The URL can be used to link to this page

Home My WebLink AboutC-4141 Cly\L\\ \lam22' ADW Wager Tax Payment Agreement This ADW Wager Tax Payment Agreement(this"Agreement") is entered into effective as of January I,2018 ("Effective Date") by and between Los Angeles Turf Club, Incorporated ("LATC"),the Thoroughbred Owners of California("TOC"),and the City of Arcadia(the "City"). RECITALS A. LATC operates a thoroughbred racetrack known as Santa Anita Park which is located within the boundaries of the City. Horses owned by members of TOC compete in the horse races conducted by LATC at Santa Anita Park. B. Under current law,the City receives a tax(the"Tucker Bill Tax") in the amount of 0.33%of wagers placed at Santa Anita Park through LATC's on-track totalizator system on horse races, including horse races conducted at Santa Anita Park and horse races conducted at other racetracks both inside and outside the State of California. Current state law prohibits the City from assessing or collecting any license or excise tax or fee, other than the Tucker Bill Tax and general sales tax, on LATC with respect to any event conducted by LATC at Santa Anita Park. C. The City asserts that the Tucker Bill Tax applies to wagers placed on horse races via mobile or online technologies ("ADW Wagers")when such ADW Wagers are placed by patrons physically present within the inclosure at Santa Anita Park at the time such ADW Wagers are placed. LATC and TOC disagree with this interpretation. D. The City has recently sought to introduce proposed California legislation that, if passed,would clarify that the Tucker Bill Tax is applicable to ADW Wagers placed by patrons physically present within the inclosure at Santa Anita Park. E. LATC, TOC,and the City have met and discussed the issue of whether or not the Tucker Bill Tax applies to ADW Wagers placed by patrons physically present within the inclosure at Santa Anita Park. F. As a result of such meetings and discussions,the City would like LATC and the TOC to agree that the Tucker Bill Tax payments to be made beginning with the Effective Date to include ADW Wagers as described in this Agreement,and LATC and the TOC are willing to make such Tucker Bill Tax payments in strict accordance with this Agreement. AGREEMENT With reference to the foregoing Recitals, and in exchange for good and valuable consideration,LATC, TOC,and the City (each a"Party", and collectively,the "Parties")hereby agree as follows: 171103,9 I. Withdrawal of Legislation. Upon full execution of this Agreement,the City agrees to then immediately request that the pending legislation related to the Tucker Bill Tax be withdrawn,and the City agrees that during the Term(as defined below) it will not request, lobby for, cooperate with,or advocate on behalf of,directly or indirectly, any legislation regarding the inclusion of ADW Wagers within the Tucker Bill Tax. 2. Geo-Location Requirement. LATC will use commercially reasonable efforts to require each ADW company with which LATC has a contractual relationship authorizing their California customers to wager on races conducted at Santa Anita Park (each,an"Applicable ADW Company")to geo-locate ADW Wagers which are facilitated via phone and tablet and which are placed by California account holders ("Geo-located Wagers"). LATC will use commercially reasonable efforts to require that based on such geo-location,each Applicable ADW Company will report, in accordance with Section 6 below,phone and tablet wagers placed within the inclosure at Santa Anita Park on days that LATC conducts live racing("Live Race Days"). 3. Tax Payment. The Geo-located Wagers which are placed within the inclosure at Santa Anita Park on Live Race Days(the"Taxed ADW Wagers")will be subject to the Tucker Bill Tax. During the Term,LATC and TOC agree to not contest in any manner or in any forum the levying and collection of the Tucker Bill Tax on the Taxed ADW Wagers, and agree further to not seek any refund of any such Tucker Bill Tax payments. The tax payments will be made collectively by LATC and TOC to the City through a deduction from takeout on the Taxed ADW Wagers. LATC will process and pay the payment by deducting such amount from the takeout on the Taxed ADW Wagers,and the TOC expressly consents thereto. 4. Limitations on Geo-Location. The City agrees that geo-location is not required for laptop or desktop wagers; or for account holders who reside in states other than California. As a result, no Tucker Bill Tax payment will be made with respect to such wagers. 5. Technology Specifications.LATC's contracts with Applicable ADW Companies will require each such Applicable ADW Company to provide LATC,TOC,and the California Horse Racing Board ("CHRB")with documentation containing details of the geo-location technology it will use to comply with the geo-location requirement.Each Applicable ADW Company will also be required to provide reasonable documentation periodically confirming that the technology is performing as intended (including making LATC,TOC and CHRB aware of any technological issues or challenges along the way). Upon the reasonable request of the City and subject to any confidentiality limitations imposed upon LATC, LATC will share such information with the City in order for the City to confirm that the spirit of this Agreement is being complied with. 6. Calculation of Tax Payment. LATC's contracts with Applicable ADW Companies will require each such Applicable ADW Company to provide to CHRIMS a daily download data file which includes all information needed to calculate the distribution of takeout for Geo-located Wagers subject to the Tucker Bill Tax and Geo-located Wagers which are not subject to the Tucker Bill Tax in a file format approved in advance by CHRIMS. The download file will be required to be provided no later than 8 a.m. Pacific Time for subject wagering generated during 171103.9 2 the preceding day (except in the case of delay caused by matters beyond the control of the parties). The data contained in the CHRIMS system specifying the amount of the Geo-located Wagers which are subject to the Tucker Bill Tax will be used to calculate the Tucker Bill Tax payment. Such calculation will be performed for all Applicable ADW Company wagers on a quarterly basis, and the Tucker Bill Tax will be remitted to the City within thirty(30)days following the end of each calendar quarter. 7. Non-California Account Holder Wagers and Additional Technologies. If LATC and/or TOC,on the one hand, and any Applicable ADW Company, on the other hand,were to enter into any amendment of any existing agreement,or were to enter into any new agreement, that(1)requires,permits,or otherwise allows for the geo-location of wagers placed by means of technology other than or in addition to phone or tablet, or(ii)requires,permits,or otherwise allows for the geo-location of wagers placed by non-California account holders(each a"New Agreement"),then the City believes such New Agreement will directly affect the City and its rights and interests under this Agreement. Accordingly,to protect the rights and interests of the City under this Agreement,the Parties agree that: a. If LATC or TOC enters into negotiations with any Applicable ADW Company over any New Agreement,such Party will notify the City of such negotiations so that the City may provide its input regarding the New Agreement to the extent that the New Agreement would have any direct or indirect impact or implication regarding the Tucker Bill Tax or this Agreement; b. Neither LATC nor TOC will execute any New Agreement without first obtaining the written consent of the City (which shall not unreasonably be withheld)to do so. The execution by LATC or TOC of any New Agreement without such consent shall be a material breach of this Agreement unless such New Agreement provides for the types of wagers specified in Subsections 7(i)and/or 7(ii)to be reported in accordance with Section 6, and LATC and TOC agree that such reported wagers will be considered Taxed ADW Wagers. 8. Term; Termination. a. This Agreement shall commence as of the Effective Date and,subject to earlier termination as set forth below, shall continue through December 31,2027(the"Term"). b. In year five of this Agreement,from the period of October 1,2022 through December 31, 2022,the City and LATC shall, in mutual good faith, enter into a joint review period to identify any and all changes in technology related to the placement of ADW Wagers and collection of the Tucker Bill Tax. During the review period,the parties may mutually agree to make amendments to this Agreement to ensure full compliance with all then-applicable laws or changes in the location, collection, and distribution of ADW Wagers at that time. c. This Agreement shall terminate immediately if at any time during the Term there is a change in California law such that the Tucker Bill is no longer in effect. 171103.9 3 d. Any Party may terminate this Agreement in its sole and absolute discretion at any time for any reason,with or without cause, by giving written notice to the other Parties of such termination at least twelve months in advance of the effective date of such termination. e. Should any Party be in material breach of its obligations under this Agreement, the Party asserting that a material breach has occurred shall give the other Parties written notice specifying the alleged breach, and the breaching Party or Parties shall have thirty (30) days in which to cure the material breach, or to demonstrate that a material breach has not occurred. If the material breach remains in existence and uncured after thirty (30)days, any Party that is not then in material breach may terminate this Agreement immediately by providing written notice to the other Parties. Thereafter, all Parties may exercise any and all rights and remedies available to them under applicable law. f. Any payment obligation due under this Agreement on the part of LATC and/or TOC that accrued prior to the time of termination of this Agreement, shall thereafter continue to exist notwithstanding the termination of this Agreement. 9. Miscellaneous. a. Entire Agreement; Amendment.This Agreement contains the entire understanding of the Parties relating to the subject matter hereof,supersedes any and all prior or contemporaneous agreements or understandings,either oral or written,and may not be changed or terminated orally. This Agreement may be amended only by a writing signed by all Parties. b. Notices.Notice to a Party shall be deemed duly given upon the earliest to occur of the following: (i)personal delivery to such Party,to the address set forth below for such Party, or to any other address which such Party has provided to the other Party for purposes of this Section 9(b); (ii)the close of business on the third day after being deposited in the United States mail,registered or certified,postage prepaid and addressed to such Party at the address set forth below for such Party, or at any other address which such Party has provided to the other Party for purposes of this Section 9(b); (iii)the close of business on the first business day after being deposited in the United States with a nationally recognized overnight delivery service, for next business day delivery,with delivery charges prepaid and addressed as provided in the preceding clause;or(iv) actual receipt by such Party via any other means(including e-mail or fax). If to City: If to LATC: City of Arcadia City Hall Los Angeles Turf Club,Incorporated Attention: City Manager Attention: President 240 West Huntington Drive 285 West Huntington Drive Arcadia, CA 91007 Arcadia, CA 91007 If to TOC: !71103.9 4 Thoroughbred Owners of California Attention: CEO 285 West Huntington Drive Arcadia, CA 91007 c. Applicable Law. This Agreement, including all matters of construction, validity, and performance shall be governed,construed, and enforced in accordance with the laws of the State of California, as applied to contracts executed and to be fully performed in California by citizens of California and without reference to principles of conflicts of law.Any action arising out of this Agreement shall be heard in state court located in the County of Los Angeles. d. Waiver;Remedies. The failure by one Party to require performance of any provision of this Agreement shall not affect that Party's right to require performance at any time thereafter, nor shall a waiver by one Party of a breach by the other Party be considered a waiver of any or all subsequent breaches by the breaching Party. All rights and remedies provided in this Agreement are cumulative and not exclusive of any other rights or remedies that may be available to the Parties,whether provided by law,equity, statute,or otherwise. e. Counterparts. This Agreement and all amendments hereto may be executed in several counterparts and each counterpart shall constitute a duplicate original of the same instrument. The Parties agree that copies of this Agreement sent by email(in PDF or similar format)or fax, and the signatures thereon, shall be deemed valid executed originals of this Agreement. f. Severability.Any provision hereof which is held to prohibited, unlawful, or unenforceable shall be ineffective without affecting any other provision or enforcement of this Agreement. [Signatures follow] 171103.9 5 City of Arcadia Los Angeles Turf Club, Incorporated By: , �__ By: 4,S;""- °.--- Nmne: Dominic Lazzaretto Name: Scoir Q v1 Title: City Manager Title: VIM tpg€SlQrr.N 1 Attes . 614: Thoroughbred Owners of California Cit .Clerk Acil Approved as to Form: 5671--1 '., 0 .1 .-eR,C- By: 1"-.6"- City Attorney Name: Greg Avioli Stephen P. De i t s ch Title: President& CEO 171103.9 6