facilities and other community facilities or programs that are located in the authority.
Do all things necessary or convenient to accomplish those purposes.

B. The board shall require that any project undertaken pursuant to this section include financial participation from the county, municipality or school district in which the project is located, from any other party or from any combination of these entities that equals or exceeds one-half of the amount to be spent or distributed by the authority. Capital improvement monies spent by a county, municipality, school district or other party for a purpose authorized by this section may be considered to be financial participation with respect to any project the authority may undertake.

C. For purposes of financing, designing, constructing or operating facilities or structures, the authority is not the agent of any other party participating in the funding of the facility or structure.

D. In evaluating projects under this section, the board shall give priority to youth recreational facilities that are adjacent, in proximity or of benefit to public schools.

§ 5-810 Regulating sale, use and consumption of alcoholic beverages

Subject to the requirements of title 4, the board may permit and regulate the sale, use and consumption of alcoholic beverages at events held on property acquired, leased or subleased under this chapter.

§ 5-811 Conflicts of interest; violation; classification

A. The directors, officers and employees of the authority are subject to title 38, chapter 3, article 8 relating to conflicts of interest.

B. A director, officer or employee of the authority shall not have any direct or indirect financial interest in any property owned, purchased or constructed by the authority.

C. A person who violates this section is guilty of a class 1 misdemeanor.

§ 5-812 Performance audit

A. Beginning not later than 2004 and at least every fifth year thereafter, the auditor general shall conduct a performance audit, as defined in section 41-1278, of the authority.

B. On or before November 30 of the respective year the auditor general shall issue a public report of the performance audit including findings and specific recommendations for statutory and administrative changes to improve the operation of the authority. The auditor general shall submit copies of the report to the governor, president of the senate, speaker of the house of representatives, secretary of state and the director of the Arizona state library, archives and public records.

§ 5-813 Disadvantaged business enterprise participation goals; contractor employment requirements

A. Notwithstanding any other law, the authority shall:

Establish disadvantaged business enterprise participation goals for the design, engineering and construction of the multipurpose facility under section 5-807 based on the availability of ready, willing and able disadvantaged business enterprises compared to the general population of consultants, prime contractors and subcontractors, suppliers and service providers.
Establish procedures for meeting these goals, including compiling a registry of disadvantaged business enterprises that are certified by a local, county or state agency.
Require monthly reports by the project coordinator regarding compliance with the goals.
Monitor compliance with this section through intergovernmental agreements with a state or county disadvantaged business enterprise program monitor or a contract with an independent organization that is experienced in monitoring disadvantaged business enterprise programs.
Impose sanctions if, based on recommendations of the monitoring organization, the authority determines that a good faith effort was not made to comply with the established procedures.

B. The authority shall provide that any contract with respect to the design, engineering and construction of the multipurpose facility under section 5-807 shall require each prime contractor and major subcontractors to provide health insurance to the contractor's employees and dependents of the contractor's employees, except for those employees who work less than one hundred twenty days in a calendar year.

C. The executive director, the project coordinator and all persons who enter into contracts, agreements or understandings related to the construction and operation of the multipurpose facility shall comply with the procedures established pursuant to this section.

§ 5-814 Monthly report; appearance before joint legislative budget committee

A. Within three weeks after the end of each calendar month the authority shall prepare a report signed by the executive director of the authority and transmit the report to the governor, the legislature, as provided by section 41-1178, and the joint legislative budget committee. The report shall include a progress report of the activities of the authority during the previous month.

B. At the request of the chairman of the joint legislative budget committee, the executive director shall appear before the joint legislative budget committee annually to report on the activities and financial performance of the authority during the previous year.

§ 5-815 Intercollegiate football national championship and playoff games

A. The authority shall enter into a special use agreement for the sole purpose of hosting at the multipurpose facility an intercollegiate football national championship game or playoff games. The authority may only contract for this purpose with a nonprofit community based organization that has extensive experience in operating or managing intercollegiate football bowl games in this state.

B. A national championship game or playoff game, hosted pursuant to subsection A, shall not be considered an event conducted by the authority and shall be in addition to any other annual intercollegiate football game hosted at the multipurpose facility. Any special use agreement shall provide that:

The manager and operator of an intercollegiate football national championship game or playoff game:

(a) Is not required to pay to the authority:

(i) Any facility user fees, including any fees on ticket sales, discount sales or complimentary tickets related to the event.

(ii) Game day expenses for the 2007 national championship game in excess of two hundred seventy-five thousand dollars, including any expenses associated with providing at least seventy-three thousand seats in the multipurpose facility.

(b) Has the exclusive rights to the marketing and pricing of all seats, club seats and suites at the event, broadcasting the event and the revenues for concession sales and temporary advertising related to the event.

(c) Has the right to use all communication systems and all other services and amenities located in the facility under the authority's control without the assessment of a fee, a charge, rent or a share of the revenue.

The scheduling of an intercollegiate football national championship game and its related activities and preparations for up to seventy-two hours before kickoff of the game has exclusive priority and use over any other event hosted by the authority at the facility except for a home playoff or wild card playoff game of a local professional football franchise. If a home playoff or wild card playoff game of a local professional football franchise is scheduled at the facility at the same time as the intercollegiate football national championship game or playoff game, the parties shall agree to make appropriate adjustments for the timing necessary to host both events at the facility.

Article 2 Financial Provisions

§ 5-831 Annual budget

A. Beginning in 2001, on or before June 30 of each year the board shall hold a public hearing to adopt a budget for the following fiscal year that includes:

Receipts during the past fiscal year.
Expenditures during the past fiscal year.
Estimates of amounts necessary for expenses during the following fiscal year including amounts proposed for:

(a) Costs of planning, constructing, financing, maintaining, operating and managing a multipurpose facility.

(b) Promotional and marketing expenses of the authority.

Anticipated revenue to the authority from each source in the following fiscal year.
A complete asset and liability statement.
A statement of profit or loss from operations.
Cash on hand as of the date the budget is adopted and the anticipated balance at the end of the current fiscal year.
An itemized statement of commitments, reserves and anticipated obligations for the following fiscal year.

B. The board may amend the budget on a finding of good cause.

§ 5-832 General fund; investments

A. The authority shall maintain a general fund, divided into a construction account, a facility revenue clearing account and a tourism revenue clearing account. The authority may establish additional accounts and subaccounts as necessary and convenient. All revenues and monies received by the authority shall initially be deposited in accounts and subaccounts in the general fund as provided by law.

B. The authority may invest any unexpended monies in the fund as provided in title 35, chapter 2. Interest and other income from investments of monies in any account shall be credited to that account except as otherwise provided by law.

C. The authority's investments must mature when the fund assets will be required for the purposes of this chapter. If the liquid assets in the fund become insufficient to meet the authority's obligations, the board shall direct the treasurer to liquidate sufficient securities to meet all of the current obligations and immediately notify the auditor general of the insufficiency. The auditor general shall investigate and audit the circumstances surrounding the depletion of the fund and report the findings to the board.

§ 5-833 Construction account

A. The authority shall maintain a construction account in the general fund consisting of:

Monies received by the authority from any source for the purpose of acquiring land for and funding the cost of constructing a multipurpose facility, including financial participation for capital costs of the facility from any private or public source.
Proceeds of bonds issued by the authority pursuant to section 5-863, which shall be held in a segregated bond proceeds subaccount in the construction account.

B. The authority may spend monies in the construction account for costs of any multipurpose facility purpose, as defined in section 5-861.

§ 5-834 Facility revenue clearing account

A. The authority shall maintain a facility revenue clearing account in the general fund consisting of:

Revenues received from dedicated public funding sources as provided by law.
Payments received from leasing, subleasing or renting property owned, leased or controlled by the authority.
Revenues received by the authority from admissions, concessions and other proceeds from events held at a multipurpose facility owned or leased by the authority.
Gifts, grants and donations received for operating purposes from any public or private source.
Proceeds from the sale of any of the authority’s property.
Financial participation for operating costs received from the county or municipality in which a multipurpose facility owned or leased by the authority is located.

B. On the second Tuesday of each month, the treasurer of the authority shall distribute all monies in the account in the following order of priority:

To the debt service account established by section 5-865, an amount equal to one-twelfth of the annual debt service on bonds and other debt obligations of the authority that are secured in whole or in part by and payable from revenues or monies deposited to the facility revenue clearing account, net of deposits to the debt service account pursuant to section 5-835, subsection B, paragraph 1.
To the operating account of the authority established by section 5-836, all remaining monies in the facility revenue clearing account.

§ 5-835 Tourism revenue clearing account

A. The authority shall maintain a tourism revenue clearing account within the general fund consisting of monies transmitted to the authority by the state treasurer pursuant to sections 5-839 and 5-840. On the second Tuesday of each month, the treasurer of the authority shall distribute all monies in the account as provided by this section.

B. For as long as the authority owes debt service on bonds or other debt obligations payable from revenues or monies deposited in the tourism revenue clearing account, the treasurer shall distribute all monies in the account in the following order of priority:

1. To the debt service account established by section 5-865, an amount equal to one-twelfth of the annual debt service on bonds and other debt obligations issued by the authority for not more than one-half of three hundred thirty-one million dollars of the capital costs associated with constructing the multipurpose facility, plus interest earned on any monies escrowed before payment to the debt service account, amortized over a thirty year repayment term and that are secured in whole or in part by and payable from revenues or monies deposited in the tourism revenue clearing account, or a lesser amount as determined by the authority.

To the tourism fund established by section 41-2306, an amount equal to one-twelfth of four million dollars over the first twelve months of distribution, increased in each subsequent twelve month period by an additional five per cent over the preceding twelve months’ distribution.
To the cactus league promotion account established by section 5-837, an amount equal to:

During the first eighty-four months $250,000 per month

During the eighty-fifth through one

hundred twentieth months $333,333 per month

During the one hundred twenty-first through

one hundred forty-fourth months $500,000 per month

During the one hundred forty-fifth through

one hundred ninety-second months $583,333 per month

During the one hundred ninety-third through

two hundred fortieth months $666,667 per month

During the two hundred forty-first through

two hundred eighty-eighth months $750,000 per month

During the two hundred eighty-ninth through

three hundred twelfth months $833,333 per month

During the three hundred thirteenth through

three hundred sixtieth months $916,667 per month

To the youth and amateur sports facilities account established by section 5-838, an amount equal to one-twelfth of one million dollars over the first twelve months of distribution, increased in each subsequent twelve month period by an additional one hundred thousand dollars over the prior twelve months' distribution.
To the operating account established by section 5-836, an amount equal to one-twelfth of the authority's adopted budget for the period for the purposes set forth in section 5-836, subsection B, paragraphs 1 and 2.
To the youth and amateur sports facilities reserve established by section 5-838, subsection B, an amount required to be distributed pursuant to paragraph 4 during the preceding fiscal year to the youth and amateur sports facilities account established by section 5-838, subsection A, less any amount on deposit in the youth and amateur sports facilities reserve.
To the operating account established by section 5-836, any monies remaining unallocated each month.

C. After all bonds and other debt obligations of the authority that are secured in whole or in part by and payable from revenues or monies deposited in the tourism revenue clearing account are redeemed or fully provided for, the treasurer of the authority shall distribute all monies remaining in the account after the distributions provided for by subsection B, paragraphs 2, 3 and 4 of this section, and after the authority’s repair and replacement requirements are funded pursuant to section 5-836, subsection C, paragraph 2, as follows:

Seventy per cent to the tourism fund established by section 41-2306.
Thirty per cent to the cactus league promotion account established by section 5-837.

§ 5-836 Operating account

A. The authority shall maintain an operating account consisting of monies transmitted to the account pursuant to sections 5-834 and 5-835.

B. The authority may spend monies in the operating account for costs incurred for any of the following purposes:

Operating, marketing, promoting, furnishing and equipping a multipurpose facility.
Paying all costs associated with the authority’s administrative duties as provided in sections 5-804 and 5-805.
Payment to the debt service account established by section 5-865 to be used for payment or early redemption of bonded indebtedness.

C. The authority shall establish in the operating account:

A reserve to meet future operating costs of the authority, including amounts that are sufficient to pay all costs associated with events held at the multipurpose facility.
A reserve for repair, replacement and removal costs associated with the multipurpose facility in an amount at least equal to twenty-five million dollars, adjusted for inflation each year after 2001.

D. This state is not liable or responsible for the operating costs of the authority, including the operating, marketing, promotion, furnishing, equipping, repair or replacement costs of any facility or project funded by the authority.

§ 5-837 Cactus league promotion account

A. The authority shall maintain a cactus league promotion account consisting of monies transmitted to the account pursuant to section 5-835.

B. The authority shall use monies in the account for purposes of section 5-808.

C. The authority may pledge all or part of the revenues and other monies received by the authority to secure bonds or other debt obligations issued by the authority for the purposes of providing monies for expenditure under this section. As nearly as practicable, the bonds issued pursuant to this subsection shall be authorized and issued in a manner consistent with article 3 of this chapter, except that the proceeds of the bonds shall be spent pursuant to this section. The pledge securing bonds issued pursuant to this section is subordinate to the pledge securing bonds or other debt obligations issued pursuant to article 3 of this chapter and, except for monies already in the cactus league promotion account, to the distribution of monies pursuant to section 5-835, subsection B, paragraph 2.

§ 5-838 Youth and amateur sports facilities account; reserve

A. The authority shall maintain a youth and amateur sports facilities account consisting of monies transmitted to the account pursuant to section 5-835.

B. The authority shall establish a youth and amateur sports facilities reserve within the account consisting of monies transmitted to the reserve pursuant to section 5-835, subsection B, paragraph 6. The authority shall transfer from the reserve to the account an amount equal to any deficiency in the monthly amount distributed to the account pursuant to section 5-835, subsection B, paragraph 3.

C. The authority shall use monies in the account for purposes of section 5-809.

§ 5-839 Car rental surcharge

A. The qualified electors residing in the authority, by majority vote at an election held in the authority, may levy and, if levied, the department of revenue shall collect a car rental surcharge beginning on the first day of the first month beginning ninety days after the election to levy the surcharge. The surcharge shall be in effect for three hundred sixty months.

B. The rate of the surcharge is:

Three and one-fourth per cent of the gross proceeds or gross income from the business or two dollars fifty cents on each lease or rental, whichever is more.
In the case of a person who leases or rents the motor vehicle as a temporary replacement motor vehicle, two dollars fifty cents on each lease or rental. For the purposes of this paragraph, "temporary replacement motor vehicle" means a vehicle loaned by a motor vehicle repair facility or dealer or rented by a person temporarily to use while the vehicle that it is replacing is not in use because of breakdown, repair, service, damage or loss.

C. The surcharge applies to the business of leasing or renting for less than one year motor vehicles for hire without a driver, that are designed to operate on the streets and highways of this state and that are primarily intended to carry not more than fourteen passengers, regardless of whether the vehicle is registered or licensed in this state.

D. The surcharge does not apply to the lease or rental of a motor vehicle:

To an automobile dealership, a repair facility, an insurance company or any other person that provides that vehicle at no charge to a person whose own motor vehicle is being repaired, adjusted or serviced.
Used in an employee vanpool arrangement for a group of at least seven but not more than fourteen passengers including a driver who meets all of the following conditions:

(a) The driver operates the motor vehicle for the purpose of commuting between the driver's residence and place of employment.

(b) The driver operates the motor vehicle under a prearranged schedule for transporting the passengers between their residences and place of employment.

(c) The driver's operation of the motor vehicle is voluntary and not required as a work responsibility or condition of employment.

(d) The driver receives no compensation other than free transportation between the driver's residence and place of employment, plus limited personal use of the motor vehicle consisting of not more than twenty per cent of the mileage use of the motor vehicle for either:

(i) Purposes other than transporting passengers between their residences and place of employment.

(ii) Travel between the passengers' residences and place of employment in which passengers transported constitute less than one-half of the adult seating capacity of the motor vehicle, not including the driver.

E. The surcharge is not taxable under section 42-5071.

F. Unless the context otherwise requires, section 42-6102 governs the administration of a surcharge imposed under this section, which shall be reported on a form prescribed by the department of revenue. The department of revenue shall require a report of the number of lease or rental transactions and shall transmit that number to the state treasurer.

G. Each month the state treasurer shall distribute revenues collected pursuant to this section as follows:

Transmit an amount equal to two dollars fifty cents on each lease or rental transaction to the county stadium district established in the county in which the authority is located pursuant to title 48, chapter 26 for deposit in the county stadium district fund. The board of directors of the county stadium district may pledge all or part of these monies to secure district bonds or financial obligations under title 48, chapter 26.
Pay the remainder of the monies collected during the month to the authority for deposit in the tourism revenue clearing account established by section 5-835.

§ 5-840 Tax on hotels

A. The qualified electors residing in the authority, by majority vote at an election held in the authority, may levy and, if levied, the department of revenue shall collect a tax on the gross proceeds of sales or gross income from the business of every person engaging or continuing in a business taxed under title 42, chapter 5 and classified under section 42-5070 within the authority. A tax under this section is in addition to the tax imposed by title 42, chapter 5 and any tax imposed by a city or town in the authority.

B. If levied, the tax shall be levied under this section beginning on the first day of the first month beginning ninety days after the election to levy the tax. The tax shall be in effect for three hundred sixty months.

C. The rate of the tax is one per cent of the tax base prescribed by section 42-5070.

D. Unless the context otherwise requires, section 42-6102 governs the administration of the tax imposed under this section.

E. Each month the state treasurer shall transmit the net revenues collected pursuant to this section to the authority for deposit in the tourism revenue clearing account established by section 5-835.

§ 5-841 Audit

A. The board of directors shall cause an annual audit to be conducted of each of the authority’s funds, accounts and subaccounts by an independent certified public accountant within one hundred twenty days after the end of the fiscal year.

B. The board shall immediately file a certified copy of the audit with the auditor general. The auditor general may make such further audits and examinations as necessary and may take appropriate action relating to the audit or examination pursuant to title 41, chapter 7, article 10.1. If the auditor general takes no further action within thirty days after the audit is filed, the audit is considered to be sufficient.

C. The board shall pay negotiated and approved fees and costs of the certified public accountant and auditor general under this section from the operating account of the authority.

Article 3 Revenue Bonds

§ 5-861 Definitions

In this article, unless the context otherwise requires:

"Bond related expenses" means any expenses incurred by the authority to issue and administer its bonds including underwriting fees and costs, trustee fees, financial consultant fees, printing and advertising costs, paying agent fees, transfer agent fees, legal, accounting, feasibility consultant and other professional fees and expenses, credit enhancement fees, attorney and accounting fees and expenses related to credit enhancement, bond insurance or liquidity enhancement, remarketing fees, rating agency fees and costs, travel and telephone expenses and all other fees considered necessary by the authority in order to market and administer the bonds.
"Bonds" means the bonds of the authority issued pursuant to this article.
"Multipurpose facility purpose" includes the following purposes:

(a) Acquiring, designing, developing, constructing, reconstructing, equipping, repairing, maintaining, operating and improving a multipurpose facility and improvements.

(b) The payment of bond obligations.

§ 5-862 Authorization of bonds

A. The authority may issue negotiable bonds pursuant to this article in such principal amount as, in the opinion of the board, is necessary to:

Provide sufficient monies for any multipurpose facility purpose.
Pay necessary bond related expenses.
Establish and fully or partially fund any reserves or sinking accounts established by the bond resolution.
Issue refunding bonds if the board considers refunding to be expedient. The board may provide for investing and holding the proceeds of the refunding bonds in trust for the benefit of the holders of the bonds being refunded.
Refund any bonds issued by the authority if the bonds are secured from the same source of revenues as the bonds authorized in this article by issuing new bonds, whether the bonds to be refunded have or have not matured.
Issue bonds partly to refund outstanding bonds and partly for any multipurpose facility purpose consistent with this article.

B. The board shall authorize the bonds by resolution. The resolution shall prescribe:

The authority’s revenue sources that are pledged and dedicated to secure the bonds.
The rate or rates of interest, which may be fixed or variable, the date or dates on which interest is payable and the denominations of the bonds.
The date or dates of the bonds and maturity.
The manner of executing the bonds.
The medium and place of payment.
The terms of redemption, which may provide for a premium for early redemption.

§ 5-863 Issuance and sale of bonds; notice

A. The board shall issue the bonds in the number and amount provided in the resolution.

B. The bonds may be sold by competitive bid or negotiated sale for public or private offering at the price and on the terms prescribed in the resolution.

C. The proceeds from the sale of the bonds shall be deposited in the bond proceeds subaccount established by section 5-864.

D. Title 35, chapter 3, article 7 applies to the board and to bonds issued under this article.

§ 5-864 Bond proceeds subaccount

A. If the authority issues bonds under this article, the board shall establish a bond proceeds subaccount within the construction account established by section 5-833 consisting of monies received from the sale of the bonds.

B. The authority may use monies in the bond proceeds subaccount only for multipurpose facility purposes in the manner prescribed by this chapter.

C. The treasurer or fiscal agent of the authority shall administer and account for the bond proceeds subaccount.

§ 5-865 Debt service account

A. If the authority issues bonds under this article the board shall establish a debt service account consisting of monies designated and dedicated by the board for repayment of the bonds and payment of costs and related expenses associated with redeeming the bonds.

B. Monies in the debt service account may be used only for the purposes authorized by this article.

C. The treasurer or fiscal agent of the authority shall administer and account for the debt service account.

§ 5-866 Securing principal and interest

In connection with issuing bonds authorized by this article and to secure the principal and interest on the bonds, the board by resolution may:

Pledge for the payment of principal and interest on the bonds all or part of the revenues and other monies received by the authority and deposited in the general fund or any account or subaccount of the authority.
Pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the debt service account or any other account or subaccount as necessary to secure and pay the principal, the interest and any premium on the bonds as they come due.
Segregate the debt service account into one or more subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the debt service account or into any subaccount in the debt service account.
Establish priorities among bondholders based on criteria adopted by the board.
Set aside, regulate and dispose of reserves and sinking accounts.
Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given.
Provide for payment of bond related expenses from the proceeds of the sale of the bonds or other revenues available to the board.
Provide for the services of trustees, co-trustees, agents, consultants and other specialized services with respect to the bonds.
Contract with a financial institution, insurance company or indemnity company to provide additional security for the bonds in the form of a line of credit, letter of credit, insurance policy or other security and pay the costs of this additional security from amounts provided in the bond issue or from other available sources.
Take any other action that in any way may affect the security and protection of the bonds or interest on the bonds.

§ 5-867 Lien of pledge

A. Any pledge made under this article is valid and binding from the time when the pledge is made.

B. The monies pledged to the holders of the bonds and received by the authority for placement in the debt service account are immediately subject to the lien of the pledge without any further act. Any lien of any pledge is valid and binding against all parties who have claims of any kind against the authority, regardless of whether the parties have notice of the lien. The official resolution or any instrument by which this pledge is created, when adopted by the board, is notice to all concerned of the creation of the pledge, and those instruments need not be recorded in any other place to perfect the pledge.

§ 5-868 Bond purchase; cancellation

The board may purchase bonds for cancellation, using any available monies, at a price not exceeding the following:

If the bonds are redeemable at the time of purchase, the applicable redemption price plus accrued interest to the next interest payment date.
If the bonds are not redeemable at the time of purchase, the applicable redemption price on the first date after purchase on which the bonds become subject to redemption plus accrued interest to that date.

§ 5-869 Payment of bonds

A. The bonds shall be paid solely from monies in the debt service account.

B. Neither the members of the board nor any person executing the bonds is personally liable for the payment of the bonds.

C. The treasurer or fiscal agent of the authority shall cancel all bonds when paid.

§ 5-870 Use of surplus monies

A. If a balance remains in the bond proceeds subaccount after all acquisition, construction and related costs have been paid:

The board shall credit the balance to repay any other outstanding indebtedness of the authority.
If the authority has no outstanding indebtedness, the board shall credit the remaining balance to the authority’s operating account established by section 5-836.

B. If a balance remains in the debt service account after payment of all bonds, interest and other charges related to bonds issued under this article, the board shall credit the balance to the authority’s operating account established by section 5-836.

§ 5-871 Investment of monies in the bond proceeds subaccount

A. The board may authorize the treasurer or fiscal agent of the authority to invest monies in the bond proceeds subaccount in the manner prescribed by section 5-873.

B. The order directing an investment shall state a date on which the proceeds from the sale of the bonds will be needed for use, and the treasurer or fiscal agent shall make the investment in such a way as to mature on or before the specified date.

C. All monies earned as interest or otherwise derived from the investment of the monies in the bond proceeds subaccount shall be credited to that subaccount.

§ 5-872 Investment of monies in debt service account

A. The board may authorize the treasurer or fiscal agent of the authority to invest and reinvest any monies in the debt service account as provided by section 5-873.

B. The order directing an investment shall state a date on which the monies and other resources in the debt service account will be needed for use, and the treasurer or fiscal agent shall make the investment in such a way as to mature on or before the specified date.

C. All monies earned as interest or otherwise derived from the investment of the monies in the debt service account shall be credited to that account.

§ 5-873 Authorized investments of monies

A. The monies in either the bond proceeds subaccount or the debt service account may be invested and reinvested at the direction of the board in any of the following:

United States treasury obligations.
Consolidated farm loan bonds.
Obligations issued by the federal intermediate credit banks or by bonds for cooperatives on authority of the farm credit act of 1933.
Any other obligations guaranteed by the United States government.
Any investments that are authorized by any other agencies of the United States government and that are authorized to secure public deposits.
State and local government series United States treasury securities.
State, county or municipal bonds issued in this state and on which the payments of interest have not been deferred.
Investment agreements and repurchase agreements collateralized by investments described in paragraphs 1 through 5.

B. The purchase of the securities shall be made by the treasurer or fiscal agent on authority of a resolution of the board. The treasurer or fiscal agent shall act as custodian of all securities purchased.

C. The board may place any restrictions on reinvestment yield on bond proceeds or on any monies pledged to pay the bonds if necessary to comply with federal income tax laws and regulations to gain any federal tax benefits available with respect to the bonds.

§ 5-874 Deposit and disbursement of monies

A. Monies derived from selling bonds under this article or pledged or assigned to or in trust for the benefit of the holder or holders of the bonds shall be deposited by the treasurer or fiscal agent in financial institutions that the board designates and that are insured by an agency or instrumentality of the United States. The monies shall be disbursed as the board directs and according to the terms of any agreements with the holder or holders of the bonds.

B. This section shall not be construed as limiting the power of the board to agree in connection with the issuance of any of its bonds as to the custody and disposition of the monies received from selling bonds or from the income and revenues pledged or assigned to or in trust for the benefit of the holder or holders of the bonds.

§ 5-875 Characteristics of bonds; negotiable; obligation; legal investments; exemption from taxation

A. Bonds issued under this article are fully negotiable within the meaning and for all purposes of the uniform commercial code, subject only to any provisions for registration, regardless of whether the bonds actually constitute negotiable instruments under the uniform commercial code.

B. The bonds, their transfer and the income from the bonds are at all times free from taxation in this state.

C. Bonds issued under this article:

Are obligations of the authority. The members of the board and persons who execute the bonds are not personally liable for payment of the bonds.
Are payable only according to their terms.
Are obligations of the authority and are not general, special or other obligations of this state.
Do not constitute a debt of this state.
Are not enforceable against this state nor is payment of the bonds enforceable out of any monies other than the revenue pledged and assigned to, or in trust for the benefit of, the holder or holders of the bonds.
Are securities in which public officers and bodies of this state and of municipalities and political subdivisions of this state, all companies, associations and other persons carrying on an insurance business, all financial institutions, investment companies and other persons carrying on a banking business, all fiduciaries and all other persons who are authorized to invest in government obligations may properly and legally invest.
Are securities that may be deposited with public officers or bodies of this state and municipalities and political subdivisions of this state for purposes that require the deposit of government bonds or obligations.

§ 5-876 Effect of changing circumstances on bonds; agreement of state

A. Bonds issued under this article remain valid and binding obligations of the authority notwithstanding that before the delivery of the bonds any of the persons whose signatures appear on the bonds cease to be officers of the authority.

B. An amendment of any provision in this chapter does not diminish or impair the validity of bonds issued under this article or the remedies and rights of bondholders.

C. This state pledges to and agrees with the holders of the bonds authorized by this article that this state will not limit, alter or impair the rights vested in the authority to receive the monies necessary to fulfill the terms of any agreements made with the holders of the bonds, or in any way impair the rights and remedies of the bondholders, until all bonds issued under this article, together with interest on the bonds, interest on any unpaid installments of principal or interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders, are fully met and discharged. The board, as agent for this state, may include this pledge and undertaking in its resolutions and indentures authorizing and securing its bonds.

§ 5-877 Validity of bonds; legal opinion

A. This article constitutes full authority for authorizing and issuing bonds without reference to any other law of this state. No other law with regard to authorizing or issuing obligations or that in any way impedes or restricts performing the acts authorized by this article may be construed to apply to any proceedings taken or acts done pursuant to this article.

B. The validity of bonds issued under this article does not depend on and is not affected by the legality of any proceeding relating to the acquisition, construction, improvement, operation or maintenance of a multipurpose facility for which the bonds are issued.

C. The board may submit any bonds to be issued under this article to the attorney general after all proceedings for authorizing the bonds have been completed. On submission the attorney general shall examine and pass on the validity of the bonds and the regularity of the proceedings. If the proceedings comply with this article, and if the bonds when delivered and paid for will constitute binding and legal obligations of the authority, the attorney general shall certify on the back of each bond, in substance, that it is issued according to the constitution and laws of this state and that the interest on the bonds will be exempt from state taxes as provided by law.

D. The bonds shall recite that they are regularly issued pursuant to this article. That recital, together with the legal opinion under subsection C, constitutes prima facie evidence of the legality and validity of the bonds. From and after the sale and delivery of the bonds, they are incontestable by this state or the authority.

Chapter 9 Sports Authority District

Article 1 Organization

§ 5-1101 Definitions

(Conditionally Rpld.)

In this chapter, unless the context otherwise requires:

"Advisory board" means the advisory board of the sports authority.
"Authority" means a sports authority established pursuant to this chapter.
"Authority board" means the governing board of the sports authority.
"Board of directors" means the county board of supervisors serving as the board of directors of the district.
"District" means a sports authority district established pursuant to this chapter.
"Multipurpose facility" means a stadium or a facility for youth sports that is adapted for additional entertainment, cultural, civic, meeting, trade show or convention events, on-site infrastructure and related parking facilities and commercial activity within the facility.
"Stadium" means a facility intended primarily for use by one or more major league baseball spring training operations, including baseball stadiums, clubhouses, practice facilities, other related facilities, on-site infrastructure and related parking facilities and commercial activity within the facility.
"Youth sports" means recreational and amateur sporting related activities and competitions organized in the district.

§ 5-1102 Formation of district; board of directors; duties

(Conditionally Rpld.)

A. A sports authority district is established in each county having a population of more than five hundred thousand but less than two million persons. The boundaries of the district are the boundaries of the county.

B. The county board of supervisors shall serve as the board of directors of the district. The directors shall not receive compensation or reimbursement of expenses for their services as the board of directors.

C. The board of directors may call an election for the establishment of a sports authority district in the county as provided by section 5-1103, subsection A.

D. The board of directors shall:

Appoint certain members of the governing board of the sports authority as provided by section 5-1103, subsection D.
Approve a budget of the authority pursuant to section 5-1131.
Approve the issuance of revenue bonds of the authority pursuant to article 3 of this chapter.

E. The district is a corporate and political body, separate and independent of this state or the county, and except as otherwise limited, modified or provided by this chapter, has all of the rights, powers and immunities of municipal corporations except to acquire real property by eminent domain. The board of directors and the district do not have the authority to levy or otherwise impose any tax or assessment, other than charges for the use of facilities owned or managed by the district. The qualified electors residing in the district may levy a tax for the fiscal needs of the authority as provided by this chapter, but the board of directors has no independent authority to impose a tax. Subject to that limitation, the district is considered to be a tax levying public improvement district for the purposes of article XIII, section 7, Constitution of Arizona.

§ 5-1103 Sports authority; establishment; authority board

(Conditionally Rpld.)

A. The board of directors may call an election of the qualified electors of the district to authorize the establishment of a sports authority within and coterminous with the boundaries of the district. The election, if held, shall occur on one of the next eight general election dates held on the first Tuesday after the first Monday in November following the establishment of the district.

B. The election ballot shall include the following questions:

"Shall a sports authority be established in ____ county?".
"Shall the sports authority district be authorized to levy and collect taxes as provided by sections 5-1133 through 5-1137, Arizona Revised Statutes?".
"Shall the sports authority district issue revenue bonds to finance the construction, renovation, expansion or repair of cactus league baseball stadiums, youth sports facilities and multipurpose facilities, to be paid exclusively from revenues of the authority?".

C. The board of directors shall order the establishment of the authority on the approval of all questions by a majority of the qualified electors voting on each issue in the election. If any question is disapproved, the authority shall not be established and further proceedings under this chapter shall be terminated.

D. Members of the authority board, who must reside in the district, shall be appointed within thirty days after the formation of the district as follows:

One member who is appointed by the board of directors and who is selected from a list of nominees submitted by the largest industry organization or trade association, as measured by its members' gross revenues, representing hotel, motel and lodging businesses in the district.
One member who is appointed by the board of directors and who is selected from a list of nominees submitted by the largest industry organization or trade association, as measured by its members' gross revenues, representing restaurant businesses in the district.
One member who is appointed by the board of directors and who is selected from a list of nominees submitted by the largest industry organization or trade association in this state specializing in on-sale and off-sale retail liquor distribution.
One member who is appointed by the board of directors, who represents youth and amateur sports in the district and who is selected from a list of nominees submitted by the largest youth or amateur sports organization in the district as measured by the size of its membership.
One member who is appointed by the governing body of the largest city in the district, as measured by population, and who is selected from a list of nominees submitted by the largest industry organization or trade association representing automobile rental businesses in the district.
One member who is appointed by the governing body of the largest city in the district, as measured by population, and who is selected from a list of nominees submitted by the largest industry organization or trade association, as measured by its members' gross revenues, representing tourism businesses generally in the district.
One member who is appointed pursuant to subsection G of this section and who is selected from a list of nominees submitted by the largest industry organization or trade association, as measured by its members' gross revenues, representing tourism businesses generally in the district.
One member who is appointed pursuant to subsection G of this section and who is selected from a list of nominees submitted by the largest chamber of commerce in the city making the appointment representing retail businesses generally in the district.
One member who is appointed pursuant to subsection G of this section and who has substantial knowledge and experience regarding major league baseball.
Two additional members who are appointed by the county board of supervisors, or by any city or town, that contributes at least twenty per cent of the cost of a project pursuant to section 5-1106, subsection C if the contribution has a value of at least fifteen million dollars. Members shall be appointed pursuant to this paragraph within thirty days after the execution of a binding agreement to make a qualifying contribution.

E. The appointing entities prescribed in subsection D of this section shall receive nominations for appointment to the authority board from specified commercial interests, and shall appoint the members from the nominees. The appointing entities shall make appointments to the authority board to provide broad geographic representation among the members. The initial members shall be appointed to terms of two, three and four years, chosen by lot. All subsequent members shall be appointed to terms of four years, except for interim appointments to fill unexpired terms. A member of the board may be removed on a two-thirds vote of all members. The removal is effective immediately.

F. A member of the authority board shall not hold any elected office while serving on the board. An authority board member who takes elective office, who files nominating petitions for elective office or who is appointed to an elective office is considered to have resigned from the authority board effective immediately.

G. The appointment of the authority board members pursuant to subsection D, paragraphs 7, 8 and 9 of this section shall be determined as follows:

The first appointment shall be made by the governing body of the second largest city in the district.
The second appointment shall be made by the governing body of the third largest city in the district.
Each subsequent appointment shall be made by the governing bodies of the next largest cities in the district in order of population, until governing bodies of all cities in the district have made an appointment.
Subsequent appointments shall repeat the sequence of appointments provided in paragraphs 1, 2 and 3 of this subsection.
For the purposes of this subsection, the population of cities and towns in the district shall be based on the population at the time of each appointment made by the second largest city in the district.
If there is a vacancy of a member of the authority board appointed pursuant to subsection D, paragraph 7, 8 or 9 of this section, the governing body that appointed the vacating member shall appoint a replacement for the remainder of the unexpired term.

§ 5-1104 Sports authority plan; authority board powers and duties; advisory board

(Conditionally Rpld.)

A. The authority board shall submit a plan for the operation of the sports authority, including proposals for the construction, renovation, expansion or repair of stadiums, multipurpose facilities and youth sports facilities as provided in this chapter. The plan shall:

Be developed and submitted to the board of directors within ninety days after the appointment of the initial authority board.
Be finalized following public hearings and meetings held in the authority.
Specify the general purposes for which the monies of the authority, including tax revenues pursuant to sections 5-1133 through 5-1137, will be spent during the first twenty years of the authority's operations.

B. In addition, the authority board, on behalf of the sports authority, shall:

Promote major league baseball spring training in the authority.
Acquire, construct, lease, finance, lease-purchase or otherwise obtain use of facilities for major league baseball spring training and related activities.
Provide grants and assistance to political subdivisions of this state and to nonprofit corporations for the development and operations of sporting activities.
Approve capital projects that are provided by the budget.
Issue revenue bonds pursuant to article 3 of this chapter.
Appoint from among its members a chairperson, a secretary and such other officers as may be necessary to conduct its business.
Employ an executive director and prescribe the terms and conditions of employment.
Keep and maintain a complete and accurate record of all of its proceedings. The board is a public body for purposes of title 38, chapter 3, article 3.1 and title 39, chapter 1.
Provide for the use, maintenance and operation of the properties and interests owned or managed by the authority.

C. The authority board may:

Enter into contracts, including intergovernmental agreements under title 11, chapter 7, article 3, as necessary to carry out the purposes and requirements of this chapter.
Adopt administrative rules as necessary to administer and operate the authority and any property under its jurisdiction.
Acquire by any lawful means, other than eminent domain, and operate, maintain, encumber and dispose of real and personal property and interests in property.
Retain legal counsel and other consultants as necessary to carry out the purposes of the authority.
Enter into contracts for the lease or rental of any facility or facilities of the authority with a nonprofit community based organization that sponsors a professional or youth sporting event that provide for the payment to the organization of a ticket surcharge or facility user fee associated with parking if the authority has fully paid the current year's required principal and interest payments on any outstanding authority bonds for which these revenues were pledged pursuant to article 3 of this chapter.

D. The authority shall comply with zoning, lighting and all other laws and ordinances of the county, city or town with zoning jurisdiction over any property owned by the authority.

E. The authority board shall appoint an advisory board consisting of members representing a broad spectrum of interested parties for the purpose of advising the authority in its activities to fully perform and accomplish its purposes.

§ 5-1105 Executive director; duties

(Conditionally Rpld.)

A. The executive director of the authority is responsible to the authority board for managing, administering and supervising the activities of the authority.

B. The executive director shall negotiate, make, execute, acknowledge and perform contracts and other agreements in the interest of the authority or to carry out or accomplish the purposes of this chapter, including construction contracts and agreements with users of a multipurpose facility, all of which are subject to approval by the authority board.

C. The executive director shall:

Employ a fiscal agent to deposit, hold, invest and disburse the authority's monies.
Employ administrative and clerical employees and prescribe the terms and conditions of their employment as necessary to carry out the purposes of the authority. Employees of the authority are considered to be public employees for purposes of title 38.
Recommend the employment of consultants by the authority board, including outside counsel and a professional facility management company.
Direct the activities of outside consultants.

§ 5-1106 Major league baseball spring training facilities; local financial participation

(Conditionally Rpld.)

A. The authority may:

Acquire land or construct, finance, furnish, improve, market or promote the use of existing or proposed major league baseball spring training facilities that are located in the authority and other structures, utilities, roads, parking areas or buildings necessary for full use of the training facilities for sports and other purposes.
Do all things necessary or convenient to accomplish the purposes described in this subsection.

B. Except as provided by section 5-1139, monies of the authority may be used for the purposes of:

Attracting major league baseball spring training operations to locations in the authority.
Retaining major league baseball spring training operations in their current locations in the authority.

C. The authority board may require that any project undertaken pursuant to this section include financial participation from the county or municipality in which the project is located, from a private party or from any combination of these entities. Capital improvement monies spent by a county, municipality or private party for a purpose authorized by this section may be considered to be financial participation with respect to any project the authority may undertake if the expenditures occur after the authority is established.

D. For the purposes of financing, designing or constructing facilities or structures, the authority is not the agent of any other party participating in the funding of the facility or structure.

E. Before undertaking the planning or construction of the first new facility under this section, the authority board may consider the costs of anticipated required renovations of existing facilities and shall consider such costs for subsequent new facilities.

§ 5-1107 Youth sports and recreation; local financial participation

(Conditionally Rpld.)

A. Except as provided by section 5-1139, the authority shall spend at least ten per cent of its general revenues for the purpose of promoting youth sports and recreation and may:

Acquire land or construct, finance, furnish, maintain, improve, operate, market or promote the use of youth sports facilities, recreational facilities and other community facilities or programs that are located in the authority.
Do all things necessary or convenient to accomplish the purposes described in this subsection.

B. The authority board may require that any project undertaken pursuant to this section include financial participation from the county, municipality or school district in which the project is located, from any other party or from any combination of these entities. Capital improvement monies spent by a county, municipality, school district or other party for a purpose authorized by this section may be considered to be financial participation with respect to any project the authority may undertake if the expenditures occur after the authority is established.

C. For the purposes of financing, designing, constructing or operating facilities or structures, the authority is not the agent of any other party participating in the funding of the facility or structure after the authority is established.

D. For the purposes of subsection A of this section, the amount spent shall be measured at the end of every tenth fiscal year following the establishment of the authority for the entire period since the formation of the authority, except that the requirement shall not interfere with, delay or impede the payment of any amounts due and payable on any outstanding obligation of the authority.

§ 5-1108 Gift ban; exemptions

(Conditionally Rpld.)

A. A principal or lobbyist or any other person acting on behalf of a principal or lobbyist shall not give a gift to any member of the board of directors or any member or employee of the authority board, and an authority board member or employee shall not accept a gift from a principal or lobbyist.

B. For the purposes of this section, a gift does not include any of the following:

Salary, compensation or employer reimbursed expenses lawfully paid to a board member or employee.
A family gift.
An award or prize that is given to competitors in a contest or event that is open to the public, including a random drawing.
Any discount or other benefit that is offered to a board member or employee on the same conditions as to the public, to a class consisting of all board members and employees or to a group or class in which membership is unrelated to being a board member or employee.
An educational event or speaking engagement.
Expenses relating to a special event or function to which all members of the board are invited and that are properly reported.
Flowers.
Food and beverage.
Informational material, including a book, calendar, pamphlet, periodical, report or video.
An item that is not used and that is returned to the donor within fifteen days after receipt or that is delivered to a charitable organization within fifteen days after receipt and that is not claimed as a charitable contribution for state or federal income tax purposes.
An item that is given to a board member or employee if the board member or employee gives an item of approximately the same value to the giver of the item at the same time that the item is given or on a similar occasion as the one that prompted the original item to be given.
An item of a personal nature that was customarily received by an individual from the donor before the individual became a board member or employee.
An item that is given to the general public at an event.
An item of nominal value such as a greeting card, baseball cap, t-shirt, mug or pen.
Nonrecreational travel or lodging, or both.
Personal hospitality.
A plaque, award or other form of recognition to a board member or employee to signify the honorary recognition of a service or other notable accomplishment.
Professional or consulting services that are rendered on matters directly related to holding a position on the board or being an employee of the board and that are not rendered to obtain a benefit for any registered principal, public body, lobbyist, designated public lobbyist or authorized public lobbyist or the clients of a principal or lobbyist.

§ 5-1109 Regulating sale, use and consumption of alcoholic beverages

(Conditionally Rpld.)

Subject to the requirements of title 4, the authority board may permit and regulate the sale, use and consumption of alcoholic beverages at events held on property acquired, leased or subleased under this chapter.

§ 5-1110 Conflicts of interest

(Conditionally Rpld.)

A. The members of the authority board are subject to title 38, chapter 3, article 8, relating to conflicts of interest, including the penalties prescribed by section 38-510.

B. A member of the board of directors shall not have any direct or indirect financial interest in any:

Property owned, purchased or constructed by the district.
Contract entered into by the district.
Private corporation or other entity with which the district contracts.

§ 5-1111 Performance audits

(Conditionally Rpld.)

A. Beginning in 2011 and at least every fifth year thereafter, the auditor general shall conduct or cause to be conducted a performance audit, as defined in section 41-1278, of the authority.

B. On or before June 30 of the respective year, the auditor general shall issue a public report of the performance audit, including findings and specific recommendations for statutory and administrative changes to improve the operation of the authority. The auditor general shall submit copies of the report to the governor, the president of the senate, the speaker of the house of representatives, the secretary of state and the Arizona state library, archives and public records.

C. The authority board shall pay the costs of the performance audits prescribed by this section from the authority's general fund.

§ 5-1112 Quarterly report; appearance before joint legislative budget committee

(Conditionally Rpld.)

A. Within six weeks after the end of each calendar quarter the authority shall prepare a report signed by the executive director and transmit the report to the governor, the legislature, as provided by section 41-1178, and the joint legislative budget committee. The report shall include a progress report of the activities of the authority during the previous quarter.

B. At the request of the chairperson of the joint legislative budget committee, the executive director shall appear before the joint legislative budget committee to report on the activities and financial performance of the authority during the previous year.

Article 2 Financial Provisions

§ 5-1131 Annual budget

(Conditionally Rpld.)

A. On or before May 31 of each year, the authority board shall hold a public hearing to adopt a budget for the following fiscal year that includes:

Receipts during the preceding fiscal year.
Expenditures during the preceding fiscal year.
Estimates of amounts necessary for expenses during the following fiscal year, including amounts proposed for:

(a) Costs of planning, constructing, financing and maintaining the authority's facilities.

(b) Administrative costs of the authority.

Anticipated revenue to the authority from each source in the following fiscal year.
A complete asset and liability statement.
A statement of profit or loss.
Cash on hand as of the date the budget is adopted and the anticipated balance at the end of the current fiscal year.
An itemized statement of commitments, reserves and anticipated obligations for the following fiscal year.

B. The authority board:

Shall transmit a copy of the budget to the district board of directors.
May amend the budget on a finding of good cause.

§ 5-1132 General fund; investments

(Conditionally Rpld.)

A. The authority shall maintain a general fund and may establish accounts and subaccounts within the general fund as necessary and convenient. All revenues and monies received by the authority shall initially be deposited in the general fund.

C. The authority's investments must mature when the fund assets will be required for the purposes of this chapter. If the liquid assets in the fund or any account or subaccount become insufficient to meet the statutory obligations, the authority board shall direct the authority's fiscal agent to liquidate sufficient securities to meet all of the current obligations and immediately notify the district board of directors and the auditor general of the insufficiency. The auditor general shall investigate and audit the circumstances surrounding the depletion of the fund, account or subaccount and report the findings to the authority board and the board of directors.

§ 5-1133 Excise tax on car rentals

(Conditionally Rpld.)

A. The qualified electors, by majority vote at an election held pursuant to section 5-1103, may levy and, if levied, the department of revenue shall collect an excise tax on the gross proceeds of sales or gross income from the business of leasing or renting motor vehicles in the authority by a person engaging or continuing in a business taxed under title 42, chapter 5 and classified under section 42-5071, beginning on the first day of the first month beginning ninety days after the election. The tax shall be in effect for three hundred sixty months except as provided by section 5-1139. The tax imposed pursuant to this section is in addition to any other taxes levied by this state or any other political subdivision of this state.

B. Except as provided by section 5-1139, the rate of the tax is .35 per cent of the tax base prescribed by section 42-5071.

C. The tax applies to the business of leasing or renting in the authority, for less than one year, motor vehicles for hire without a driver that are designed to operate on the streets and highways of this state and that are primarily intended to carry not more than fourteen passengers, regardless of whether the vehicle is registered or licensed in this state.

D. The tax does not apply to the lease or rental of:

A motor vehicle as a temporary replacement vehicle that is loaned at no charge by a repair facility or dealer for use while the vehicle that it is replacing is not in service because of breakdown, repair, service, damage or loss.
A motor vehicle to an automobile dealership, a repair facility, an insurance company or any other person that provides that vehicle at no charge to a person whose own motor vehicle is being repaired, adjusted or serviced.

E. The tax is not taxable under section 42-5071.

§ 5-1134 Excise tax on hotels and motels

(Conditionally Rpld.)

A. The qualified electors, by majority vote at an election held pursuant to section 5-1103, may levy and, if levied, the department of revenue shall collect a tax on the gross proceeds of sales or gross income from the business of every person engaging or continuing in a business taxed under title 42, chapter 5 and classified under section 42-5070 within the authority. A tax under this section is in addition to the tax imposed by title 42, chapter 5 and any tax imposed by any other political subdivision in the authority.

B. If levied, the tax shall be levied under this section beginning on the first day of the first month beginning ninety days after the election, and shall continue in this manner for three hundred sixty months except as provided by section 5-1139.

C. Except as provided by section 5-1139, the rate of the tax is .45 per cent of the tax base prescribed by section 42-5070.

§ 5-1135 Tax on restaurants and bars

(Conditionally Rpld.)

A. The qualified electors, by majority vote at an election held pursuant to section 5-1103, may levy and, if levied, the department of revenue shall collect a tax on the gross proceeds of sales or gross income from the business of every person engaging or continuing in a business taxed under title 42, chapter 5 and classified under section 42-5074 in the authority. A tax under this section is in addition to the tax imposed by title 42, chapter 5 and any tax imposed by any other political subdivision in the authority.

C. Except as provided by section 5-1139, the rate of the tax is .25 per cent of the tax base prescribed by section 42-5074.

§ 5-1136 Tax on amusements and sporting events

(Conditionally Rpld.)

C. Except as provided by section 5-1139, the rate of the tax is .35 per cent of the tax base prescribed by section 42-5073.

§ 5-1137 Tax on retail

(Conditionally Rpld.)

A. The qualified electors, by majority vote at an election held pursuant to section 5-1103, may levy and, if levied, the department of revenue shall collect a tax on the gross proceeds of sales or gross income from the business of every person engaging or continuing in a business taxed under title 42, chapter 5 and classified under section 42-5061 in the authority. A tax under this section is in addition to the tax imposed by title 42, chapter 5 and any tax imposed by any other political subdivision in the authority.

C. Except as provided by section 5-1139, the rate of the tax is .15 per cent of the tax base prescribed by section 42-5061.

§ 5-1138 Administration of tax

(Conditionally Rpld.)

A. Unless the context otherwise requires, section 42-6102 governs the administration of the taxes imposed under this article.

B. Each month the state treasurer shall transmit the net revenues collected pursuant to this article to the authority for deposit in the general fund.

§ 5-1139 Conditional reduction of district taxes

(Conditionally Rpld.)

A. If, seventy-two months after the district is established, at least two major league baseball franchises have not executed binding contractual agreements for use of stadiums and other facilities in the district as their exclusive sites for spring training operations for terms of at least ten years, the respective tax rates prescribed by sections 5-1133 through 5-1137 are reduced by fifty per cent as provided by paragraph 2 of this subsection, and the district shall use all revenues produced by the reduced rates exclusively for the promotion of youth and amateur sports as provided by section 5-1107. If the condition described by this subsection occurs:

The executive director shall notify the department of revenue in writing on or before the date that is seventy-two months after the district is established.
The reduced tax rates are effective on the first day of the first month that is at least ninety days after the date of notification.

B. If, at any subsequent time, at least two major league baseball franchises execute binding contractual agreements for use of stadiums and other facilities in the district as their exclusive sites for spring training operations for terms of at least ten years, the respective tax rates prescribed by sections 5-1133 through 5-1137 shall be reinstated at the full amounts as provided by paragraph 2 of this subsection, and the district shall use the revenues as provided by law without condition. If the condition described by this subsection occurs:

The executive director shall notify the department of revenue in writing on or before the date that the second contract is entered into.
The increased tax rates are effective on the first day of the first month that is at least ninety days after the date of notification.

§ 5-1140 Annual audit

(Conditionally Rpld.)

A. The board of directors of the district shall cause an annual audit to be conducted of each of the authority's funds, accounts and subaccounts by an independent certified public accountant within one hundred twenty days after the end of the fiscal year.

C. The authority board shall pay negotiated and approved fees and costs of the certified public accountant and auditor general under this section from the authority's general fund.

Article 3 Revenue Bonds

§ 5-1161 Definitions

(Conditionally Rpld.)

In this article, unless the context otherwise requires:

"Bond" means any obligation authorized and issued pursuant to this article, including:

(a) Bonds and notes.

(b) Certificates of participation in a lease-purchase or certificates of purchase in a lease or installment purchase agreement.

(c) Obligations that are authorized and issued to refund or refinance obligations that are authorized and issued pursuant to this article.

"Bond related expenses" means any expenses incurred by the authority for issuing and administering its bonds, including underwriting fees and costs, trustee fees, financial consultant fees, printing and advertising costs, paying agent fees, transfer agent fees, legal, accounting, feasibility consultant and other professional fees and expenses, credit enhancement fees, attorney and accounting fees and expenses related to credit enhancement, bond insurance or liquidity enhancement, remarketing fees, rating agency fees and costs, travel and telephone expenses and all other fees considered necessary by the authority board in order to market and administer the bonds.
"Sports authority purpose" includes:

(a) The capital costs of acquiring, designing, developing, constructing, reconstructing, equipping, furnishing, repairing, maintaining and improving stadiums and multipurpose facilities, directly related improvements and infrastructure, except as otherwise limited by this article. For the purposes of this subdivision, "infrastructure" means improvements that will directly and principally benefit the stadium or multipurpose facility and includes:

(i) Sanitary sewage systems.

(ii) Drainage and flood control systems.

(iii) Water systems.

(iv) Roadways for access, entry and exit and parking facilities.

(v) Pedestrian and other nonmotorized facilities for access, entry and exit and parking.

(vi) Landscaping.

(vii) Lighting systems.

(viii) Traffic control systems, signals, controls, markings and signage.

(b) The payment of bonds.

§ 5-1162 Obligation for the bonds

(Conditionally Rpld.)

Bonds issued under this article:

Are payable only according to their terms.
Are obligations of the authority.
Are not general, special or other obligations of this state, or of the county or any city or town located in the authority. The members of the board of directors and the authority board and persons who execute the bonds are not personally liable for payment of the bonds.
Do not constitute a debt of this state or of the county or any city or town located in the authority.
Are not enforceable against this state. Payment of the bonds is enforceable only out of any monies or assets of the authority specifically pledged and assigned to or in trust for the benefit of the holder or holders of the bonds.

§ 5-1163 Authorization of bonds

(Conditionally Rpld.)

A. The authority may issue bonds pursuant to this article in a principal amount that is necessary to:

Provide sufficient monies for any sports authority purposes.
Establish and fully or partially fund any required reserves or sinking accounts.
Issue refunding bonds to refund bonds issued by the authority if the authority board considers refunding to be expedient. The board may provide for investing and holding the proceeds of the refunding bonds in trust for the benefit of the holders of the bonds being refunded.

B. The authority board shall authorize the bonds by resolution. The resolution shall prescribe:

The revenue sources that are pledged and dedicated to secure the bonds.
The rate or rates of interest, which may be fixed or variable, the date or dates on which interest is payable and the denominations of the bonds.
The date or dates of the bonds and maturity, which shall be within thirty years after the date of issuance.
The manner of executing the bonds.
The medium and place of payment.
The terms of redemption, which may provide for a premium for early redemption.

§ 5-1164 Issuance and sale of bonds

(Conditionally Rpld.)

A. The authority board shall issue the bonds in the number and amount provided in the resolution. The authority board shall provide published notice within fifteen days to the public and to the district board of directors of its intention to issue bonds.

B. The bonds may be sold by competitive public sale, through an online bidding process or at negotiated sale for public or private offering at the price and on the terms prescribed in the resolution. For the purposes of this subsection, "online bidding process" means a procurement process in which the board receives bids electronically over the internet in a real-time, competitive bidding event.

C. The proceeds from the sale of the bonds shall be deposited in the bond proceeds account established pursuant to section 5-1165.

D. Title 35, chapter 3, article 7 applies to the authority board and to bonds issued under this article.

§ 5-1165 Bond proceeds account

(Conditionally Rpld.)

A. If the authority issues bonds under this article, the authority board shall establish a bond proceeds account within the general fund consisting of monies received from the sale of the bonds.

B. The authority board may use monies in the bond proceeds account only for sports authority purposes in the manner prescribed by this chapter.

C. The authority's fiscal agent shall administer and account for the bond proceeds account.

§ 5-1166 Debt service account

(Conditionally Rpld.)

A. If the authority issues bonds under this article, the authority board shall establish a debt service account within the general fund consisting of monies designated and dedicated by the board for repayment of the bonds and payment of costs and related expenses associated with redeeming the bonds.

B. Monies in the debt service account may be used only for the purposes authorized by this article.

C. The authority's fiscal agent shall administer and account for the debt service account.

§ 5-1167 Securing principal and interest

(Conditionally Rpld.)

In connection with issuing bonds authorized by this article and to secure the principal and interest on the bonds, the authority board by resolution may:

Pledge for the payment of principal and interest on the bonds all or part of the revenues and other monies received by the authority and deposited in the general fund or any account or subaccount of the general fund.
Pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the debt service account or any other account or subaccount as necessary to secure and pay the principal, the interest and any premium on the bonds as they come due.
Segregate the debt service account into one or more subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the debt service account or into any subaccount in the debt service account.
Establish priorities among bondholders based on criteria adopted by the board.
Set aside, regulate and dispose of reserves and sinking accounts.
Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given.
Provide for payment of bond related expenses from the proceeds of the sale of the bonds or other revenues available to the board.
Provide for the services of trustees, cotrustees, agents and consultants and other specialized services with respect to the bonds.
Take any other action that in any way may enhance the security and protection of the bonds or interest on the bonds.

§ 5-1168 Lien of pledge

(Conditionally Rpld.)

A. Any pledge made under this article is valid and binding from the time when the pledge is made.

B. The monies pledged to the holders of the bonds and received by the authority for placement in the debt service account are immediately subject to the lien of the pledge without any further act. Any lien of any pledge is valid and binding against all parties who have claims of any kind against the authority, regardless of whether the parties have notice of the lien. The official resolution or any instrument by which this pledge is created, when adopted by the authority board, is notice to all concerned of the creation of the pledge, and those instruments need not be recorded in any other place to perfect the pledge.

§ 5-1169 Bond purchase for cancellation

(Conditionally Rpld.)

The authority board may purchase bonds for cancellation, using any available monies, at a price not exceeding the following:

If the bonds are redeemable at the time of purchase, the applicable redemption price plus accrued interest to the next interest payment date.
If the bonds are not redeemable at the time of purchase, the applicable redemption price on the first date after purchase on which the bonds become subject to redemption plus accrued interest to that date.

§ 5-1170 Payment of bonds

(Conditionally Rpld.)

A. The bonds shall be paid solely from monies in the debt service account.

B. The members of the authority board and any persons who execute the bonds are not personally liable for the payment of the bonds.

C. The authority's fiscal agent shall cancel all bonds when paid.

§ 5-1171 Investment of monies in the bond proceeds account

(Conditionally Rpld.)

A. The authority board may authorize the authority's fiscal agent to invest monies in the bond proceeds account in the manner prescribed by section 5-1173.

B. The order directing an investment shall state a date on which the proceeds from the sale of the bonds will be needed for use, and the fiscal agent shall make the investment in such a way as to mature on or before the specified date.

C. All monies earned as interest or otherwise derived from the investment of the monies in the bond proceeds account shall be credited as described in the authorizing resolution.

§ 5-1172 Investment of monies in the debt service account

(Conditionally Rpld.)

A. The authority board may authorize the authority's fiscal agent to invest and reinvest any monies in the debt service account as provided by section 5-1173.

B. The order directing an investment shall state a date on which the monies and other resources in the debt service account will be needed for use, and the fiscal agent shall make the investment in such a way as to mature on or before the specified date.

C. All monies earned as interest or otherwise derived from the investment of the monies in the debt service account shall be credited as described in the authorizing resolution.

§ 5-1173 Authorized investment of monies

(Conditionally Rpld.)

A. The monies in either the bond proceeds account or the debt service account may be invested and reinvested at the direction of the authority board in any of the following:

United States treasury obligations.
Consolidated farm loan bonds.
Obligations issued by the federal intermediate credit banks or bonds for cooperatives on authority of the farm credit act of 1933.
Any other obligations guaranteed by the United States government.
Any investments that are authorized by any other agencies of the United States government and that are authorized to secure public deposits.
State and local government series United States treasury securities.
State, county or municipal bonds issued in this state and on which the payments of interest have not been deferred.
Investment agreements and repurchase agreements collateralized by investments described in paragraphs 1 through 5.
Investment agreements from providers rated in one of the two highest rating categories by a nationally recognized rating agency.

B. The purchase of the securities shall be made by the authority's fiscal agent on authority of a resolution of the authority board. The fiscal agent shall act as custodian of all securities purchased.

C. The authority board may place any restrictions on reinvestment yield on bond proceeds or on any monies pledged to pay the bonds if necessary to comply with federal income tax laws and regulations to gain any federal tax benefits available with respect to the bonds.

§ 5-1174 Deposit and disbursement of monies

(Conditionally Rpld.)

A. Monies derived from selling bonds under this article or pledged or assigned to or in trust for the benefit of the holder or holders of the bonds shall be deposited by the authority's fiscal agent in financial institutions that the authority board designates and that are insured by an agency or instrumentality of the United States. The monies shall be disbursed as the authority board directs and according to the terms of any agreements with the holder or holders of the bonds.

B. This section shall not be construed as limiting the power of the authority board to agree in connection with the issuance of any of its bonds as to the custody and disposition of the monies received from selling bonds or from the income and revenues pledged or assigned to or in trust for the benefit of the holder or holders of the bonds.

§ 5-1175 Characteristics of bonds; negotiability; legal investments; exemption from taxation

(Conditionally Rpld.)

B. The bonds, their transfer and the income from the bonds are at all times free from taxation in this state.

C. Bonds issued under this article:

Are securities in which public officers and bodies of this state and of municipalities and political subdivisions of this state, all companies, associations and other persons carrying on an insurance business, all financial institutions, investment companies and other persons carrying on a banking business, all fiduciaries and all other persons who are authorized to invest in government obligations may properly and legally invest.
Are securities that may be deposited with public officers or bodies of this state and municipalities and political subdivisions of this state for purposes that require the deposit of government bonds or obligations.

§ 5-1176 Effect of changing circumstances on bonds; agreement of state

(Conditionally Rpld.)

A. Bonds issued under this article remain valid and binding obligations of the authority notwithstanding that before the delivery of the bonds any person whose signature appears on the bonds ceases to be an officer of the authority.

B. An amendment of any provision in this chapter does not diminish or impair the validity of bonds issued under this article or the remedies and rights of bondholders.

C. This state pledges to and agrees with the holders of the bonds authorized by this article that this state will not limit, alter or impair the rights vested in the authority to receive the monies necessary to fulfill the terms of any agreements made with the holders of the bonds, or in any way impair the rights and remedies of the bondholders, until all bonds issued under this article, together with interest on the bonds, interest on any unpaid installments of principal or interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders, are fully met and discharged. The authority board, as agent for this state, may include this pledge and undertaking in its resolutions and indentures authorizing and securing its bonds.

§ 5-1177 Validity of bonds; legal opinion

(Conditionally Rpld.)

B. The validity of bonds issued under this article does not depend on and is not affected by the legality of any proceeding relating to the acquisition, construction, improvement, operation or maintenance of a stadium or multipurpose facility for which the bonds are issued.

C. The authority board may submit any bonds to be issued under this article to a nationally recognized bond counsel after all proceedings for authorizing the bonds have been completed. On submission the counsel shall examine and pass on the validity of the bonds and the regularity of the proceedings. If the proceedings comply with this article, and if the bonds when delivered and paid for will constitute binding and legal obligations of the authority, the counsel shall certify on the back of each bond, in substance, that it is issued according to the constitution and laws of this state and that the interest on the bonds will be exempt from state taxes as provided by law.

Chapter 10 Fantasy Sports Contests

Article 1 General Provisions

§ 5-1201 Definitions

In this chapter, unless the context otherwise requires:

"Applicant" means any person that has applied for a license as a fantasy sports contest operator or that has been approved for any act related to fantasy sports contests.
"Application" means a request to issue a license as a fantasy sports contest operator or to approve any act related to fantasy sports contests.
"Athletic event":

(a) Means a real-world professional, collegiate or nationally recognized sports game, contest or competition that involves the physical exertion and skill of the participating individual athletes who are each physically present at the location in which the sports game, contest or competition occurs, and the outcome of the sports game, contest or competition is directly dependent on the performance of the participating athletes.

(b) Includes events involving motor vehicles.

"Department" means the department of gaming.
"Entry fee" means cash or cash equivalent that is paid by a participant to a fantasy sports contest operator to participate in a fantasy sports contest.
"Fantasy sports contest" means a simulated game or contest that is offered to the public with an entry fee and that meets all of the following conditions:

(a) No fantasy sports contest team is composed of the entire roster of a real-world sports team.

(b) No fantasy sports contest team is composed entirely of individual athletes who are members of the same real-world sports team.

(c) Each prize or award or the value of all prizes or awards offered to winning fantasy sports contest players is made known to the fantasy sports contest players in advance of the fantasy sports contest.

(d) Each winning outcome reflects the relative knowledge and skill of the fantasy sports contest players and is determined by the aggregated statistical results of the performance of multiple individual athletes or participants selected by the fantasy sports contest player to form the fantasy sports contest team, whose individual performances in the fantasy sports contest directly correspond with the actual performance of those athletes or participants in the athletic events in which those individual athletes or participants participated.

(e) A winning outcome is not based on randomized or historical events or on the score, point spread or performance in an athletic event of a single real-world sports team, a single athlete or any combination of real-world sports teams.

(f) The fantasy sports contest does not constitute or involve and is not based on any of the following:

(i) Racing that involves animals.

(ii) A game or contest ordinarily offered by a horse track or casino for money, credit or any representative of value, including any races, games or contests that involve horses or that are played with cards or dice.

(iii) A slot machine or other mechanical, electromechanical or electronic device, equipment or machine.

(iv) Poker, blackjack, faro, monte, keno, bingo, fan-tan, twenty-one, seven and a half, klondike, craps, chuck-a-luck, Chinese chuck-a-luck, wheel of fortune, chemin de fer, baccarat, pai gow, beat the banker, panguingue, roulette or other banking or percentage games.

(v) Any other game or device that is authorized or that is not authorized by this state.

(vi) A high school or youth sporting event or any event that is not an athletic event.

(vii) A contest that involves or results in betting on a race, a game, a contest or a sport that constitutes event wagering as defined in section 5-1301.

"Fantasy sports contest adjusted revenues" means the amount equal to the total of all entry fees that a fantasy sports contest operator collects from all fantasy sports contest players minus the total of all sums paid out as prizes or awards to all fantasy sports contest players, multiplied by the in-state percentage.
"Fantasy sports contest operator" or "operator" means a person that is engaged in the business of professionally conducting paid fantasy sports contests for cash or other prizes or awards for members of the general public that requires cash or cash equivalent as an entry fee to be paid by a member of the general public who participates in a paid fantasy sports contest.
"Fantasy sports contest platform" means the hardware, software, firmware, communications technology or other equipment, including operator procedures implemented to allow player participation in digital or online fantasy sports contests, and if supported, the corresponding equipment related to the display of the outcomes, and other similar information necessary to facilitate player participation in which a player is provided with the means to establish a player account and the fantasy sports contest operator is provided with the means to review player accounts, suspend fantasy sports contests, generate various financial transaction and account reports, input outcomes for fantasy sports contests and set any configurable parameters.
"Fantasy sports contest player" or "player" means an individual who participates in a fantasy sports contest offered by a fantasy sports contest operator.
"Fantasy sports contest team" means the simulated team composed of multiple individual athletes, each of whom is a member of a real-world sports team that a fantasy sports contest player selects to compete in a fantasy sports contest.
"Highly experienced player" means a fantasy sports contest player who has done at least one of the following:

(a) Entered more than one thousand fantasy sports contests offered by a single fantasy sports contest operator.

(b) Won more than three prizes or awards valued at $1,000 each or more from a single fantasy sports contest operator.

"Holding company" means a corporation, firm, partnership, limited partnership, limited liability company, trust or other form of business organization that is not an individual and that directly or indirectly does either of the following:

(a) Holds an ownership interest of ten percent or more, as determined by the holding company's board, in a fantasy sports contest operator.

(b) Holds voting rights with the power to vote ten percent or more of the outstanding voting rights of a fantasy sports contest operator.

"In-state percentage" means for each fantasy sports contest, the percentage, rounded to the nearest tenth of a percent, equal to the total entry fees collected from all in-state participants divided by the total entry fees collected from all participants in the fantasy sports contest, unless otherwise prescribed by the department.
"Key employee" means an employee of a fantasy sports contest operator who has the power to exercise significant influence over decisions concerning the fantasy sports contest operator.
"License" means an approval that is issued by the department to any person or entity to be involved in a fantasy sports operation.
"Management company" means a person retained by a fantasy sports contest operator to manage a fantasy sports contest platform and provide general administration and other operational services.
"Person" means an individual, partnership, corporation, association, limited liability company, federally recognized Indian tribe or other legal entity.
"Player account" means an account that is established by a patron for the purpose of participating in fantasy sports contests, including deposits, withdrawals, entry fees and payouts.
"Prize or award" means anything of value or any amount of cash or cash equivalents.
"Protected information" means information related to playing fantasy sports contests by a fantasy sports contest player that is not readily available to the general public and that is obtained as a result of a person's employment in relation to a fantasy sports contest.
"Script" means a list of commands that a fantasy contest-related computer program can execute and that is created by a fantasy sports contest player or by a third party for a fantasy sports contest player to automate processes on a fantasy sports contest platform.

§ 5-1202 Fantasy sports contests; exceptions; rules; licensure

A. Except as otherwise provided in this section, a person may not offer fantasy sports contests in this state unless the person is licensed by the department as a fantasy sports contest operator.

B. An individual may offer one or more fantasy sports contests if all of the following apply:

The fantasy sports contests are not made available to the general public.
Each of the fantasy sports contests is limited to not more than fifteen total fantasy sports contest players.
The individual collects not more than $10,000 in total entry fees for all fantasy sports contests offered in a calendar year, at least ninety-five percent of which are awarded to the fantasy sports contest players.

C. An Indian tribe that lawfully conducts class III gaming pursuant to a tribal-state gaming compact with this state, directly or through a third-party operator, may offer and conduct fantasy sports contests without applying for or holding a license pursuant to this section if all activities of the fantasy sports contest occur within the boundary of its Indian lands and the Indian tribe complies with any regulations that are included in the compact or its appendices regarding fantasy sports contests.

D. To ensure the integrity of fantasy sports contests, the department has jurisdiction over each person involved in conducting a fantasy sports contest. The department may adopt rules related to conducting fantasy sports contests, including rules prescribing penalties for violating this chapter or any rules adopted under this chapter.

E. Every applicant for licensure shall submit a completed application, along with any required information, to the department. The department shall determine the form and content of the application. Each application shall be accompanied by the applicant's current photograph and the fee required by the department. The applicant must also submit a full set of fingerprints to the department for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation.

F. The information required by the department shall include documentation of all of the following:

The name of the applicant.
The location of the applicant's principal place of business.
The applicant's telephone number.
The applicant's social security number or, if applicable, the applicant's federal tax identification number.
The name and address of each individual that holds a ten percent or more ownership interest in the applicant or in shares of the applicant.
The applicant's criminal record, if any, or if the applicant is a business entity, on request, any criminal record of an individual who is a director, officer or key employee of, or any individual who has a ten percent or more ownership interest in, the applicant.
Any ownership interest that a director, officer, key employee or individual owner of ten percent or more of the applicant holds in a person that is or was a fantasy sports contest operator or similar entity in any jurisdiction.
An identification of any business, including, if applicable, the state of incorporation or registration, in which an applicant, director, officer, key employee or individual owner of ten percent or more of the applicant, has an equity interest of five percent or more.
Whether an applicant, director, officer, key employee or individual owner of ten percent or more of the applicant has ever applied for or been granted any license, registration or certificate issued by a licensing authority in this state or any other jurisdiction for a gaming activity.
Whether an applicant, director, officer, key employee or individual owner of ten percent or more of the applicant has filed or been served with a complaint or other notice filed by a public body regarding the delinquency in payment of or dispute over filings concerning the payment of any tax required under federal, state or local law, including the amount of tax, the type of tax, the taxing agency and the time periods involved.
A description of any physical facility operated by the applicant in this state, the employees who work at the facility and the nature of the business conducted at the facility.
Information sufficient to show, as determined by the department, that the applicant can meet the requirements of procedures submitted by the applicant under section 5-1203 and under any rules adopted under this chapter.

G. The department may require licensure of a holding company, a management company or any other person it considers sufficiently connected to the fantasy sports contest operator if that licensure is necessary to preserve the integrity of fantasy sports contests and protect fantasy sports contest players.

H. A license issued under this section is valid for two years. The department shall renew a license biennially if the applicant demonstrates continued eligibility for licensure under this chapter and pays the renewal fee. Notwithstanding this subsection, the department may investigate a licensee at any time the department determines it is necessary to ensure that the licensee remains in compliance with this chapter and the rules adopted pursuant to this chapter.

I. The department shall establish the initial license fee and the license renewal fee. The department may assess investigative costs if the cost of a licensure investigation exceeds the amount of the initial license or renewal fee.

J. On receipt of a completed application and the required fee, the department shall conduct the necessary background investigation to determine if the applicant meets the qualifications for licensure. On completion of the necessary background investigation, the department shall either issue a license or deny the application. If the application for licensure is denied, a statement setting forth the grounds for denial shall be forwarded to the applicant together with all other documents relied on by the department, to the extent allowed by law.

§ 5-1203 Prohibited employees; procedures and controls

A. The fantasy sports contest operator may not employ an individual and, if already employed, shall terminate an employee who is identified through regulations issued by the department if the individual meets any of the following criteria:

Has been convicted of any gaming offense.
Has been convicted of a felony in the seven years before submission of the employment application unless that felony has been set aside.
Has ever been convicted of a felony related to extortion, burglary, larceny, bribery, embezzlement, robbery, racketeering, money laundering, forgery, fraud, murder, voluntary manslaughter or a sexual offense that requires the individual to register pursuant to section 13-3821.
Has knowingly and wilfully provided materially important false statements or information or omitted materially important information on the individual's employment application or background questionnaire.
Is an individual whose prior activities, criminal record, if any, or reputation, habits and associations pose a threat to the public interest or to the effective regulation and control of gaming or create or enhance the dangers of unsuitable, unfair or illegal practices, methods and activities in conducting gaming or carrying on the business and financial arrangements incidental to gaming.

B. As a condition of licensure, a fantasy sports contest operator must submit to and receive approval from the department for commercially reasonable procedures and internal controls intended to do all of the following:

Prevent the fantasy sports contest operator or its owners, directors, officers and employees and any relative of any of these individuals living in the same household from participating in a fantasy sports contest offered to the public.
Prevent the employees or agents of the fantasy sports contest operator from sharing protected information with third parties unless the protected information is otherwise made publicly available.
Prevent participants and officials in an athletic event from participating in a fantasy sports contest that is based on the athletic event.
Establish the number of entries a single fantasy sports contest player may enter in a single fantasy sports contest and take reasonable steps to prevent fantasy sports contest players from submitting more than the allowable number of entries.
Identify each highly experienced player by a symbol attached to the highly experienced player's username.
Offer some fantasy sports contests that are open only to players other than highly experienced players.
Either of the following:

(a) Segregate the deposits in the fantasy sports contest players' accounts from operational money.

(b) Maintain a reserve in the form of cash, cash equivalents, payment processor reserves, payment processor receivables, an irrevocable letter of credit, a bond or a combination of these, the aggregate amount of which exceeds the total dollar value amount of deposits in the fantasy sports contest players' accounts. The reserve may not be used for operational activities.

Ensure compliance with the applicable state and federal requirements to protect the privacy and online security of a fantasy sports contest player and the fantasy sports contest player's account.
Otherwise ensure the integrity of fantasy sports contests.

C. A licensed fantasy sports contest operator shall comply with the procedures and internal controls that are submitted to and approved by the department under subsection B of this section. A licensed fantasy sports contest operator may make technical adjustments to its procedures and internal controls if the adjustments are not material and it notifies the department within twenty-one days of the changes becoming effective and continues to meet or exceed the standards required by this chapter and any rules adopted by the department.

D. Procedures submitted to the department under subsection B of this section are confidential and privileged and are not subject to disclosure under title 39, chapter 1, article 2.

§ 5-1204 Financial responsibility

On or before July 1 of each year, a licensed fantasy sports contest operator shall contract with a certified public accountant to perform an independent audit in accordance with generally accepted accounting principles of the financial condition of the licensed fantasy sports contest operator's total operation for the previous fiscal year and to ensure compliance with this chapter and for any other purpose as prescribed by rule. Not later than one hundred eighty days after the end of the fantasy sports contest operator's fiscal year, a licensed fantasy sports contest operator shall submit the audit results under this section to the department. The results of an audit submitted to the department under this section are confidential and privileged and are not subject to disclosure as provided in title 39, chapter 1, article 2.

§ 5-1205 Prohibitions; exception

A. A fantasy sports contest operator shall prohibit an individual who is under twenty-one years of age from participating in a fantasy sports contest.

B. A licensed fantasy sports contest operator may not do any of the following:

Allow the use of a script that provides a fantasy sports contest player with an unfair competitive advantage. A script made readily available to all fantasy sports contest players does not provide a fantasy sports contest player with an unfair competitive advantage and may not be determined otherwise.
Use false, deceptive or misleading advertising or advertising that is not based on fact.
Target, in advertising or promotions, either of the following:

(a) Individuals who have restricted themselves from entering a fantasy sports contest under the procedures established by the department pursuant to section 5-1206.

(b) Individuals who are under twenty-one years of age.

C. A fantasy sports contest may not be offered on, at or from any of the following:

A kiosk or machine open to public use and physically located in a retail business location, bar, restaurant or other commercial establishment.
A kiosk or machine open to public use and physically located in a place of public accommodation, except that a fraternal organization or veterans' organization as defined in section 5-401 or a licensed racetrack may operate up to two kiosks for the sole purpose of offering fantasy sports.

D. This section does not apply to a federally recognized Indian tribe operating under its tribal-state gaming compact and any amendments.

§ 5-1206 Problem gambling; self-exclusion list; program; liabilities

A. A fantasy sports contest operator shall develop a procedure to inform fantasy sports contest players that help is available if an individual has a problem with gambling and, at a minimum, provide the statewide toll-free helpline telephone number, text message and website information established by the department.

B. The department and the fantasy sports contest operator shall comply with the following requirements to allow problem gamblers to voluntarily exclude themselves from fantasy sports contests statewide:

The department shall establish a list of persons who acknowledge, in a manner to be established by rule, that they have a compulsive play problem and voluntarily seek to exclude themselves from fantasy sports contests statewide. The department shall establish procedures for the placement on and removal from the list of self-excluded persons. Only a person seeking voluntary self-exclusion shall be allowed to include the person's name on the self-exclusion list of the department.
The fantasy sports contest operator shall establish procedures for advising persons who inquire about self-exclusion and offer self-exclusion application forms provided by the department to those persons when requested.
The department shall compile identifying information concerning self-excluded persons. Such information shall contain, at a minimum, the full name and any aliases of the person, a photograph of the person, the social security or driver's license number of the person and the current physical and electronic contact information, including mailing address, of the person.
The department, on a weekly basis, shall provide the compiled information to fantasy sports contest operators. Fantasy sports contest operators shall treat the information received from the department under this section as confidential, and the information may not be disclosed except to vendors approved by the department for purposes of complying with this section, appropriate law enforcement agencies if needed in conducting an official investigation, or unless ordered by a court of competent jurisdiction.
A fantasy sports contest operator shall check the most recent self-excluded persons list provided by the department before creating a player account for any self-excluded person. A fantasy sports contest operator shall revoke a player account and remove all self-excluded persons from all marketing lists of the fantasy sports contest operator.
A fantasy sports contest operator shall take reasonable steps to ensure that persons on the department's list of self-excluded persons are denied access to all fantasy sports contests.
A fantasy sports contest operator shall take reasonable steps to identify self-excluded persons.
If a self-excluded person participates in a fantasy sports contest, the fantasy sports contest operator shall report to the department, at a minimum, the name of the self-excluded person, the date of participation, the amount or value of any monies, prizes or awards forfeited, if any, and any other action taken. The report shall be provided to the department within twenty-four hours of discovery.

C. A fantasy sports contest operator may not pay any prize or award to a person who is on the department's self-exclusion list. Any prize or award won by a person on the self-exclusion list shall be forfeited and shall be donated by the fantasy sports contest operator to the department's division of problem gambling on a quarterly basis by the twenty-fifth day of the following month.

D. Notwithstanding any other provision of this chapter, the department's list of self-excluded persons is not open to public inspection.

E. A fantasy sports contest operator shall develop and maintain a program to mitigate compulsive play and curtail compulsive play, which may be in conjunction with the department.

§ 5-1207 Department of gaming; authority

The department shall adopt rules to implement this chapter as provided in title 41, chapter 6, including rules that do all of the following:

Require a fantasy sports contest operator to implement commercially reasonable procedures to prohibit access to both of the following:

(a) Individuals who request to restrict themselves from playing fantasy sports contests.

(b) Individuals who are under twenty-one years of age.

Prescribe requirements related to beginning players and highly experienced players.
Suspend the account of a fantasy sports contest player who violates this chapter or a rule adopted under this chapter.
Provide a fantasy sports contest player with access to information on playing responsibly and how to ask for assistance for compulsive play behavior.
Require an applicant for a fantasy sports contest operator license to designate at least one key employee as a condition of obtaining a license.
Include any other rule the department determines is necessary to ensure the integrity of fantasy sports contests.

§ 5-1208 Requirements

A. After a fantasy sports contest operator is licensed, the fantasy sports contest operator shall report any change to the information regarding ownership included in its application with the department within thirty days after the change is effective. The fantasy sports contest operator's license shall remain valid unless the department determines that the fantasy sports contest operator is no longer qualified to maintain the license due to the change.

B. A licensed fantasy sports contest operator shall retain and maintain in a place secure from theft, loss or destruction all of the records required to be maintained under this chapter and the rules adopted under this chapter for at least three years after the date the record is created.

C. A licensed fantasy sports contest operator shall organize all records under subsections A and B of this section in a manner that enables the licensed fantasy sports contest operator to provide the department with the records.

D. Information obtained under this section is confidential and privileged and is not subject to disclosure as provided in title 39, chapter 1, article 2.

E. If a fantasy sports contest operator is required to file a form 1099-Misc or other substantially equivalent form with the United States internal revenue service for a person who is identified by the Arizona administrative office of the courts, the department of economic security division of child support enforcement, the department of economic security supplemental nutrition assistance program and assistance overpayment or the Arizona health care cost containment system administration as owing an obligation, the fantasy sports contest operator shall withhold from the person's account the amount of obligations owed at the time the form 1099-Misc or a substantially equivalent form is issued, if the fantasy sports operator has been notified by this state of the obligation. At that time, the fantasy sports contest operator shall transmit the amount withheld for obligations to the department of gaming and shall also transmit any information requested by the department of gaming. The department of gaming shall provide information to the fantasy sports contest operator of persons with outstanding obligations. If the identified person is also self-excluded, tax liabilities and setoff obligations shall be satisfied before any monies are donated to the department of gaming division of problem gambling pursuant to section 5-1206. If the identified person has multiple liabilities, those liabilities shall be satisfied in the following order:

Child support enforcement.
Supplemental nutrition assistance program and assistance overpayment.
The courts.
The Arizona health care cost containment system administration.

§ 5-1209 Revocation, suspension or denial of license; grounds; definitions

A. The department may revoke, suspend or deny a license if an applicant or licensee meets any of the following criteria:

Violates, fails or refuses to comply with the provisions, requirements, conditions, limitations or duties imposed by law or rule, or if any such violation occurs on any fantasy sports contest platform operated by any such person or over which the person has substantial control.
Knowingly causes, aids, abets or conspires with another to cause any person to violate any of the laws of this state or the rules of the department.
Obtains a license by fraud, misrepresentation, concealment or through inadvertence or mistake.
Is convicted of or forfeited bond on a charge of or pleads guilty to:

(a) Forgery, larceny, extortion or conspiracy to defraud.

(b) Wilful failure to make required payment or reports to any tribal, state or federal governmental agency, filing false reports with any tribal, state or federal governmental agency or any similar offense or offenses.

(d) Any crime, whether a felony or misdemeanor, involving any gaming activity, physical harm to an individual or moral turpitude.

Makes a misrepresentation of or fails to disclose a material fact to the department.
Fails to prove, by clear and convincing evidence, that the person is qualified for licensure.
Is subject to current prosecution or pending charges or a conviction that is under appeal for any of the offenses included in this subsection. At the request of an applicant for an original license, the department may defer decision on the application during the pendency of the prosecution or appeal.
Has had a gaming license issued by any jurisdiction in the United States revoked or denied.
Demonstrates a wilful disregard for compliance with gaming regulatory authority in any jurisdiction, including suspension, revocation or denial of an application for a license or forfeiture of a license.
Has pursued or is pursuing economic gain in an occupational manner or context in violation of the criminal laws of any state if the pursuit creates probable cause to believe that the person's participation in gaming or related activities would be detrimental to the proper operation of authorized gaming or a related activity in this state.
Is a career offender or a member of a career offender organization or an associate of a career offender or career offender organization thereby establishing probable cause to believe that the association is of such a nature as to be detrimental to the proper operation of authorized gaming or related activities in this state.
Is a person whose prior activities, criminal record, if any, habits and associations pose a threat to the public interest of this state or to the effective regulation and control of fantasy sports contests, or creates or enhances the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of fantasy sports contests, or the carrying on of the business and financial arrangements incidental thereto.
Fails to provide any information requested by the department within seven days of the request for the information.

B. The department, pursuant to the laws of this state, may summarily suspend a license issued pursuant to this chapter if the continued licensure of a person constitutes an immediate threat to the public health, safety or welfare.

C. Any applicant for licensure agrees by making such application to be subject to state jurisdiction to the extent necessary to determine the applicant's qualification to hold such license, including all necessary administrative procedures, hearings and appeals pursuant to title 41, chapter 6 and the department's rules.

D. An applicant for licensure may not withdraw an application without the department's written permission. The department may not unreasonably withhold permission to withdraw an application.

E. For the purposes of this section:

"Career offender" means any individual who behaves in an occupational manner or context for the purposes of economic gain by violating federal law or the laws and public policy of this state.
"Career offender organization" means any group of individuals who operate together as career offenders.
"Occupational manner or context" means the systematic planning, administration, management or execution of an activity for financial gain.

§ 5-1210 Violations; classification; penalties

A. A person may not do any of the following:

Except as otherwise provided in this chapter, offer a fantasy sports contest in this state unless the person is licensed by the department.
Knowingly make a false statement on an application for a license under this chapter.
Knowingly provide false testimony to the department or any authorized representative of the department.

B. The department may not issue a license under this chapter to a person that violates subsection A of this section.

C. A person that violates subsection A, paragraph 1 of this section is guilty of a crime as follows:

For the first or second violation, the person is guilty of a class 3 misdemeanor.
For a third or subsequent violation, the person is guilty of a class 1 misdemeanor.

D. The department may issue a cease and desist order and obtain injunctive relief against a person that violates this chapter.

E. The department may impose a civil penalty of not more than $10,000 for a violation of this chapter, a rule adopted under this chapter or an order of the department. A civil penalty imposed under this section is payable to this state and may be collected in a civil action brought by the department.

F. The department may suspend, revoke or restrict the license of a fantasy sports contest operator that violates this chapter, a rule adopted under this chapter or an order of the department.

§ 5-1211 Fees; penalty

A. The department shall establish a fee for the privilege of operating fantasy sports contests. In determining the fee, the department shall consider the highest percentage of revenue share that an Indian tribe pays to this state pursuant to the tribal-state gaming compacts and any amendments. The fee may not exceed ten percent of the fantasy sports contest operator's adjusted revenues. A fantasy sports contest operator shall report to the department and pay the fee from its monthly fantasy sports contest adjusted revenues, on a form and in the manner prescribed by the department. This subsection does not apply to an individual who offers a fantasy sports contest under section 5-1202, subsection B.

B. The fee established pursuant to subsection A of this section is due and payable to the department by the twenty-fifth day of each month and shall be based on monthly fantasy sports contest adjusted revenue derived during the previous month.

C. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected pursuant to this section in the fantasy sports contest fund established by section 5-1212.

D. A licensed fantasy sports contest operator who fails to remit to the department the fees required under this section is liable, in addition to any sanction or penalty imposed under this chapter, for the payment of a penalty of five percent per month up to a maximum of twenty-five percent of the amounts ultimately found to be due, to be recovered by the department. Penalties imposed and collected by the department under this subsection must be deposited in the fantasy sports contest fund established by section 5-1212.

§ 5-1212 Fantasy sports contest fund

A. The fantasy sports contest fund is established consisting of monies deposited pursuant to section 5-1211 or from any other source. The department shall administer the fund. Monies in the fund are subject to legislative appropriation.

B. On notice from the department, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.

C. The department may spend not more than ten percent of monies on the department's annual costs of regulating and enforcing this chapter unless otherwise provided by the legislature. At the end of each fiscal year, any revenues collected in excess of the amount appropriated from the fund shall be transferred to the state general fund.

§ 5-1213 Conditional enactment; notice

A. This chapter does not become effective unless and before each Indian tribe with a gaming facility in Pima county and each Indian tribe with a gaming facility in the Phoenix metropolitan area, as defined in the 2021 compact amendment, has entered into a 2021 gaming compact amendment and notice of the United States secretary of the interior's approval or approval by operation of law has been published in the federal register.

B. The department shall notify the director of the Arizona legislative council in writing of the date on which the condition was met.

Chapter 11 Event Wagering

Article 1 General Provisions

§ 5-1301 Definitions

In this chapter, unless the context otherwise requires:

"Adjusted gross event wagering receipts" means an event wagering operator's gross wagering receipts, excluding voided bets, minus winnings paid to authorized participants and any federal excise tax. A deduction from adjusted gross event wagering receipts equal to the value of free bets or promotional credits redeemed by authorized participants may be taken as provided in this paragraph. The deduction under this paragraph for free bets or promotional credits is limited to the first five years following the effective date of this section as follows:

(a) For years one and two, a deduction not to exceed twenty percent of an event wagering operator's gross wagering receipts.

(b) For year three, a deduction not to exceed fifteen percent of an event wagering operator's gross wagering receipts.

(c) For years four and five, a deduction not to exceed ten percent of an event wagering operator's gross wagering receipts.

(d) For year six and each year thereafter, a deduction of free bets is not allowed. January 1 following the year in which the event wagering operator begins event wagering operations is considered the first year of event wagering for the purposes of this paragraph. An event wagering operator may deduct up to twenty percent of an event wagering operator's gross wagering receipts during any period that the operator conducts event wagering before January 1 of the first year of event wagering operations.

"Department" means the department of gaming.
"E-sport" means an organized, multiplayer video game competition, particularly between professional players, individually or as teams.
"Event wagering":

(a) Means accepting wagers on sports events or other events, portions of sports events or other events, the individual performance statistics of athletes in a sports event or combination of sports events or the individual performance of individuals in other events or a combination of other events by any system or method of wagering, including in person or over the Internet through websites and on mobile devices.

(b) Does not include a fantasy sports contest as defined in section 5-1201.

"Event wagering employee" means an employee of an event wagering operator, sports facility, management services provider or limited event wagering operator who is directly involved in the management or control of the conduct of event wagering under this chapter in this state.
"Event wagering facility" means a facility at which event wagering is conducted under this chapter.
"Event wagering operator" means either:

(a) An owner or operator of an Arizona professional sports team or franchise, an operator of a sports facility in this state that hosts an annual tournament on the PGA tour or a promoter of a national association for stock car auto racing national touring race in this state, or the designee of such an owner, operator or promoter, who is licensed to offer event wagering under this chapter. If an owner, operator or promoter that qualified for an event wagering operator license appoints a designee, the designee will be considered the event wagering operator and the licensee with respect to the applicable license for the purposes of this chapter.

(b) An Arizona Indian tribe or an entity fully owned by an Arizona Indian tribe, or its designee, licensed to operate only mobile event wagering outside the boundaries of its Indian lands and throughout this state if it has signed the most recent tribal-state gaming compact and any applicable appendices or amendments. If an Indian tribe that qualified for an event wagering operator license appoints a designee, the designee will be considered the event wagering operator and the licensee with respect to the applicable license for the purposes of this chapter.

"Limited event wagering operator" means a racetrack enclosure or additional wagering facility that holds a permit issued by the division of racing to offer wagers on horseracing and that is licensed under this chapter.
"Official league data" means statistics, results, outcomes and other data related to a sports event or other event obtained pursuant to an agreement with the relevant sports governing body or an entity expressly authorized by the sports governing body to provide such information to licensees that authorizes the use of such data for determining the outcome of sports wagers on sports events or other events.
"Licensee" means a person that holds an event wagering operator license, limited event wagering license, supplier license or management services provider license.
"Management services provider" means a person that operates, manages or controls event wagering authorized by this chapter on behalf of an event wagering operator or limited event wagering operator, including developing or operating event wagering platforms and providing odds, lines and global risk management, and may provide services to more than one licensed event wagering operator or licensed limited event wagering operator.
"Other event" means a competition of relative skill or an event authorized by the department under this chapter.
"Person" means an individual, partnership, committee, association, corporation, Indian tribe or an entity fully owned by an Indian tribe, or any other organization or group of persons.
"Professional sport" means a sport conducted at the highest level league or organizational play for its respective sport and includes baseball, basketball, football, golf, hockey, soccer and motorsports.
"Prohibited conduct" includes any statement, action or other communication intended to unlawfully influence, manipulate or control a betting outcome of a sports event or other event of any individual occurrence or performance in a sports event or other event in exchange for financial gain or to avoid financial or physical harm.
"Prohibited participant" means:

(a) Any individual whose participation may undermine the integrity of the wagering, the sports event or the other event.

(b) Any individual who is prohibited from placing a wager as an agent, proxy or because of self-exclusion.

(c) Any individual who is an athlete, coach, referee, player, trainer or personnel of a sports organization in any sports event or other event overseen by that individual's sports organization who, based on information that is not publicly available, has the ability to determine or to unlawfully influence the outcome of a wager.

(d) An individual who holds a position of authority or influence sufficient to exert influence over the participants in a sporting contest, including coaches, managers, handlers and athletic trainers, such that their actions can affect the outcome of a wager.

(e) An individual with access to exclusive information on any sports event or other event overseen by that individual's sports governing body that is not publicly available information or any individual identified by any lists provided by the sports governing body to the department.

"Sports event" means a professional sport or athletic event, a collegiate sport or athletic event, a motor race event, an e-sport event or an olympic event.
"Sports facility" means a facility that is owned by a commercial, state or local government or quasi-governmental entity that hosts professional sports events and that holds a seating capacity of more than ten thousand persons at its primary facility, one location in this state that hosts an annual golf tournament on the PGA tour and one location that holds an outdoor motorsports facility that hosts a national association for stock car auto racing national touring race.
"Sports governing body" means an organization headquartered in the United States that prescribes final rules and enforces codes of conduct with respect to a sports event and participants in a sports event.
"Tier one sports wager" means a sports wager that is determined solely by the final score or final outcome of the sports event and that is placed before the sports event has begun.
"Tier two sports wager" means a sports wager that is not a tier one sports wager.
"Supplier" means a person that manufactures, distributes or supplies event wagering equipment or software, including event wagering systems.
"Wager":

(a) Means a sum of money or thing of value risked on an uncertain occurrence.

(b) Includes tier one and tier two sports wagers, single-game bets, teaser bets, parlays, over-under bets, moneyline bets, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, straight bets and other wagers approved by the department.

§ 5-1302 Department of gaming; powers; duties

A. The department shall enforce this chapter and supervise compliance with laws and rules relating to regulating and controlling event wagering in this state.

B. The department may adopt rules in accordance with this chapter and title 41, chapter 6.

C. The department shall evaluate all applicants to determine suitability for issuing all event wagering operator licenses, limited event wagering operator licenses, supplier licenses and management services provider licenses and license renewals and shall charge and collect all fees pursuant to this chapter.

D. The department may deny, revoke or suspend licenses or renewals or deny an applicant's request to withdraw a license application.

E. The department shall conduct background checks of event wagering operators, limited event wagering operators, management services providers and event wagering suppliers and may monitor and conduct periodic audits of event wagering operations and providers.

F. Hearings shall be conducted pursuant to title 41, chapter 6, article 10. Except as provided in section 41-1092.08, subsection H, any party aggrieved by a final order or decision of the department may seek judicial review pursuant to title 12, chapter 7, article 6.

G. The department shall oversee event wagering and develop standards and procedures and engage in other duties as the director of the department prescribes to further the purposes of this chapter, including establishing and enforcing standards and procedures for:

Collecting, depositing and disbursing all applicable license fees and payments as required by this chapter.
Operating event wagering and maintaining, testing, inspecting, approving and auditing event wagering accounts, platforms, hardware, software and data, including player, financial, accounting and wagering data.
Operating event wagering facilities, including location, security and surveillance, departmental access, inspections and approvals.
Licensing and requirements for the use of geolocation services to reasonably ensure persons engaging in event wagering are located in this state or another departmentally authorized location allowed by this chapter at the time of event wagering.
Approving other events on which wagers may be taken consistent with this chapter.
Establishing mechanisms designed to detect and prevent the unauthorized use of player accounts and to detect and prevent fraud, money laundering and collusion, including a requirement that event wagering operations contract with a departmentally licensed integrity monitoring provider.
Paying winning wagers, reporting taxes and collecting debt setoffs from a payout of winnings that triggers the licensee's obligation to file a form W-2G or a substantially equivalent form with the United States internal revenue service, including overdue child support payments, state tax debt and debts as established by the department of economic security.

H. The department may adopt rules authorizing event wagering operators to offset loss and manage risk, directly or with a third party approved by the department, through the use of a liquidity pool in this state or another jurisdiction, if the event wagering operator or its management services provider is licensed by such jurisdiction to operate an event wagering or sports betting business. An event wagering operator's use of a liquidity pool does not eliminate its duty to ensure that it has sufficient monies available to pay bettors.

§ 5-1303 Event wagering; license required; exception

A. Event wagering may be conducted only to the extent that it is conducted in accordance with this chapter. A person may not offer any activity in connection with event wagering in this state unless all necessary licenses have been obtained in accordance with federal and state law and any applicable rules of the department.

B. A wager placed by a participant in this state and received by an event wagering operator or its management services provider in this state is considered to be gambling or gaming that is conducted in this state.

C. A law that is inconsistent with this chapter does not apply to event wagering as provided for by this chapter.

D. This chapter does not apply to event wagering conducted exclusively on Indian lands as that term is defined in the Indian gaming regulatory act (P.L. 100-497; 102 Stat. 2467) by an Indian tribe operated in accordance with a tribal-state gaming compact and any amendments. For purposes of this chapter, event wagering is conducted exclusively on Indian lands only if the individual who places the wager is physically present on Indian lands when the wager is initiated, received or otherwise made on equipment that is physically located on Indian lands, and the wager is initiated, received or otherwise made in conformity with the safe harbor requirements as provided in 31 United States Code section 5362(10)(c). An event wagering operator may not accept any wager if the individual who places the wager is physically present on Indian lands when the wager is initiated.

E. A person may not provide or make available event wagering devices in a place of public accommodation in this state, including a club or other association, to enable individuals to place wagers except as provided by this chapter. This subsection does not apply to an event wagering operator aggregating, providing or making available event wagering devices within its own event wagering facility.

F. For purposes of this chapter, the intermediate routing of electronic data in connection with event wagering, including routing across state lines, does not determine the location or locations in which the wager is initiated, received or otherwise made.

G. An event wagering operator may use more than one event wagering platform to offer, conduct or operate event wagering. Only an event wagering operator or its management services provider may process, accept, offer or solicit wagers. The event wagering operator must clearly display its own brand or that of an affiliate on the event wagering platform that it uses. The event wagering operator, in its sole discretion, may also elect to have the brand of the management services provider that it uses be the name and logos of the event wagering platform provider if the event wagering platform also clearly displays the event wagering operator's own trademarks and logos or those of an affiliate.

H. An owner, operator, promoter or Indian tribe that qualifies for an event wagering operator license and appoints a designee to be licensed as an event wagering operator is not responsible for the conduct of its designee.

§ 5-1304 Licensure; application

A. The department may issue not more than ten event wagering operator licenses to applicants other than an Indian tribe. The department may issue not more than ten event wagering operator licenses to Indian tribes in this state if the Indian tribe receiving a license has signed the most recent tribal-state gaming compact and any applicable appendices or amendments. The department shall issue event wagering operator licenses only to applicants that are either of the following in compliance with this chapter:

An owner of an Arizona professional sports team or franchise, operator of a sports facility that hosts an annual tournament on the PGA tour, promoter of a national association for stock car auto racing national touring race conducted in this state or the owner's, operator's or promoter's designee, contracted to operate event wagering for both retail event wagering at a sports facility or its complex as prescribed in subsection D of this section and mobile event wagering throughout the state. If a designee is used, the designee shall be considered the applicant and be subject to any requirements of the application process rather than the owner, operator or promoter.
An Indian tribe, or an entity fully owned by an Indian tribe, or its designee contracted to operate only mobile event wagering outside the boundaries of its Indian lands and throughout the state if it has signed the most recent tribal-state gaming compact and any applicable appendices or amendments.

B. An applicant for an event wagering license shall submit an application in a form prescribed by the department, including all of the following:

The identification of the applicant's principal owners that own more than five percent of the company, the partners, the members of its board of directors and the officers, the identification of any holding company, including its principals, that is engaged by the applicant to assist in the management or operation of event wagering, if applicable, and information to verify that the applicant is qualified to hold a license under subsection A of this section.
A full set of fingerprints for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation. The fingerprints shall be furnished by the applicant's officers and directors, if a corporation, members, if a limited liability company, and partners, if a partnership. An applicant convicted of a disqualifying offense may not be licensed.
A notice and description of civil judgments obtained against the applicant pertaining to antitrust or security regulation laws of the federal government, of this state or of any other state, jurisdiction, province or country.
If the applicant has conducted gaming operations in a jurisdiction that allows such activity, letters of compliance from the regulatory body that regulates event wagering, sports wagering or any other gaming activity that the applicant is licensed for, conducts or operates under jurisdiction of the regulatory body.
Information, documentation and assurances concerning financial background and resources of the applicant or its management services provider as may be required to establish by clear and convincing evidence the financial stability and responsibility of the applicant or its management services provider, including bank references, business and personal income and disbursement schedules, tax returns and other reports filed with governmental agencies, and business and personal accounting and check records and ledgers. Each applicant or its management services provider, in writing, shall authorize the examination of all bank accounts and records as may be deemed necessary by the department. The department may consider any relevant evidence of financial stability. The applicant is presumed to be financially stable if the applicant or its management services provider establishes by clear and convincing evidence that it meets each of the following standards:

(a) The ability to ensure the financial integrity of event wagering operations by maintaining a bankroll or equivalent provisions adequate to pay winning wagers to bettors when due. An applicant is presumed to have met this standard if the applicant or its management services provider maintains, on a daily basis, a bankroll or equivalent provisions in an amount that is at least equal to the average daily minimum bankroll or equivalent provisions, calculated on a monthly basis, for the corresponding month in the previous year.

(b) The ability to meet ongoing operating expenses that are essential to maintaining continuous and stable event wagering operations.

Information to establish by clear and convincing evidence that the applicant or its management services provider has sufficient business ability and gaming experience as to establish the likelihood of creating and maintaining a successful and stable event wagering operation.
Information regarding the financial standing of the applicant, including each person or entity that has provided loans or financing to the applicant or its management services provider.
Information on the amount of adjusted gross event wagering receipts and associated adjusted gross receipts that the applicant expects to generate.
A nonrefundable application fee or annual licensing fee as prescribed by section 5-1310.
Any additional information required by the department to determine the financial and operational ability to fulfill its obligations as an event wagering operator.

C. Any applicant for licensure agrees to be subject to state jurisdiction to the extent necessary to determine the applicant's qualification to hold a license, including all necessary administrative procedures, hearings and appeals as provided in title 41, chapter 6 and department rules.

D. A license issued by the department pursuant to this section authorizes an event wagering operator identified in subsection A, paragraph 2 of this section to operate only mobile event wagering or an event wagering operator identified in subsection A, paragraph 1 of this section to offer both:

Event wagering in this state through an event wagering facility within a five-block radius of the event wagering operator's sports facility or, in the case of a designee, the sports facility or the designating owner, operator or promoter of a professional sports team, event or franchise. An event wagering facility within one mile of a tribal gaming facility must be:

(a) Within a sports complex that includes retail centers that are adjacent to the sports facility.

(b) Not more than one-fourth of a mile from a sports facility within the sports complex.

Event wagering through a mobile platform as specified by the department. A licensed event wagering operator or its designated management services provider may offer event wagering through an event wagering platform as specified by the department.

E. A license issued under this section is valid for five years if the licensee submits an annual license fee, maintains the qualifications to obtain a license under this section and substantially complies with this chapter and other laws and rules relating to event wagering. A licensee may renew its license by submitting an application in a form prescribed by department rule and the application fee. A license may not be renewed if it is determined by the department that the event wagering operator has not substantially complied with this chapter or any other law regulating its event wagering operations or other operations licensed by the department. A licensee shall submit the nonrefundable annual license and application fees prescribed in section 5-1310 with its application for the renewal of its license.

F. A person may not apply for or obtain more than one event wagering operator license. A management services provider may offer services to more than one event wagering operator.

§ 5-1305 License review; approval; fees; material change; exemption; display; transferability

A. On receipt of a completed application and the required fee, the department shall conduct the necessary background investigation to ensure the applicant is qualified for licensure. On completion of the necessary background investigation, the department shall either issue a license or deny the application. If the application is denied, the department shall forward a statement setting forth the grounds for denial to the applicant together with all other documents on which the department relied, to the extent allowed by law.

B. The department may conduct additional background investigations of any person required to be licensed at any time while the license remains valid. The issuance of a license does not create or imply a right of employment or continued employment. The event wagering operator or limited event wagering operator may not employ and, if already employed, shall terminate an event wagering employee if it is determined that the person meets any of the following criteria:

Has been convicted of any gaming offense.
Has been convicted of a felony in the seven years before submitting an application unless that felony has been set aside.
Has ever been convicted of a felony related to extortion, burglary, larceny, bribery, embezzlement, robbery, racketeering, money laundering, forgery, fraud, murder, voluntary manslaughter, a sexual offense that requires the individual to register pursuant to section 13-3821 or kidnapping.
Knowingly and wilfully provides materially important false statements or information or omits materially important information on the person's employment application or background questionnaire.
Is a person whose prior activities, criminal record, if any, or reputation, habits and associations pose a threat to the public interest or to the effective regulation and control of gaming or create or enhance the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of gaming or the carrying on of the business and financial arrangements incidental thereto.

C. Not later than sixty days after the department receives a complete application, the department shall issue a license to the applicant unless the background investigation the department conducts discloses that the applicant has a criminal history or unless other grounds sufficient to disqualify the applicant are apparent on the face of the application. If more than ten applications are received for a particular license type, the department shall adopt a process for ensuring an equal opportunity for all qualified applicants to obtain a license. The department shall review and approve or deny an application for a license as provided in title 41, chapter 6, article 10.

D. For each application for licensure or renewal of a license that is approved under this section, the amount of the application fee must be credited toward the licensee's license fee and the licensee shall remit the balance of the initial license fee to the department on approval of a license. The fees collected from licensees under this section shall be deposited in the event wagering fund established by section 5-1318 and used by the department to pay the actual operating and administrative expenses incurred for event wagering.

E. Each person licensed under this chapter shall give the department written notice within thirty days after a material change is made to information provided in the licensee's application for a license or renewal.

F. Indian tribes within this state operating event wagering exclusively on Indian lands are exempt from the licensure requirements of this section. Event wagering on Indian lands is governed by the tribal-state gaming compact, its appendices, any amendments and the Indian gaming regulatory act (P.L. 100-497; 102 Stat. 2467).

G. Each licensee shall display its license conspicuously in the licensee's place of business or have the license available for inspection by an agent of the department or a law enforcement agency. Each licensee that operates an event wagering platform shall conspicuously display a notice of the license on its platform's landing page.

H. The department shall keep all information, records, interviews, reports, statements, memoranda or other data supplied to or used by the department in the course of its review or investigation of an application for an event wagering operator license or renewal of a license confidential. The materials described in this subsection are exempt from disclosure pursuant to title 39, chapter 1, article 2.

I. A license issued under this chapter may not be transferred to another person or entity without prior approval of the department. The department shall work with applicants and licensees to ensure there is no gap in the validity of the license.

§ 5-1306 License revocation; suspension; denial; grounds; definitions

A. The department may revoke, suspend or deny a license when an applicant or licensee meets any of the following criteria:

Violates, fails or refuses to comply with the provisions, requirements, conditions, limitations or duties imposed by this chapter and other laws and rules, or if any such violation has occurred on any event wagering system operated by any such person or over which the person has substantial control.
Knowingly causes, aids, abets or conspires with another to cause any person to violate any of the laws of this state or the rules of the department.
Obtains a license by fraud, misrepresentation, concealment or through inadvertence or mistake.
Is convicted or forfeited bond on a charge of or pleads guilty to:

(a) Forgery, larceny, extortion or conspiracy to defraud.

(d) Any crime, whether a felony or misdemeanor, involving any gaming activity, physical harm to an individual or moral turpitude.

Misrepresents or fails to disclose a material fact to the department.
Fails to prove, by clear and convincing evidence, that the person is qualified for licensure.
Is subject to current prosecution or pending charges or a conviction that is under appeal for any of the offenses included in this subsection. At the request of an applicant for an original license, the department may defer decision on the application during the pendency of the prosecution or appeal.
Has had a gaming license issued by any jurisdiction in the United States revoked or denied.
Demonstrates a wilful disregard for compliance with gaming regulatory authority in any jurisdiction, including suspension, revocation or denial of an application for a license or forfeiture of a license.
Has pursued or is pursuing economic gain in an occupational manner or context in violation of the criminal laws of any state if the pursuit creates probable cause to believe that the person's participation in gaming or related activities would be detrimental to the proper operation of an authorized gaming or related activity in this state.
Is a career offender or a member of a career offender organization or an associate of a career offender or career offender organization thereby establishing probable cause to believe that the association is of such a nature as to be detrimental to the proper operation of the authorized gaming or related activities in this state.
Is a person whose prior activities, criminal record, if any, habits and associations pose a threat to the public interest of this state or to the effective regulation and control of event wagering, creates or enhances the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of event wagering or the carrying on of the business and financial arrangements incidental thereto.
Fails to provide any information requested by the department within seven days after the request for the information, except for good cause as determined by the department.

B. Any applicant for licensure or holder of a license shall be entitled to a full hearing on any final action by the department that may result in the revocation, suspension or denial of licensure. The hearing shall be conducted in accordance with the procedures as provided in title 41, chapter 6 and the department's rules.

C. The department may summarily suspend any license if the continued licensing of the person constitutes an immediate threat to the public health, safety or welfare.

D. For the purposes of this section:

"Career offender" means any individual who behaves in an occupational manner or context for the purposes of economic gain by violating federal law or the laws and public policy of this state.
"Career offender organization" means any group of individuals who operate together as career offenders.
"Occupational manner or context" means the systematic planning, administration, management or execution of an activity for financial gain.

§ 5-1307 Limited event wagering operator licenses; definition

A. An event wagering operator may partner with a racetrack enclosure or additional wagering facility that holds a permit that is issued by the division of racing to obtain a limited event wagering license for event wagering only at one specific physical location. On application, the department may issue a total of up to ten limited event wagering licenses to authorize event wagering at ten specific physical locations.

B. An entity seeking a limited event wagering license shall provide the following information to the department in its application:

A copy of its current approval by the division of racing to conduct racing meetings or approval as an additional wagering facility.
A letter from an event wagering operator of its partnership for the purposes of event wagering.
An attestation and map demonstrating that the specific physical location of the event wagering facility is located at least five miles from:

(a) A tribal gaming facility.

(b) The specific event wagering facility location operated by an event wagering operator.

C. The department shall issue a limited event wagering license if the following conditions are met:

The applicant is in compliance with all division of racing rules regarding its racing or additional wagering facility operations.
The applicant has a current license with the division of racing.
The applicant is not currently the subject of an investigation by the division of racing for a violation of division rules.
The applicant submits fees as required by the department.

D. A limited event wagering license allows the licensee to conduct event wagering only in accordance with this chapter and any applicable rules adopted by the department.

E. A limited event wagering operator shall be licensed by the department before the commencement of operation and every two years thereafter. The license shall include each principal, the primary management official and key employees.

F. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected from licenses under this section in the event wagering fund established by section 5-1318.

G. For the purposes of this section, "additional wagering facility" has the same meaning prescribed in section 5-101.

§ 5-1308 Supplier license

A. The department may issue a supplier license to a person that manufactures, distributes, sells or leases event wagering equipment, systems or other gaming items to conduct event wagering and offers services related to the equipment or other gaming items and data to an event wagering operator or limited event wagering operator while the license is active. The department may accept a license issued by another jurisdiction that the department determines to have similar licensure requirements as evidence the applicant meets supplier licensure requirements.

B. The department may adopt rules that establish additional requirements for a supplier and any system or other equipment used for event wagering.

C. An applicant for a supplier license shall demonstrate that the equipment, system or services that the applicant plans to offer to the event wagering operator conform to standards established by the department and applicable state law. The department may accept approval by another jurisdiction that the department determines has similar equipment standards as evidence the applicant meets the standards established by the department and applicable state law.

D. An applicant shall pay to the department a nonrefundable license and application fee as prescribed by section 5-1310. A license is valid for two years. The department shall grant a renewal of a supplier license if the renewal applicant has continued to comply with all applicable statutory and regulatory requirements, submits the renewal application on a department-issued renewal form and pays the renewal fee prescribed by section 5-1310. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected from licensees under this subsection in the event wagering fund established by section 5-1318.

E. A supplier shall submit to the department a list of all event wagering equipment and services sold, delivered or offered to an event wagering operator in this state, as required by the department, all of which must be tested and approved by an independent testing laboratory approved by the department. An event wagering operator or limited event wagering operator may continue to use supplies acquired from a licensed supplier, even if a supplier's license expires or is otherwise canceled, unless the department finds a defect in the supplies.

§ 5-1309 Management services provider license

A. An event wagering operator may contract with an entity to conduct event wagering in accordance with the rules of the department and this chapter. The entity shall obtain a license from the department as a management services provider pursuant to this chapter and any rules adopted by the department before the execution of any such contract. A management services provider may provide services to more than one event wagering operator or limited event wagering operator under its license.

B. Each applicant for a management services provider license shall meet all requirements for licensure and pay a nonrefundable license and application fee as prescribed by section 5-1310. The department may adopt rules establishing additional requirements for a management services provider. The department may accept a license issued by another jurisdiction that the department determines to have similar licensure requirements as evidence the applicant meets management services provider licensure requirements. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected from licensees under this subsection in the event wagering fund established by section 5-1318.

C. Management services provider licenses shall be renewed every two years to licensees who continue to be in compliance with all requirements and who pay the renewal fee.

§ 5-1310 License fees; bond

A. The department shall establish and collect fees for applications, initial licenses and renewals of the following:

Event wagering operator licenses.
Limited event wagering operator licenses.
Management services provider licenses.
Supplier licenses.

B. If actual costs incurred by the department to investigate the background of an applicant exceed the fees pursuant to subsection A of this section, those costs may be assessed to the applicant during the investigation process. Payment in full to the department shall be required before the department issues a license. The department may require event wagering operators, limited event wagering operators and suppliers applying for licensure to post a bond sufficient to cover the actual costs that the department anticipates will be incurred in conducting a background investigation of the applicant.

§ 5-1311 License restrictions; prohibited licensees; violation; classification

A. The following persons or their immediate family members may not apply for or obtain a license under this chapter:

An employee of the department.
An employee of any professional sports team.
A coach of or player for a collegiate, professional or olympic sports team or sport.
An individual who has been convicted of a crime related to sports or event wagering on a sports event or other event, cheating, extortion, burglary, larceny, bribery, embezzlement, robbery, racketeering, money laundering, forgery or fraud.
An individual who has the ability to directly affect the outcome of a sports event or other event for which wagers are allowed.
Any other category of individuals that, if licensed, would negatively affect the integrity of event wagering in this state.

B. A licensee may not:

Allow a person under twenty-one years of age to place a wager.
Offer, accept or extend credit to a bettor.
Target minors in advertising or promotions.
Offer or accept a wager on any event, outcome or occurrence, including a high school sports event offered, sponsored or played in connection with a public or private institution that offers education at the secondary level, other than a sports event or other event.
Accept a wager from a person who is on the department's list of self-excluded persons created and maintained by an Indian tribe or the department.
Accept a wager from a prohibited participant.

C. A violation of this section is:

For a first offense, a class 3 misdemeanor.
For a second or subsequent offense, a class 1 misdemeanor.

§ 5-1312 Reporting

A. On or before September 30 of each year, the department shall prepare and submit an annual report to the governor, the president of the senate and the speaker of the house of representatives, and shall provide a copy to the secretary of state that contains the following information:

The number of active licensees by type.
The aggregate gross and net revenue of all licensees.
The number of investigations conducted to enforce this chapter.
The financial impact on this state of the event wagering industry in this state.

B. The report may be included with other information required to be submitted by the department annually. A report submitted under subsection A of this section may be submitted electronically.

§ 5-1313 Escrow account; insurance; cash-on-hand; financial practices; audit; post-employment restrictions

A. The department shall establish:

The amount of a bond in escrow and the amount of cash that must be kept on hand to ensure that adequate reserves exist for payouts.
Any insurance requirements for a licensee.
Minimum requirements by which each licensee must exercise effective control over its internal fiscal affairs, including requirements for all of the following:

(a) Safeguarding assets and revenues, including evidence of indebtedness.

(b) Maintaining reliable records relating to accounts, transactions, profits and losses, operations and events.

Requirements for internal and independent audits of licensees.
The manner in which periodic financial reports must be submitted to the department from each licensee, including the financial information to be included in the reports.
The type of information deemed confidential financial or proprietary information that is not subject to any reporting requirements under this subsection.
Policies, procedures and processes designed to mitigate the risk of fraud, cheating or money laundering.
Any post-employment restrictions for department employees necessary to maintain the integrity of event wagering in this state.

B. The licensee may maintain the bond at any bank lawfully operating in this state or another entity as approved by the department, and the licensee must be the beneficiary of any interest accrued on the bond.

§ 5-1314 Event wagering authorized

A. Notwithstanding any other law relating to wagering except for title 5, chapter 1 and title 13, chapter 33, the operation of event wagering is lawful only if the event wagering is conducted in accordance with this chapter and any other relevant laws and rules.

B. Notwithstanding section 5-112, wagers on racing meetings or simulcasted races may be made, offered or received through the means that other wagers allowed by this chapter are made, offered or received unless otherwise prohibited by federal law.

C. Each event wagering operator shall adopt and adhere to a written, comprehensive policy outlining the house rules governing the acceptance of wagers and payouts. The policy and rules must be approved by the department before the event wagering operator accepts wagers. The policy and rules must be readily available to a bettor at any event wagering facility location and on any event wagering platform.

D. The department shall adopt rules regarding:

The manner in which an event wagering operator accepts wagers from and issues payouts to bettors, including payouts in excess of $10,000.
Reporting requirements necessary to comply with the bank secrecy act (P.L. 91-508; 84 Stat. 1114) and patriot act (P.L. 107-56; 115 Stat. 272) and for any other applicable laws and rules governing reporting suspicious wagers.

E. Each wager placed in accordance with this chapter is deemed to be an enforceable contract under law.

F. If the governing body of a sport or sports league, organization or association or other authorized entity that maintains official league data opts to provide official league data for the purposes of event wagering, an event wagering operator shall exclusively use official league data for purposes of tier two sports wagers unless the event wagering operator can demonstrate to the department that the governing body of a sport or sports league, organization or association or other authorized entity cannot provide a feed of official league data for tier two sports wagers in accordance with commercially reasonable terms, as determined by the department.

§ 5-1315 Prohibited wagers

A. A person may not wager on any of the following:

Injuries, penalties and other types or forms of event wagering under this chapter that are contrary to law.
Individual actions, events, occurrences or nonoccurrences to be determined during a collegiate sports event, including on the performance or nonperformance of a team or individual participant during a collegiate sports event. This paragraph does not prohibit wagers on the overall outcome of a collegiate sports event or seasonal awards based on a player's cumulative overall play.

B. An event wagering operator may offer only parlay and proposition bets of the type or category as prescribed by the department. The department shall prescribe the types and categories of parlay and proposition bets that may be offered in this state, if any.

C. An event wagering operator, professional sports team, league, association or institution of higher education may submit to the department in writing a request to prohibit a type or form of event wagering, or to prohibit a category of persons from event wagering, if the event wagering operator, team, league, association or institution believes that such event wagering by type, form or category is contrary to public policy, unfair to consumers or affects the integrity or perceived integrity of a particular sport or the sports betting industry. Such a request shall provide a reasonable amount of time for the department to conduct due diligence before decision-making, absent the need to proceed on an emergency basis.

D. The department shall review a request made pursuant to subsection C of this section to determine if good cause exists to grant the request. In making a determination under this section, the department shall seek input from licensees unless the emergency nature of the matter does not provide sufficient time for such due diligence. The department shall respond to the request concerning a particular event before the start of the event, or if it is not feasible to respond before the start of the event, as soon as practicable.

§ 5-1316 Integrity; reporting prohibited or suspicious conduct; investigations

A. All licensees under this chapter shall immediately report to the department and the relevant sports governing body that has requested to receive it any information relating to any of the following:

Abnormal betting activity or patterns that may indicate a concern with the integrity of a sports event or events, or any other conduct that corrupts a betting outcome of a sports event or events for purposes of financial gain, including match fixing.
Any potential breach of a sports governing body's internal rules and codes of conduct pertaining to event wagering.
Conduct that corrupts the betting outcome of event wagering for purposes of financial gain, including match fixing.
Suspicious or illegal event wagering activities, including cheating, the use of monies derived from illegal activity, wagers to conceal or launder monies derived from illegal activity, using agents to place wagers or using false identification.

B. Licensees shall report to the department, in real time and at the account level, information regarding a bettor, the amount and type of bet, the time the bet was placed, the location of the bet, including the internet protocol address if applicable, the outcome of the bet and records related to subsection A of this section. Information reported under this subsection must be submitted in the form and manner established by the department.

C. If a sports governing body has notified the department that real-time information sharing for wagers placed on its sports events is necessary and desirable, licensees shall share the same information with the sports governing body or its designee with respect to wagers on its sports events. Such information may be provided in anonymized form and may be used by a sports governing body solely for integrity purposes.

D. The department and licensees shall make commercially reasonable efforts to cooperate with investigations conducted by sports governing bodies, including using commercially reasonable efforts to provide or facilitate the provision of betting information for the purposes of investigations.

E. The department shall establish a hotline or other method of communication that allows any person to confidentially report to the department information about prohibited conduct.

F. The department shall investigate allegations and refer to prosecutorial entities prohibited conduct under this chapter.

G. The identity of any reporting person shall remain confidential unless that person authorizes disclosure of the person's identity or until such time as the allegation of prohibited conduct is referred to a prosecutorial entity.

H. If the department receives a complaint of prohibited conduct by an athlete, the department shall notify the appropriate sports governing body to review the complaint for appropriate action.

I. Notwithstanding any confidentiality provisions of this chapter, the department may provide or facilitate access to information regarding account-level betting information and data files relating to persons placing wagers on notification by a sports governing body of an official investigation being conducted into a person or persons who are prohibited by that body from participating in wagering or who are believed to have taken action that affects the integrity or perceived integrity of the sport it governs. Any information obtained by a sports governing body shall be kept confidential unless the information has been made public through a criminal proceeding or by a court order.

§ 5-1317 Sports governing body agreements

This chapter does not prohibit a sports governing body on whose events the department has authorized wagering from entering into agreements with licensees in which the sports governing body may share in the amount bet from sports wagering on the events of the sports governing body. A sports governing body is not required to obtain a license or any other approval from the department to lawfully accept such amounts.

§ 5-1318 Fees; event wagering fund

A. The department shall establish a fee for the privilege of operating event wagering. In determining the fee, the department shall consider the highest percentage of revenue share that an Indian tribe pays to this state pursuant to the tribal-state gaming compact. The fee may not exceed ten percent of the event wagering operator's adjusted gross event wagering receipts. The event wagering operator or designee has the option to choose either the cash accrual or modified accrual basis method of accounting for purposes of calculating the amount of the fee owed by the event wagering operator or designee. The fees required pursuant to this section are due and payable to the department not later than the twenty-fifth day of the month following the calendar month in which the adjusted gross event wagering receipts were received and the obligation was accrued.

B. The event wagering fund is established consisting of monies deposited pursuant to this chapter or from any other source. The department shall administer the fund. Except as otherwise provided in this chapter, the department shall deposit, pursuant to sections 35-146 and 35-147, all monies collected under this chapter in the event wagering fund. On or before the twenty-fifth of each month, ninety percent of the monies deposited in the event wagering fund from the previous month shall be transferred to the state general fund. On notice from the department, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.

C. Unless otherwise determined by the legislature, the department may spend not more than ten percent of monies on the department's annual costs of regulating and enforcing this chapter.

§ 5-1319 Financial responsibility

On or before July 1 of each year, a licensed event wagering operator and management services provider shall contract with a certified public accountant to perform an independent audit, in accordance with generally accepted accounting principles published by the American institute of certified public accountants, the financial condition of the licensed event wagering operator's or management services provider's total operation for the previous fiscal year and to ensure compliance with this chapter and for any other purpose as prescribed by rule. Not later than one hundred eighty days after the end of the event wagering operator's or management services provider's fiscal year, a licensed event wagering operator or management service provider shall submit the audit results under this section to the department. The results of an audit submitted to the department under this section are confidential and privileged and are not subject to disclosure as provided in title 39, chapter 1, article 2.

§ 5-1320 Problem gambling; self-exclusion list; program; liabilities

A. A licensee shall develop a procedure to inform players that help is available if a person has a problem with gambling and, at a minimum, provide the statewide toll-free helpline telephone number, text message and website information established by the department.

B. The department and licensees shall comply with the following requirements to allow problem gamblers to voluntarily exclude themselves from event wagering statewide:

The department shall establish a list of persons who, by acknowledging in a manner to be established by the department that they are problem gamblers, voluntarily seek to exclude themselves from event wagering statewide. The department shall establish procedures for the placement on and removal from the list of self-excluded persons. A person other than the person seeking voluntary self-exclusion may not include that person's name on the self-exclusion list of the department.
Event wagering operators, commercial sports license holders and limited event wagering operators shall establish procedures for advising persons who inquire about self-exclusion and offer self-exclusion application forms provided by the department to those persons when requested.
The department shall compile identifying information concerning self-excluded persons. Such information shall contain, at a minimum, the full name and any aliases of the person, a photograph of the person, the social security or driver's license number of the person and the current physical and electronic contact information, including mailing address, of the person.
The department shall provide the compiled information to event wagering operators, commercial sports license holders and limited event wagering operators on a weekly basis. Event wagering operators, commercial sports license holders and limited event wagering operators shall treat the information received from the department under this section as confidential, and the information shall not be disclosed except to vendors approved by the department for purposes of complying with this section, appropriate law enforcement agencies if needed in conducting an official investigation or unless ordered by a court of competent jurisdiction.
Event wagering operators, commercial sports license holders and limited event wagering operators shall check the most recent self-excluded persons list provided by the department before creating a player account. The event wagering operator, commercial sports license holder or limited event wagering operator shall revoke a player account and remove all self-excluded persons from all mailing lists of the event wagering operator, commercial sports license holder or limited event wagering operator.
Event wagering operators, commercial sports license holders and limited event wagering operators shall take commercially reasonable steps to ensure that persons on the department's list of self-excluded persons are denied access to all event wagering.
Event wagering operators, commercial sports license holders and limited event wagering operators shall take commercially reasonable steps to identify self-excluded persons. If a self-excluded person participates in event wagering, the event wagering operator, commercial sports license holder and limited event wagering operator shall report to the department, at a minimum, the name of the self-excluded person, the date of participation, the amount or value of any monies, prizes or awards forfeited, if any, and any other action taken. The report shall be provided to the department within twenty-four hours of discovery.

C. Event wagering operators, commercial sports license holders and limited event wagering operators may not pay any prize or award to a person who is on the department's self-exclusion list. Any prize or award won by a person on the self-exclusion list shall be forfeited and shall be donated by the event wagering operator, commercial sports license holder or limited event wagering operator to the department's division of problem gambling on a quarterly basis by the twenty-fifth day of the following month.

D. Notwithstanding any other provision of this chapter, the department's list of self-excluded persons is not open to public inspection.

E. Event wagering operators, commercial sports license holders and limited event wagering operators shall develop and maintain a program to mitigate problem gambling and curtail compulsive gambling, which may be in conjunction with the department.

F. Before paying a person a payout of winnings that triggers the licensee's obligation to file a form W-2G or a substantially equivalent form with the United States internal revenue service, the event wagering facility operator shall check to determine if the person is identified as having a past-due, setoff obligation in the information provided to the department of gaming on a weekly basis by the administrative office of the courts or in the information provided on a monthly basis by the department of economic security division of child support enforcement, department of economic security supplemental nutrition assistance program and assistance overpayment and the Arizona health care cost containment system administration. The department of gaming shall provide to the event wagering facility operator information of persons with outstanding obligations. Subsequent to statutory state and federal tax withholding, if a person receives a payout of winnings that triggers the licensee's obligation to file a form W-2G or a substantially equivalent form with the United States internal revenue service and is identified, the event wagering facility operator shall withhold the full amount of the winnings or such portion of the winnings that satisfies the person's past-due, setoff obligation and forward those monies to the identifying agency. The event wagering facility operator shall disburse to the person only that portion of the prize, if any, remaining after the person's identified obligations have been satisfied. If the identified person is also self-excluded, tax liabilities and setoff obligations are to be satisfied before any monies are donated to the department's division of problem gambling. If the identified person has multiple liabilities, they shall be satisfied in this order:

Child support enforcement.
Supplemental nutrition assistance program and assistance overpayment.
The courts.
The Arizona health care cost containment system administration.

G. This section does not waive an Indian tribe's sovereign immunity from a suit by a person listed and whose winnings are withheld for an identified obligation.

§ 5-1321 Conditional enactment; notice

B. The department shall notify the director of the Arizona legislative council in writing of the date on which the condition was met.

Chapter 12 Southern Arizona Sports, Tourism and Film Authority

Article 1 Organization

§ 5-1401 Definitions

In this chapter, unless the context otherwise requires:

"Advisory board" means the advisory board of the authority.
"Authority" means the southern Arizona sports, tourism and film authority.
"Board" means the board of directors of the authority.
"Indian tribe" means any organized Indian nation, tribe, band or community that is recognized as an Indian tribe by the United States department of the interior.

§ 5-1402 Formation of authority

A. The southern Arizona sports, tourism and film authority is established. The authority consists of the counties of Greenlee, Graham, Cochise, Santa Cruz, Pima and Pinal.

B. The authority is a corporate and political body, separate and independent of this state or the counties. Except as otherwise limited, modified or provided by this chapter, the authority has all of the rights, powers and immunities of municipal corporations except to acquire real property by eminent domain.

C. The board and the authority do not have the authority to levy or otherwise impose any tax or assessment. The qualified electors residing in the boundaries of the authority may levy a tax for the fiscal needs of the authority as provided by this chapter, but the board has no independent authority to impose a tax. Subject to that limitation, the authority is considered to be a tax levying public improvement authority for the purposes of article XIII, section 7, Constitution of Arizona.

§ 5-1403 Board of directors

A. The authority is governed by a board consisting of the following members who must reside within the boundaries of the authority:

Six members representing the county government of each county in the authority. The governor shall appoint two members, the president of the senate shall appoint two members and the speaker of the house of representatives shall appoint two members.
Four members who reside within the authority. The governor shall appoint two members, the president of the senate shall appoint one member and the speaker of the house of representatives shall appoint one member. Of these members:

(a) One member shall have experience in youth and professional sports.

(b) One member shall have experience in the tourism and hospitality industry.

(d) One member shall have experience in workforce development.

Three members representing Indian tribes who reside within the boundaries of the authority. The governor shall appoint one member, the president of the senate shall appoint one member and the speaker of the house of representatives shall appoint one member.

B. A member of the board may not simultaneously hold any state or local elective public office. The governor, the president of the senate and the speaker of the house of representatives shall make appointments to produce a general geographically diverse representation of areas in the authority. Members of the board shall be appointed for terms of five years. A member may be reappointed for one full subsequent term.

C. Members of the board are eligible for compensation as provided by section 38-611.

D. In appointing members, the president of the senate shall appoint first, the speaker of the house of representatives shall appoint second and the governor shall appoint third. When a vacancy occurs, the order shall commence with the officer following the officer who made the last appointment.

E. If the governor fails to make an appointment within ninety days after a vacancy, the president of the senate and the speaker of the house of representatives shall make a joint appointment to fill that vacancy. If the speaker of the house of representatives fails to make an appointment within ninety days after a vacancy, the president of the senate shall make the appointment. If the president of the senate fails to make an appointment within ninety days after a vacancy, the speaker of the house of representatives shall make the appointment.

§ 5-1404 Administrative powers and duties

A. The board of directors, on behalf of the authority, may:

Adopt and use a corporate seal.
Sue and be sued.
Enter into contracts, including intergovernmental agreements under pursuant to title 11, chapter 7, article 3, as necessary to carry out the purposes and requirements of this chapter.
Adopt administrative rules as necessary to administer and operate the authority and any property under its jurisdiction.
Acquire by any lawful means, other than eminent domain, and operate, maintain, encumber and dispose of real and personal property and interests in property.
Retain legal counsel and other consultants as necessary to carry out the purposes of the authority.
Acquire land or construct, finance, furnish, maintain, improve, operate, market or promote the use of amateur or professional sports facilities, recreational facilities and other community facilities or programs that are located in the authority and do all things necessary or convenient to accomplish those purposes.
Construct, finance, furnish, maintain, improve, operate, market and promote the use of a multipurpose facility that is located in the authority and do all things necessary or convenient to accomplish those purposes. The authority may own or lease the land on which the multipurpose facility is located.
Issue revenue bonds pursuant to article 3 of this chapter.

B. The board of directors shall:

Appoint from among its members a chairperson, a secretary and such other officers as may be necessary to conduct its business.
Employ an executive director and prescribe the terms and conditions of employment.
Keep and maintain a complete and accurate record of all of its proceedings. The board is a public body for purposes of title 38, chapter 3, article 3.1 and title 39, chapter 1.
Provide for the use, maintenance and operation of the properties and interests owned or controlled by the authority.
Promote tourism, the development of youth and professional sports, including the attraction of amateur and professional events, and promote filming opportunities.

C. The board shall appoint four advisory boards consisting of members representing youth and professional sports, tourism and hospitality, film and digital media and workforce development. The board members appointed pursuant to section 5-1403, subsection A, paragraph 2 shall serve as chairpersons of the advisory committees that corresponds to their areas of appointment.

§ 5-1405 Executive director; duties

A. The executive director is responsible for managing, administering and supervising the activities of the authority.

B. The executive director shall negotiate, make, execute, acknowledge and perform contracts and other agreements in the interest of the authority or to carry out or accomplish the purposes of this chapter, including construction contracts and agreements with users of any facility, all of which are subject to approval by the board.

C. The executive director shall:

Employ a treasurer to serve as fiscal agent to deposit, hold, invest and disburse the authority's monies.
Employ administrative and clerical employees and prescribe the terms and conditions of their employment as necessary to carry out the purposes of the authority. Employees of the authority are considered to be public employees for purposes of title 38.
Recommend the employment of consultants by the board, including outside counsel and a professional facility management company.
Direct the activities of outside consultants.

§ 5-1406 Conflicts of interest

A. The members of the board are subject to title 38, chapter 3, article 8, relating to conflicts of interest, including the penalties prescribed in section 38-510.

B. A member of the board of directors may not have any direct or indirect financial interest in any of the following:

Property owned, purchased or constructed by the authority.
A contract entered into by the authority.
A private corporation or other entity with which the authority contracts.

§ 5-1407 Gift ban; exemption

A. A principal or lobbyist or any other person acting on behalf of a principal or lobbyist may not give a gift to any member or employee of the board, and a board member or employee may not accept a gift from a principal or lobbyist.

B. For the purposes of this section, a gift does not include any of the following:

Salary, compensation or employer-reimbursed expenses lawfully paid to a board member or employee.
A family gift.
An award or prize that is given to competitors in a contest or event that is open to the public, including a random drawing.
Any discount or other benefit that is offered to a board member or employee on the same conditions as to the public, to a class consisting of all board members and employees or to a group or class in which membership is unrelated to being a board member or employee.
An educational event or speaking engagement.
Expenses relating to a special event or function to which all members of the board are invited and that are properly reported.
Flowers.
Food and beverage.
Informational material, including a book, calendar, pamphlet, periodical, report or video.
An item that is not used and that is returned to the donor within fifteen days after receipt or that is delivered to a charitable organization within fifteen days after receipt and that is not claimed as a charitable contribution for state or federal income tax purposes.
An item that is given to a board member or employee if the board member or employee gives an item of approximately the same value to the giver of the item at the same time that the item is given or on a similar occasion as the one that prompted the original item to be given.
An item of a personal nature that was customarily received by an individual from the donor before the individual became a board member or employee.
An item that is given to the general public at an event.
An item of nominal value such as a greeting card, baseball cap, t-shirt, mug or pen.
Nonrecreational travel or lodging, or both.
Personal hospitality.
A plaque, award or other form of recognition to a board member or employee to signify the honorary recognition of a service or other notable accomplishment.
Professional or consulting services that are rendered on matters directly related to holding a position on the board or being an employee of the board and that are not rendered to obtain a benefit for any registered principal, public body, lobbyist, designated public lobbyist or authorized public lobbyist or the clients of a principal or lobbyist.

§ 5-1408 Regulating sale, use and consumption of alcoholic beverages

Subject to the requirements of title 4, the board may allow and regulate the sale, use and consumption of alcoholic beverages at events held on property acquired, leased or subleased under this chapter.

§ 5-1409 Annual report; appearance before joint legislative budget committee

A. Within three months after the end of each fiscal year, the authority shall prepare a report signed by the executive director and transmit the report to the joint legislative budget committee. The report shall include a progress report of the activities of the authority during the previous year.

Article 2 Financial Provisions

§ 5-1431 Annual budget

A. On or before May 31 of each year, the board shall hold a public hearing to adopt a budget for the following fiscal year that includes:

Receipts during the preceding fiscal year.
Expenditures during the preceding fiscal year.
Estimates of amounts necessary for expenses during the following fiscal year, including amounts proposed for administrative costs of the authority.
Anticipated revenue to the authority from each source in the following fiscal year.
A complete asset and liability statement.
A statement of profit or loss.
Cash on hand as of the date the budget is adopted and the anticipated balance at the end of the current fiscal year.
An itemized statement of commitments, reserves and anticipated obligations for the following fiscal year.

B. The board may amend the budget on a finding of good cause.

§ 5-1432 General fund; investments

B. The authority may invest any unexpended monies in the general fund as provided in title 35, chapter 2. Interest and other income from investments of monies in any account shall be credited to that account except as otherwise provided by law.

C. The authority's investments must mature when the fund assets will be required for the purposes of this chapter. If the liquid assets in the fund or any account or subaccount become insufficient to meet the statutory obligations, the board shall direct the authority's fiscal agent to liquidate sufficient securities to meet all of the current obligations and immediately notify the board and the auditor general of the insufficiency. The auditor general shall review the circumstances surrounding the depletion of the fund, account or subaccount and report the results of the review to the joint legislative audit committee.

§ 5-1433 Performance audit

A. Beginning not later than 2027, and at least every fifth year thereafter, the auditor general shall conduct a performance audit as defined in section 41-1278 of the authority.

B. On or before November 30 of the respective year, the auditor general shall issue a public report of the performance audit, including findings and specific recommendations for statutory and administrative changes to improve the operation of the authority. The auditor general shall submit copies of the report to the governor, the president of the senate, the speaker of the house of representatives and the secretary of state.

§ 5-1434 Annual audit

A. The board shall cause an annual audit to be conducted of each of the authority's funds, accounts and subaccounts by an independent certified public accountant within one hundred twenty days after the end of the fiscal year.

C. The board shall pay negotiated and approved fees and costs of the certified public accountant and auditor general under this section from the authority's general fund.

Article 3 Revenue Bonds

§ 5-1461 Definitions

In this article, unless the context otherwise requires:

"Authority purpose" includes:

(i) Sanitary sewage systems.

(ii) Drainage and flood control systems.

(iii) Water systems.

(iv) Roadways for access, entry and exit and parking facilities.

(v) Pedestrian and other nonmotorized facilities for access, entry and exit and parking.

(vi) Landscaping.

(vii) Lighting systems.

(viii) Traffic control systems, signals, controls, markings and signage.

(b) The payment of bonds.

2."Bond" means any obligation authorized and issued pursuant to this article, including:

(a) Bonds and notes.

(b) Certificates of participation in a lease-purchase or certificates of purchase in a lease or installment purchase agreement.

(c) Obligations that are authorized and issued to refund or refinance obligations that are authorized and issued pursuant to this article.

"Bond-related expenses" means any expenses incurred by the authority for issuing and administering its bonds, including underwriting fees and costs, trustee fees, financial consultant fees, printing and advertising costs, paying agent fees, transfer agent fees, legal fees, accounting fees, feasibility consultant and other professional fees and expenses, credit enhancement fees and expenses related to credit enhancement, bond insurance or liquidity enhancement, remarketing fees, rating agency fees and costs, travel and telephone expenses and all other fees considered necessary by the board in order to market and administer the bonds.

§ 5-1462 Obligations for the bonds

Bonds issued under this article:

Are payable only according to their terms.
Are obligations of the authority.
Are not general, special or other obligations of this state, or of the county or any city or town located in the authority. The members of the board and persons who execute the bonds are not personally liable for the payment of the bonds.
Do not constitute a debt of this state or of the county or any city or town located in the authority.
Are not enforceable against this state. Payment of the bonds is enforceable only out of any monies or assets of the authority specifically pledged and assigned to or in trust for the benefit of the holder or holders of the bonds.

§ 5-1463 Authorization of bonds

A. The board may issue bonds pursuant to this article in a principal amount that is necessary to:

Provide sufficient monies for any authority purposes.
Establish and fully or partially fund any required reserves or sinking accounts.
Issue refunding bonds to refund bonds issued by the authority if the board considers refunding to be expedient. The board may provide for investing and holding the proceeds of the refunding bonds in trust for the benefit of the holders of the bonds being refunded.

B. The board shall authorize the bonds by resolution. The resolution shall prescribe:

The revenue sources that are pledged and dedicated to secure the bonds.
The rate or rates of interest, which may be fixed or variable, the date or dates on which interest is payable and the denominations of the bonds.
The date or dates of the bonds and maturity, which shall be within thirty years after the date of issuance.
The manner of executing the bonds.
The medium and place of payment.
The terms of redemption, which may provide for a premium for early redemption.

§ 5-1464 Issuance and sale of bonds

A. The board shall issue the bonds in the number and amount provided in the resolution. The board shall provide published notice within fifteen days to the public of its intention to issue bonds.

C. The proceeds from the sale of the bonds shall be deposited in the bond proceeds account established pursuant to section 5-1465.

D. Title 35, chapter 3, article 7 applies to the board and to bonds issued under this article.

§ 5-1465 Bond proceeds account

A. If the authority issues bonds under this article, the board shall establish a bond proceeds account within the general fund consisting of monies received from the sale of the bonds.

B. The board may use monies in the bond proceeds account only for authority purposes in the manner prescribed by this chapter.

C. The authority's fiscal agent shall administer and account for the bond proceeds account.

§ 5-1466 Debt service account

A. If the authority issues bonds under this article, the board shall establish a debt service account within the general fund consisting of monies designated and dedicated by the board for repayment of the bonds and payment of costs and related expenses associated with redeeming the bonds.

B. Monies in the debt service account may be used only for the purposes authorized by this article.

C. The authority's fiscal agent shall administer and account for the debt service account.

§ 5-1467 Securing principal and interest

In connection with issuing bonds authorized by this article and to secure the principal and interest on the bonds, the board by resolution may:

Pledge for the payment of principal and interest on the bonds all or part of the revenues and other monies received by the authority and deposited in the general fund or any account or subaccount of the general fund.
Pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the debt service account or any other account or subaccount as necessary to secure and pay the principal, the interest and any premium on the bonds as they come due.
Segregate the debt service account into one or more subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the debt service account or into any subaccount in the debt service account.
Establish priorities among bondholders based on criteria adopted by the board.
Set aside, regulate and dispose of reserves and sinking accounts.
Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given.
Provide for payment of bond-related expenses from the proceeds of the sale of the bonds or other revenues available to the board.
Provide for the services of trustees, cotrustees, agents and consultants and other specialized services with respect to the bonds.
Take any other action that in any way may enhance the security and protection of the bonds or interest on the bonds.

§ 5-1468 Lien of pledge

A. Any pledge made under this article is valid and binding from the time when the pledge is made.

§ 5-1469 Bond purchase for cancellation

The board may purchase bonds for cancellation, using any available monies, at a price of not more than the following:

If the bonds are redeemable at the time of purchase, the applicable redemption price plus accrued interest to the next interest payment date.
If the bonds are not redeemable at the time of purchase, the applicable redemption price on the first date after purchase on which the bonds become subject to redemption plus accrued interest to that date.

§ 5-1470 Payment of bonds

A. The bonds shall be paid solely from monies in the debt service account.

B. The members of the board and any persons who execute the bonds are not personally liable for the payment of the bonds.

C. The authority's fiscal agent shall cancel all bonds when paid.

§ 5-1471 Investment of monies in the bond proceeds account

A. The board may authorize the authority's fiscal agent to invest monies in the bond proceeds account in the manner prescribed by section 5-1473.

C. All monies earned as interest or otherwise derived from the investment of the monies in the bond proceeds account shall be credited as described in the authorizing resolution.

§ 5-1472 Investment of monies in the debt service account

A. The board may authorize the authority's fiscal agent to invest and reinvest any monies in the debt service account as provided by section 5-1473.

C. All monies earned as interest or otherwise derived from the investment of the monies in the debt service account shall be credited as described in the authorizing resolution.

§ 5-1473 Authorized investment of monies

A. The monies in either the bond proceeds account or the debt service account may be invested and reinvested at the direction of the board in any of the following:

United States treasury obligations.
Consolidated farm loan bonds.
Obligations issued by the federal intermediate credit banks or bonds for cooperatives on authority of the farm credit act of 1933 (48 Stat. 257).
Any other obligations guaranteed by the United States government.
Any investments that are authorized by any other agencies of the United States government and that are authorized to secure public deposits.
State and local government series United States treasury securities.
State, county or municipal bonds issued in this state and on which the payments of interest have not been deferred.
Investment agreements and repurchase agreements collateralized by investments described in paragraphs 1, 2, 3, 4 and 5 of this subsection.
Investment agreements from providers rated in one of the two highest rating categories by a nationally recognized rating agency.

B. The purchase of the securities shall be made by the authority's fiscal agent on authority of a resolution of the board. The fiscal agent shall act as custodian of all securities purchased.

§ 5-1474 Deposit and disbursement of monies

A. Monies derived from selling bonds under this article or pledged or assigned to or in trust for the benefit of the holder or holders of the bonds shall be deposited by the authority's fiscal agent in financial institutions that the board designates and that are insured by an agency or instrumentality of the United States. The monies shall be disbursed as the board directs and according to the terms of any agreements with the holder or holders of the bonds.

B. This section does not limit the power of the board to agree in connection with issuing any of its bonds as to the custody and disposition of the monies received from selling bonds or from the income and revenues pledged or assigned to or in trust for the benefit of the holder or holders of the bonds.

§ 5-1475 Characteristics of bonds; negotiability; legal investments; exemption from taxation

B. The bonds, their transfer and the income from the bonds are at all times free from taxation in this state.

C. Bonds issued under this article:

Are securities in which public officers and bodies of this state and of municipalities and political subdivisions of this state, all companies, associations and other persons carrying on an insurance business, all financial institutions, investment companies and other persons carrying on a banking business, all fiduciaries and all other persons who are authorized to invest in government obligations may properly and legally invest.
Are securities that may be deposited with public officers or bodies of this state and municipalities and political subdivisions of this state for purposes that require the deposit of government bonds or obligations.

§ 5-1476 Effect of changing circumstances on bonds; agreement of state

A. Bonds issued under this article remain valid and binding obligations of the authority, notwithstanding that before the delivery of the bonds any person whose signature appears on the bonds ceases to be an officer of the authority.

B. An amendment of this chapter does not diminish or impair the validity of bonds issued under this article or the remedies and rights of bondholders.

§ 5-1477 Validity of bonds; legal opinion

A. This article constitutes full authority for authorizing and issuing bonds without reference to any other law of this state. No other law with regard to authorizing or issuing obligations or that in any way impedes or restricts performing the acts authorized by this article applies to any proceedings taken or acts done pursuant to this article.

B. The validity of bonds issued under this article does not depend on and is not affected by the legality of any proceeding relating to the acquisition, construction, improvement, operation or maintenance of a stadium or multipurpose facility for which the bonds are issued.

C. The board may submit any bonds to be issued under this article to a nationally recognized bond counsel after all proceedings for authorizing the bonds have been completed. On submission, the counsel shall examine and pass on the validity of the bonds and the regularity of the proceedings. If the proceedings comply with this article and if the bonds, when delivered and paid for, will constitute binding and legal obligations of the authority, the counsel shall certify on the back of each bond, in substance, that it is issued according to the constitution and laws of this state and that the interest on the bonds will be exempt from state taxes as provided by law.

D. The bonds shall recite that they are regularly issued pursuant to this article. That recital, together with the legal opinion under subsection C of this section, constitutes prima facie evidence of the legality and validity of the bonds. From and after the sale and delivery of the bonds, they are incontestable by this state or the authority.