BILL ANALYSIS Ó AB 707 Page 1 Date of Hearing: May 11, 2011 ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION Isadore Hall, Chair AB 707 (Garrick) - As Amended: March 31, 2011 SUBJECT : Horse racing: thoroughbred races. SUMMARY : Increases from 32 to 60, the limitation on the total number of out-of-state Thoroughbred races that may be imported per day by a Thoroughbred association or fair that is conducting a live race meet with approval by the California Horse Racing Board (CHRB). EXISTING LAW : 1) Provides that CHRB regulate the various forms of horse racing authorized in this state. 2) Limits the number of races that may be imported by associations and fairs to no more than 32 races per day on days when live Thoroughbred or fair racing is being conducted in this state, with specified exceptions. Exempts from that 32-race per day limit races imported that are part of the race card of certain prominent races, including the Kentucky Derby, the Kentucky Oaks, the Preakness Stakes, the Belmont Stakes, the Jockey Club Gold Cup, the Travers Stakes, the Breeders' Cup, the Dubai Cup, or the Haskell Invitational. 3) Authorizes Thoroughbred racing associations or fairs to distribute the audiovisual signal and accept wagers on the results of out-of-state and international Thoroughbred races during the calendar period the association or fair is conducting live racing, including days on which there is no live racing being conducted by the association or fair. FISCAL EFFECT : This bill has been keyed non-fiscal by Legislative Counsel. COMMENTS : The scale and scope of horse racing is governed by statute. Any attempt to expand its market requires legislative action. The California Legislature has attempted to address the racing AB 707 Page 2 industry's long-term viability through a number of legislative efforts to expand the exposure of horse racing to the general public and enhance horse racing's marketability. AB 707 increases the number of out-of-state races on which Thoroughbred and fair racing associations may simulcast and accept wagers on each day from 32 to 60. The author states by allowing Thoroughbred and fair racing associations to import more out-of-state races, it will give the horse racing industry a marketing tool and leverage with racetracks outside of this state. Presently, due to specific importation restrictions, Thoroughbred and fair racing associations are sending their signal to out-of-state locations, but are not able to receive the maximum rate for their live racing product. However, if these racing associations were able to accept more out-of-state races under some type of reciprocity agreement, a majority of the money wagered between the two markets would stay in this state for track commissions, purses, and breeders' awards. This measure will also give the industry a marketing tool to increase on-track and off-track attendance because more quality races from out-of-state locations would be offered to their wagering patrons on a daily basis. Background: Satellite wagering : Satellite wagering via an off-track facility has been legal in California since 1985. It was authorized at a time when California racetracks were beginning to experience declining attendance and handle figures. The industry believed that making the product easier to access not only would expose and market horse racing to potential customers, but also would make it more convenient for the existing patrons to wager more often. Simulcasting : Simulcasting is the process of transmitting the audio and video signal of a live racing performance from one facility to a satellite for retransmission to other locations or venues where pari-mutuel wagering is permitted. Simulcasting provides racetracks with the opportunity to increase revenues by exporting their live racing content to as many wagering locations as possible, such as other racetracks, fair satellite facilities and Indian casinos. Revenues are increased because simulcasting provides racetracks AB 707 Page 3 that export their live content with additional customers in multiple locations who would not have otherwise been able to place wagers on the live racing event. Racetrack attendance : There has been a general decline in the number of people attending and wagering at live horse racetracks in California due to a number of factors, including increased competition from other forms of gaming, unwillingness of customers to travel a significant distance to racetracks and the availability of off-track wagering. The declining attendance at live horse racing events has prompted racetracks to rely on revenues from in-state and out-of-state satellite wagering and account wagering. In opposition : In opposition to this bill, Los Alamitos Race Course writes, "this measure will have a detrimental impact on Los Alamitos. Those who enjoy the sport of wagering on horse racing will now have the opportunity to wager on seventy-eight different racing events each day before they see their very first race from Los Alamitos. This places us at a disadvantage because many racing patrons might become tired of handicapping races, and/or possibly have exhausted their bankroll before the first live race from our racetrack is run." Prior legislation : AB 2790 (Committee on Governmental Organization), Chapter 141, Statutes of 2010. Added races that are part of the race card of the Arlington Million to the list of imported races not subject to the limitation of 32 races per day. SB 899 (Denham), Chapter 279, Statutes of 2010. Deleted the statewide cap on the number of out-of-country thoroughbred races that a thoroughbred racing association or fair may import, simulcast and on which wagers may be accepted. AB 3074 (Governmental Organization Committee), Chapter 510, Statutes of 2008. Allows a harness racing association in California to import all of the races conducted on Kentucky Futurity day, irrespective of the six-race day limit in law and increases, from 23 to 32, the limitation on the total number of out-of-state Thoroughbred races that may be imported per day by a Thoroughbred association or fair that is conducting a live race meet. AB 1736 (Assembly Committee on Governmental Organization), AB 707 Page 4 Chapter 444, Statutes of 2007. Adds the "Travers Stakes" to the group of specific stake races which are exempt from the 23-race per day limit on imported races, as specified. SB 379 (Denham), Chapter 443, Statutes of 2007. Adds the Dubai World Cup race to a specified list of races that would be exempted from the 23-race per day limit on imported races for satellite wagering in California. SB 590 (Perata), Chapter 936, Statutes of 2001. Authorizes Thoroughbred racing associations and fairs in the northern racing zone to increase the number of imported racing simulcasts available to be wagered upon if the CHRB reduces the number of live racing days. AB 509 (Jerome Horton), Chapter 235, Statutes of 2004. Allows a Thoroughbred or fair association to distribute the audiovisual signal and accept wagers on the results of out-of-country Thoroughbred races during the calendar period the association or fair is conducting a race meeting under specified conditions. REGISTERED SUPPORT / OPPOSITION : Support Del Mar Thoroughbred Club Fairplex Racing Association LA County Fair Association Oak Tree Racing Association Opposition Los Alamitos Race Course Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531