BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 732| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 732 Author: Wyland (R) Amended: 4/11/11 Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE : 11-0, 5/10/11 AYES: Wright, Anderson, Berryhill, Cannella, Corbett, De León, Evans, Hernandez, Padilla, Strickland, Wyland NO VOTE RECORDED: Calderon, Yee SUBJECT : Horse racing: northern zone: vanning of starters SOURCE : Thoroughbred Owners of California DIGEST : This bill makes the following substantive changes to existing horse racing law provisions pertaining to offsite stabling and vanning of horses: (1) deletes the requirement that racing associations in the northern zone provide, at the option of the horse owner, vanning of participating racehorses from any California Horse Racing Board (CHRB)-approved offsite stabling facility, and (2) authorizes, with respect to the northern zone and subject to the availability of specified funds, at the option of the horse owner, vanning of participating racehorses from any CHRB-approved offsite stabling facility. ANALYSIS : Article IV, Section 19(b) of the Constitution of the State of California provides that the Legislature may provide for the regulation of horse races and horse CONTINUED SB 732 Page 2 race meetings and wagering on the results. Existing law authorizes the CHRB to regulate the various forms of horse racing authorized in this state. Existing law sets the amount deducted from the parimutuel pools of thoroughbred races in California. According to the CHRB 2009-10 annual report, the "takeout rate" (the amount deducted from wagers before winnings are paid out to bettors) for conventional wagering (e.g., win, place, and show wagers) on Thoroughbred races is 15.9 percent, and 21.34 percent for exotic wagers (e.g., Exacta, Trifecta, Pick-6). These funds are used for a variety of purposes including funding commissions, purses, welfare funds, and enforcement fees. Existing law provides that, when satellite wagering is conducted on thoroughbred races at associations or fairs in the central or southern zone, an amount equal to 1.25 percent of the total amount handled by all of those satellite wagering facilities must be deducted from the take-out for the benefit of the "Vanning and Stabling" Fund. Proceeds therein are distributed to the organization representing the racing associations and horsemen and women for the purpose of providing reimbursement for off-site stabling and vanning at board-approved auxiliary training facilities of licensed racing associations. This is to compensate for the additional stalls beyond the number of usable stalls the association is required to provide under current law. Existing law requires the CHRB to determine the number of usable stalls that each racing association or fair must make available and maintain for a racing meeting. The minimum number of stalls may be at the site of the racing meeting or at CHRB-approved offsite locations. Additionally, existing law divides the state into three geographical zones for regulating horse racing (northern zone, central zone and southern zone) and with respect to racing meetings conducted in the northern zone, requires the association or fair conducting the meeting to provide all stabling required by the CHRB without cost to participating horsemen. SB 732 Page 3 Furthermore, existing law requires with respect to northern zone thoroughbred meetings only, the association conducting the meeting to provide, at the option of the horse owner, vanning of participating racehorses from any CHRB-approved offsite stabling facility in the northern zone. Racing fairs may, but are not required to, provide vanning of participating racehorses from any board-approved offsite stabling facility subject to the availability of funds. This bill makes the following substantive changes to existing horse racing law provisions pertaining to offsite stabling and vanning of horses: 1. Deletes the requirement that racing associations in the northern zone provide, at the option of the horse owner, vanning of participating racehorses from any CHRB-approved offsite stabling facility. 2. Authorizes, with respect to the northern zone and subject to the availability of specified funds, at the option of the horse owner, vanning of participating racehorses from any CHRB-approved offsite stabling facility. Prior/Related Legislation SB 766 (Negrete McLeod), Chapter 616, Statutes of 2009, authorized the CHRB to shift money around from various funds dedicated for specific purposes within horse racing that are in surplus, such as the promotions fund and workers' compensation fund, to others that are in deficit, such as the Vanning and Stabling account. AB 813 (Portantino), Chapter 19, Statutes of 2008, provided that, with respect to harness meetings, if there are funds unexpended in the horse racing promotion account, those funds may be expended for other purposes with the consent of the horsemen and the racing association to benefit the horsemen, or the racing association, or both, pursuant to their agreement. AB 2103 (Plescia), Chapter 443, Statutes of 2008, extended the sunset date, from January 1, 2009 to January 1, 2014, SB 732 Page 4 on a deduction from parimutuel wagering on thoroughbred horse racing in order to defray the costs of pay or workers' compensation insurance. SB 1805 (Florez), Chapter 883, Statutes of 2006, provided that any funds not used to defray the costs of workers' compensation insurance as described, may also be used to reimburse a racing association for actual costs of safety improvements to racing and training surfaces, health and safety programs, and research or safety equipment. AB 2931 (Horton), Chapter 922, Statutes of 2002, authorized racing associations to use existing industry funds (stabling and vanning and promotion funds) for use in developing a program to offset workers' compensation rates for horse trainers in the state. SB 27 (Maddy), Chapter 335, Statutes of 1998, among other things, granted major license fee relief ($40 million annually) and limited out-of-state full-card simulcasting. SB 28 (Maddy), Chapter 516, Statutes of 1998, provided that when satellite wagering is conducted on thoroughbred races at associations or fairs in the central or southern zone, an amount equal to 1.25 percent of the total amount handled by all of those satellite wagering facilities must be deducted from the take-out and distributed to the organization representing the racing associations and horsemen and women for the purpose of providing reimbursement for off-site stabling and vanning at board-approved auxiliary training facilities of licensed racing associations. This was intended to compensate for additional stalls beyond the number of usable stalls an association is required to provide under existing law. SB 1515 (Maddy), Chapter 53, Statutes of 1996, permitted any vanning and stabling reimbursement funds that are not expended during an association or fair horse racing meeting in which they are collected to be allocated to the organization representing racing fairs to offset its costs of maintaining the stalls contracted for by fairs. SB 1196 (Thompson), Chapter 80, Statutes of 1995, allowed SB 732 Page 5 fairs in the northern zone, subject to the availability of funds, to provide for the vanning of racehorses from any offsite stabling facility. SB 14 (Maddy), Chapter 1273, Statutes of 1987, expanded satellite wagering statewide, as specified. SB 1499 (Maddy), Chapter 1698, Statutes of 1984, implemented satellite wagering in the central and southern part of the state, and made conforming and technical changes in the northern part of the state. Background Over the years, racing has been raiding the Vanning and Stabling Fund to cover the costs of workers' compensation, amongst other things. Since 2002, upwards of $4 million annually has been deducted from the fund to help defray the cost of workers' compensation coverage for stable employees and jockeys of thoroughbred trainers. Furthermore, an additional $1 million from the Vanning and Stabling Fund has been diverted to the backstretch employees' welfare fund to provide various services and benefits to backstretch employees. The author's office notes that the Vanning and Stabling Fund exists to help horsemen and women defray the costs of having to transport and stable their races horses at auxiliary training facilities. This bill is intended to allow for greater flexibility in the use of the Vanning and Stabling Fund to help streamline operations in light of current financial constraints. The author's states that this bill provides racing associations the same flexibility currently available to racing fairs by deleting the requirement that they help pay for the vanning or transportation of a race horse from an offsite stabling facility to the racing venue. The author's office contends that this modification would allow racing associations to use the Fund's support where it will be most efficient. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/10/11) SB 732 Page 6 Thoroughbred Owners of California (source) ARGUMENTS IN SUPPORT : The Thoroughbred Owners of California (TOC), the sponsor of this bill, points out that "when a racing association conducts live racing, current law mandates that the Vanning and Stabling Fund provide for the subsidization of shipping a race horse(s) from an approved offsite stabling facility to the live racing venue; however, the law makes no such mandate when racing fairs are conducting live racing (e.g., it is left to the discretion of the Fund's management along with other business decisions)." The TOC states that "this bill would treat racing associations in the same manner as racing fairs by allowing the Vanning and Stabling Fund the same operational flexibility to allocate its funds to where they may be most efficient depending on horse inventory, vanning and stabling demands, and other operating requirements." PQ:kc 5/10/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****