BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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                              UNFINISHED BUSINESS


          Bill No:  SB 1072
          Author:   Calderon (D)
          Amended:  8/30/10 
          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:  Breeders 
                      Cup promotion:  wagering deductions:  exchange  
          wagering

           SOURCE :     California Authority of Racing Fairs


           DIGEST  :    This bill makes the following substantive  
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          changes and additions to Californias Horse Racing Law: (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 and  
          makes it explicit that exchange wagering shall not become  
          operative until May 1, 2012; (3) requires each exchange  
          wagering licensee to annually distribute a specified amount  
          of exchange wagering revenue to the existing jockey health  
          and benefit welfare fund; (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, from  
          January 1, 2011 to January 1, 2014, on provisions that  
          authorize racing associations and fairs that conduct  
          thoroughbred racing to pay to the owners' organization a  
          certain portion of the purses for a statewide marketing  
          program, as specified, to increase interest in horse  
          racing; and (6) 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 CHRB for the purpose of  
          maintaining a database of horse racing information, as  
          defined.   

           Assembly Amendments  incorporate provisions contained in AB  
          2414 (Perez) into this bill.

           ANALYSIS  :    Existing law provides that "parimutuel  
          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.

          Existing law requires racing associations to pay out  

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          certain percentages of the total amount wagered and of the  
          portion deducted from the parimutuel 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.

          Existing law authorizes a Thoroughbred association or fair,  
          at the joint request of the association or fair and the  
          organization representing the horsemen, and subject to  
          approval of CHRB, to deduct from the parimutuel pool for  
          any type of wager, an amount of 10 percent to 25 percent,  
          inclusive, of the total amount handled for the meeting of  
          the thoroughbred association or fair that accepts the  
          wager.  Existing law allows the distribution of funds from  
          the amount deducted to be modified or redirected, subject  
          to the approval of CHRB, as specified.

          Existing law 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 percent nor more than 30 percent  
          at the joint request of an association or fair and the  
          horsemen's organization.

          Existing law authorizes a quarter horse association,  
          subject to approval by CHRB, and a harness racing  
          association to deduct up to two percent more from the total  
          amount wagered in the parimutuel pool for any type of  
          wager, and, specifies how the funds shall be distributed to  
          eligible satellite wagering facilities, owners' purses and  
          racetrack commissions.

          Existing law provides that unclaimed refunds from horse  
          racing are to be distributed to an organization that is  
          responsible for 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.  Existing law requires that the funds held in  
          trust shall not exceed $450,000. 


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          Existing law authorizes racing associations, fairs, and the  
          Thoroughbred Owners of California 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.

          Existing law provides for the California Travel and 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. 

          This bill:

          1. Makes various legislative findings relative to the  
             economic 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. Also, 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 two percent of the total amount handled on  
             exotic wagers requiring the selection of two wagering  
             interests (e.g., exactas, quinellas) and three percent  
             of the total amount handled on exotic wagers requiring  

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             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 two percent or three percent takeout  
             referenced above on exotic wagers required by this bill,  
             for distribution as overnight purses.

          5. Grants 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 CHRB is best suited to  
             oversee, license, and regulate exchange wagering in  
             California.  Also, 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. Defines a host of new terms, as specified, for purposes  
             of exchange wagering including the term "exchange  
             wagering" which means a form of parimutuel wagering in  
             which two or more persons place identically opposing  
             wagers in a given market.

          8. Stipulates that exchange wagering shall only be  
             conducted by an exchange wagering licensee pursuant to a  
             valid exchange wagering license issued by CHRB.  Also,  
             provides that no exchange wagering licensee may accept  
             wagers prior to May 1, 2012. 

          9. 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  

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             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 Horseracing Act of 1978.

          10.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.

          11.Requires 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, allows 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). 

          12.Requires CHRB, prior to promulgating rules and  
             regulations under which exchange wagering may be  
             conducted, to consider studies or comments submitted by  
             interested parties on the impact of exchange wagering on  
             parimutuel wagering and the economics of the State's  
             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  
             industry.  

          13.Provides that only persons 18 years of age or older  
             could establish exchange wagering accounts and requires  
             CHRB to approve security policies and safeguards to  
             ensure player protections, age verification and  
             location.

          14.Directs CHRB to adopt rules prohibiting any owner,  
             trainer, jockey, or stable employee from placing an  

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             exchange wager on any horse owned, trained, or ridden by  
             any of those individuals.

          15.Includes language (similar to Advance Deposit Wagering  
             law) relative to supporting the contracting rights of  
             parimutuel 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.

          16.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.

          17.Also, 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.

          18.Furthermore, requires that a written report be made to  
             CHRB detailing the manner in which the set aside funds  
             were utilized to promote and support the Breeders' Cup.

          19.Extends the sunset, from January 1, 2011 to January 1,  
             2014, on provisions that authorize racing associations  
             and fairs that conduct thoroughbred racing to pay to the  
             owners' organization a certain portion of the purses for  
             a statewide marketing program, as specified, to increase  
             interest in horse racing.

          20.Requires the statewide marketing plan for horse racing  
             to be presented (rather than submitted) to the Horse  
             Racing Board at CHRB's November meeting.  Also, requires  
             the written plan be submitted to CHRB by November 1st of  
             each year.

          21.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  

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             amount handled by each satellite wagering facility which  
             is then distributed to the marketing organization, as  
             specified.

          22.Provides that an initial amount of 0.05 percent of the  
             total amount handled by each satellite wagering facility  
             shall be distributed to the nonprofit organization  
             designated by CHRB for the purpose of maintaining a  
             database of horse racing information as defined.

          23.Requires the marketing organization, on a quarterly  
             basis, to submit to CHRB a report accounting for all  
             receipts and expenditures of the promotion funds during  
             the previous three months.

          24.Deletes obsolete language regarding workers'  
             compensation responsibilities associated with the  
             statewide marketing association.

           Background  

           Takeout rate component  .  The "takeout" is the amount  
          deducted from wagers 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 percent for win, place, and show wagers, and 20.68  
          percent 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 parimutuel  
          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  

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          parimutuel 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 percent nor more than 25  
          percent from the parimutuel pool for any type of wager.  AB  
          1308 provided the horse racing industry with greater  
          flexibility to make adjustments to the takeout. 

          This bill expands on the concept contained in AB 1308 by  
          directing the increased takeout (two percent to three  
          percent) directly to purses which benefits owners,  
          trainers, and jockeys.  This bill 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 bill 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 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.  

          This bill allows 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  
          percent) in the nation.  Del Mar Thoroughbred Club, Santa  

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          Anita Park, Hollywood Park, and Golden Gate Fields rank in  
          the top ten 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 percent, Monmouth Park in New Jersey at 25 percent,  
          Pimilco in Maryland at 25.75 percent, Belmont Park and  
          Saratoga Park in New York at 26 percent, and Penn National  
          in Pennsylvania at 31 percent compared to California at  
          20.68 percent.   
           
          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 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 component  .  This bill additionally  
          authorizes 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  

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          federal Interstate Horseracing Act.  Exchange wagering is  
          defined as a means of parimutuel wagering in which two or  
          more persons place identically opposing wagers on a horse  
          race.  This bill requires 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  
          parimutuel 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 "parimutuel 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 parimutuel wagering, each bettor selects the  
          horse(s) 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 horse are determined by the  
          total amount bet on the race by the individual bettors.   
          The bets made are pooled together and the parimutuel  
          operator is responsible for paying the winning bets from  
          that pool. 

          In parimutuel "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  

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          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 parimutuel exchange wagering operator is  
          responsible for paying the winning bettors out of the pool  
          (just as is the case in all other forms of parimutuel  
          wagering on horse races in California).  Parimutuel  
          exchange wagering is limited to win, place and show  
          wagering.  

          The racing industry derives revenue from traditional  
          parimutuel wagering from a "takeout" or "commission" that  
          is charged on every wager placed in the pool, and from  
          parimutuel 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 parimutuel wagering service.  
           
          Breeders' Cup Component  .  This bill 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 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  

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          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 bill stipulates 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. 
           
          Marketing program component  .  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 0.4 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 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  
          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  
          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.  CMC will expire after this year due to a sunset  
          provision in the law unless there is legislation to extend  
          it.

          AB 1736 (Assembly Governmental Organization Committee),  
          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.  Additionally, SB 1072 makes  
          various modifications to the manner in which the marketing  

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          organization may expend its revenue.  Furthermore, SB 1072  
          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 [the California Horse Racing Information  
          Management System, Inc (CHRIMS)] designated by CHRB for the  
          purpose of maintaining a database of horse racing  
          information, as defined.

          Proponents indicate 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 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.   
          Proponents contend that this measure will help ensure that  
          CHRIMS remains a valuable technology and marketing tool for  
          California's horse racing industry. 

           Related Legislation  

          AB 2414 (Perez) sunsets the exchange wagering provisions of  
          SB 1072 (Calderon) on May 1, 2016.  The bill is pending in  
          Senate Rules Committee.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

          Unknown.

           SUPPORT  :   (Verified  8/31/10)

          California Authority of Racing Fairs (source)

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                                                               SB 1072
                                                                Page  
          15

          California Horse Racing Board
          California Teamsters Public Affairs Council
          California Thoroughbred Breeders Association
          Del Mar Thoroughbred
          Hollywood Park
          Jockeys Guild
          Los Angeles County Fair
          Service Employees International Union
          Thoroughbred Owners of California
          TVG
          UNITE HERE

           OPPOSITION  :    (Verified  8/31/10)

          California Coalition Against Gambling Expansion 
          California Thoroughbred Trainers
          Churchill Downs Incorporated (Twin Spires, YouBet, and  
          United Tote)

           ARGUMENTS IN SUPPORT  :    Proponents contend that this bill  
          is about self-reliance, re-investing in California for  
          growth, and protecting jobs for the future.  Proponents  
          claim this bill potentially increases purses by $25 million  
          or more annually thereby placing California's purse  
          structure on a competitive basis with other states.   
          Proponents also argue that the higher purses will help  
          increase field size and provide increased handle.   
          Furthermore, proponents believe there are adequate  
          safeguards (checks and balances) in this bill to ensure  
          that implementation of "exchange wagering" will benefit  
          California's horse racing industry.    

           ARGUMENTS IN OPPOSITION  :    Opponents are generally  
          supportive of the provisions in this bill 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.  This is fraught with danger and threatens the very  
          integrity of horse racing in our state which is a  
          multi-billion dollar industry, providing tens of thousands  

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                                                               SB 1072
                                                                Page  
          16

          of jobs.  This also has the potential of actually reducing  
          on-track activity 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.  
           

           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

                                ****  END  ****















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