BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2414|
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THIRD READING
Bill No: AB 2414
Author: John A. Perez (D)
Amended: 8/31/10 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SENATE GOV. ORGANIZATION COMMITTEE : 10-0, 8/31/10
AYES: Wright, Harman, Calderon, Denham, Florez, Negrete
McLeod,
Padilla, Price, Wyland
NO VOTE RECORDED: Oropeza
SUBJECT : Horse racing: exchange wagering
SOURCE : Author
DIGEST : This bill sunset the exchange wagering
horseracing which is contained in SB 1072 (Calderon) on May
1, 2016. The bill is contingent only upon the enactment of
SB 1072.
ANALYSIS :
. Exchange wagering . SB 1072 (Calderon) authorizes the
California Horseracing Board (CHRB) to license entities to
operate exchange wagering systems that accept "exchange
wagers" from individuals residing either within or outside
of this state on horse races run in California or in other
states, so long as the process is conducted in compliance
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with the federal Interstate Horseracing Act. Exchange
wagering is defined as a means of parimutuel wagering in
which two or more persons place identically opposing wagers
on a horse race. It requires exchange wagering agreements
to be entered into by the exchange wagering licensee, the
applicable racing association or fair conducting live
racing in the state, and the horsemen's organization
representing the particular breed currently racing at the
meet, and that provides for the contractual terms and
conditions specifying the use of the racing signal and the
compensation returned to the respective parties to the
agreement, audit terms and conditions, and contractual
remedies.
Exchange wagering on horse racing is currently permitted in
England, where it has been reported to have contributed to
a double-digit increase in wagering handle as well as
helping to appeal to a different segment of the betting
public that generally did not gravitate to conventional
parimutuel wagering opportunities. Similar legislation has
been introduced and is moving through the New Jersey State
Legislature as well.
Wagering on horse races in California is conducted using
the "parimutuel method" in which bettors are betting
against each other, with no other entity having an interest
or stake in the outcome of the race.
In traditional parimutuel wagering, each bettor selects the
horse(s) they choose to wager on an outcome (how those
individual horses will finish in a race - Win, Place, and
Show wagering) or the order of finish for multiple numbers
of horses (exotic wagers such as exacta, trifecta,
superfecta), and the amount which they desire to wager.
The odds on any particular horse are determined by the
total amount bet on the race by the individual bettors.
The bets made are pooled together and the parimutuel
operator is responsible for paying the winning bets from
that pool.
In parimutuel "exchange wagering" (which involves bettors
betting against each other, with no other entity having an
interest or stake in the outcome of the race), each bettor
again selects a horse, an outcome, and the amount the
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bettor desires to wager. Another bettor can match that
wager, choosing to wager the opposite of the original
wager. For example, if bettor "A" thinks a horse will win
a race and would like to wager $2 to win on that horse at
1-1 odds, bettor "B" can match the wager for $2 at 1-1 odds
if bettor B has the opinion that the horse will not win the
race. When wagers are matched, they are pooled together
and the parimutuel exchange wagering operator is
responsible for paying the winning bettors out of the pool
(just as is the case in all other forms of parimutuel
wagering on horse races in California). Parimutuel
exchange wagering is limited to win, place and show
wagering.
The racing industry derives revenue from traditional
parimutuel wagering from a "takeout" or "commission" that
is charged on every wager placed in the pool, and from
parimutuel exchange wagering from a "commission" that is
charged only on a bettor's net winnings on a particular
race. In either case, those revenues are shared among the
horse owners (purses), the race tracks and the provider of
the parimutuel wagering service.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
TSM:DLW:do 8/31/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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