BILL ANALYSIS                                                                                                                                                                                                    






                                                       Bill No:  SB  
          899
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2009-2010 Regular Session
                                 Staff Analysis



          SB 899  Author:  Denham
          As Introduced:  January 26, 2010
          Hearing Date:  April 27, 2010
          Consultant:  Chris Lindstrom


                                     SUBJECT  

                Horse racing: satellite wagering: out-of-country  
                              thoroughbred races.

                                   DESCRIPTION
           
          SB 899 deletes the statewide cap on the number of  
          out-of-country thoroughbred races that a thoroughbred  
          racing association or fair may import, simulcast and on  
          which wagers may be accepted.

          Specifically, the bill strikes the following language from  
          the Horse Racing Law authorizing the importation,  
          simulcasting and wagering on out-of-country thoroughbred  
          races:


            19596.3. (b)  The total number of out-of-country  
            thoroughbred races on which wagers are allowed to be  
            accepted statewide in any given year shall not exceed  
            the total number of out-of-country thoroughbred races  
            on which wagers were accepted in 1998.

                                   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.




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          Existing law provides that the California Horse Racing  
          Board (CHRB) regulate the various forms of horse racing  
          authorized in this state.

          Existing law authorizes a thoroughbred racing association  
          or fair to distribute the audiovisual signal and accept  
          wagers on the results of out-of-country thoroughbred races  
          during the calendar period the association or fair is  
          conducting a race meeting, without the consent of the  
          participating horsemen's organization.  

          Existing law limits the total number of out-of-country  
          thoroughbred races on which wagers are allowed to be  
          accepted statewide in any given year to the total number of  
          out-of-country thoroughbred races on which wagers were  
          accepted in 1998.

          Existing law provides that no thoroughbred association or  
          fair may accept wagers pursuant to this section on  
          out-of-country races commencing after 5:30 p.m. without the  
          consent of the harness or quarter horse racing association  
          that is then conducting a live racing meeting.

          Existing law authorizes the CHRB to approve the  
          establishment of 15 mini-satellite wagering sites in each  
          zone (for a total of 45) and defines "minisatellite  
          wagering site" to mean a location where satellite wagering  
          may be conducted, with the approval of the CHRB, provided  
          that the wagering occurs in an area that is restricted to  
          those who are 21 years of age or older.
                                   BACKGROUND
           
           Purpose of the bill  .  According to the sponsor, "There is  
          an inconsistency in the current law with respect to the  
          importation of other types of simulcast races.  In the  
          prior legislative session, the annual cap on imported  
          out-of-state and out-of-country harness and quarter horse  
          races was eliminated (B&P 16596.1).  Similarly, the annual  
          cap on imported out-of-state thoroughbred races was  
          eliminated (B&P 19596.2); however, there was an  
          unintentional oversight that left the annual cap on  
          out-of-country thoroughbred races unchanged."

           Background  .  The scale and scope of horse racing is  
          governed by statute.  Any attempt to expand its market  




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          requires legislative action.  The California Legislature  
          has attempted to address the racing industry's long-term  
          viability through a number of legislative efforts to expand  
          the exposure of horse racing to the general public and  
          enhance horse racing's marketability.

          Current law limits the number of out-of-country  
          thoroughbred races authorized to be imported for wagering  
          purposes in any given year to no more than the total that  
          were accepted in 1998.

          In 1998, legislation was enacted to provide for limited  
          growth on the number of out-of-state thoroughbred races  
          that may be imported and wagered upon when an association  
          is conducting a race meeting.  SB 27 (Maddy) of 1998,  
          limited the number of imported races that may be wagered  
          upon to 20 per day and 10,734 per year statewide.  These  
          restrictions were intended to address the Administration's  
          concerns relative to the expansion of gambling and the fear  
          that importing out-of-state races might cannibalize the  
          live racing product in California.  

          As a result of the restricted expansion authorized by SB  
          27, many California race tracks dropped international  
          thoroughbred races that were once imported from Hong Kong  
          and Australia and available in the evening market.   
          Instead, they selected to import the daytime race cards  
          from racing associations located in other states.  Also,  
          there was no cannibalization of the live racing product in  
          California as feared.

          In addition to SB 27, there are a number of other notable  
          measures that were enacted to help promote California's  
          horse racing industry.  In 1984 and 1987, respectively,  
          legislation by Senator Maddy authorized and then expanded  
          satellite wagering statewide.  AB 471 (Hertzberg), Chapter  
          198, Statutes of 2001, authorized until January 1, 2008,  
          Advance Deposit Wagering (ADW) in California.  AB 765  
          (Evans), Chapter 613, Statutes of 2007, extends ADW  
          indefinitely.  AB 509 (J. Horton), Chapter 235, Statutes of  
          2004 authorizes a thoroughbred or fair association to  
          import out-of-country thoroughbred races during the  
          calendar period that the association or fair is conducting  
          a race meeting, as specified.  AB 241 (Price), Chapter 594,  
          Statutes of 2007, authorizes each fair to operate a  
          satellite wagering facility off of the fair grounds as well  




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          as up to 45 mini-satellite wagering sites to be operated by  
          private industry throughout California.  AB 3074  
          (Governmental Organization), Chapter 510, Statutes of 2008,  
          eliminates the ceiling on the total number of out-of-state  
          thoroughbred races that may be imported in a given year and  
          increases, from 23 to 32, the limitation on the total  
          number of out-of-state thoroughbred races that may be  
          imported per day by a thoroughbred association or fair that  
          is conducting a live race meet.

          Satellite wagering.  Satellite wagering via an off-track  
          facility has been legal in California since 1985.  It was  
          authorized at a time when California racetracks were  
          beginning to experience declining attendance and handle  
          figures.  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.

          Simulcasting.  Simulcasting is the process of transmitting  
          the audio and video signal of a live racing performance  
          from one facility to a satellite for retransmission to  
          other locations or venues where pari-mutuel wagering is  
          permitted.  Simulcasting provides racetracks with the  
          opportunity to increase revenues by exporting their live  
          racing content to as many wagering locations as possible,  
          such as other racetracks, fair satellite facilities and  
          Indian casinos.  Revenues are increased because  
          simulcasting provides racetracks that export their live  
          content with additional customers in multiple locations who  
          would not have otherwise been able to place wagers on the  
          live racing event.

                            PRIOR/RELATED LEGISLATION
           
           AB 3074 (Governmental Organization), Chapter 510, Statutes  
          of 2008  .  Eliminates the ceiling on the total number of  
          out-of-state thoroughbred races that may be imported in a  
          given year.  Increases, from 23 to 32, the limitation on  
          the total number of out-of-state thoroughbred races that  
          may be imported per day by a thoroughbred association or  
          fair that is conducting a live race meet.  

          AB 1736 (Governmental Organization), Chapter 444, Statutes  
          of 2007  .  Adds the Travers Stakes to the group of specific  
          stake races which are exempt from the 23-race per day limit  




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          on imported races, as specified.

           SB 379 (Denham), Chapter 443, Statutes of 2007  .  Adds the  
          Dubai World Cup race to a specified list of races that  
          would be exempted from the 23 race per day limit on  
          imported races for satellite wagering in California.
           
          AB 509 (J. Horton), Chapter 235, Statutes of 2004  .   
          Increases the number of out-of-country horse races that  
          California racing associations and fairs may simulcast and  
          accept wagers by removing the limitation on out-of-country  
          races.

           SB 590 (Perata), Chapter 936, Statutes of 2001  .  Authorizes  
          thoroughbred racing associations and fairs in the northern  
          racing zone to increase the number of imported racing  
          simulcasts available to be wagered upon if the reduces the  
          number of live racing days.

           SB 263 (Perata), Chapter 219, Statutes of 1999  .  Increases  
          from 20 to 23 the number of thoroughbred race simulcasts  
          that may be imported by racing associations and fairs on  
          days when live thoroughbred or fair racing is being  
          conducted in California.  Exempts from this limitation:   
          (1) any imported races that are part of the race card for  
          the Kentucky Derby, the Kentucky Oaks, the Preakness  
          Stakes, the Belmont States, the Jockey Club Gold Cup, the  
          Breeders' Cup, or the Haskell Invitational; and (2) races  
          conducted in either the northern or the combined central  
          and southern zones, respectively, when no live racing is  
          being conducted in the particular zone. 

           SB 27 (Maddy), Chapter 335, Statutes of 1998  .  In addition  
          to giving the horse racing industry some $40 million in  
          license fee relief, this bill also authorized thoroughbred  
          racing associations and fairs, to import an amount not  
          exceeding 20 out-of-state and or out-of-country  
          thoroughbred races during the time the association or fair  
          is conducting a racing meeting.

           SB 14 (Maddy), Chapter 1273, Statues of 1987  .  Expanded  
          satellite wagering statewide.

           SB 1499 (Maddy), Chapter 1698, Statutes of 1984  .   
          Implemented satellite wagering in the central and southern  
          part of the state, and made conforming and technical  




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          changes in the northern part of the state.

           SUPPORT  :  None on file as of April 23, 2010.

           OPPOSE  :  None on file as of April 23, 2010.

           FISCAL COMMITTEE  :  No



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