BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 1072
Author: Calderon (D)
Amended: 8/20/10
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 7-0, 4/27/10
AYES: Wright, Denham, Florez, Negrete McLeod, Price,
Wyland, Yee
NO VOTE RECORDED: Harman, Calderon, Oropeza, Padilla
SENATE FLOOR : 34-0, 5/3/10
AYES: Aanestad, Ashburn, Cedillo, Cogdill, Corbett,
Correa, Cox, Denham, DeSaulnier, Ducheny, Dutton, Florez,
Hancock, Harman, Hollingsworth, Huff, Kehoe, Leno, Liu,
Lowenthal, Negrete McLeod, Oropeza, Padilla, Pavley,
Price, Romero, Runner, Simitian, Strickland, Walters,
Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Alquist, Calderon, Steinberg, Wiggins,
Vacancy, Vacancy
ASSEMBLY FLOOR : 56-10, 8/30/10 - See last page for vote
SUBJECT : Horse racing: statewide marketing organization
SOURCE : California Authority of Racing Fairs
DIGEST : This bill 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.
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This bill also provides that an amount not to exceed 0.05
percent of the total amount handled by each satellite
wagering facility shall be distributed to the nonprofit
organization designated by the California Horse Racing
Board for the purpose of maintaining a database of horse
racing information.
Assembly Amendments add all of the provisions to the bill
other than extending the sunset date.
ANALYSIS : Existing law provides that the California
Horse Racing Board (CHRB) regulates the various forms of
horse racing authorized in this state.
Existing law authorizes a California racing association to
execute an agreement with any other racing association
conducting thoroughbred races in the southern racing zone
to allow the other association to distribute the signal and
accept wagers on out-of-state and international races.
Existing law 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. Existing law 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.
Existing law authorizes California Thoroughbred owners to
deduct a portion of their purse pools to participate in the
"national marketing" association, the National Thoroughbred
Racing Association.
Existing law allows uncommitted surplus funds in the horse
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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.
This bill:
1. Provides that the statewide marketing organization may
use funds to market and promote thoroughbred and fair
horse racing, including, but not limited to:
A. Establishment and maintenance of a Web site
featuring California thoroughbred and fair racing.
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.
2. Changes the distribution amount that would normally be
available for commissions and purses, from 0.4 percent
to an amount not to exceed 0.25 percent of the total
amount handled by each satellite wagering facility which
in then distributed to the marketing organization, as
specified.
3. Deletes 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.
4. Provides that the marketing organization shall provide
specific reports to CHRB, as defined.
5. Provides an amount not to exceed 0.05 percent 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.
6. States that the amount distributed to such nonprofit
organization may be adjusted by CHRB, in its discretion.
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7. Requires the nonprofit organization shall annually
submit to CHRB at its November meeting its budget for
the ensuing calendar year and shall file quarterly
financial statements with the board.
8. Extends the sunset date from January 1, 2011, to January
1, 2014
Comments
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." This 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 percent 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
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vouchers have declined dramatically. CHRIMS 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
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.
Related Legislation
AB 2414 (John A. Perez) 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. The bill requires a minimum $2 million
investment (CMC funding) in the marketing and promotion of
the Breeders' Cup Championship. The bill is in the Senate
Rules Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, funding
for the CMC comes from the in-state off-track wagering
handle. 0.4 percent of the amount wagered is provided to
the CMC for marketing horse racing in the state. In 2009,
the CMC received approximately $5 million for marketing.
Extending the sunset would result in continuing the annual
redirection of the handle. Minor and absorbable costs for
CMC to produce a semi-annual report on receipts and
expenditures and for CHRB to audit and review the reports.
SUPPORT : (Verified 8/27/10)
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California Authority of Racing Fairs (source)
ASSEMBLY FLOOR :
AYES: Ammiano, Anderson, Bass, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Conway, Coto, Davis, De La
Torre, De Leon, Evans, Feuer, Fletcher, Fong, Fuentes,
Furutani, Galgiani, Garrick, Gatto, Gilmore, Hall,
Hayashi, Hernandez, Hill, Huber, Huffman, Jones, Lieu,
Ma, Mendoza, Miller, Nava, Nestande, Norby, V. Manuel
Perez, Portantino, Salas,
Saldana, Silva, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, John A. Perez
NOES: Adams, Bill Berryhill, DeVore, Gaines, Harkey,
Knight, Niello, Nielsen, Skinner, Smyth
NO VOTE RECORDED: Arambula, Tom Berryhill, Cook, Eng,
Fuller, Hagman, Jeffries, Logue, Bonnie Lowenthal,
Monning, Ruskin, Yamada, Vacancy, Vacancy
TSM:mw 8/31/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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