Section 1.

Contains whereas clauses.

Adds 32 new terms to the definitions provision of Article 10, pertaining to Pari-Mutuel Wagering, of GS Chapter 18C. Specifies that advance deposit account wager or advance deposit account wagering is made exclusively on an advance-deposit (ADW) wagering platform, as described. Now details what ADW licensees are licensed for by the NC State Lottery Commission (Commission). Further describes what kind of bets may be placed as part of the term pari-mutuel wager or pari-mutuel system of wagering or pari-mutuel wagering or mutuel wagering.

Enacts GS 18C-1002, authorizing pari-mutuel wagering (i.e., any method of approved wagering in which one or more bettors wager on a horse race or races, whether live, simulcast, or previously run) and equipment used as part of pari-mutuel wagering placed at a legacy track or satellite facility controlled by a legacy track operator, a startup track controlled by a startup track operator, or through an ADW licensee, which includes all legacy track operators and startup track operators. Requires the pari-mutuel wagering licensee (licensee) to (1) ensure that the registered player is located within the State and not present on Indian lands within the State when placing any sports wager or pari-mutuel wager, by utilizing geofencing (i.e, approved technology used by a licensee to verify a gambler’s location) and (2) monitor and block attempts to place unauthorized pari-mutuel. Specifies three conditions for a license granted under the Article, including that, if applicable, it be only for the locations identified in the license. Excludes pari-mutuel wagering conducted exclusively on Indian lands by an Indian tribe operating according to law, as described, from the Article. Clarifies that the Article does not apply to fantasy or simulated games or contests as specified. Upon request, grants the Commission or the Department of Revenue (DOR) the authority to give reasonable notice and thereafter audit any licensee and any pari-mutuel wagering device supplier licensee as related to pari-mutuel wagering activities. Clarifies that the Article does not require the Commission to regulate maximum or minimum payouts or hold percentages. Bans five persons from gambling through pari-mutuel wagering, including those under 21 years of age and with respect to a horse race, any jockey or driver of a horse competing in the horse race. Authorizes injunctive relief against any pari-mutuel wagering not licensed under the Article.

Enacts GS 18C-1003, authorizing the Commission to award two legacy track licenses if it receives two or more qualifying applications or one such license if only one applicant applies or is qualified. In that case, or if the Commission awards no legacy licenses it will accept applications for any remaining legacy track licenses after providing 30 days' notice and not more than six months after its decision to award one legacy track license or deny all applications. Limits applicants to those who, at the time of the application, control a legacy horse track in the State. Prevents the Commission from granting a license if it determines that any of the applicant's key persons (i.e., an officer or director who is directly involved in the operation, management, or control of pari-mutuel wagering or who exercises substantial influence or control over pari-mutuel wagering activities) are determined to be unsuitable because one of more of the five listed acts are true, including convictions for certain crimes or revocation of a gambling license in another jurisdiction. Details nine required components of a legacy track license application to be provided by the applicant, including a commitment to provide the Commission an initial license fee of $500,000 upon award of the license and a minimum investment of $250,000 to redevelop the legacy track and develop the satellite facility.

Authorizes legacy track licensees to: (1) conduct horse races at the legacy track and allow pari-mutuel wagering on those races at the legacy track and satellite facility; (2) offer in-person pari-mutuel wagering by the use of simulcasting and by the use of not more than a total of 1,800 pari-mutuel wagering devices located at the legacy track and the satellite facility, collectively; (3) offer in-person sports wagering through an interactive sports wagering operator via a written designation agreement; and (4) conduct all activities of an ADW licensee. Allows a legacy track operator to accept pari-mutuel wagers through the use of advance deposit account wagering, pari-mutuel wagering devices, ADW wagering platform, kiosks, and windows. Allows business to be conducted through a disclosed affiliate to the Commission, including providing any information required by the Commission on the affiliate.

Sets out a timeline for the Commission to review and decide on legacy track license applications. Specifies three types of applicant information that are public records, including the names of all key persons, the decision on the application, and the name and address of the applicant. Requires a legacy track operator to comply with three reporting requirements to the Commission.  

Enacts GS 18C-1004 providing for evaluation of startup track licenses on a comparative basis, with one license to be issued for a thoroughbred track before the second issues for a standardbred horse track.  Directs the Commission to choose which two applicants best satisfy the criteria and purposes of the Article. Sets forth a procurement process for the thoroughbred track to include that an applicant commits to a minimum investment of $350 million in the State to develop or enhance the startup track with a minimum number of live race days. Sets forth a procurement bid process for the standardbred track to include that an applicant commits to a minimum investment of $150 million in the State to develop or enhance the startup track with a minimum number of live race days. Allows the Commission to decline to award such licenses if it determines no applicants qualify. Allows applicants to bid on both types of license tracks, unless they are awarded a license for one of the tracks. Requires any startup track operator to conduct live horse racing within 18 months of accepting pari-mutuel wagers on a pari-mutuel wagering device.

Details eleven required components of a startup track license application to be provided by the applicant, including a commitment to provide the Commission with an initial fee of $500,000 upon award of the license. Prevents the Commission from granting a license if it determines that any of the applicant's key persons are determined to be unsuitable because one of more of the five listed acts in GS 18C-1003 (described above) are true. Authorizes startup track licensees to engage in the five described activities, including conducting races at the startup track so long as thoroughbred horses do not participate in standardbred races and vice versa. Allows business to be conducted through a disclosed affiliate to the Commission, including providing any information required by the Commission on the affiliate.

Sets out a timeline for the Commission to review and decide on license applications. Specifies three types of applicant information that are public records, including the names of all key persons, the decision on the application, and the name and address of the applicant. Requires a startup track operator to comply with three reporting requirements to the Commission.  

Makes conforming change to GS 18C-1005 (ADW licensees) to account for new track operator licenses, described above.

Enacts GS 18C-1006 requiring a pari-mutuel wagering device supplier license (Supplier License) to sell any pari-mutuel wagering device or totalizator to any legacy track operator and to any startup track operator. Authorizes the Commission to issue a Supplier License to a qualified applicant even if they hold another license under the Article. Allows for provisional Supplier Licenses at the applicant’s request, as described. Specifies that both types of licenses are sufficient to offer pari-mutuel wagering devices for sale to a legacy track operator and to a startup track operator. Provides for comity upon application for persons holding a pari-mutuel wagering device supplier license or its equivalent, on the basis of comparable licensing requirements issued to that person by a proper authority by another state or territory of the United States or the District of Columbia if that jurisdiction's requirements for licensure, certification, or registration are substantially equivalent to or exceed the requirements of this State, and who, in the opinion of the Commission otherwise meets the requirements of this Article or of Article 9 of Chapter 18C. Requires the Commission to approve each pari-mutuel wagering device before it may be sold so long as it approves pari-mutuel wagering devices that have been approved in other states that allow for pari-mutuel wagering. Prevents any person from offering a pari-mutuel wagering device available for use by the public without a legacy track license or a startup track license.

Provides for a refundable (less 5%) $30,000 Supplier License licensing fee. Requires applicants to disclose the identity of four types of persons/information required by the Commission, including each key person who directly owns 10% or more of the applicant and each holding, intermediary, or parent company that directly owns 15% or more of the applicant. Provides for background checks on applicants and their key persons and current employees, as deemed necessary by the Commission, as described. Prevents the Commission from awarding a Supplier License if the applicant or a key person of the applicant has been convicted of a felony or any gambling offense in any state or federal court of the United States within 10 years of application or renewal. Sets out a timeline for the Commission to review and decide on applications. Requires a licensee to comply with the specified reporting requirements to the Commission. 

Enacts GS 18C-1007, concerning support for the NC equine industry, as follows. Creates a trust and revolving fund designated as the "Equine Breeders Incentive Fund" (Fund) for the purpose of providing rewards for breeders or owners of horses bred and foaled in this State, to be administered by the Commission. Requires the Commission to promulgate regulations establishing the conditions and criteria for the distribution of money from the fund that are consistent with GS 18C-1007. Directs that revenues deposited in the Fund be distributed in the amounts described between two programs known as the Mare Incentive Program, which promotes horse farming and mare residency in the State and the State Bred Development Program, which promotes NC bred or initially owned horses. Requires, on at least an annual basis, the Commission to disburse money in the fund to be used to promote, enhance, improve, and encourage the further and continued development of the equine industry in North Carolina to breeders or owners of horses in the State.

Establishes a trust and revolving fund designated as the "Equine Industry Purse Fund" (Purse Fund) for the purpose of promoting horse racing and to provide purses for races conducted in this State. Provides for at least 85% of the Purse Fund to be distributed for purses of live horse races, including steeplechase horse races, involving thoroughbred horses, 10% to purses of live horse races involving standardbred horses, with the rest to be distributed to purses of live horse races involving other breeds of horses.

Establishes the Equine Programs Fund (Programs Fund) for the purposes of supporting the equine industry and horses in the State. Requires distribution of the Programs Fund to three programs known as Aftercare, North Carolina State Equine Veterinarian Programs, and the National Steeplechase Association, for purposes and in the amounts described. Instructs that all revenues in the funds created by GS 18C-1007 do not revert but remain in each fund for purposes consistent with the fund.

Enacts GS 18C-1008, setting forth general provisions for authorized horse races as follows. Describes five acts that are prohibited and may be punished as set forth in general law including (1) willfully and falsely announcing a slower or faster time than the time actually accomplished by a horse in an official horse race, and (2) knowingly entering or causing to be entered for competition for a prize or stake or drive any horse under an assumed name, out of its proper class, where the prize or stake is to be decided by a contest of speed. Directs that the pari-mutuel system of wagering on live or future horse races will be operated only by a totalizator or other mechanical equipment approved by the Commission and sold by a pari-mutuel wagering device licensee, but prevents the Commission from requiring any particular make of equipment. Provides for abandonment of pari-mutuel winning tickets under the conditions described with distribution of those funds to the Purse Fund.

Provides for administrative appeals and judicial review in new GS 18C-1009. Authorizes the Commission take any of the four listed actions against licensees for violations of the act, including imposing a fine capped at $10,000 for each violation, suspension or revocation of the license, or a formal warning and reprimand.

Amends GS 18C-1010 (license renewals) so that all licenses are now renewed every five years (was, ADW licensees pay an annual fee to maintain their licenses). Provides for notice of renewal, renewal process, and authority to the Commission to deny a license if the licensee has been suspended twice during the prior five years, so long as the suspensions were not appealed or affirmed by last order of review. Sets a renewal fee of $250,000 for legacy track operators, startup track operators, and ADW licensees and $15,000 for all other licensees under the Article. Removes provisions allowing Commission to suspend or revoke licenses for failure to timely pay the annual renewal fee. Makes conforming changes.  

Enacts GS 18C-1011, concerning the relation of legacy track licenses and startup track licenses (collectively, Track Licenses) to other provisions of law, to clarify that those holders of Track Licenses are allowed to operate the track and any allowed satellite facility as authorized by the Article at the location and physical address specified on the license.

Enacts GS 18C-1012 authorizing the Governor to execute a compact as described on behalf of this State with any of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and each territory or possession of the United States. Specifies that a compact is not effective unless it is ratified by a simple majority of each chamber of the General Assembly within two years of the Governor’s execution of the compact.

Sets forth five purposes of a compact including to establish uniform requirements among the party states for the licensing of participants in live racing with pari-mutuel wagering and ensure that all such participants who are licensed pursuant to this compact meet a uniform minimum standard of honesty and integrity. Defines compact committee, official, participants in live racing, party state, and state. Authorizes any state that has adopted or authorized live racing with pari-mutuel wagering to become a party to the compact. Specifies conditions for the compact’s entry into force and the effect of withdrawal from the compact.

Creates an intergovernmental entity called the Compact Committee, as described. Grants the Compact Committee nine powers and duties. Provides for voting requirements including that all officials be entitled to one vote on the Compact Committee and requirements for what majorities are required for certain action taken by the Compact Committee. Provides for Compact Committee officers, bylaws, employees, and an executive director. Provides for immunity for officials of a party state or employee of the Compact Committee for any good faith act or omission that occurs during the performance and within the scope of his responsibilities and duties under this compact. Articulates three rights and responsibilities of each party state. Specifies that no party state will be held responsible for the debts or financial obligations incurred by the Compact Committee. Provides for rules of construction and a severability clause in the compact.

Enacts GS 18C-1013, concerning simulcasting, providing conditions for simulcasted horse races as follows: (1) limiting offering of pari-mutuel wagering on simulcasted horse races to legacy track operators and startup track operators; (2) specifying that placing a pari-mutuel wager on an ADW wagering platform is not pari-mutuel wagering on simulcasted horse races; (3) authorizing a track operator to offer pari-mutuel wagering on simulcasted horse races at only the track and, as applicable, the satellite facility, identified in its track license; (4) requiring every legacy track operator and startup track operator to provide a separate accounting on all interstate simulcasting to the Commission on a form and at such times, not more than monthly, as required by the Commission; and (5) authorizing an interstate common wagering pool, as described.

Authorizes the assignment or transfer of a license issued under the Article to a third party so long as the assignment or transfer is approved by the Commission, as described, in new GS 18C-1014.

Makes conforming changes to GS 18C-1015 (wagering), GS 18C-1020 (criminal penalties) and GS 18C-1025 (rulemaking). Allows for relocation of a track or satellite facility within the county identified in its license upon notice to the Commission, as specified, in new GS 18C-1016. Requires in new GS 18C-1017 for the Commission to identify the described information on its website and to report annual reports to the General Assembly on the matters described.

Section 2.

Enacts Article 2F, Taxes on Pari-Mutuel Wagering, in GS Chapter 105. Incorporates the definitions of GS 18C-1001 and, to the extent, they do not conflict, GS 18C-901 into new article. Sets forth tax rates in new GS 105-113.151 as follows:

• Pari-mutuel wagering devices. – A tax at the rate of 29% is imposed on each legacy track operator and startup track operator. The tax applies to the adjusted gross revenue derived from pari-mutuel wagering on all pari-mutuel wagering devices.
• Pari-mutuel wagering. – A tax rate of 1.5% is imposed on each legacy track operator, startup track operator, and ADW licensee. The tax applies to the total handle of each horse race for which the pari-mutuel wagering licensee accepted pari-mutuel wagers; provided, however, the tax does not apply to pari-mutuel wagers made on pari-mutuel wagering devices. For purposes of this tax, the handle for each horse race shall include pari-mutuel wagers made in person at a licensed legacy track, a satellite facility operated by a legacy track operator, a licensed startup track, and pari-mutuel wagers made through an advance deposit wagering account, regardless of whether the horse race occurred in this State or in another jurisdiction.

Provides for monthly returns on the dates specified with taxes due at the filing of each return. Requires recordkeeping by all persons who must file taxes, to be open at all times for inspection by the Secretary of Revenue (Secretary) for the applicable time limits set forth in Article 9 of GS Chapter 105. Provides for tax refunds upon request for a pari-mutuel wager that has been refunded.

Enacts GS 105-113.152 requiring a Licensee to register with the Secretary and give notice to the Secretary if they change ownership or discontinue the taxable activities under Article 10 of GS Chapter 18C. Provides for the allocation of the taxes collected to the described Funds in the amounts specified in new GS 105-113.153.

Effective July 1, 2025, and applies to pari-mutuel wagers received on or after that date.

Section 3 through Section 5.

Makes conforming changes to GS 18C-901 (definitions pertaining to sports betting), GS 18C-905 (written designation agreements), GS 18C-926(b) (places of public accommodation concerning sports betting), GS 18B-1000 (definitions pertaining to the regulation of alcoholic beverages), GS 18B-1006 (ABC permits for listed places); GS 14-295 (gaming tables), GS 14-296 (illegal slot machines and punchboards); GS 14-297 (allowing gaming tables, illegal punchboards or slot machines on premises); GS 14-301 (operation or possession of slot machines); GS 14-302 (punchboards, vending machines, and other gambling devices); GS 14-304 (manufacture and sale of slot machines and devices); GS 14-305 (agreements with reference to slot machines or devices); GS 14-306.1A (types of machines and devices prohibited by law); and GS 14-306.4 (Electronic machines and devices for sweepstakes prohibited).

Section 6.

Directs the Commission to announce a date certain that it will begin accepting applications for legacy track licenses issued under Article 10 of GS Chapter 18C; provided, that such date is not earlier than three months nor later than four months from July 1, 2025. Instructs the Commission to also provide 30 days' notice of the date chosen.