BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 2215
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          AB 2215 (Fuentes)
          As Amended  August 5, 2010
          Majority vote
          |ASSEMBLY:  |73-0 |(June 2, 2010)  |SENATE: |32-0 |(August 18,    |
          |           |     |                |        |     |2010)          |
           Original Committee Reference:    G.O.  

           SUMMARY  :  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.  

           The Senate amendments  :

          1)Authorize a mini-satellite wagering facility to enter into an  
            agreement with an advance deposit wagering provider to accept  
            and facilitate the placement of any wager at its facility that  
            a California resident could make through that advance deposit  
            wagering provider.  

          2)Specify that the CHRB must develop and adopt rules to license  
            and regulate advance deposit wagering activity that takes  
            place in a mini-satellite wagering facility. 

          3)Authorize the CHRB to recover any costs associated with the  
            licensing or regulation of advance deposit wagering activity  
            in a mini-satellite wagering facility, as provided.

          4)Delete language which authorized the CHRB, if it determines  
            that it is appropriate to allow advance deposit wagering at  
            mini-satellite wagering facilities, to evaluate the  
            feasibility of that wagering at those facilities and to  
            undertake a study to determine the appropriate licensing fee  
            sufficient to cover the costs to the board for regulation and  

           EXISTING LAW  :

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


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          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.

          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.

           AS PASSED BY THE ASSEMBLY  , the intent of the bill was to allow  
          mini-satellite wagering facilities established under existing  
          law, to use a modified version of the current ADW infrastructure  
          for processing wagers on horse racing.           

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, unknown, less than $50,000 annually.

           COMMENTS  :  

           Background  :  

           ADW  :  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.  


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           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  
          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 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.  

          California's first and only mini-satellite facility opened in  
          July 2009 at the Commerce Casino, a Southern California Card  
          Club.  The facility is currently averaging more than $80,000 in  
          horse racing wagers per day.   It is unclear why there has not  
          been a broader interest in these facilities.  Some speculate  
          that the 2% commission that is retained by the mini-satellite is  
          not enticing enough for business owners.


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          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.  

          This bill is intended to establish another distribution method  
          for wagering on horse racing by allowing mini-satellite  
          facilities, to access the current ADW infrastructure.  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.

           Related legislation  :  SB 1439 (Price) of 2010 modifies  
          provisions of the Horse Racing Law relative to the authorization  
          of  "mini-satellite" wagering facilities by shrinking the  
          protective zone for existing satellite wagering facilities, as  
          specified, from a 20 mile radius to 15 miles. That bill is  
          currently pending on the Senate Floor.

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


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          AB 241 (Price), Chapter 594, Statutes of 2007, authorizes 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.

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

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