BILL ANALYSIS                                                                                                                                                                                                    

                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           2215 (Fuentes)
          Hearing Date:  08/02/2010           Amended: 06/24/2010
          Consultant:  Maureen Ortiz      Policy Vote: GO 8-0
          BILL SUMMARY:    AB 2215 requires the California Horse Racing  
          Board (CHRB) to develop and adopt rules to license and regulate  
          advance deposit wagering activity that takes place within a  
          mini-satellite wagering facility.  
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     Fund
          Admin expenses                      ----unknown, less than $50  
          annually---           General

          STAFF COMMENTS: 
          AB 2215 authorizes CHRB to recover any costs associated with  
          this requirement either directly from the advance deposit  
          wagering (ADW) provider or through an appropriate increase in  
          the funding formula devised by the board.

          Current law, AB 241 (Price) Chapter 594 Statutes of 2007, allows  
          for the establishment of 45 mini-satellite wagering facilities  
          throughout the state, fifteen in each zone.  However, at this  
          time only one has been established due to financial challenges.   
          Proposed mini satellite facilities such as sports bars,  
          restaurants, and card clubs have been slow to develop since the  
          costs to facilitate a wager is the same no matter where the  
          wager takes places.  The facility retains a 2% commission, and  
          the remainder of the wagers is distributed throughout a variety  
          of ways including purses, owner commissions, and support for  
          workers' compensation for backstretch employees and a pension  
          fund for jockeys.  

          ADW wagering has been authorized since 2002 at racing  
          associations, fairs, and satellite wagering facilities.  AB 2215  


          will extend that authorization to mini-satellite wagering  
          facilities in order to establish another distribution method for  
          wagering on horse racings.  It is intended to make the operation  
          of mini-satellites more viable from a financial prospective  
          while allowing California's racing industry to market their  
          product to new and existing patrons.

          There are currently four companies approved by the CHRB to  
          provide ADW services to California customers.  To use an ADW  
          service, a consumer deposits money on an account with the  
          provider, and then can use those funds to place bets on-line and  
          over the phone. ADW constitutes about $600 million in handle for  
          the horse racing industry, and is the only segment that has been  

          Page 2
          AB 2215 (Fuentes)

          "Advance deposit wagering" (ADW) is a form of parimutuel  
          wagering in which a person residing within California or outside  
          of this state establishes an account with an ADW provider, and  
          subsequently issues wagering instructions concerning the funds  
          in this account, thereby authorizing the ADW provider holding  
          the account to place wagers on the account owner's behalf. 

          ADW providers must be licensed by the CHRB, and a racing  
          association or fair conducting the races must agree in writing  
          to allow advance deposit wagering.

          Staff recommends an amendment on page 16, lines 11 and 12, to  
          delete "and who, as of the date of their retirement, had ridden  
          in a minimum of 1,250 parimutuel races conducted in California"  
          to avoid chaptering out AB1152 (Chapter 53, Statutes of 2010).    
          AB 1152, among other things, deleted the requirement that a  
          jockey ride a minimum of 1,250 rides in order to participate in  
          the pension fund, however, that vesting requirement was  
          determined to be in conflict with IRS regulations.