BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 2215
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          Date of Hearing:   April 21, 2010

                                   Joe Coto, Chair
                AB 2215 (Fuentes) - As Introduced:  February 18, 2010
          SUBJECT  :   Horse racing: advance deposit wagering: wagering  
          account facilities.

           SUMMARY  :   The intent of this bill is to allow a satellite  
          facility, including mini-satellites established under existing  
          law, to use a modified version of the current Advance Deposit  
          Wagering (ADW) infrastructure for processing wagers on horse  
          racing.  Specifically,  this bill  : 

          1)Authorizes the California Horse Racing Board (CHRB) to adopt  
            rules and regulations authorizing ADW providers to create and  
            administer wagering accounts at facilities located within this  
            state through which persons may deposit cash funds or  
            vouchers, issue wagering instructions, and withdraw cash funds  
            or vouchers, subject to the approval of racing associations or  
            satellite wagering facilities located within 10 miles of a  
            facility administering those accounts, and the approval of the  
            horsemen's organization responsible for negotiating with the  
            racing associations or satellite wagering facilities. 

           EXISTING LAW  :

          1)Provides for the California Horse Racing Board (CHRB) to  
            regulate the various forms of horse racing authorized in this  

          2)Authorizes and defines "Advance Deposit Wagering (ADW)" as a  
            form of pari-mutuel wagering in which a person "establishes an  
            account with a board-approved betting system or wagering hub  
            where the account owner provides "wagering instructions"  
            authorizing the entity holding the account to place wagers on  
            the owner's behalf."

          3)Provides that a racing association, a fair, or a satellite  
            wagering facility may enter into an agreement with an ADW  
            provider to accept and facilitate the placement of any wager  
            from a patron at its facility that a California resident could  
            make through that ADW provider, as defined.


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          4)Authorizes CHRB to permit licensed racing associations and  
            fairs to operate satellite-wagering facilities on their  
            grounds, as specified.

          5)Provides that CHRB may approve an additional 15 mini-satellite  
            wagering sites in the northern, central, and southern racing  
            zones, as defined.            

           FISCAL EFFECT  :   Unknown

           COMMENTS  :  

           Background  :  

           Advance Deposit Wagering  :  The California horse racing industry  
          entered into a new era in 2002 with the advent of ADW [AB 471  
          (Hertzberg), Chapter 198, Statutes of 2001], which allows  
          customers to deposit funds into an account in order to wager  
          online and over the telephone.  These wagers are commingled into  
          pools at the host track where the races are run, and within the  
          pari-mutuel wagering system regulated by CHRB.

          ADW was authorized at a time when California racetracks were  
          beginning to experience declining attendance and handle figures.  
           The industry believed that making the product easier to access  
          not only would expose and market horse racing to potential  
          customers, but also would make it more convenient for the  
          existing patrons to wager more often.  In general, industry  
          stakeholders agree that ADW has become an important element to  
          the financial stability of California's horse racing industry.   
          Currently, the CHRB has approved three companies (,  
          TVG, and XpressBet) to provide ADW services to California  

          ADW constitutes about $600 million in handle for the horse  
          racing business.  It has become an important segment of the  
          industry - in fact, it is the only segment that has been  

           Wagering at a satellite or mini-satellite  :  California has  
          allowed off-track betting in satellite wagering facilities  
          located at fairs and racing associations throughout the state  
          for 25 years.  In 2007, AB 241 (Price) was enacted to authorize  
          the creation of 15 additional "mini-satellites" in each racing  
          zone for a total of 45.  The stated intent of this legislation  


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          was to make the sport of horse racing more accessible to  
          potential California bettors and to increase the handle - the  
          amount wagered on horse races.

          Currently, there are 34 satellite wagering facilities in  
          California located at live racetracks, fairgrounds and Indian  
          casinos.  Furthermore, 64 additional wagering facilities are  
          authorized pursuant to SB 241 of 2007 - 44 mini-satellite  
          facilities (one has been established already) and all fairs that  
          currently are not operating satellite wagering facilities may do  
          so either on or off the fairgrounds (within the boundaries of  
          the fair district).  

          Currently, no mini-satellite wagering facility can be  
          established within a 20 mile radius of an existing satellite  
          wagering facility or racetrack without the consent of the  
          existing wagering facility.  

          The Commerce Club mini-satellite, which opened last July, has  
          averaged $80,000 in handle a day, taking bets on both the  
          afternoon and evening races.  Overall though, California's  
          simulcasting network has seen a steady decline in the last  
          decade since the approval of ADW.  That drop-off has been  
          accelerated with the recession.

           Purpose of the bill  :  According to the author, ADW has operated  
          in California since 2002, and it has been proving to be an  
          efficient and accountable system employing current technologies  
          to process wagers on horse racing in California.  Unfortunately  
          though, former customers of California's simulcast network  
          prefer to stay home to do their daily wagering.  California's  
          racing industry thought that AB 241 (Price), Chapter 594,  
          Statutes of 2007 would help reverse the customer shift but to  
          date various obstacles, mostly financial have proved otherwise.   
          One of the challenges the industry faces relating to the  
          implementation of mini-satellites (sports bars, restaurants, and  
          card clubs) is the ability to process wagers in an economically  
          efficient manner because these facilities generally produce  
          lower wagering figures than established "brick and mortar"  
          facilities.  Mini-satellite facilities though must bear the same  
          fixed costs associated with the traditional simulcast model.  In  
          essence, the cost to facilitate a wager is the same no mater  
          where the wager takes place.  Due to this inequality,  
          California's mini-satellite system has been slow to develop.  


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          This measure will make the operation of mini-satellites more  
          viable from a financial perspective while allowing California's  
          racing industry to market their product to new and existing  
          patrons.  AB 2215 will assist to make satellite wagering more  
          attractive to the customer while reducing the migration of daily  
          wagering from brick and mortar locations to Internet wagering.

           Policy consideration  :  The author might want to consider  
          amending this bill to clarify its stated intent.  This bill as  
          written could be construed to include facilities or outlets in  
          addition to those which are authorized under current law, as  
          detailed in the analysis.  The measure should be amended to  
          specify that the CHRB should only adopted rules and regulations  
          for satellite facilities or mini-satellites which have been  
          authorized by existing statute.

           Prior Legislation  :  AB 765 (Evans), Chapter 613, Statutes of  
          2007.  Reauthorized horse racing's ADW law, which was set to  
          "sunset" on January 1, 2008, as specified.   

          AB 241 (Price), Chapter 594, Statutes of 2007.  Authorized all  
          fairs to operate a satellite wagering facility off of the fair  
          grounds.  Authorized the establishment of up to 45  
          mini-satellite wagering sites to be operated by private industry  
          throughout California.

          AB 1286 (Richardson), Chapter 202, Statutes of 2007.  Authorized  
          the Alameda County Fair and the Los Angeles County Fair to  
          operate 2 additional satellite-wagering facilities off the  
          fairgrounds, with certain approval and conditions, as specified.

          AB 401 (J. Horton), Chapter 556, Statutes of 2003.  Permits the  
          California Exposition and State Fair, with the approval of CDFA  
          and CHRB, to operate a satellite wagering facility within the  
          boundaries of the fair in addition to any facility otherwise  
          authorized under current law.


          Thoroughbred Owners of California



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          None on file

          Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531