2015 -- S 0966

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LC002818

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO AUTHORIZING AN AMENDMENT TO THE NEWPORT GRAND MASTER

VIDEO LOTTERY TERMINAL CONTRACT AND PARI-MUTUEL LICENSEES

     Introduced By: Senators Goodwin, Crowley, and Ciccone

     Date Introduced: June 03, 2015

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Unless otherwise amended by this act, Chapter 151, Article 25 of the Public

Laws of 2011, Chapter 289 of the Public Laws of 2012 or Chapter 145, Article 13 of the Public

Laws of 2014, the terms, conditions, provisions and definitions of Chapter 16 of the Public Laws

of 2010 are hereby incorporated by reference and shall remain in full force and effect.

     SECTION 2. Chapter 16 of the Public Laws of 2010, entitled "An Act Relating to

Authorizing the First Amendments to the Master Video Lottery Terminal Contracts," as amended,

is hereby further amended as follows: Part B, Section 4(a)(i) is hereby amended to read as

follows:

     (i) to provide for a Newport Grand Term commencing on the effective date of the

Newport Grand Master Contract and continuing through and including the fifth (5th) anniversary

of such effective date; provided that Newport Grand shall have two (2) successive five (5) years

extension options with the First Extension Term, as defined in the Newport Grand Master

Contract, commencing on November 23, 2010 and the Second Extension Term, commencing on

November 23, 2015. Except as otherwise provided herein in section 4(a)(vii), the exercise of the

option to extend said Master Contract shall be subject to the terms and conditions of section 2.3

of the Newport Grand Master Contract; provided however, section 2.3B of the Newport Grand's

Master Contract shall be amended such that with respect to UTGR's Newport Grand's exercise of

its option to extend for the Second Extension Term, Newport Grand shall be required to certify to

the Division that (i) there are 180 one hundred (100) full-time equivalent employees at the

Newport Grand facility on the date of the exercise of the option for the Second Extension Term;

and (ii) for the one-year period preceding the date said Second Extension Term option is

exercised, there had been 180 one hundred (100) full-time equivalent employees on average, as

the term full-time equivalent employee is defined in section 2.3B of the Newport Grand Master

Contract and as confirmed by the Rhode Island department of labor and training. In the event that

Newport Grand is licensed to host video lottery games and table games at a facility relocated to a

location outside the City of Newport and actually offers video lottery games and table games to

patrons at such relocated facility, then Newport Grand shall, no later than the six (6) month

anniversary of all such events occurring, certify to the Division that there are one hundred eighty

(180) full-time equivalent employees at the relocated Newport Grand facility on such date, and in

the event Newport Grand is unable to timely make the foregoing certification, the Newport Grand

Master Contract shall automatically terminate as of the one year anniversary of all such events

occurring.

     SECTION 3. Authorized Procurement of Fourth Amendment to the Newport Grand

Master Contract. Notwithstanding any provision of the general or Public Laws to the contrary, the

Division is hereby expressly authorized and directed to enter into with Newport Grand a Fourth

Amendment to the Newport Grand Master Contract to make the Newport Grand Master Contract

consistent with the provisions of this act, as follows:

     (a) To require that Newport Grand, in connection with exercising its option to extend for

the Second Extension Term, certify to the Division that: (i) There are one hundred (100) full-time

equivalent employees at the Newport Grand facility on the date of the exercise of the option for

the Second Extension Term; and (ii) For the one-year period preceding the date said Second

Extension Term option is exercised, there had been one hundred (100) full-time equivalent

employees on average, as the term full-time equivalent employee is defined in section 2.3B of the

Newport Grand Master Contract and as confirmed by the Rhode Island Department of Labor and

Training. In the event that Newport Grand is licensed to host video lottery games and table games

at a facility relocated to a location outside the City of Newport and actually offers video lottery

games and table games to patrons at such relocated facility, then Newport Grand shall, no later

than the six (6) month anniversary of all such events occurring, certify to the Division that there

are one hundred eighty (180) full-time equivalent employees at the relocated Newport Grand

facility on such date, and in the event Newport Grand is unable to timely make the foregoing

certification, the Newport Grand Master Contract shall automatically terminate as of the one year

anniversary of all such events occurring.

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     SECTION 4. Section 41-7-3 of the General Laws in Chapter 41-7 entitled "Jai Alai" is

hereby amended to read as follows:

     41-7-3. Regulation of operations -- Licensing. -- (a) The division of racing and athletics

is hereby authorized to license jai alai in the city of Newport. The operation of a fronton shall be

under the division's supervision. The division is hereby authorized to issue rules and regulations

for the supervision of the operations.

      (b) Any license granted under the provisions of this chapter shall be subject to the rules

and regulations promulgated by the division and shall be subject to suspension or revocation for

any cause which the division shall deem sufficient after giving the licensee a reasonable

opportunity for a hearing at which he or she shall have the right to be represented by counsel. If

any license is suspended or revoked, the division shall state the reasons for the suspension or

revocation and cause an entry of the reasons to be made on the record books of the division.

      (c) Commencing July 1, 2003, the division of racing and athletics shall be prohibited to

license jai alai in the city of Newport. Any license having been issued and in effect as of that date

shall be null and void and any licensee shall be prohibited from operating thereunder; provided,

however, that any entity having been issued a license to operate a jai alai fronton prior to July 1,

2003, and any successor in interest to such entity by reason of acquiring the stock or substantially

all of the assets of such entity, shall be deemed a pari-mutuel licensee as defined in § 42-61.2-1 et

seq., and a licensee as defined in § 41-11-1 et seq.

     SECTION 5. Section 42-61.2-1 of the General Laws in Chapter 42-61.2 entitled "Video

Lottery Terminal" is hereby amended to read as follows:

     42-61.2-1. Definitions. -- For the purpose of this chapter, the following words shall

mean:

      (1) "Central communication system" means a system approved by the lottery division,

linking all video lottery machines at a licensee location to provide auditing program information

and any other information determined by the lottery. In addition, the central communications

system must provide all computer hardware and related software necessary for the establishment

and implementation of a comprehensive system as required by the division. The central

communications licensee may provide a maximum of fifty percent (50%) of the video lottery

terminals.

      (2) "Licensed video lottery retailer" means a pari-mutuel licensee specifically licensed

by the director subject to the approval of the division to become a licensed video lottery retailer.

      (3) "Net terminal income" means currency placed into a video lottery terminal less

credits redeemed for cash by players.

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      (4) "Pari-mutuel licensee" means an entity licensed and authorized to conduct:

      (i) Dog racing, pursuant to chapter 3.1 of title 41; and/or

      (ii) Jai-alai games, pursuant to chapter 7 of title 41.

      (5) "Technology provider" means any individual, partnership, corporation, or association

that designs, manufactures, installs, maintains, distributes, or supplies video lottery machines or

associated equipment for the sale or use in this state.

      (6) "Video lottery games" means lottery games played on video lottery terminals

controlled by the lottery division.

      (7) "Video lottery terminal" means any electronic computerized video game machine

that, upon the insertion of cash or any other representation of value that has been approved by the

division of lotteries, is available to play a video game authorized by the lottery division, and that

uses a video display and microprocessors in which, by chance, the player may receive free games

or credits that can be redeemed for cash. The term does not include a machine that directly

dispenses coins, cash, or tokens.

      (8) "Casino gaming" means any and all table and casino-style games played with cards,

dice, or equipment, for money, credit, or any representative of value; including, but not limited to,

roulette, blackjack, big six, craps, poker, baccarat, paigow, any banking or percentage game, or

any other game of device included within the definition of Class III gaming as that term is

defined in Section 2703(8) of Title 25 of the United States Code and that is approved by the state

through the division of state lottery.

      (9) "Net table game revenue" means win from table games minus counterfeit currency.

      (10) "Rake" means a set fee or percentage of cash and chips representing cash wagered

in the playing of a nonbanking table game assessed by a table games retailer for providing the

services of a dealer, gaming table or location, to allow the play of any nonbanking table game.

      (11) "Table game" or "Table gaming" means that type of casino gaming in which table

games are played for cash or chips representing cash, or any other representation of value that has

been approved by the division of lotteries, using cards, dice, or equipment and conducted by one

or more live persons.

      (12) "Table game retailer" means a retailer authorized to conduct table gaming pursuant

to §§ 42-61.2-2.1 and 42-61.2-2.2.

      (13) "Credit facilitator" means any employee of Twin River approved in writing by the

division whose responsibility is to, among other things, review applications for credit by players,

verify information on credit applications, grant, deny and suspend credit, establish credit limits,

increase and decrease credit limits, and maintain credit files, all in accordance with this chapter

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and rules and regulations approved by the division.

     (14) "Newport Grand" means Newport Grand, LLC, a Rhode Island limited liability

company, successor to Newport Grand Jai Alai, LLC, and each permitted successor to and

assignee of Newport Grand, LLC under the Newport Grand Master Contract, provided it is a pari-

mutuel licensee as defined in § 42-61.2-1 et seq.; provided, however, where the context indicates

that the term is referring to the physical facility, then it shall mean the gaming and entertainment

facility located at 150 Admiral Kalbfus Road, Newport, Rhode Island.

     (15) ''Newport Grand Marketing Year" means each fiscal year of the state or a portion

thereof between November 23, 2010 and the termination date of the Newport Grand Master

Contract.

     (16) ''Newport Grand Master Contract" means that certain master video lottery terminal

contract made as of November 23, 2005 by and between the Division of Lotteries of the Rhode

Island Department of Administration and Newport Grand, as amended and extended from time to

time as authorized therein and/or as such Newport Grand Master Contract may be assigned as

permitted therein.

     SECTION 6. Section 42-61.2-7 of the General Laws in Chapter 42-61.2 entitled "Video

Lottery Terminal" is hereby amended to read as follows:

     42-61.2-7. Division of revenue. [Contingent effective date; see note.] -- (a)

Notwithstanding the provisions of § 42-61-15, the allocation of net, terminal income derived from

video lottery games is as follows:

      (1) For deposit in the general fund and to the state lottery division fund for

administrative purposes: Net, terminal income not otherwise disbursed in accordance with

subdivisions (a)(2) -- (a)(6) inclusive;

      (i) Except for the fiscal year ending June 30, 2008, nineteen one hundredths of one

percent (0.19%), up to a maximum of twenty million dollars ($20,000,000), shall be equally

allocated to the distressed communities as defined in § 45-13-12 provided that no eligible

community shall receive more than twenty-five percent (25%) of that community's currently

enacted municipal budget as its share under this specific subsection. Distributions made under

this specific subsection are supplemental to all other distributions made under any portion of

general laws § 45-13-12. For the fiscal year ending June 30, 2008, distributions by community

shall be identical to the distributions made in the fiscal year ending June 30, 2007, and shall be

made from general appropriations. For the fiscal year ending June 30, 2009, the total state

distribution shall be the same total amount distributed in the fiscal year ending June 30, 2008, and

shall be made from general appropriations. For the fiscal year ending June 30, 2010, the total

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state distribution shall be the same total amount distributed in the fiscal year ending June 30,

2009, and shall be made from general appropriations, provided, however, that seven hundred

eighty-four thousand four hundred fifty-eight dollars ($784,458) of the total appropriation shall

be distributed equally to each qualifying distressed community. For each of the fiscal years

ending June 30, 2011, June 30, 2012, and June 30, 2013, seven hundred eighty-four thousand four

hundred fifty-eight dollars ($784,458) of the total appropriation shall be distributed equally to

each qualifying distressed community.

      (ii) Five one hundredths of one percent (0.05%), up to a maximum of five million dollars

($5,000,000), shall be appropriated to property tax relief to fully fund the provisions of § 44-33-

2.1. The maximum credit defined in subdivision 44-33-9(2) shall increase to the maximum

amount to the nearest five dollar ($5.00) increment within the allocation until a maximum credit

of five hundred dollars ($500) is obtained. In no event shall the exemption in any fiscal year be

less than the prior fiscal year.

      (iii) One and twenty-two one hundredths of one percent (1.22%) to fund § 44-34.1-1,

entitled "Motor Vehicle and Trailer Excise Tax Elimination Act of 1998", to the maximum

amount to the nearest two hundred fifty dollar ($250) increment within the allocation. In no event

shall the exemption in any fiscal year be less than the prior fiscal year.

      (iv) Except for the fiscal year ending June 30, 2008, ten one hundredths of one percent

(0.10%), to a maximum of ten million dollars ($10,000,000), for supplemental distribution to

communities not included in subsection (a)(1)(i) above distributed proportionately on the basis of

general revenue sharing distributed for that fiscal year. For the fiscal year ending June 30, 2008,

distributions by community shall be identical to the distributions made in the fiscal year ending

June 30, 2007, and shall be made from general appropriations. For the fiscal year ending June 30,

2009, no funding shall be disbursed. For the fiscal year ending June 30, 2010, and thereafter,

funding shall be determined by appropriation.

      (2) To the licensed, video-lottery retailer:

      (a) (i) Prior to the effective date of the NGJA Newport Grand Master Contract, Newport

Jai Ali Grand twenty-six percent (26%), minus three hundred eighty-four thousand nine hundred

ninety-six dollars ($384,996);

      (ii) On and after the effective date of the NGJA Newport Grand Master Contract, to the

licensed, video-lottery retailer who is a party to the NGJA Newport Grand Master Contract, all

sums due and payable under said Master Contract, minus three hundred eighty four thousand nine

hundred ninety-six dollars ($384,996).

      (iii) (A) Effective July 1, 2013, the rate of net, terminal income payable to Newport

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Grand, LLC under the Newport Grand master contract Master Contract shall increase by two and

one quarter percent (2.25%) percentage points. (i.e., x% plus 2.25 percentage points equals (x +

2.25)%, where "x%" is the current rate of net terminal income payable to Newport Grand). The

dollar amount of additional net terminal income paid to Newport Grand with respect to any

Newport Grand Marketing Year as a result of such increase in rate shall be referred to as

"Additional Newport Grand Marketing NTI."

     (B) The excess, if any, of Newport Grand's marketing expenditures with respect to a

Newport Grand Marketing Year over one million four hundred thousand dollars ($1,400,000)

shall be referred to as the "Newport Grand Marketing Incremental Spend." Beginning with the

Newport Grand Marketing Year that starts on July 1, 2015, after the end of each Newport Grand

Marketing Year, Newport Grand shall pay to the Division the amount, if any, by which the

Additional Newport Grand Marketing NTI for such Newport Grand Marketing Year exceeds the

Newport Grand Marketing Incremental Spend for such Newport Grand Marketing Year; provided

however, that Newport Grand's liability to the Division hereunder with respect to any Newport

Grand Marketing Year shall never exceed the Additional Newport Grand Marketing NTI paid to

Newport Grand with respect to such Newport Grand Marketing Year.

     (C) The increase herein in rate of net terminal income payable to Newport Grand

provided for in subsection (a)(2)(a)(iii)(A) and the provisions of subsection (a)(2)(a)(iii)(B) shall

sunset and expire on June 30, 2015 2017, and the rate in effect as of June 30, 2013, shall be

reinstated.

      (b) (i) Prior to the effective date of the UTGR master contract, to the present licensed,

video-lottery retailer at Lincoln Park, which is not a party to the UTGR, master contract, twenty-

eight and eighty-five one hundredths percent (28.85%), minus seven hundred sixty-seven

thousand six hundred eighty-seven dollars ($767,687);

      (ii) On and after the effective date of the UTGR master contract, to the licensed, video-

lottery retailer that is a party to the UTGR master contract, all sums due and payable under said

master contract minus seven hundred sixty-seven thousand six hundred eighty-seven dollars

($767,687).

      (3) (i) To the technology providers that are not a party to the GTECH Master Contract as

set forth and referenced in Public Law 2003, Chapter 32, seven percent (7%) of the net, terminal

income of the provider's terminals; in addition thereto, technology providers that provide

premium or licensed proprietary content or those games that have unique characteristics, such as

3D graphics; unique math/game play features; or merchandising elements to video lottery

terminals; may receive incremental compensation, either in the form of a daily fee or as an

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increased percentage, if all of the following criteria are met:

      (A) A licensed, video-lottery retailer has requested the placement of premium or licensed

proprietary content at its licensed, video-lottery facility;

      (B) The division of lottery has determined in its sole discretion that the request is likely

to increase net, terminal income or is otherwise important to preserve or enhance the

competiveness of the licensed, video-lottery retailer;

      (C) After approval of the request by the division of lottery, the total number of premium

or licensed, propriety-content video-lottery terminals does not exceed ten percent (10%) of the

total number of video-lottery terminals authorized at the respective licensed, video-lottery

retailer; and

      (D) All incremental costs are shared between the division and the respective licensed,

video-lottery retailer based upon their proportionate allocation of net terminal income. The

division of lottery is hereby authorized to amend agreements with the licensed, video-lottery

retailers, or the technology providers, as applicable, to effect the intent herein.

      (ii) To contractors that are a party to the master contract as set forth and referenced in

Public Law 2003, Chapter 32, all sums due and payable under said master contract; and

      (iii) Notwithstanding paragraphs (i) and (ii) above, there shall be subtracted

proportionately from the payments to technology providers the sum of six hundred twenty-eight

thousand seven hundred thirty-seven dollars ($628,737).

      (4) (A) To the city of Newport one and one hundredth percent (1.01%) of net terminal

income of authorized machines at Newport Grand, except that:

      (i) Effective November 9, 2009 until June 30, 2013, the allocation shall be one and two

tenths percent (1.2%) of net terminal income of authorized machines at Newport Grand for each

week the facility operates video lottery games on a twenty-four-hour (24) basis for all eligible

hours authorized; and

      (ii) Effective July 1, 2015, provided that both:

      (I) The referendum measure authorizing casino gaming at Newport Grand is approved

statewide and by the city of Newport at the statewide general election to be held in November of

2014; and

      (II) The proposed amendment to the Rhode Island Constitution requiring that prior to a

change in location where casino gaming is permitted in any city or town, there must be a

referendum in said city or town and approval by the majority of those electors voting in said

referendum on said proposed change in location in said city or town, is approved statewide at the

statewide general election to be held in November of 2014, then then the allocation shall be one

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and forty-five hundredths percent (1.45%) of net terminal income of authorized video lottery

terminals at Newport Grand.

      (iii) If, effective July 1, 2015, the conditions established in subsections (4)(A)(ii)(I and

II) are met, and the following conditions in subsections (4)(A)(iii)(I through III) are met:

      (I) NGJA Newport Grand or its successor has made an investment of no less than forty

million dollars ($40,000,000) exclusive of acquisition costs within three (3) years, and a

certificate of completion and final approval from the city building inspector has been issued for

the facility upgraded through this investment; and

      (II) The number of video lottery terminals in operation is no fewer than those in

operation as of January 1, 2014; and

      (III) Table gaming has commenced in Newport;

      Then in such event the allocation shall be the greater of one million dollars ($1,000,000),

or one and forty-five hundredths percent (1.45%) of net terminal income of authorized video

lottery terminals at Newport Grand, except that for six (6) consecutive, full-fiscal years

immediately thereafter, the allocation shall be the greater of one million five hundred thousand

dollars ($1,500,000), or one and forty-five hundredths percent (1.45%) of net-terminal income of

authorized video lottery terminals at Newport Grand. Such minimum distribution shall be

distributed in twelve (12) equal payments during the fiscal year.

      (B) To the town of Lincoln one and twenty-six hundredths percent (1.26%) of net

terminal income of authorized machines at Twin River except that;

      (i) Effective November 9, 2009 until June 30, 2013, the allocation shall be one and forty-

five hundredths percent (1.45%) of net terminal income of authorized machines at Twin River for

each week video lottery games are offered on a twenty-four-hour (24) basis for all eligible hours

authorized; and

      (ii) Effective July 1, 2013, provided that the referendum measure authorized by Article

25, Chapter 151, Section 4 of the Public Laws of 2011 is approved statewide and in the Town of

Lincoln, the allocation shall be one and forty-five hundredths percent (1.45%) of net terminal

income of authorized video lottery terminals at Twin River; and

      (5) To the Narragansett Indian Tribe, seventeen hundredths of one percent (0.17%) of net

terminal income of authorized machines at Lincoln Park, up to a maximum of ten million dollars

($10,000,000) per year, that shall be paid to the Narragansett Indian Tribe for the account of a

Tribal Development Fund to be used for the purpose of encouraging and promoting: home

ownership and improvement; elderly housing; adult vocational training; health and social

services; childcare; natural resource protection; and economic development consistent with state

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law. Provided, however, such distribution shall terminate upon the opening of any gaming facility

in which the Narragansett Indians are entitled to any payments or other incentives; and provided

further, any monies distributed hereunder shall not be used for, or spent on, previously contracted

debts; and

      (6) Unclaimed prizes and credits shall remit to the general fund of the state; and

      (7) Payments into the state's general fund specified in subdivisions (a)(1) and (a)(6) shall

be made on an estimated monthly basis. Payment shall be made on the tenth day following the

close of the month except for the last month when payment shall be on the last business day.

      (b) Notwithstanding the above, the amounts payable by the division to UTGR related to

the marketing program shall be paid on a frequency agreed by the division, but no less frequently

than annually.

      (c) Notwithstanding anything in this chapter 61.2 of this title to the contrary, the director

is authorized to fund the marketing program as described above in regard to the first amendment

to the UTGR master contract.

      (d) Notwithstanding the above, the amounts payable by the division to Newport Grand

related to the marketing program shall be paid on a frequency agreed by the division, but no less

frequently than annually.

      (e) Notwithstanding anything in this chapter 61.2 of this title to the contrary, the director

is authorized to fund the marketing program as described above in regard to the first amendment

to the Newport Grand master contract.

      (f) Notwithstanding the provisions of § 42-61-15, the allocation of net, table-game

revenue derived from table-games at Twin River is as follows:

      (1) For deposit into the state lottery fund for administrative purposes and then the

balance remaining into the general fund:

      (i) Sixteen percent (16%) of net, table-game revenue, except as provided in § 42-61.2-

7(f)(1)(ii);

      (ii) An additional two percent (2%) of net, table-game revenue generated at Twin River

shall be allocated starting from the commencement of table games activities by such table-game

retailer and ending, with respect to such table-game retailer, on the first date that such table-game

retailer's net terminal income for a full state fiscal year is less than such table-game retailer's net

terminal income for the prior state fiscal year, at which point this additional allocation to the state

shall no longer apply to such table-game retailer.

      (2) To UTGR, net, table-game revenue not otherwise disbursed pursuant to above

subsection (f)(1); provided, however, on the first date that such table-game retailer's net terminal

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income for a full state fiscal year is less than such table-game retailer's net terminal income for

the prior state fiscal year, as set forth in subsection (f)(1)(ii) above, one percent (1%) of this net,

table-game revenue shall be allocated to the town of Lincoln for four (4), consecutive state fiscal

years.

      (g) Notwithstanding the provisions of § 42-61-15, the allocation of net, table-game

revenue derived from table games at Newport Grand is as follows:

      (1) For deposit into the state lottery fund for administrative purposes and then the

balance remaining into the general fund: eighteen percent (18%) of net, table-game revenue.

      (2) [Deleted by P.L. 2014, ch. 436, § 1].

     SECTION 7. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO AUTHORIZING AN AMENDMENT TO THE NEWPORT GRAND MASTER

VIDEO LOTTERY TERMINAL CONTRACT AND PARI-MUTUEL LICENSEES

***

     This act would: (a) Change the provisions in chapter 16 of the public laws of 2010 by

reducing the number of full-time equivalent employees that Newport Grand must certify it

employs and would authorize the Division of Lotteries to enter into an amendment to the Master

Contract to change such requirement; (b) Extend the sunset date on the 2.25% increase in net

terminal income payable to Newport Grand to June 30, 2017; and (c) Provide that any successor

in interest to an entity that had been issued a license to operate a jai alai fronton prior to July 1,

2003 shall be deemed a pari-mutuel licensee as defined in § 42-61.2-1.

     This act would take effect upon passage.

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