BILL ANALYSIS Ó
AB 432
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 432 (V. Manuel Pérez)
As Amended June 19, 2013
Majority vote
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|ASSEMBLY: |73-0 |(May 20, 2013) |SENATE: |38-0 |(August 15, |
| | | | | |2013) |
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Original Committee Reference: G.O.
SUMMARY : Requires any racing association or racing fair
receiving distributions from any exchange wagering agreement to
distribute a specified portion of that revenue to the official
registering agency, as defined. The bill requires the official
registering agency to distribute those revenues in a specified
manner.
The Senate amendments clarify the procedure for distributing
exchange wagering revenues to each official registering agency,
if such wagering is conducted by a racing association or fair.
AS PASSED BY THE ASSEMBLY , this bill required any racing
association or racing fair receiving distributions from any
exchange provider's exchange revenues to distribute a portion of
that revenue to the official registering agency. This bill, as
amended in the Senate is consistent with Assembly actions.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
Purpose of the bill : According to the author, when exchange
wagering was authorized by the Legislature in 2010, the enabling
legislation lacked clarity pertaining to the allotment of
exchange wagering revenues for California's Thoroughbred
breeders. The author contends this bill simply clarifies that
if exchange wagering is implemented in the state, California
Thoroughbred breeders will not see a reduction in breeder, owner
and stallion owner incentives. The intent of the bill is to
ensure that each official registering agency for a specific
breed of horse receives the same type of proportion distribution
as retained for other types of wagers in current law (on-track,
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simulcasting, and advance deposit wagering).
Background : SB 1072 (Ron Calderon), Chapter 283, Statutes of
2010, added Business and Professions Code Section 19604.5 to
provide that the California Horse Racing Board (CHRB) shall
prescribe rules, regulations, and conditions under which
exchange wagering may be conducted in California. Exchange
wagering is a relatively new form of wagering which was
introduced in the United Kingdom in 2000. Exchange wagering
account holders may buy, sell, or "back" and "lay" the outcome
of horse races in a manner much like day trading on the stock
exchange. The statute defines exchange wagering as a form of
pari-mutuel wagering in which two or more persons place
identically opposing wagers in a given market. Out-of-state
residents, who live in states that allow wagering on California
races, are also allowed to participate in exchange wagering.
After a lengthy rule-making process and review, in November
2012, the CHRB unanimously approved 25 rules regulating the
activity while also granting provisional licenses to operators
Betfair and Churchill Downs Incorporated.
Exchange wagering can only commence after a California racetrack
and the horsemen's organization at that racetrack reach an
agreement with one or more exchange wagering companies and the
agreement and/or operating plan is approved by the CHRB.
Status of exchange wagering in California : In March 2013, the
state's Office of Administrative Law (OAL) notified the CHRB
that they disapproved the proposed exchange wagering regulations
for failure to comply with specified standards and procedures of
the California Administrative Procedure Act (APA). The rejected
provisions were approved earlier this year by the CHRB. The
CHRB has stated that this will delay the implementation of
exchange wagering in California for several months. The OAL
cited problems with the manner in which the CHRB would assess
its licensing fee to conduct exchange wagering. OAL also cited
instances in the regulations that did not to comply with
government rule-making standards for clarity, consistency, and
administrative procedures. Rules for exchange wagering cannot
go into effect until approved by the OAL and sent to the
Secretary of State's Office for final consideration.
Prior legislation : SB 1072 (Ron Calderon), Chapter 283,
Statutes of 2010, authorized the CHRB to license entities to
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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. The bill stated that exchange wagering shall not become
operative until May 1, 2012.
AB 765 (Evans), Chapter 613, Statutes of 2007, reauthorized
horse racing's Advance Deposit Wagering (ADW) law, which was set
to "sunset" on January 1, 2008, as specified.
AB 471 (Hertzberg), Chapter 198, Statutes of 2001, allowed
customers to deposit funds into an account in order to wager
online and over the telephone (ADW). ADW wagers are commingled
into pools at the host track where the races are run, and within
the pari-mutuel wagering system regulated by CHRB. The bill
established a process for the distribution of the revenue
received from ADW to mirror existing distributions for track
commissions, owner purses, and breeder incentive awards.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0001286