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 growing. 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.