BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           2414 (J. Perez)
          
          Hearing Date:  08/12/2010           Amended: 06/22/2010
          Consultant:  Maureen Ortiz      Policy Vote: GO 8-0
          _________________________________________________________________ 
          ____
          BILL SUMMARY:   AB 2414 authorizes the thoroughbred racing  
          industry to use monies from horse racing wagering pools to  
          promote the Breeders' Cup, in cooperation with the California  
          Tourism Commission.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     Fund
                                                                  
          Marketing program                      -------------$2,000  
          annually---------------         Special*

          Admin expenses                              
          ------------------minor-------------------            General

          *California Marketing Committee Fund
          _________________________________________________________________ 
          ____

          STAFF COMMENTS:  SUSPENSE FILE.

          The horse racing takeout is the percentage deducted from all of  
          the wagers before the winnings are paid out to bettors.  These  
          takeout rates vary among states and types of races.  The current  
          takeout rate in California is 15.43% for conventional wagers  
          (win, place, and show) and 20.68% for exotic wagers (Exacta,  
          Trifecta, and Pick-6).  The money from the takeouts is used for  
          owner purses, racing association commissions, and breeding  
          incentive programs.  In addition, funds are used for offsite  
          stabling and transporting horses on race day, workers  
          compensation program, pension and welfare fund for backstretch  
          employees, and for funding the California Marketing Committee.   
          While current law allows for the adjustment in the takeout rates  
          upon approval of the California Horse Racing Board (CHRB), this  
          bill will allow an increased takeout during the Breeders' Cup  
          upon filing a written notice with the CHRB, but without the  










          necessity of obtaining CHRB approval.

          Staff recommends an amendment to require CHRB approval of any  
          changes in the takeout amount in order to be consistent with  
          other provisions of horse racing law that provide the board with  
          continued oversight of the industry.
          
          In 2009, $128 million was wagered on Breeders' Cup Championship  
          races and the takeout was approximately $26 million.  AB 2414  
          will give the industry flexibility in adjusting the takeout  
          which could result in the takeout being anywhere from $13  
          million to $32 million.




          Page 2
          AB 2414 (J. Perez)



          Specifically, AB 2414 does the following:

          1)Contains Legislative findings and declarations that the  
            Breeders' Cup Championship series of races is the preeminent  
            series of horse races recognized throughout the world; that it  
            is the desire of the Legislature to make California the  
            permanent home of this series; and, that it is the intent of  
            the Legislature to provide substantial support towards that  
            end.

          2)Authorizes a thoroughbred association, upon filing a written  
            notice with the California Horse Racing Board (CHRB), to  
            deduct from the total amount handled in the parimutuel pool  
            for any wagers made during the days on which the Breeders' Cup  
            races are held, an amount of not less than 10% not more than  
            25%.

          3)Requires the existing private statewide marketing organization  
            that markets and promotes the horse racing industry, with the  
            cooperation of the California Tourism Commission, to enter  
            into an agreement with the organization operating the  
            Breeders' Cup in the years that the Cup is held in California.  
             The agreement shall provide a minimum of $2 million in annual  
            financial support to promote the Breeders' Cup.











          4)Authorizes the CHRB to require that a percentage of takeout  
            that is attributable to the Breeders' Cup races be made  
            available to support the statewide marketing organization that  
            promotes horse racing in California.

          The Breeders' Cup Championship races were held in California  
          during 2008 and 2009 and resulted in bringing significant  
          revenue and tourism to this state.  The event is a year-end  
          championship for North American thoroughbred racing and attracts  
          top horses from other parts of the world.  The Breeders' Cup is  
          considered to be the richest two days in the United States for  
          total purses paid to horse owners.

          In 2009, the Breeders' Cup was held at Santa Anita racetrack  
          located in Los Angeles County where it was attended by over  
          96,000 fans and was telecast to over 130 countries.  The Los  
          Angeles Economic Development Commission concluded that the  
          Breeders' Cup has brought $60 million in economic impact in each  
          of the last two years through added tourism and has created over  
          500 jobs.

          The California Travel & Tourism Commission is a not-for-profit  
          corporation formed in 1998 to work jointly with the state's  
          Division of Tourism to implement an annual marketing plan which  
          promotes California as a travel destination.  While the  
          commission and the division are two separate entities, they are  
          commonly referred to jointly as the California Tourism  
          Commission.

          Existing law authorizes racing associations, fairs, and the  
          Thoroughbred Owners of California to form a private statewide  
          marketing organization to market and promote thoroughbred and  
          fair horse racings.  The California Marketing Committee promotes  

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          AB 2414 (J. Perez)



          horse racing in the state by developing and implementing a  
          marketing plan to increase on-track and off-track attendance.   
          Created by SB 27 (Maddy), Chapter 335, Statutes of 1998, the  
          Committee is funded by 0.4% of the in-state satellite wagering  
          facility handle, and is expected to receive approximately $4  
          million in 2010.











          The intent of this bill is to promote the Breeders' Cup in order  
          that California might be considered the permanent home of this  
          championship series of races.  California is currently in  
          competition with Kentucky and New York as permanent host states.  
           The 2010 series will be held at Churchill Downs in Kentucky.