ALLOCATION OF BREAKAGE.

(a) A horse racetrack association shall allocate two percent of the breakage from a pari-mutuel pool for purposes of Subchapter F, Chapter 88, Education Code. The remaining 98 percent of the breakage constitutes "total breakage" and must be allocated as provided by Subsections (b), (c), and (d).

(b) A horse racetrack association shall pay to the commission for use by the appropriate state horse breed registry, subject to commission rules, 10 percent of the total breakage from a live pari-mutuel pool or a simulcast pari-mutuel pool. The appropriate state horse breed registries are as follows:

(1) the Texas Thoroughbred Breeders Association for Thoroughbred horses;

(2) the Texas Quarter Horse Association for quarter horses;

(3) the Texas Appaloosa Horse Club for Appaloosa horses;

(4) the Texas Arabian Breeders Association for Arabian horses; and

(5) the Texas Paint Horse Breeders Association for paint horses.

(c) A horse racetrack association shall retain 10 percent of the total breakage from a live pari-mutuel pool or a simulcast pari-mutuel pool to be used in stakes races restricted to accredited Texas-bred horses.

(d) The horse racetrack association shall pay to the commission for deposit into the Texas-bred incentive fund established under Section 2028.301 and distribution to the appropriate state horse breed registry the remaining 80 percent of the total breakage to be allocated as follows:

(1) 40 percent to the owners of the accredited Texas-bred horses that finish first, second, or third;

(2) 40 percent to the breeders of accredited Texas-bred horses that finish first, second, or third; and

(3) 20 percent to the owner of the stallion standing in this state at the time of conception whose Texas-bred get finish first, second, or third.

(d-1) The commission shall deposit the portions of total breakage paid to the commission under Subsections (b) and (d) into the Texas-bred incentive fund established under Section 2028.301. The commission shall distribute the money collected under this section and deposited into the fund to the appropriate state horse breed registries in accordance with this section and with rules adopted by the commission under Section 2028.103.

(e) If a share of the breakage cannot be distributed to the person entitled to the share, the appropriate state horse breed registry shall retain that share.

(f) For purposes of this section:

(1) "Breeder" means a person who, according to the rules of the appropriate state horse breed registry, is the breeder of the accredited Texas-bred horse.

(2) "Stallion owner" means a person who is owner of record, at the time of conception, of the stallion that sired the accredited Texas-bred horse.