BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1439|
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THIRD READING
Bill No: SB 1439
Author: Price (D)
Amended: 5/28/10
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 8-0, 4/13/10
AYES: Wright, Calderon, Denham, Florez, Oropeza, Padilla,
Price, Yee
NO VOTE RECORDED: Harman, Negrete McLeod, Wyland
SENATE APPROPRIATIONS COMMITTEE : 6-3, 5/24/10
AYES: Kehoe, Cox, Leno, Walters, Wyland, Yee
NOES: Alquist, Corbett, Wolk
NO VOTE RECORDED: Denham, Price
SENATE FLOOR : 18-18, 6/3/10 (FAIL)
AYES: Calderon, Correa, Florez, Hancock, Huff, Kehoe,
Leno, Liu, Lowenthal, Negrete McLeod, Oropeza, Padilla,
Price, Romero, Steinberg, Wright, Wyland, Yee
NOES: Aanestad, Alquist, Ashburn, Cedillo, Cogdill,
Corbett, Denham, DeSaulnier, Ducheny, Dutton,
Hollingsworth, Pavley, Runner, Simitian, Strickland,
Walters, Wiggins, Wolk
NO VOTE RECORDED: Cox, Harman, Vacancy, Vacancy
SUBJECT : Horse racing: minisatellite wagering facilities
SOURCE : Author
DIGEST : This bill reduces the protective zone for
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satellite wagering facilities and racetracks from a 20 mile
radius to 15 miles, and also authorizes the California
Horse Racing Board to approve a one-year test at a location
that is between 10 and 15 miles from an existing satellite
wagering facility, and prohibits any satellite wagering
facility from being located within 20 miles from a tribal
casino.
ANALYSIS :
Existing Law
1. Authorizes California Horse Racing Board (CHRB) to
permit licensed racing associations, fairs and
mini-satellites licensees to operate satellite wagering
facilities.
2. Authorizes and defines "advance deposit wagering (ADW)"
as a form of parimutuel wagering in which a person
"establishes an account with a board-approved betting
system or wagering hub where the account owner provides
"wagering instructions" authorizing the entity holding
the account to place wagers on the owner's behalf."
3. Permits the San Joaquin, Humboldt, Shasta, and Fresno
Fairs, with the approval of CHRB and the California
Department of Food and Agriculture (CDFA), to operate a
satellite wagering facility on leased premises within
the boundaries of the fair.
4. Permits the California Exposition and State Fair, with
the approval of CDFA and CHRB, to operate a satellite
wagering facility within the boundaries of the fair in
addition to any facility otherwise authorized under
current law.
5. Authorizes CDFA to approve no more than three satellite
wagering facilities either on the San Francisco
fairgrounds (Cow Palace) or within the boundaries of San
Francisco. The fair may contract for the operation and
management of such a facility with other racing
associations.
6. Provides that the San Mateo County Fair may operate a
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satellite wagering facility on its fairgrounds or on
leased premises in San Mateo County contingent upon the
closure of a racing association licensed in the year
2002 to conduct a thoroughbred race meeting in that
county.
7. Authorizes CHRB to approve the Solano County Fair to
operate a satellite wagering facility on the fairgrounds
or on leased premises in Solano County, if the fair
ceases to conduct live horse racing at the site of its
2002 racing meeting, as specified.
8. Prohibits a satellite wagering facility, except when
that facility conducts live race meetings, from being
located within 20 miles of any existing satellite
wagering facility or track, which conducts live race
meetings. In the northern zone, existing racing
associations and satellite wagering facilities may waive
this prohibition.
9. Defines "inclosure" for purposes of wagering as all
areas of the racing association's or fair's grounds and
locations, as designated by the racing association or
fair licensed to conduct a live racing meeting and
approved by CHRB, excluding the public parking lot.
This bill:
1. Provides that the CHRB may approve an additional 15
minisatellite wagering sites if all of the conditions
are met:
A. No site is within 15 miles of a racetrack, a
satellite wagering facility, or a tribal casino that
has a satellite wagering facility. If the proposed
mini-satellite wagering facility is within 15 miles
of one of the above-referenced facilities, then the
consent of each such facility within 15 miles
(reduced from a 20 mile radius) must be given before
the proposed minisatellite wagering facility may be
approved by CHRB.
B. Until July 1, 2011 (reduced from January 1, 2013),
if the proposed mini-satellite wagering site is in
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the northern zone in a fair district where the fair
has operated a satellite wagering facility for the
previous five years, the approval of the fair must be
obtained even if the proposed location is more than
15 miles from the existing satellite wagering
facility operated by the fair.
C. The written consent of the San Mateo County Fair
shall be obtained prior to the approval of any
mini-satellite wagering site located within 15 miles
(reduced from a 20 mile radius) of its fairground.
D. Notwithstanding subdivisions (a) and (c) above (no
mini-satellite within 15 miles of an existing
facility without the consent of the existing
facility, as specified, and, written consent must be
obtained by San Mateo County Fair to locate within 15
miles of its fairground) , the requirement that the
approval of a racetrack, satellite wagering facility,
tribal casino that has a satellite wagering facility,
or fair be obtained if the proposed mini-satellite
wagering facility is within 15 miles shall only apply
to those facilities that are operated by tribal
casinos, racetracks, or fairs that actually conduct
two weeks or more of live racing in the preceding
year.
If a satellite wagering facility, or tribal casino
that has a satellite wagering facility, does not
consent to a mini-satellite wagering facility being
situated within 15 miles, CHRB may conduct a one-year
test at the proposed site in order to determine the
impact of the proposed mini-satellite wagering
facility on total parimutuel revenues, and on the
attendance and wagering at existing satellite
wagering facilities.
With respect to the one-year test, CHRB may approve
only one mini-satellite wagering facility per
existing satellite wagering facility and the
mini-satellite wagering facility must be located
within 10 miles of the existing satellite wagering
facility.
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During the one-year study, the operator of the
mini-satellite wagering facility and the satellite
wagering facility operated by a fair or a tribal
casino may enter into an agreement providing for the
payment of an impact fee. If there is no agreement
within that year, CHRB may hear testimony from both
parties and impose an impact fee based on the results
of the one-year test study. A decision of CHRB
regarding a proposed site may cover the period of
time during which the test is to be conducted, as
well as apply to the operation of the minisatellite
wagering facility if it continues to operate beyond
one year.
E. For purposes of this section, mileages shall be
measured property line to property line by the
shortest publicly accessible driving route.
F. Provides that, notwithstanding the provisions of
this bill, no satellite wagering facility or
mini-satellite wagering facility shall be located
within 20 miles of a tribal casino.
2. Makes other technical and conforming changes.
Comments
According to the author's office, this bill seeks to allow
for the easier citing of mini-satellite wagering
facilities. The current law that provides for a protective
zone for existing satellite wagering facilities up to a
twenty mile radius has been determined to be too
restrictive.
This bill will empower the CHRB to approve mini-satellite
wagering facilities that are less than twenty-miles from
existing satellite wagering facilities. It will further
allow the CHRB to conduct a one-year feasibility study at
the proposed site to determine its impact on pari-mutuel
revenues, attendance and wagering at existing facilities."
NOTE: Please refer to the Senate Governmental
Organization Committee analysis for additional
information on this subject.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Admin expenses ----------minor,
absorbable---------- General
SUPPORT : (Verified 5/28/10)
California Horse Racing Board
Del Mar Thoroughbred Club
Golden Gate Fields
Hollywood Park Race Track
Los Alamitos Race Course
Oak Tree Racing Association
Santa Anita Race Track
Scientific Games
Thoroughbred Owners of California
OPPOSITION : (Verified 6/3/10)
Artichoke Joe's Casino
California Authority of Racing Fairs
County of San Mateo
Department of Food and Agriculture
San Mateo County Event Center
ARGUMENTS IN SUPPORT : CHRB supports the basic concept of
the bill and feels that mini-satellites are an integral
part of a broader plan to promote horse racing in
California.
The Thoroughbred Owners of California (TOC) states "The
2007 minisatellite legislation cited the fact that there
are over 18,000 lottery outlets, more than 90 card clubs
and 60 tribal casinos where people can make a bet in
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California. However, there are only 33 places to wager on
a horse race in the entire state. Limited distribution has
placed California's horse racing industry at a competitive
disadvantage with other forms of wagering and
gaming-supporting horse racing venues in other states.
"Unlike the bigger satellite wagering facilities, which are
located in settings that cater to existing fans, it was
envisioned that the minisatellites would be set-up within
establishments that serve a larger population of adult
clientele. It was also hoped that locating minisatellites
in existing bars, card clubs, casinos, etc. would help
attract a new more casual bettor to the sport.
"Preliminary experience with the minisatellite model is
quite encouraging. California's first minisatellite, which
opened in November 2009 at the Commerce Club, is handling
more than $80,000 in horse racing wagers per day. Other
card club based minisatellites are in the works and it is
reasonable to expect that they will perform at a
proportionate level.
"Requirements that must be met to establish a minisatellite
include approval from the CHRB, buy-in from the horsemen's
organization, and consent from any preexisting satellite
facility within a 20-mile radius of the new site. The
latter requirement has not been an obstacle in the southern
zone, where both Hollywood Park and Santa Anita have
consented to minisatellites within their 20-mile radius.
However, it has raised significant issues in underserved
urban areas in the northern zone. Specifically, required
consent has been withheld for a couple of sites in San
Francisco, which is slightly less than 20 miles to the
north of an existing facility.
"SB 1439 would ensure that placement of additional
minisatellites in prime locations is not unreasonably
restricted by existing satellite operators. In its present
state, this bill would reduce the 20-mile consent radius to
15 miles for existing facilities, allow minisatellites to
be located within the radius restriction on a 1-year trail
basis, provide a process for determining if a new
minisatellite has any negative impact on existing facility
revenue and allow for payment of mitigation fees where
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appropriate.
"Minisatellites may not fix everything for California horse
racing, but they do have the capacity to create a
substantial new source of much-needed revenue and attract a
new variety of horse racing fan. Given horse racing's
current financial condition, passage of SB 1439 is
essential to maintain the industry's statewide presence,
support jobs in this sector and continue our positive
contribution to the state's sagging economy."
ARGUMENTS IN OPPOSITION : The County of San Mateo states
that it, in partnership with the San Mateo County Event
Center (SMCEC), constructed and opened the five million
dollar, 16,000-square-foot Jockey Club in 2008.
Considering the 20-mile protection this significant
investment was reasonable. Revenue from the Jockey Club is
used to repay construction loans to both the County and the
State. Locating new satellites within a 20-mile proximity
would jeopardize these funds and the ability of the Jockey
Club to make the required debt service payments to both the
State and County.
The County of San Mateo does not see the benefit in
changing existing statute, which was enacted to provide a
balance between protecting the fiscal base of existing
facilities while allowing for a process of approval for new
facilities. The provisions included in this bill appear to
circumvent the very intent of current law and diminish
confidence in constructing facilities that benefit horse
racing across the state.
The California Department of Food and Agriculture writing
in opposition to this bill states that, "the horse racing
industry's revenues are in a steady decline and many tracks
are closing statewide. The horse racing industry needs
innovative activities such as off-site wagering and it is
important to keep the well being of these related
industries in mind. The satellite wagering facilities
located at fairs with and without live racing are an
integral part of the racing industry as a whole. Taking
business away from these fairs will inherently hurt fairs,
satellite wagering facilities, and eventually the
mini-satellite wagering facilities.
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"A system of revenue sharing would benefit the racing fairs
and satellite wagering facilities in which the
mini-satellite wagering facilities are making their
revenues. The Department supports a system that allows
businesses to generate more revenue via wagering activities
on races throughout the United States at any location in
California. However, this bill does not take into account
the detrimental effects of allowing mini-satellites to set
up shop so close to the satellite facilities and live
races.
"The mini-satellites will be more accessible than a larger
satellite located on fairgrounds. They could be gas
stations, liquor stores, etc. Therefore the fairgrounds
could lose significant satellite wagering revenues, as well
as admissions and concessions.
TSM:do 6/10/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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