BILL ANALYSIS
Bill No: AB
2414
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 2414 Author: John A. Perez
As Amended: June 22, 2010
Hearing Date: June 29, 2010
Consultant: Art Terzakis
SUBJECT
Horse Racing: Breeders' Cup
DESCRIPTION
AB 2414 authorizes the thoroughbred racing industry to use
monies from horse racing wagering pools to promote the
Breeders' Cup, in order that California might be considered
the permanent home of this championship series of races.
Specifically, this measure:
1. Makes various legislative findings relative to the
economic importance of the Breeders' Cup Championship
series and declares that it is not only the desire of the
Legislature to encourage the organization operating this
prestigious international event to make California its
permanent home but also the intent of the Legislature to
provide substantial support toward that endeavor.
2. Allows a thoroughbred association hosting the Breeders'
Cup races, upon filing a written notice with the
California Horse Racing Board (CHRB), to deduct from the
total handle (wagering pools) during the days when
Breeders' Cup races are being run an amount of not less
than 10 percent nor more than 25 percent. Also, requires
the written notice to include a written agreement of the
participating thoroughbred association and horsemen's
organization.
3. Stipulates that the private, statewide marketing
organization formed pursuant to existing law (Business
and Professions Section 19605.73) to market and promote
AB 2414 (John A. Perez) continued
Page 2
thoroughbred and fair horse racing, shall enter into an
agreement, in consultation and cooperation with the
California Tourism Commission, with the organization that
operates the Breeders' Cup Championship series to sponsor
and promote the Breeders' Cup Championship series of
races.
4. Stipulates that the agreement must provide a minimum of
$2,000,000 annually in support of the organization
operating the Breeders' Cup Championship series and to
promote the Breeders' Cup Championship series.
5. Provides that the CHRB may require that a percentage of
the takeout (funds from horse racing wagering pools) that
is attributable to the Breeders' Cup races that otherwise
would not have been generated absent the Breeders' Cup
races be made available to support the private horse
racing marketing organization.
EXISTING LAW
Article IV, Section 19(b) of the Constitution of the State
of California provides that the Legislature may provide for
the regulation of horse races and horse race meetings and
wagering on the results.
Existing law authorizes a thoroughbred association or fair,
subject to approval by CHRB, to deduct from the pari-mutuel
pool for any type of wager, a specified percentage for the
meeting of the thoroughbred association or fair that
accepts the wager.
Existing law authorizes racing associations, fairs, and the
Thoroughbred Owners of California (TOC) to form a private
statewide marketing organization to market and promote
thoroughbred and fair horse racing. The California
Marketing Committee (CMC) is generally responsible for
promoting horse racing in the state by developing and
implementing a marketing plan that will increase on-track
and off-track attendance throughout the state. The CMC is
required to submit an annual marketing and promotion plan
to the California Horse Racing Board (CHRB). These
provisions sunset as of January 1, 2011.
Existing law provides for the California Travel & Tourism
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Page 3
Commission (CTTC). The CTTC is a not-for-profit, 501(C)(6)
corporation formed in 1998 to work jointly with the State
of California's Division of Tourism to implement the annual
Marketing Plan, which promotes California as a travel
destination. While these two partners (CTTC and Division of
Tourism) are separate legal entities, they are commonly
referred to jointly as California Tourism.
BACKGROUND
Purpose of AB 2414: According to the author's office, this
measure is intended to encourage the Breeders' Cup to
consider locating its series of championship races on a
permanent basis in California. The State of California is
in competition with the states of Kentucky and New York to
be the permanent home of the Breeders Cup, which is
actively looking at a permanent host location as a
potential option as part of its ongoing strategic planning
initiative. The Breeders' Cup Championship series of races
were held in California in 2008 and 2009 and generated
significant revenue and tourism for the State.
The author's office notes that the California horse racing
industry is in distress and has lost favor with the public,
primarily due to competition with other forms of gambling
and declining popularity of its own product. Yet the horse
racing industry in this state remains an important segment
of the economy, generating by some estimates almost 50,000
jobs. Locating the Breeders Cup on a permanent basis in
California would generate $60 million in economic output
and create over 500 direct and indirect jobs, according to
the Los Angeles Economic Development Corporation's estimate
in relation to the 2009 Breeders' Cup that was held at
Santa Anita racetrack.
PRIOR/RELATED LEGISLATION
SB 1072 (Calderon) 2009-10 Session. Would extend the
sunset on provisions to enable racing associations and
fairs to fund taking part in the statewide horse racing
marketing program, to increase interest in horse racing.
(Pending in Assembly G.O. Committee)
SB 766 (Negrete McLeod) Chapter 766, Statutes of 2009.
Authorized the CHRB to shift money around from various
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funds, including the marketing funds, that are in surplus,
to others that are in deficit, such as the Vanning and
Stabling Account.
AB 1736 (Governmental Organization) Chapter 444, Statutes
of 2007. Among other things, extended the sunset on
provisions to enable racing associations and fairs to fund
taking part in the statewide horse racing marketing
program.
AB 2164 (Plescia) Chapter 80, Statutes of 2004. Extended
the sunset on provisions to enable racing associations and
fairs to fund taking part in the statewide horse racing
marketing program to 2006.
AB 2502 (Wyland) Chapter 90, Statutes of 2002. Extended
the sunset on provisions to enable racing associations and
fairs to fund taking part in the National Thoroughbred
Racing Association (NTRA) to increase interest in horse
racing.
AB 2931 (Horton) Chapter 922, Statutes of 2002. Authorized
the racing associations to use funds earmarked for the CMC
for use in developing a program to off-set workers'
compensation rates for horse trainers in the state.
SB 27 (Maddy) Chapter 335, Statutes of 1998. Among other
things, granted major license fee relief ($40 million
annually) and limited out-of-state full-card simulcasting.
Also, created the CMC that is funded by 0.4 percent of the
in-state off-track handle.
SB 103 (Maddy) Chapter 10, Statutes of 1998. Provided for
California's involvement in the NTRA by permitting
thoroughbred owners to (pay to) take part in a national
marketing program to increase interest in horse racing.
SUPPORT: As of June 25, 2010:
California Horse Racing Board
California-Nevada Conference of Operating Engineers
California Teamsters Public Affairs Council
Del Mar Thoroughbred Club
Golden Gate Fields Racetrack
Fairplex: Los Angeles County Fair
Oak Tree Racing Association
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Santa Anita Racetrack
The Jockeys' Guild
UNITE-HERE
OPPOSE: None on file as of June 25, 2010.
FISCAL COMMITTEE: Senate Appropriations Committee