BILL ANALYSIS
SB 1072
Page 1
Date of Hearing: June 30, 2010
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
SB 1072 (Calderon) - As Introduced: February 17, 2010
SENATE VOTE : 34-0
SUBJECT : Horse racing: statewide marketing organization.
SUMMARY : Extends the sunset date from January 1, 2011 to
January 1, 2014, in existing law relating to a private statewide
marketing organization to market and promote thoroughbred and
fair horse racing in California, as described.
EXISTING LAW :
1)Provides that the California Horse Racing Board (CHRB)
regulates the various forms of horse racing authorized in this
state.
2)Permits racing associations, fairs, and the organization
responsible for contracting with racing associations and fairs
with respect to the conduct of racing meetings, to form a
private, statewide marketing organization to market and
promote thoroughbred and fair horse racing, and to obtain,
provide, or defray the cost of workers' compensation coverage
for stable employees and jockeys of thoroughbred trainers.
3)Requires the marketing organization to annually submit to the
CHRB a statewide marketing and promotion plan and a
thoroughbred trainers' workers' compensation defrayal plan for
thoroughbred and fair horse racing. A specified percentage of
the amount handled by each satellite wagering facility is
required to be distributed to the marketing organization for
the promotion of thoroughbred and fair horse racing, and for
workers' compensation defrayal, as specified. Existing law
repeals these provisions on January 1, 2011.
4)Allows uncommitted surplus funds in the horse racing Marketing
Promotion Fund or the horse racing Workers' Compensation Fund,
to be reallocated to any other fund or account created
pursuant to the Horse Racing Law.
5)Authorizes California Thoroughbred owners to deduct a portion
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of their purse pools to participate in the "national
marketing" association, the National Thoroughbred Racing
Association (NTRA).
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of the bill : According to the author's office, "SB 27
(Maddy), Chapter 335, Statutes of 1998, among its provision,
created a private statewide marketing organization for
thoroughbred and fair racing that is funded by .4 percent of the
instate off-track handle. The funds generated from this
distribution are used to market California horse racing on a
statewide basis. 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.
"AB 1736 (Governmental Organization), Chapter 444, Statutes of
2007, extended the sunset to January 1, 2011. SB 1072 will
extend the sunset of the program until January 1, 2014."
Background :
Marketing horseracing : The popularity of horse racing as both a
sport and industry has suffered of late in California, primarily
due to the industry's inability to expand its market share and
attract new customers. Moreover, the industry has experienced
difficulty competing with other more popular forms of gambling,
such as those games offered by the state lottery, card clubs and
casino gambling in Nevada or on Indian reservations.
SB 27 (Maddy), Chapter 335, Statutes of 1998, creates a private
statewide marketing organization for Thoroughbred and fair
racing that is funded by 0.4% of the in-state off-track handle.
The funds generated from this distribution are used to market
California horse racing on a statewide basis. 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. An
underlying assumption of the CMC's Marketing Plan is that it is
far easier to capture a new fan through an on-track experience
than through an off-track visitation to a satellite wagering
facility.
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In 2003, the CMC received approximately $6.1 million to support
its marketing efforts but due to handle declines it has been
reduced to approximately $4 million in 2010. Current law
provides that the CMC must annually submit to the CHRB a
statewide marketing and promotion plan for thoroughbred and fair
horse racing that encompasses all geographical zones in the
state, including the manner in which funds were expended in the
implementation of the plan for the previous calendar year.
Additionally, the 2010 CMC Budget redirects a portion of its
marketing and advertising funds to enhance purses on major
racing days, such as the Santa Anita Handicap, Hollywood Gold
Cup, and Pacific Classic. The CMC program will expire after
this year due to a sunset clause in the law unless there is
legislation to extend it.
In addition, to help address general declines in the overall
industry, Thoroughbred racing interests from across the country
formed the National Thoroughbred Racing Association (NTRA) in
order to create a centralized structure which would promote
Thoroughbred horse racing on a national level. The primary
objective of NTRA is to develop and implement a comprehensive
marketing strategy featuring increased network and cable media
exposure. Funding for this program comes from racing interests
outside of California, as well as California's Thoroughbred
racing associations and horse owners from purses. Last year,
California Thoroughbred owners, through the Thoroughbred Owners
of California (TOC), paid approximately $400,000 to NTRA for the
purpose of marketing horse racing.
CHRB has concerns with CMC Fund : At a March 2010 CHRB board
meeting, both the Chairman and Vice Chairman repeatedly
questioned CMC representatives, about how decisions are made for
CMC budgeting and whether there is any long-term, coherent,
concerted marketing activity that benefits all segments of the
industry. The board members asked for more information on this
subject for a future meeting if this program is to be extended
beyond 2010. No further action has been taken by the CHRB at
subsequent meetings on this matter.
Policy consideration : To provide a more specific overview of
the annual funds generated and expedited by the horse racing
industry within the CMC Fund, the author might want to consider
an amendment which would specify in law that the CMC shall
provide a verbal report each November to the board on the
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statewide marketing and promotion plan for thoroughbred and fair
horse racing. In addition, the marketing committee shall file a
written report with the board on a semi-annually basis which
accounts for all receipts and expenditures in the specified
fund.
Prior/Related Legislation : AB 2414 (John A. Perez) of 2010,
requires for every year that the organization operating the
Breeders' Cup Championship series chooses to conduct the series
of races in California, the statewide marketing organization
shall enter into an agreement, in consultation and cooperation
with the California Tourism Commission and with the organization
that operates the Breeders' Cup to sponsor and promote the
event. This bill requires a minimum $2 million investment (CMC
funding) in the marketing and promotion of the Breeders' Cup
Championship. (Pending in Senate G.O. Committee)
SB 766 (Negrete McLeod), Chapter 616, Statutes of 2009. Allows
uncommitted surplus funds in the horse racing Marketing
Promotion Fund or the horse racing Workers' Compensation Fund,
to be reallocated to any other fund or account created pursuant
to the Horse Racing Law.
AB 1736 (Governmental Organization), Chapter 444, Statutes of
2007. Extends the sunset date, from January 1, 2008 to January
1, 2011, on the provision in existing law authorizing any racing
association or fair that conducts thoroughbred racing to pay to
the owners' organization a certain portion of the purses for
a statewide marketing program, as specified.
SB 124 (Denham), Chapter 130, Statutes of 2005. Extends the
sunset date, from January 1, 2006 to January 1, 2008, related to
a private statewide marketing organization to market and promote
thoroughbred and fair horse racing in California from January 1,
2006, to January 1, 2008.
AB 2164 (Plescia), Chapter 80, Statutes of 2004. Extends a
sunset date, from July 1, 2004 to January 1, 2006, related to a
private statewide marketing organization to market and promote
thoroughbred and fair horse racing in California.
AB 2931 (Horton), Chapter 922, Statutes of 2002. Authorizes
funds from a designated marketing program, and also funds used
for the purpose of stabling and vanning horses, to be used to
defray the cost workers' compensation insurance for jockeys of
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thoroughbred trainers and stable employees, as specified.
AB 1093 (Briggs), Chapter 933, Statutes of 2001. Extended the
sunset date, from July 1, 2002 to July 1, 2004, for the
statewide marketing organization to market and promote
thoroughbred and fair horse racing in California.
SB 27 (Maddy) Chapter 335, Statutes of 1998. Established, until
July 1, 2002, a private statewide marketing organization for
thoroughbred and fair racing, as specified.
REGISTERED SUPPORT / OPPOSITION :
Support
California Authority of Racing Fairs
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531