Committee Substitute for SB0229JUS

SENATE JUDICIARY COMMITTEE SUBSTITUTE FOR

SENATE BILL 229

49th legislature - STATE OF NEW MEXICO - first session, 2009

AN ACT

RELATING TO GAMING; AMENDING, REPEALING AND ENACTING CERTAIN SECTIONS OF THE GAMING CONTROL ACT; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 60-2E-3 NMSA 1978 (being Laws 1997, Chapter 190, Section 5, as amended) is amended to read:

"60-2E-3. DEFINITIONS.--As used in the Gaming Control Act:

A. "affiliate" means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with a specified person;

B. "affiliated company" means a company that:

(1) controls, is controlled by or is under common control with a company licensee; and

(2) is involved in gaming activities or involved in the ownership of property on which gaming is conducted;

C. "applicant" means a person who has applied for a license or for approval of an act or transaction for which approval is required or allowed pursuant to the provisions of the Gaming Control Act;

D. "application" means a request for the issuance of a license or for approval of an act or transaction for which approval is required or allowed pursuant to the provisions of the Gaming Control Act, but "application" does not include a supplemental form or information that may be required with the application;

E. "associated equipment" means equipment or a mechanical, electromechanical or electronic contrivance, component or machine used in connection with gaming activity;

F. "board" means the gaming control board;

G. "certification" means a notice of approval by the board of a person required to be certified by the board;

H. "cheat" or "cheating" means to alter the element of chance, the method of selection or other criteria in a manner that determines:

(1) the result of the game;

(2) the amount or frequency of payment in a game, including taking advantage of a malfunctioning machine;

(3) the value of a wagering instrument; or

(4) the value of a wagering credit;

[H.] I. "company" means a corporation, partnership, limited partnership, trust, association, joint stock company, joint venture, limited liability company or other form of business organization that is not a natural person; "company" does not mean a nonprofit organization;

[I.] J. "distributor" means a person who supplies gaming devices to a gaming operator but does not manufacture gaming devices;

[J.] K. "equity security" means an interest in a company that is evidenced by:

(1) voting stock or similar security;

(2) a security convertible into voting stock or similar security, with or without consideration, or a security carrying a warrant or right to subscribe to or purchase voting stock or similar security;

(3) a warrant or right to subscribe to or purchase voting stock or similar security; or

(4) a security having a direct or indirect participation in the profits of the issuer;

[K.] L. "executive director" means the chief administrative officer appointed by the board pursuant to Section 60-2E-7 NMSA 1978;

[L.] M. "finding of suitability" means a certification of approval issued by the board permitting a person to be involved directly or indirectly with a licensee, relating only to the specified involvement for which it is made;

N. "foreign institutional investor" means:

(1) a government-related pension plan of a foreign government; or

(2) a person that meets the requirement of a qualified institutional buyer as defined by the governing financial regulatory agency of the foreign country in which the company's primary operations are located and is registered or licensed in that country as a bank, an insurance company, an investment company, an investment advisor, a collective trust fund, an employee benefit plan or pension fund sponsored by a publicly traded corporation registered with the board or a group composed entirely of entities specified in this subsection;

[M.] O. "game" means an activity in which, upon payment of consideration, a player receives a prize or other thing of value, the award of which is determined by chance even though accompanied by some skill; "game" does not include an activity played in a private residence in which no person makes money for operating the activity except through winnings as a player;

[N.] P. "gaming" means offering a game for play;

[O.] Q. "gaming activity" means an endeavor associated with the manufacture or distribution of gaming devices or the conduct of gaming;

[P.] R. "gaming device" means associated equipment or a gaming machine and includes a system for processing information that can alter the normal criteria of random selection that affects the operation of a game or determines the outcome of a game;

[Q.] S. "gaming employee" means a person connected directly with a gaming activity; "gaming employee" does not include:

(1) bartenders, cocktail servers or other persons engaged solely in preparing or serving food or beverages;

(2) secretarial or janitorial personnel;

(3) stage, sound and light technicians; or

(4) other nongaming personnel;

[R.] T. "gaming establishment" means the premises on or in which gaming is conducted;

[S.] U. "gaming machine" means a mechanical, electromechanical or electronic contrivance or machine that, upon insertion of a coin, token or similar object, or upon payment of any consideration, is available to play or operate a game, whether the payoff is made automatically from the machine or in any other manner;

[T.] V. "gaming operator" means a person who conducts gaming;

[U.] W. "holding company" means a company that directly or indirectly owns or has the power or right to control a company that is an applicant or licensee, but a company that does not have a beneficial ownership of more than ten percent of the equity securities of a publicly traded corporation is not a holding company;

[V.] X. "immediate family" means natural persons who are related to a specified natural person by affinity or consanguinity in the first through the third degree;

[W.] Y. "independent administrator" means a person who administers an annuity, who is not associated in any manner with the gaming operator licensee for which the annuity was purchased and is in no way associated with the person who will be receiving the annuity;

[X.] Z. "institutional investor" means:

(1) a foreign institutional investor;

(2) a state or federal government pension plan; or

(3) a person that meets the requirements of a qualified institutional buyer as defined in Rule 144A of the federal Securities Act of 1933, and is:

[(1)] (a) a bank as defined in Section 3(a)(6) of the federal Securities Exchange Act of 1934;

[(2)] (b) an insurance company as defined in Section 2(a)(17) of the federal Investment Company Act of 1940;

[(3)] (c) an investment company registered under Section 8 of the federal Investment Company Act of 1940;

[(4)] (d) an investment adviser registered under Section 203 of the federal Investment Advisers Act of 1940;

[(5)] (e) collective trust funds as defined in Section 3(c)(11) of the federal Investment Company Act of 1940;

[(6)] (f) an employee benefit plan or pension fund that is subject to the federal Employee Retirement Income Security Act of 1974, excluding an employee benefit plan or pension fund sponsored by a publicly traded corporation registered with the board; or

[(7)] (g) a group comprised entirely of persons specified in [Paragraphs (1) through (6) of this subsection] Subparagraphs (a) through (f) of this paragraph;

[Y.] AA. "intermediary company" means a company that:

(1) is a holding company with respect to a company that is an applicant or licensee; and

(2) is a subsidiary with respect to any holding company;

[Z.] BB. "key executive" means an executive of a licensee or other person having the power to exercise significant influence over decisions concerning any part of the licensed operations of the licensee or whose compensation exceeds an amount established by the board in a rule;

[AA.] CC. "license" means an authorization required by the board for engaging in gaming activities;

[BB.] DD. "licensee" means a person to whom a valid license has been issued;

[CC.] EE. "manufacturer" means a person who manufactures, fabricates, assembles, produces, programs or makes modifications to any gaming device for use or play in New Mexico or for sale, lease or distribution outside New Mexico from any location within New Mexico;

[DD.] FF. "net take" means the total of the following, less the total of all cash paid out as losses to winning patrons and those amounts paid to purchase annuities to fund losses paid to winning patrons over several years by independent administrators:

(1) cash received from patrons for playing a game;

(2) cash received in payment for credit extended by a licensee to a patron for playing a game; and

(3) compensation received for conducting a game in which the licensee is not a party to a wager;

[EE.] GG. "nonprofit organization" means:

(1) a bona fide chartered or incorporated branch, lodge, order or association, in existence in New Mexico prior to January 1, 1997, of a fraternal organization that is described in Section 501(c)(8) or (10) of the federal Internal Revenue Code of 1986 and that is exempt from federal income taxation pursuant to Section 501(a) of that code; or

(2) a bona fide chartered or incorporated post, auxiliary unit or society of, or a trust or foundation for the post or auxiliary unit, in existence in New Mexico prior to January 1, 1997, of a veterans' organization that is described in Section 501(c)(19) or (23) of the federal Internal Revenue Code of 1986 and that is exempt from federal income taxation pursuant to Section 501(a) of that code;

[FF.] HH. "person" means a legal entity;

[GG.] II. "premises" means land, together with all buildings, improvements and personal property located on the land;

[HH.] JJ. "progressive jackpot" means a prize that increases over time or as gaming machines that are linked to a progressive system are played and upon conditions established by the board may be paid by an annuity;

[II.] KK. "public post-secondary educational institution" means an institution designated in Article 12, Section 11 of the constitution of New Mexico [and] or an institution designated in Chapter 21, [Articles] Article 13, 14 [and] or 16 NMSA 1978;

[JJ.] LL. "progressive system" means one or more gaming machines linked to one or more common progressive jackpots;

[KK.] MM. "publicly traded corporation" means a corporation that:

(1) has one or more classes of securities registered pursuant to the securities laws of the United States or New Mexico;

(2) is an issuer subject to the securities laws of the United States or New Mexico; or

(3) has one or more classes of securities registered or is an issuer pursuant to applicable foreign laws that, the board finds, provide protection for institutional investors that is comparable to or greater than the stricter of the securities laws of the United States or New Mexico;

[LL.] NN. "registration" means a board action that authorizes a company to be a holding company with respect to a company that holds or applies for a license or that relates to other persons required to be registered pursuant to the Gaming Control Act;

[MM.] OO. "subsidiary" means a company, all or a part of whose outstanding equity securities are owned, subject to a power or right of control or held, with power to vote, by a holding company or intermediary company;

[NN.] PP. "technician" means a person approved by the board to repair and service gaming devices or associated equipment but who is prohibited from programming gaming devices; and

[OO.] QQ. "work permit" means a card, certificate or permit issued by the board, whether denominated as a work permit, registration card or otherwise, authorizing the employment of the holder as a gaming employee."

Section 2. Section 60-2E-8 NMSA 1978 (being Laws 1997, Chapter 190, Section 10, as amended) is amended to read:

"60-2E-8. BOARD REGULATIONS--DISCRETIONARY REGULATIONS--PROCEDURE--REQUIRED PROVISIONS.--

A. The board may adopt any regulation:

(1) consistent with the provisions of the Gaming Control Act; and

(2) it decides is necessary to implement the provisions of the Gaming Control Act.

B. No regulation shall be adopted, amended or repealed without a public hearing on the proposed action before the board or a hearing officer designated by it. Notice of the subject matter of the regulation, the action proposed to be taken, the time and place of the hearing, the manner in which interested persons may present their views and the method by which copies of the proposed regulation, amendment or repeal may be obtained shall be published once at least thirty days prior to the hearing date in a newspaper of general circulation and mailed at least thirty days prior to the hearing date to all persons who have made a written request for advance notice of hearing. All regulations and actions taken on regulations shall be filed in accordance with the State Rules Act.

C. The board shall adopt regulations:

(1) prescribing the method and form of application to be followed by an applicant;

(2) prescribing the information to be furnished by an applicant or licensee concerning [his] the applicant's or licensee's antecedents, immediate family, habits, character, associates, criminal record, business activities and financial affairs, past or present;

(3) prescribing the manner and procedure of all hearings conducted by the board or a hearing officer;

(4) prescribing the manner and method of collection and payment of fees;

(5) prescribing the manner and method of the issuance of licenses, permits, registrations, certificates and other actions of the board not elsewhere prescribed in the Gaming Control Act;

(6) defining the area, games and gaming devices allowed and the methods of operation of the games and gaming devices for authorized gaming;

(7) prescribing under what conditions the nonpayment of winnings is grounds for suspension or revocation of a license of a gaming operator;

(8) governing the manufacture, sale, distribution, repair and servicing of gaming devices;

(9) prescribing accounting procedures, security, collection and verification procedures required of licensees and matters regarding financial responsibility of licensees;

(10) prescribing what shall be considered to be an unsuitable method of operating gaming activities;

(11) restricting access to confidential information obtained pursuant to the provisions of the Gaming Control Act and ensuring that the confidentiality of that information is maintained and protected;

(12) prescribing financial reporting and internal control requirements for licensees;

(13) prescribing the manner in which winnings, compensation from gaming activities and net take shall be computed and reported by a gaming operator licensee;

(14) prescribing the frequency of and the matters to be contained in audits of and periodic financial reports relevant to [his] the gaming operator licensee's gaming activities from a gaming operator licensee consistent with standards prescribed by the board;

(15) prescribing the procedures to be followed by a gaming operator licensee for the exclusion of persons from gaming establishments;

(16) establishing criteria and conditions for the operation of progressive systems;

(17) establishing criteria and conditions for approval of procurement by the board of personal property valued in excess of twenty thousand dollars ($20,000), including background investigation requirements for a person submitting a bid or proposal;

(18) establishing an applicant fee schedule for processing applications that is based on costs of the application review incurred by the board whether directly or through payment by the board for costs charged for investigations of applicants by state departments and agencies other than the board, which regulation shall set a maximum fee of one hundred thousand dollars ($100,000); and

(19) establishing criteria and conditions for allowing temporary possession of gaming devices:

(a) by post-secondary educational institutions; [and]

(b) for trade shows;

(d) for other non-gaming purposes."

Section 3. Section 60-2E-12 NMSA 1978 (being Laws 1997, Chapter 190, Section 14) is amended to read:

"60-2E-12. CONFLICTS OF INTEREST--BOARD--EXECUTIVE DIRECTOR--EMPLOYEES.--

A. In addition to all other provisions of New Mexico law regarding conflicts of interest of state officials and employees, a member of the board, the executive director, an employee of the board or a person in the immediate family of or residing in the household of any of the foregoing persons, shall not:

(1) directly or indirectly, as a proprietor or as a member, stockholder, director or officer of a company, have an interest in a business engaged in gaming activities in this or another jurisdiction; or

(2) accept or agree to accept any economic opportunity, gift, loan, gratuity, special discount, favor, hospitality or service having an aggregate value of one hundred dollars ($100) or more in any calendar year from a licensee or applicant.

B. If a member of the board, the executive director or a person in the immediate family of or residing in the household of a member of the board or the executive director violates a provision of this section, the member of the board or executive director shall be removed from office. A board member shall be removed by the governor, and the executive director shall be removed from [his] the executive director's position by the board."

Section 4. Section 60-2E-13.1 NMSA 1978 (being Laws 2002, Chapter 102, Section 9) is amended to read:

"60-2E-13.1. TEMPORARY POSSESSION OF GAMING DEVICE FOR LIMITED PURPOSE.--

A. A public post-secondary educational institution may temporarily possess gaming devices for the limited purpose of providing instruction on the technical aspects of gaming devices to persons seeking certification as technicians qualified to repair and maintain gaming devices. [Any] A gaming device allowed for such limited use shall be subject to registration, transport, possession and use requirements and restrictions established in board regulations.

B. Trade shows and similar events for the purpose of demonstrating and marketing gaming devices may be conducted in the state at the discretion of the board. [Any] A gaming device allowed in the state for such limited use shall be subject to registration, transport, possession and use requirements and restrictions established in board regulations.

C. A person may possess an unlicensed gaming device used by [him] the person for the purposes of testing or demonstration if that person is a manufacturer licensee or has obtained a waiver pursuant to the Gaming Control Act.

D. A person may possess a gaming device for the purpose of film or theater productions or other non-gaming purposes permitted by regulation of the board. Any gaming device allowed in the state for such limited use shall be subject to registration, transport, possession and use requirements and restrictions established in board regulations."

Section 5. Section 60-2E-16 NMSA 1978 (being Laws 1997, Chapter 190, Section 18, as amended) is amended to read:

"60-2E-16. ACTION BY BOARD ON APPLICATIONS.--

A. A person that the board determines is qualified to receive a license pursuant to the provisions of the Gaming Control Act may be issued a license. The burden of proving qualifications is on the applicant.

B. A license shall not be issued unless the board is satisfied that the applicant is:

(1) a person of good moral character, honesty and integrity;

(2) a person whose prior activities, state and federal criminal records, reputation, habits and associations do not 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; and

(3) in all other respects qualified to be licensed consistent with the laws of this state.

C. A license shall not be issued unless the applicant has satisfied the board that:

(1) the applicant has adequate business probity, competence and experience in business and gaming;

(2) the proposed financing of the applicant is adequate for the nature of the proposed license and from a suitable source; any lender or other source of money or credit that the board finds does not meet the standards set forth in Subsection B of this section shall be deemed unsuitable; and

(3) the applicant is sufficiently capitalized under standards set by the board to conduct the business covered by the license.

D. An application to receive a license, certification or work permit constitutes a request for a determination of the applicant's general moral character, integrity and ability to participate or engage in or be associated with gaming. Any written or oral statement made in the course of an official proceeding of the board or by a witness testifying under oath that is relevant to the purpose of the proceeding is absolutely privileged and does not impose liability for defamation or constitute a ground for recovery in any civil action.

E. The board [shall not issue] may deny a license or certification to an applicant who has previously been denied a license or certification in this state or another state, who has had a certification, permit or license issued pursuant to the gaming laws of a state or the United States permanently suspended or revoked for cause or who is currently under suspension or subject to any other limiting action in this state or another state involving gaming activities or licensure for gaming activities.

F. The board shall investigate the qualifications of each applicant before a license, certification or work permit is issued by the board and shall continue to observe and monitor the conduct of all licensees, work permit holders, persons certified as being suitable and the persons having a material involvement directly or indirectly with a licensee.

G. The board has the authority to deny an application or limit, condition, restrict, revoke or suspend a license, certification or permit for any cause.

H. After issuance, a license, certification or permit shall continue in effect upon proper payment of the initial and renewal fees, subject to the power of the board to revoke, suspend, condition or limit licenses, certifications and permits.

I. The board has full and absolute power and authority to deny an application for any cause it deems reasonable. If an application is denied, the board shall prepare and file its written decision on which its order denying the application is based."

Section 6. Section 60-2E-19 NMSA 1978 (being Laws 1997, Chapter 190, Section 21, as amended) is amended to read:

"60-2E-19. [REGISTRATION WITH BOARD BY] COMPANY APPLICANTS--NONPROFIT [ORGANIZATIONS] ORGANIZATION APPLICANTS--REQUIRED INFORMATION.--

A. A company applicant for a license or a renewal of a license shall provide the following information to the board on forms provided by the board:

(1) the organization, financial structure and nature of the business to be operated, including the names and personal histories of all officers, directors and key executives;

(2) the rights and privileges acquired by the holders of different classes of authorized securities;

(3) the terms and conditions of all outstanding loans, mortgages, trust deeds, pledges or any other indebtedness or security interest evidenced by a security instrument pertaining to the proposed gaming operation or other licensed activity in this state and the name and address of the person who is servicing the loan, mortgage, trust deed, pledge or other indebtedness or security interest;

(4) remuneration to persons, other than directors, officers and key executives, exceeding [fifty thousand dollars ($50,000)] one hundred thousand dollars ($100,000) per year;

(5) bonus and profit-sharing arrangements within the company;

(6) a list of management and service contracts pertaining to the proposed gaming activity in this state;

(7) balance sheets and profit and loss statements for at least the three preceding fiscal years, or, if the company has not been in business for a period of three years, balance sheets and profit and loss statements from the time of its commencement of business operations and projected for three years from the time of its commencement of business operations. All balance sheets and profit and loss statements shall be [certified] audited by independent certified public accountants; and

(8) any further financial data that the board deems necessary or appropriate.

B. A nonprofit organization applying for a license or a renewal of a license as a nonprofit gaming operator pursuant to the Gaming Control Act shall provide in its application:

(1) the organization, financial structure and nature of the nonprofit organization, including the names of all officers, directors and key executives;

(2) the terms and conditions of all outstanding loans, mortgages, trust deeds, pledges or any other indebtedness or security interest evidenced by a security instrument pertaining to the proposed gaming operation or other licensed activity in this state and the name and address of the person who is servicing the loan, mortgage, trust deed, pledge or other indebtedness or security interest;

(3) management and service contracts pertaining to the proposed gaming activity in this state;

(4) balance and profit and loss statements for at least the three preceding fiscal years or, if the nonprofit organization has not been in business for a period of three years, balance sheets and profit and loss statements from the date of charter or incorporation and projected for three years from the date of charter or incorporation. All balance sheets and profit and loss statements shall be [certified by independent certified public accountants] submitted in a manner prescribed by the board;

(5) any further financial data that the board deems necessary or appropriate;

(6) if the nonprofit organization has various classes of members, information detailing the rights and privileges attributed to each class of member and providing the number of members in each class;

(7) the level of remuneration for all paid employees of the nonprofit organization; and

(8) details about any other form of remuneration or awards that are conferred on members."

Section 7. Section 60-2E-20 NMSA 1978 (being Laws 1997, Chapter 190, Section 22, as amended) is amended to read:

"60-2E-20. INDIVIDUAL CERTIFICATION OF FINDING OF SUITABILITY OF OFFICERS, DIRECTORS AND OTHER PERSONS.--

A. An officer, director, equity security holder of five percent or more, partner, general partner, limited partner, trustee or beneficiary of the company that holds or has applied for a license shall [be certified] individually apply for and obtain a certification of finding of suitability, according to the provisions of the Gaming Control Act, and if, in the judgment of the board the public interest is served by requiring any or all of the company's key executives to [be certified] apply for and obtain a certification of finding of suitability, the company shall require those persons to apply for certification. A person who is required to be certified pursuant to this subsection shall apply for certification within thirty days after becoming an officer, director, equity security holder of five percent or more, partner, general partner, limited partner of five percent or more, trustee, beneficiary or key executive. A person who is required to be certified pursuant to a decision of the board shall apply for certification within thirty days after the board so requests. A person required or requested to be certified pursuant to this subsection shall provide to the board an application for certification, including a personal history, a financial statement, copies of the person's income tax returns for the three years immediately prior to the year of the application and other information that the board deems necessary or appropriate.

B. The key executives of a nonprofit organization that holds or has applied for a license shall [be certified] individually apply for and obtain a certification of finding of suitability. For purposes of this subsection, key executives are those officers, employees, volunteers and other persons who are designated by the nonprofit organization as key executives. The board may require additional officers, employees, volunteers and other persons to [become certified] apply for and obtain a certification of finding of suitability if the board determines the public interest is served by the additional certifications. A person who is required to be certified pursuant to this subsection shall apply for certification within thirty days after becoming an officer or key executive. A person who is required to be certified pursuant to a decision of the board shall apply for certification within thirty days after the board so requests. [An officer, employee, volunteer or other] A person required or requested to be certified pursuant to this subsection shall provide to the board an application for certification, including a personal history, a financial statement, copies of the person's income tax returns for the three years immediately prior to the year of the application and other information that the board deems necessary or appropriate."

Section 8. Section 60-2E-21 NMSA 1978 (being Laws 1997, Chapter 190, Section 23) is amended to read:

"60-2E-21. REQUIREMENTS IF COMPANY IS OR BECOMES A SUBSIDIARY--INVESTIGATIONS--RESTRICTIONS ON UNSUITABLE PERSONS--OTHER REQUIREMENTS.--

A. If the company applicant or licensee is or becomes a subsidiary, each nonpublicly traded holding company and intermediary company with respect to the subsidiary company shall:

(1) qualify to do business in New Mexico; and

(2) register with the board and furnish to the board the following information:

(a) a complete list of all beneficial owners of five percent or more of its equity securities, which shall be updated within thirty days after any change;

(b) the names of all company officers and directors within thirty days of their appointment or election;

(d) the terms, position, rights and privileges of the different classes of its outstanding securities;

(e) the terms on which its securities are to be, and during the preceding three years have been, offered;

(f) the holder of and the terms and conditions of all outstanding loans, mortgages, trust deeds, pledges or any other indebtedness or security interest pertaining to the applicant or licensee;

(g) the extent of the securities holdings or other interest in the holding company or intermediary company of all officers, directors, key executives, underwriters, partners, principals, trustees or any direct or beneficial owners, and the amount of any remuneration paid them as compensation for their services in the form of salary, wages, fees or by contract pertaining to the licensee;

(h) remuneration to persons other than directors, officers and key executives exceeding [fifty thousand dollars ($50,000)] two hundred fifty thousand dollars ($250,000) per year;

(i) bonus and profit-sharing arrangements within the holding company or intermediary company, if deemed necessary by the board;

(j) management and service contracts pertaining to the licensee or applicant, if deemed necessary by the board;

(k) options existing or to be created in respect to the company's securities or other interests, if deemed necessary by the board;

(l) balance sheets and profit and loss statements, [certified] audited by independent certified public accountants or their foreign equivalents, for not more than the three preceding fiscal years, or, if the holding company or intermediary company has not been in existence more than three years, balance sheets and profit and loss statements from the time of its establishment, together with projections for three years from the time of its establishment;

(m) any further financial statements necessary or appropriate to assist the board in making its determinations; and

(n) a current annual profit and loss statement, a current annual balance sheet and a copy of the company's most recent federal income tax return or its foreign equivalent within thirty days after the return is filed.

B. The board may require all holders of five percent or more of the equity security of a holding company or intermediary company [shall] to apply for a certification of finding of suitability.

C. The board may in its discretion perform the investigations concerning the officers, directors, key executives, underwriters, security holders, partners, principals, trustees or direct or beneficial owners of any interest in any holding company or intermediary company as it deems necessary, either at the time of initial registration or at any time thereafter.

D. If at any time the board finds that any person owning, controlling or holding with power to vote all or any part of any class of securities of, or any interest in, any holding company or intermediary company is unsuitable to be connected with a licensee, it shall so notify both the unsuitable person and the holding company or intermediary company. The unsuitable person shall immediately offer the securities or other interest to the issuing company for purchase. The company shall purchase the securities or interest offered upon the terms and within the time period ordered by the board.

E. Beginning on the date when the board serves notice that a person has been found to be unsuitable pursuant to Subsection D of this section, it is unlawful for the unsuitable person to:

(1) receive any dividend or interest upon any securities held in the holding company or intermediary company, or any dividend, payment or distribution of any kind from the holding company or intermediary company;

(2) exercise, directly or indirectly or through a proxy, trustee or nominee, any voting right conferred by the securities or interest; or

(3) receive remuneration in any form from the licensee, or from any holding company or intermediary company with respect to that licensee, for services rendered or otherwise.

F. A holding company or intermediary company subject to the provisions of Subsection A of this section shall not make any public offering of any of its equity securities unless such public offering has been approved by the board.

G. This section does not apply to a holding company or intermediary company that is a publicly traded corporation, the stock of which is traded on recognized stock exchanges, which shall instead comply with the provisions of Section [24 of the Gaming Control Act] 60-2E-22 NMSA 1978."

Section 9. Section 60-2E-22 NMSA 1978 (being Laws 1997, Chapter 190, Section 24) is amended to read:

"60-2E-22. [REGISTRATION AND CERTIFICATION OF PUBLICLY TRADED CORPORATIONS] CHANGE IN COMPANY OWNERSHIP.--

A. If a company applicant or company licensee [is or becomes a publicly traded corporation, it shall register with the board] proposes to transfer ownership of twenty percent or more of the applicant or licensee, it shall notify the board in writing and provide the following information about the successor company:

(1) if the company is a publicly traded corporation, as of the date the company became a publicly traded corporation, and on any later date when the information changes, the names of all stockholders of record who hold five percent or more of the outstanding shares of any class of equity securities issued by the publicly traded corporation;

(2) the names of all officers within thirty days of their respective appointments;

(3) the names of all directors within thirty days of their respective elections or appointments;

(4) the organization, financial structure and nature of the businesses the [publicly traded corporation] company operates;

(5) if the company is a publicly traded corporation, the terms, position, rights and privileges of the different classes of securities outstanding as of the date the company became a publicly traded corporation;

(6) if the company is a publicly traded corporation, the terms on which the company's securities were issued during the three years preceding the date on which the company became a publicly traded corporation and the terms on which the publicly traded corporation's securities are to be offered to the public as of the date the company became a publicly traded corporation;

(7) the terms and conditions of all outstanding indebtedness and evidence of security pertaining directly or indirectly to the [publicly traded corporation] company;

(8) remuneration exceeding [fifty-thousand dollars ($50,000)] one hundred thousand dollars ($100,000) per year paid to persons other than directors, officers and key executives who are actively and directly engaged in the administration or supervision of the gaming activities of the [publicly traded corporation] company;

(9) bonus and profit-sharing arrangements within the [publicly traded corporation] company directly or indirectly relating to its gaming activities;

(10) management and service contracts of the [corporation] company pertaining to its gaming activities;

(11) options existing or to be created pursuant to its equity securities;

(12) balance sheets and profit and loss statements, certified by independent certified public accountants or their foreign equivalents, for not less than the three fiscal years preceding the date [the company became a publicly traded corporation] of the proposed transfer of ownership;

(13) any further financial statements deemed necessary or appropriate by the board; and

(14) a description of the [publicly traded corporation's] company's affiliated companies and intermediary companies and gaming licenses, permits and approvals held by those entities.

B. The board shall [consider the following criteria in determining whether to certify a publicly traded corporation] determine whether the proposed transaction is a transfer or assignment of the license as prohibited by Subsection G of Section 60-2E-14 NMSA 1978. If the board determines that the proposed transaction is prohibited, it shall notify the licensee in writing and shall require the proposed transferee to file an application for a license. If the board determines that the proposed transaction is not a prohibited transfer or assignment of the license, it shall make a determination as to whether to issue a certification approving the transaction. The board shall consider the following information about the successor company in determining whether to certify the transaction:

(1) the business history of the [publicly traded corporation] company, including its record of financial stability, integrity and success of its gaming operations in other jurisdictions;

(2) the current business activities and interests of the [applicant] company, as well as those of its officers, promoters, lenders and other sources of financing, or any other persons associated with it;

(3) the current financial structure of the [publicly traded corporation] company as well as changes that could reasonably be expected to occur to its financial structure as a consequence of its proposed action;

(4) the present and proposed compensation arrangements between the [publicly traded corporation] company and its directors, officers, key executives, securities holders, lenders or other sources of financing;

(5) the equity investment, commitment or contribution of present or prospective directors, key executives, investors, lenders or other sources of financing; and

(6) the dealings and arrangements, prospective or otherwise, between the [publicly traded corporation] company and its investment bankers, promoters, finders or lenders and other sources of financing.

C. The board may issue a certification upon receipt of a proper application and consideration of the criteria set forth in Subsection B of this section if it finds that the certification would not be contrary to the public interest or the policy set forth in the Gaming Control Act.

D. The board may require the officers, directors key executives and holders of an equity security interest of five percent or more of the successor company and any other person specified in the Gaming Control Act to apply for and obtain a certification of finding of suitability."

Section 10. Section 60-2E-25 NMSA 1978 (being Laws 1997, Chapter 190, Section 27) is amended to read:

"60-2E-25. REPORT OF PROPOSED ISSUANCE OR TRANSFER OF [SECURITIES] OWNERSHIP--REPORT OF CHANGE IN CORPORATE OFFICERS AND DIRECTORS--APPROVAL OF BOARD.--

A. Before a company licensee, other than a publicly traded corporation, may issue or transfer five percent or more of its [securities] ownership to [any] a person, it shall file a report of its proposed action with the board, which report shall request the approval of the board. The board shall have ninety days within which to approve or deny the request. If the board fails to act in ninety days, the request is deemed approved. If the board denies the request, the company shall not issue or transfer five percent or more of its securities to the person about whom the request was made.

B. A company licensee shall file a report of each change of the corporate officers and directors with the board within thirty days of the change. The board shall have ninety days from the date the report is filed within which to approve or disapprove such change. During the ninety-day period and thereafter, if the board does not disapprove the change, an officer or director is entitled to exercise all powers of the office to which [he] the officer or director was elected or appointed.

C. A company licensee shall report to the board in writing [any] a change in company personnel who have been designated as key executives. The report shall be made no later than thirty days after the change.

D. The board may require that a company licensee furnish the board with a copy of its federal income tax return within thirty days after the return is filed."

Section 11. Section 60-2E-26 NMSA 1978 (being Laws 1997, Chapter 190, Section 28) is amended to read:

"60-2E-26. GAMING OPERATOR LICENSEES--GENERAL PROVISIONS--BUSINESS PLAN--PLAYER AGE LIMIT--RESTRICTIONS.--

A. An applicant for [licensure as a gaming operator] a gaming operator's license shall submit with the application a plan for assisting in the prevention, education and treatment of compulsive gambling. The plan shall include regular educational training sessions for employees. Plan approval by the board is a condition of issuance of the license.

B. An applicant for [licensure as a gaming operator] a gaming operator's license shall submit with the application a proposed business plan. The plan shall include at least:

(1) a floor plan of the area to be used for gaming machine operations;

(2) an advertising and marketing plan;

(3) the proposed placement and number of gaming machines;

(4) a current financial [control] status and gaming protection plan;

(5) a security plan;

(6) a staffing plan for gaming machine operations; [and]

(7) internal control systems in compliance with Section 60-2E-35 NMSA 1978; and

[(7)] (8) details of any proposed progressive systems.

C. A gaming operator licensee shall be granted a license to operate a [specific] number of machines, not to exceed the statutory maximum, at a gaming establishment identified in the license application and shall be granted a license for each gaming machine.

D. A gaming operator licensee [who desires to change the number of machines in operation at a gaming establishment shall apply to the board for an amendment to his license authorizing a change in the number of machines] shall apply for and pay the machine license fee for any increase in the number of authorized gaming machines in operation at the licensed premises and shall notify the board of any decrease in the number of authorized gaming machines in operation at the licensed premises.

E. Gaming machines may be available for play only in an area restricted to persons twenty-one years of age or older.

F. A gaming operator licensee shall erect a permanent physical barrier to allow for multiple uses of the premises by persons of all ages. For purposes of this subsection, "permanent physical barrier" means a floor-to-ceiling wall separating the general areas from the restricted areas. The entrance to the area where gaming machines are located shall display a sign that the premises are restricted to persons twenty-one years of age or older. Persons under the age of twenty-one shall not enter the area where gaming machines are located.

G. A gaming operator licensee shall not have automated teller machines in the area restricted pursuant to Subsection F of this section.

H. A gaming operator licensee shall not provide, allow, contract or arrange to provide alcohol or food for no charge or at reduced prices as an incentive or enticement for patrons to game.

I. Only a racetrack licensed by the state racing commission or a nonprofit organization may apply for or be issued a gaming operator's license. No other persons are qualified to apply for or be issued a gaming operator's license pursuant to the Gaming Control Act."

Section 12. Section 60-2E-27 NMSA 1978 (being Laws 1997, Chapter 190, Section 29, as amended) is amended to read:

"60-2E-27. GAMING OPERATOR LICENSEES--SPECIAL CONDITIONS FOR RACETRACKS--NUMBER OF GAMING MACHINES--DAYS AND HOURS OF OPERATIONS.--

A. A racetrack licensed by the state racing commission pursuant to the Horse Racing Act to conduct live horse races or simulcast races may be issued a gaming operator's license to operate gaming machines on its premises where live racing is conducted.

B. A racetrack's gaming operator's license shall automatically become void if:

(1) the racetrack no longer holds an active license to conduct parimutuel wagering; or

(2) the racetrack fails to maintain a minimum of four live race days a week with at least nine live races on each race day during its licensed race meet, except as provided in Subsection F of this section.

C. Unless a larger number is allowed pursuant to Subsection D of this section, a gaming operator licensee that is a racetrack may have up to six hundred licensed gaming machines [but the number of gaming machines to be located on the licensee's premises shall be specified in the gaming operator's license].

D. By execution of an allocation agreement, signed by both the allocating racetrack and the racetrack to [whom] which the allocation is made, a gaming operator licensee that is a racetrack may allocate any number of its authorized gaming machines to another gaming operator licensee that is a racetrack. To be valid, the allocation agreement must bear the written approval of the board and the state racing commission, and this approval shall make specific reference to the meeting at which the action of approval was taken and the number of votes cast both for and against the approval. By allocating a number of its authorized machines to another racetrack, the allocating racetrack automatically surrenders all rights to operate the number of machines allocated. No racetrack shall operate or be authorized to operate more than seven hundred fifty gaming machines.

E. Gaming machines on a racetrack gaming operator licensee's premises may be played only on days when the racetrack is either conducting live horse races or simulcasting horse race meets. On days when gaming machines are permitted to be operated, a racetrack gaming operator licensee may offer gaming machines for operation for up to eighteen hours per day; provided that the total number of hours in which gaming machines are operated does not exceed one hundred twelve hours in a one-week period beginning on Tuesday at 8:00 a.m. and ending at 8:00 a.m. on the following Tuesday. A racetrack gaming operator licensee may offer gaming machines for play at any time during a day; provided that the total hours of operation in each day from just after midnight of the previous day until midnight of the current day does not exceed eighteen hours. A racetrack gaming operator licensee shall determine, within the limitations imposed by this subsection, the hours it will offer gaming machines for operation each day and shall notify the board in writing of those hours.

F. Maintaining fewer than four live race days or nine live races on each race day during a licensed race meet does not constitute a failure to maintain the minimum number of live race days or races as required by Paragraph (2) of Subsection B of this section if the licensee submits to the board written approval by the state racing commission for the licensee to vary the minimum number of live race days or races, and the variance is due to:

(1) the inability of a racetrack gaming operator licensee to fill races as published in the licensee's condition book;

(2) severe weather or other act, event or occurrence resulting from natural forces;

(3) a strike or work stoppage by jockeys or other persons necessary to conduct a race or meet;

(4) a power outage, electrical failure or failure or unavailability of any equipment or supplies necessary to conduct a race or meet;

(5) hazardous conditions or other threats to the public health or safety; or

(6) any other act, event or occurrence that the board finds is not within the control of the licensee even with the exercise of reasonable diligence or care.

[F.] G. Alcoholic beverages shall not be sold, served, delivered or consumed in the area restricted pursuant to Subsection F of Section 60-2E-26 NMSA 1978."

Section 13. Section 60-2E-29 NMSA 1978 (being Laws 1997, Chapter 190, Section 31) is amended to read:

"60-2E-29. LICENSING OF MANUFACTURERS OF GAMING DEVICES--EXCEPTION--DISPOSITION OF GAMING DEVICES.--

A. It is unlawful for [any] a person to operate, carry on, conduct or maintain any form of manufacturing of [any] a gaming device or associated equipment for use or play in New Mexico or any form of manufacturing of [any] a gaming device or associated equipment in New Mexico for use or play outside of New Mexico without first obtaining and maintaining a manufacturer's license.

B. If the board revokes a manufacturer's license:

(1) no new gaming device manufactured by the manufacturer may be approved for use in this state;

(2) any previously approved gaming device manufactured by the manufacturer is subject to revocation of approval if the reasons for the revocation of the license also apply to that gaming device;

(3) no new gaming device or associated equipment made by the manufacturer may be distributed, sold, transferred or offered for use or play in New Mexico; and

(4) any association or agreement between the manufacturer and a distributor licensee or gaming operator licensee in New Mexico shall be terminated.

C. An agreement between a manufacturer licensee and a distributor licensee or a gaming operator licensee in New Mexico shall be deemed to include a provision for its termination without liability for the termination on the part of either party upon a finding by the board that either party is unsuitable. Failure to include that condition in the agreement is not a defense in [any] an action brought pursuant to this section to terminate the agreement.

D. A gaming device shall not be used and offered for play by a gaming operator licensee unless it is identical in all material aspects to a model that has been specifically tested and approved by:

(1) the board; or

(2) a laboratory selected by the board [or

(3) gaming officials in Nevada or New Jersey for current use].

E. The board may inspect every gaming device that is manufactured:

(1) for use in New Mexico; or

(2) in New Mexico for use outside of New Mexico.

F. The board may inspect every gaming device that is offered for play within New Mexico by a gaming operator licensee.

G. The board may inspect all associated equipment that is manufactured and sold for use in New Mexico or manufactured in New Mexico for use outside of New Mexico.

H. In addition to all other fees and charges imposed pursuant to the Gaming Control Act, the board may determine, charge and collect from each manufacturer an inspection fee, which shall not exceed the actual cost of inspection and investigation.

I. The board may prohibit the use of a gaming device by a gaming operator licensee if it finds that the gaming device does not meet the requirements of this section."

Section 14. A new section of the Gaming Control Act, Section 60-2E-34.1 NMSA 1978, is enacted to read:

"60-2E-34.1. [NEW MATERIAL] SELF-EXCLUSION FROM GAMING ESTABLISHMENTS--PROCEDURE--FINES--CONFIDENTIALITY.--

A. The board shall develop rules that permit a person who is a compulsive gambler to be voluntarily excluded from a gaming establishment.

B. Self-exclusion shall occur through written application made by the compulsive gambler to the board and shall be governed by the following provisions:

(1) self-exclusion shall be enforceable upon issuance of a self-exclusion order by the board to each applicable gaming establishment identified in the order;

(2) only the person who is the compulsive gambler may apply on that person's behalf;

(3) the application shall be submitted to the board;

(4) except for notification of the gaming establishments for which the self-exclusion order is effective and for notification for mailing list exclusion pursuant to this section, the application and the self-exclusion order shall be held confidential by employees of the board and a gaming operator licensee and its employees and key executives;

(5) a self-exclusion order may apply to one or more gaming establishments licensed pursuant to the Gaming Control Act;

(6) a self-excluded person, if present at a gaming establishment from which the person is excluded, shall forfeit the following to that gaming establishment, provided that all money or other property forfeited shall be used by the gaming establishment only to supplement the one-fourth percent of the net take of its gaming machines to fund or support programs for the treatment and assistance of compulsive gamblers pursuant to Subsection E of Section 60-2E-47 NMSA 1978:

(a) all winnings of the person obtained while present at the gaming establishment; and

(b) all credits, tokens or vouchers received by the person while present at the gaming establishment;

(7) a gaming establishment is immune from liability arising out of its efforts to exclude a person identified in a self-exclusion order; and

(8) a specific term shall be set for each self-exclusion order.

C. Notice shall be submitted by the board at least monthly to all gaming establishments listing all persons who are currently self-excluded and ordering the removal of their names from direct mail or electronic advertisement or promotional lists.

D. The state gaming representative may negotiate an agreement with each tribal casino in the state to allow the state to include tribal casinos in the self-exclusion orders."

Section 15. REPEAL.--Section 60-2E-45 NMSA 1978 (being Laws 1997, Chapter 190, Section 47) is repealed.

Section 16. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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