BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 732|
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                                 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





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          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.  







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          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, 







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          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 







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          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)







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          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

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