BILL ANALYSIS
SB 1072
Page 1
SENATE THIRD READING
SB 1072 (Ron Calderon)
As Amended August 30, 2010
Majority vote
SENATE VOTE :Vote not relevant
GOVERNMENTAL ORGANIZATION 18-0 APPROPRIATIONS 12-0
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|Ayes:|Hall, Anderson, Chesbro, |Ayes:|Fuentes, Conway, |
| |De Leon, Evans, Galgiani, | |Bradford, |
| |Hernandez, Hill, Lieu, | |Charles Calderon, Coto, |
| |Ma, Mendoza, Nestande, | |Davis, Gatto, Hall, |
| |V. Manuel Perez, | |Norby, Solorio, |
| |Portantino, Silva, | |Torlakson, Torrico |
| |Torres, Torrico, Tran | | |
| | | | |
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SUMMARY : SB 1072 is a horse racing measure that: 1) requires
Thoroughbred racing associations and fairs to deduct an
additional amount of the total handle on exotic wagering (e.g.,
exacta, trifecta, superfecta) for purse augmentation; 2)
authorizes the California Horse Racing Board (CHRB) to license
entities to operate "exchange wagering" systems, as defined,
that accept exchange wagers from individuals residing either
within or outside of this state on horse races run in California
or other states; 3) states that exchange wagering shall not
become operative until May 1, 2012; 4) authorizes the
Thoroughbred racing industry to use monies from horse racing
wagering pools to promote the Breeders' Cup, in order that
California might be considered the permanent home of this
championship series of races; 5) 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;
and, 6) provides that an amount not to exceed 0.05% of the total
amount handled by each satellite wagering facility shall be
distributed to the non-profit organization designated by CHRB
for the purpose of maintaining a database of horse racing
information, as defined. Specifically, this bill :
1)Makes various legislative findings relative to the economic
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importance of the Breeders' Cup Championship series and
declares that it is not only the desire of the Legislature to
encourage the organization operating this prestigious
international event to make California its permanent home but
also the intent of the Legislature to provide substantial
support towards that endeavor.
2)Makes additional findings and declarations relative to the
fact that California has one of the lowest "takeouts" on
wagering and concern that horse owners are not bringing their
horses to California because of lower purses and horses are
leaving the state in order to compete for higher purses.
3)Provides that every Thoroughbred racing association or fair
that conducts a live race meet shall deduct an additional 2%
of the total amount handled on exotic wagers requiring the
selection of two wagering interests (e.g., exactas, quinellas)
and 3% of the total amount handled on exotic wagers requiring
the selection of three or more wagering interests (e.g.,
trifectas, superfectas). (The additional takeout is intended
to augment purses.)
4)Provides that any Thoroughbred association or fair that
authorizes betting systems located outside of this state to
accept wagers on a race shall retain from the total amount
received from the out-of-state betting system, less certain
deductions made pursuant to existing provisions of law, the
incremental amount received as a result of the 2% or 3%
takeout referenced above on exotic wagers required by this
measure, for distribution as overnight purses.
5)Grants the CHRB the authority to postpone or revoke
implementation of the takeout increase, as specified.
6)Adds a new Article (Article 9.1) to the Horse Racing Law
authorizing "exchange wagering" and declares that the
Legislature has determined that the CHRB is best suited to
oversee, license, and regulate exchange wagering in
California. Declares legislative intent to promote the
economic future of the horse racing industry in California and
to foster the potential for increased commerce, employment and
recreational opportunities by authorizing exchange wagering.
7)States that exchange wagering shall not become operative until
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May 1, 2012.
8)Defines a host of new terms, as specified, for purposes of
exchange wagering including the term "exchange wagering" which
means a form of pari-mutuel wagering in which two or more
persons place identically opposing wagers in a given market.
9)Stipulates that exchange wagering shall only be conducted by
an exchange wagering licensee pursuant to a valid exchange
wagering license issued by the CHRB.
10)Makes it explicit that no exchange wagering licensee shall
accept exchange wagers on races conducted in California from a
resident of California or a resident of a jurisdiction outside
California, or conducted outside California from a resident of
California, unless an exchange wagering agreement, as defined,
exists allowing such wagers. Additionally, exchange wagering
must be conducted pursuant to and in compliance with the
federal Interstate Horse Racing Act of 1978.
11)Defines "exchange wagering agreement" to mean a written
agreement by and among the applicable exchange wagering
licensee, the applicable racing association or racing fair
conducting live racing in this state and the horsemen's
organization responsible for negotiating purse agreements for
the breed on which exchange wagers are accepted, provided that
the terms and conditions for the permitted use of signal by
the exchange wagering licensee, and the compensation to the
applicable racing association or racing fair and the
horsemen's organization include certain specified provisions.
12)Requires the CHRB to promulgate rules and regulations
governing the conditions under which exchange wagering may be
conducted, including requiring an annual audit of an exchange
wagering licensee. Also, would allow exchange wagers to be
submitted and accepted by licensed exchange wagering systems
in the same manner as is currently provided for Advanced
Deposit Wagers (e.g., in person, telephone, or Internet).
13)States prior to CHRB promulgating rules, regulations and
conditions under which exchange wagering may be conducted in
California, the board shall consider studies or comments
submitted by interested parties on the impact of exchange
wagering on pari-mutuel betting and the economics of the
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California horse racing industry to assist the board in
developing rules, regulations and conditions for exchange
wagering that are in the best interest of the public and the
California horse racing industry, as specified.
14)Provides that only persons 18 years of age or older could
establish exchange wagering accounts and requires the CHRB to
approve security policies and safeguards to ensure player
protections, age verification and location.
15)Directs the CHRB to adopt rules prohibiting any owner,
trainer, jockey, or stable employee from placing an exchange
wager on any horse owned, trained, or ridden by any of those
individuals.
16)Includes language (similar to Advance Deposit Wagering law)
relative to supporting the contracting rights of pari-mutuel
clerks that have been displaced due to the increased
automation of the wagering process, in addition to a specific
distribution to the existing jockey health and benefit welfare
fund.
17)Provides that monies that would have been otherwise
distributed to a purse account from the increased takeout on
Breeders' Cup day(s) shall be available for the purpose of
promoting and sponsoring the Breeders' Cup.
18)Requires the host track of the Breeders' Cup to enter into a
written agreement with the Breeders' Cup, LTD, in consultation
and cooperation with the California Tourism Commission and the
statewide marketing organization relative to the manner in
which the funds set aside to support and promote the Breeders'
Cup are to be expended.
19)Requires that a written report be made to the CHRB detailing
the manner in which the set aside funds were utilized to
promote and support the Breeders' Cup.
20)Extends the sunset date from January 1, 2011, to January 1,
2014, in existing law relating to a private statewide
marketing organization (CMC) to market and promote
Thoroughbred and fair horse racing in California, including,
but not limited to:
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a) Establishment and maintenance of a Web site featuring
California thoroughbred and fair racing; and,
b) Establishment and administration of a players incentive
programs for those who wager on thoroughbred association
and fair races, and promotional activities at satellite
wagering facilities to increase their attendance and
handle, as defined.
1)Change the distribution amount that would normally be
available for commissions and purses, from 0.4% to an amount
not to exceed 0.25% of the total amount handled by each
satellite wagering facility which in then distributed to the
marketing organization, as specified.
2)Delete a provision which provides that the statewide marketing
organization may use funds to defray the cost of workers'
compensation coverage for stable employees and jockeys of
Thoroughbred trainers.
3)Provide that the marketing organization shall provide specific
reports to CHRB, as defined.
4)Provide that an initial amount of 0.05% of the total amount
handled by each satellite wagering facility shall be
distributed to the non-profit organization designated by the
CHRB for the purpose of maintaining a database of horse racing
information, as defined. State that in subsequent years the
initial amount can be lowered/adjusted below 0.05% by CHRB.
5)Require the non-profit organization shall annually submit to
the CHRB at its November meeting its budget for the ensuing
calendar year and shall file quarterly financial statements
with the board.
EXISTING LAW :
1)Provides under Article IV, Section 19(b) of the Constitution
of the State of California, that the Legislature may provide
for the regulation of horse races and horse race meetings and
wagering on the results.
2)Provides that CHRB shall regulate the various forms of horse
racing authorized in this state.
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3)Provides that "pari-mutuel wagering" is a form of wagering in
which bettors either purchase tickets of various
denominations, or issue wagering instructions leading to the
placement of wagers, on the outcome of one or more horse
races. When the outcome of the race or races has been
declared official, the association distributes the total
wagers comprising each pool, less the amounts retained for
purposes specified in this chapter, to winning bettors.
4)Requires racing associations to pay out certain percentages of
the total amount wagered and of the portion deducted from the
pari-mutuel pool (i.e., the takeout), for state license fees,
owner purses, racing association commissions, and breeding
incentive programs. The amounts vary depending upon the type
of breed bet upon (Thoroughbred, Quarter Horse, harness,
etc.), the type of bet made (e.g., conventional or exotic),
and whether the wager was made on-track or at a satellite
wagering facility.
5)Authorizes a Thoroughbred association or fair, at the joint
request of the association or fair and the organization
representing the horseman, and subject to approval of CHRB, to
deduct from the pari-mutuel pool for any type of wager, an
amount of 10% to 25%, inclusive, of the total amount handled
for the meeting of the thoroughbred association or fair that
accepts the wager. Allows the distribution of funds from the
amount deducted to be modified or redirected, subject to the
approval of CHRB, as specified.
6)Permits CHRB to set the deduction for any new type of wager
introduced after January 1, 2004, in an amount of not less
than 10% nor more than 30% at the joint request of an
association or fair and the horsemen's organization.
7)Authorizes a Quarter Horse association, subject to approval by
the CHRB, and a harness racing association to deduct up to 2%
more from the total amount wagered in the pari-mutuel pool for
any type of wager, and, specifies how the funds shall be
distributed to eligible satellite wagering facilities, owners'
purses and racetrack commissions.
8)Provides that unclaimed refunds from horse racing are to be
distributed to an organization that is responsible for
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negotiating business agreements on behalf of horsemen, to be
held in trust for the purpose of negotiating an agreement with
a jockey's organization to provide health and welfare benefits
to California licensed jockeys.
9)Authorizes racing associations, fairs, and the Thoroughbred
Owners of California (TOC) to form a private statewide
marketing organization to market and promote thoroughbred and
fair horse racing. 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. The CMC is required to submit an annual marketing and
promotion plan to CHRB. These provisions sunset as of January
1, 2011.
10)Provides for the California Travel & Tourism Commission
(CTTC). The CTTC is a not-for-profit, 501(C)(6) corporation
formed in 1998 to work jointly with the State of California's
Division of Tourism to implement the annual Marketing Plan,
which promotes California as a travel destination. While
these two partners (CTTC and Division of Tourism) are separate
legal entities, they are commonly referred to jointly as
California Tourism.
11)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.
12)Declares that cash vouchers that are not redeemed within 365
days of the close of the racing meeting at which the voucher
was purchased shall be distributed to a nonprofit organization
designated by the board for purposes of maintaining a data
base of horseracing information, as defined.
FISCAL EFFECT : Unknown
COMMENTS :
Takeout : The "takeout" is the amount deducted from wagers
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before winnings are paid out to bettors. The state, racetracks,
breeders, and horsemen through purses, receive a distribution
from the takeout. Currently, California's takeout rate on
Thoroughbred races is 15.43% for win, place, and show wagers,
and 20.68% for other types of wagers (i.e., Exacta, Trifecta,
and Pick-6). Over the last couple of years, there has been a
movement within the racing industry in other states to have
greater flexibility to either lower or increase the takeout.
For instance, Keeneland Racetrack in Kentucky and Saratoga in
New York lowered their takeout structure while the Maryland
Jockey Club increased their pari-mutuel takeout. The various
racing jurisdictions experienced varied results after altering
the takeout.
Many within the racing industry have a view that moderating
takeout rates on specific pools might stimulate handle as well
as overall revenue for purses. Today's racing customer is not
just a local resident who comes to a California racetrack but a
patron sitting in a simulcast facility in another state with a
wide choice of tracks to wager on. Ultimately, racing's patrons
drive the pari-mutuel market and their response to an increased
or decreased takeout on any type of wager will determine the
rate of takeout. Many within the racing industry have a view
that moderating takeout rates on specific pools might stimulate
handle as well as overall revenue for purses.
AB 1308 (Torrico), Chapter 410, Statutes of 2007, gave a racing
association and the owners' organization flexibility, subject to
CHRB approval, to set takeout rates at an amount of not less
than 10% nor more than 25% from the pari-mutuel pool for any
type of wager. AB 1308 provided the horse racing industry with
greater flexibility to make adjustments to the takeout.
This measure would expand on the concept contained in AB 1308 by
directing the increased takeout (2% - 3%) directly to purses
which benefits owners, trainers, and jockeys. This measure is
intended to allow greater flexibility to direct the distribution
of funds generated by a takeout increase to an area with the
greatest economic benefit for the industry. This measure is
also intended to enable the California racing industry to
increase its competitiveness by establishing purses more
consistent with purses in other major racing states (e.g., New
York, Pennsylvania, West Virginia, Delaware, Iowa, Indiana,
Louisiana, New Mexico, and Florida) that benefit from the
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operation of slot machines and video lottery terminals, which
are prohibited at California racetracks. Even with an increase
in the takeout rate, California would still rank among the top
twenty lowest takeout structures on specific exotic wagers in
the country. Proponents indicate that the increased takeout
revenue would be focused on an agreed upon strategy for
stabilizing industry operations.
SB 1072 would allow the CHRB to postpone and/or revoke the
implementation of the takeout increase, as defined, if the board
determines that the incremental amount received from
out-of-state betting systems is insufficient to achieve the
objective.
Takeout Rate Comparisons : Currently, California has one of the
lowest takeouts on rates on exotic wagering (20.68%) in the
nation. Del Mar Thoroughbred Club, Santa Anita Park, Hollywood
Park, and Golden Gate Fields rank in the top 10 nationally for
offering the lowest takeout rate on exotic wagers. Examples of
a higher takeout rate (Thoroughbreds) for an exotic wager
(Trifecta) would be Fair Grounds in Louisiana at 25%, Monmouth
Park in New Jersey at 25%, Pimilco in Maryland at 25.75%,
Belmont Park and Saratoga Park in New York at 26%, and Penn
National in Pennsylvania at 31% compared to California at
20.68%.
Even with the takeout increase as proposed, California will
still be in the middle-tier for its takeout on exotic wagers
compared to other racing prominent jurisdictions across the
country.
Deteriorating Status of the Horse Racing Industry in California :
The California horse racing industry's long-term health is
threatened by a combination of factors, including competition
from racing in other states, other forms of gaming within
California, racetrack bankruptcies and the potential for higher
return from development than operating revenues. As resources
shrink, the industry is experiencing deficits in virtually every
one of its revenue sources. Traditional take out, allocation
and distribution formulas are no longer able to sustain ongoing
operations. As the value of racing operations declines, track
ownership is struggling to maximize shareholders' return on the
investment and tempted by alternative uses of the property that
yield higher returns. Consequently, the racing industry is
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suffering unprecedented instability and capital flight. Tens of
thousands of industry jobs are in immediate jeopardy, along with
breeding farms and precious open space in urban centers
throughout California. Also at risk is a substantial amount of
local and state revenue generated both directly and indirectly
by the industry.
Exchange Wagering: This measure would additionally authorize
the 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 with the federal Interstate Horseracing
Act. Exchange wagering is defined as a means of pari-mutuel
wagering in which two or more persons place identically opposing
wagers on a horse race. SB 1072 would require 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 pari-mutuel 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
"pari-mutuel 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 pari-mutuel wagering, each bettor selects the
horse or horses 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
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horse are determined by the total amount bet on the race by the
individual bettors. The bets made are pooled together and the
pari-mutuel operator is responsible for paying the winning bets
from that pool.
In pari-mutuel "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 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 pari-mutuel exchange wagering
operator is responsible for paying the winning bettors out of
the pool (just as is the case in all other forms of pari-mutuel
wagering on horse races in California.) Pari-mutuel exchange
wagering is limited to win, place and show wagering.
The racing industry derives revenue from traditional pari-mutuel
wagering from a "takeout" or "commission" that is charged on
every wager placed in the pool, and from pari-mutuel 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 pari-mutuel wagering service.
Promoting the Breeders' Cup: This measure is also intended to
encourage the Breeders' Cup to consider locating its series of
championship races on a permanent basis in California. The
State of California is in competition with the states of
Kentucky and New York to be the permanent home of the Breeders'
Cup, which is actively looking at a permanent host location as a
potential option as part of its ongoing strategic planning
initiative. The Breeders' Cup Championship series of races were
held in California in 2008 and 2009 and generated significant
revenue and tourism for the State.
It is a well known fact that the California horse racing
industry is in distress and has lost favor with the public,
primarily due to competition with other forms of gambling and
declining popularity of its own product. Yet the horse racing
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industry in this state remains an important segment of the
economy, generating by some estimates almost 50,000 jobs. It is
the author's belief that locating the Breeders' Cup on a
permanent basis in California would generate $60 million in
economic output and create over 500 direct and indirect jobs,
according to the Los Angeles Economic Development Corporation's
estimate in relation to the 2009 Breeders' Cup that was held at
Santa Anita racetrack. To that end, this measure would
stipulate that the monies that would have otherwise been
distributed to a purse account from the increased takeout on
Breeders' Cup day(s) shall be available for the purpose of
promoting and sponsoring the Breeders' Cup.
Arguments in Support: Proponents contend that SB 1072 is about
self-reliance, re-investing in California for growth, and
protecting jobs for the future. Proponents claim this measure
would potentially increase purses by $25 million or more
annually thereby placing California's purse structure on a
competitive basis with other states. California has
historically been a leader in thoroughbred breeding, training,
and racing. In recent years, out of state racing circuits have
increasingly supplemented their purses with funds generated from
alternate forms of gaming. As a result, out-of-state owners are
not bringing their horses to California and local horses - along
with associated breeding, training and other support services -
are leaving the state in order to compete for higher purses
offered elsewhere.
Furthermore, proponents believe there are adequate safeguards
(checks and balances) in this measure to ensure that
implementation of "exchange wagering" will benefit California's
horse racing industry. Proponents note that exchange wagering
is very popular in Great Britain where promoters claim it has
attracted a younger audience for wagering on horse races. It is
hoped that exchange wagering will attract a new clientele to
California horse racing and lead to increased wagering that will
benefit all segments of the industry. Proponents further note
that language in the bill provides safeguards to the industry by
explicitly stating that the applicable racetracks and horsemen
must agree to the business model before exchange wagering can
occur in California.
The CHRB states, this bill will help stabilize the California
horse racing industry by providing incentives for the Breeders'
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Cup to come to California, increasing purses, and expanding
wagering opportunities. The CHRB also supports the passage of
this bill because it will conform to the principles set forth in
the Horse Racing Law requiring the CHRB to assure protection of
the public, encourage agriculture and the breeding of horses in
the state, support the network of California fairs, provide for
maximum expansion of horse racing opportunities in the public
interest, and provide uniformity of regulation for each type of
horse racing.
Arguments in Opposition : Opponents are generally supportive of
the provisions in this measure pertaining to the increase in the
takeout on specified wagers as well as the provisions intended
to improve California's ability to attract the Breeders' Cup
World Championships however opponents have expressed concern
with the provisions authorizing "exchange wagering."
Opponents state that "exchange wagering actually allows bettors
using the Internet to place bets that a horse will lose, rather
than win. It is not currently authorized anywhere in the United
States and is considered extremely controversial in the few
foreign countries (England and Australia) where it is permitted
and has been linked to well publicized race-fixing incidents.
Opponents state that exchange wagering is a dangerous proposal
that threatens the very integrity of horse racing in our state
which is a multi-billion dollar industry, providing tens of
thousands of jobs. This also has the potential of actually
reducing on-track and off-track wagering activity in California
and could negatively impact jobs in the future." Opponents
believe that exchange wagering is a major policy change in horse
racing law that warrants major study and discussion prior to
adoption by the Legislature.
Opponents further state, that even though there are amendments
which specify that the racing association and horsemen must give
their consent on meet-by-meet basis, this is not an adequate
safeguard. Under the Interstate Horseracing Act of 1978, which
contains the same consent language in this bill, situations have
existed where horsemen have been financially shortchanged.
Marketing horse racing in California : SB 27 (Maddy), Chapter
335, Statutes of 1998, creates a private statewide marketing
organization for Thoroughbred and fair racing that is funded by
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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.
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.
Data base of horseracing information : The California Horse
Racing Information Management System, Inc (CHRIMS) is a
non-profit organization focused on providing technology
solutions for the pari-mutuel gaming industry. CHRIMS was
launched in 1990 to track all-sources handle on California races
and provide automatic breakouts of where each wagered dollar
should be directed. Since 2000, every pari-mutuel facility in
California has relied on CHRIMS for consolidated wagering
information. Instead of having to log and calculate data on
their own, tracks can let CHRIMS handle such time consuming jobs
as figuring out money-room shifts, simulcast fees, taxes, and
workers' compensation payments.
CHRIMS specializes in accounting applications and pari-mutuel
settlement outsourcing, but also provide solutions for managing
customer loyalty programs and admission and wager tracking.
CHRIMS also provides customized reports and consulting services
to assist you with analyzing trends, budgets, projections, etc.
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CHRIMS's customer base includes some of the most well respected
racetracks in North America, such as the Del Mar Thoroughbred
Club, Santa Anita Park, Hollywood Park, Keeneland and the NYRA
family of tracks as well as horsemen's' groups. By statute,
CHRIMS is the source of pari-mutuel wagering data for the CHRB
in discharging its regulatory responsibilities and monitoring
the integrity of pari-mutuel pools and distributions from those
pools. CHRIMS also manages the intrastate communications system
through which wagering data is transmitted both inter-track and
throughout the state's off-track wagering network.
Purpose of the bill relating to CMC and CHRIMS : According to
the author, "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." The
bill also makes various modifications to the manner in which the
marketing organization may expend its revenue. Supporters note
that this adjustment takes into consideration current marketing
and promotion trends which will lead to fiscally responsible
business decisions.
In addition, the bill contains language which provides an amount
not to exceed 0.05% of the total amount handled by each
satellite wagering facility shall be distributed to the
non-profit organization (CHRIMS) designated by the CHRB for the
purpose of maintaining a database of horse racing information,
as defined.
Supporters note, that the original funding for the development
of CHRIMS was provided by un-cashed vouchers [AB 1418 (Tucker),
Chapter 311, Statutes of 1994]. As account wagering has
proliferated and on-track and off-track wagering have
experienced severe declines in handle due to economic conditions
the revenues from vouchers have declined dramatically. CHRIMS
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Page 16
has filled the funding gap through the deferral of equipment and
software upgrades, direct industry surcharges and through the
development of outside revenues from services provided to
customers in other states. However, voucher revenues have
continued to decline and are projected to decline by $125,000 in
2010. In addition, CHRIMS must repay capital equipment
financing provided by Oak Tree Racing Association which was used
to replace equipment on the verge of failure and replace
revenues from services previously provided to California
Marketing Committee (CMC) for its player rewards and database
marketing efforts. This bill will help to ensure that CHRIMS
remains a valuable technology and marketing tool for
California's Horse Racing Industry.
Prior/related legislation : SB 517 (Florez), Chapter 636,
Statutes of 2009, allows a Thoroughbred association or fair,
subject to CHRB, to alter the amount deducted from horse racing
wagering. Allows the distribution of funds from the amount
deducted to be modified or redirected, subject to the approval
of CHRB.
SB 766 (Negrete McLeod), Chapter 616, Statutes of 2009, allows
uncommitted surplus funds in the CMC 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 1308 (Torrico), Chapter 410, Statutes of 2007, authorizes a
Thoroughbred association or fair and the horsemen's
organization, subject to approval by CHRB, to deduct an amount
of not less than 10% nor more than 25% from the pari-mutuel pool
for any type of wager.
AB 1736 (Governmental Organization Committee), Chapter 444,
Statutes of 2007, extends "sunset" provisions in current law
relating to the marketing of the California Horse Racing
Industry.
SB 103 (Maddy), Chapter 10, Statutes of 1998, requires any
association, including fairs, that conducts thoroughbred racing
to pay to the owners' organization contracting with the
association an additional percentage for a national marketing
program, as specified, to promote thoroughbred racing unless the
owners' organization chooses not to contribute to the program.
The bill sunsets January 1, 2004.
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SB 27 (Maddy), Chapter 335, Statutes of 1998, among its
provision, creates a private statewide marketing organization
for thoroughbred and fair racing that is funded by .4% of the
instate 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.
AB 1418 (Tucker), Chapter 311, Statutes of 1994, among various
provisions, stated that cash vouchers that are not redeemed
within 365 days of the close of the racing meeting at which the
voucher was purchased shall be distributed to a nonprofit
organization designated by the board for purposes of maintaining
a data base of horseracing information, as defined.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0006847