BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 899
                                                                  Page  1

          Date of Hearing:   June 16, 2010

                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                                   Joe Coto, Chair
                  SB 899 (Denham) - As Introduced:  January 26, 2010

           SENATE VOTE  :   34-0
           
          SUBJECT  :   Horse racing: satellite wagering: out-of-country  
          thoroughbred races.

           SUMMARY  :   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,  this bill  :   

          1)Deletes from the Horse Racing Law a provision that 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.

           EXISTING LAW  :

          1)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.

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

          3)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.  

          4)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.

          5)Provides that no thoroughbred association or fair may accept  








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            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.

           FISCAL EFFECT  :   Unknown.

           COMMENTS  :   

           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.   
          Similarly, the annual cap on imported out-of-state thoroughbred  
          races was eliminated; 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 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  








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          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 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  








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          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.  

          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 263 (Perata), Chapter 219, Statutes of 1999.  Increased 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.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          Golden Gate Fields








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          Hollywood Park Race Track
          Santa Anita Park
          Thoroughbred Owners of California (source)
           
            Opposition 
           
          None on file

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