BILL ANALYSIS Ó
AB 1074
Page 1
ASSEMBLY THIRD READING
AB 1074 (Atkins)
As Amended May 24, 2013
Majority vote
GOVERNMENTAL ORGANIZATION 16-0APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Hall, Nestande, Bigelow, |Ayes:|Gatto, Harkey, Bigelow, |
| |Chesbro, Cooley, Gray, | |Bocanegra, Bradford, Ian |
| |Hagman, | |Calderon, Campos, |
| |Roger Hernández, Jones, | |Donnelly, Eggman, Gomez, |
| |Jones-Sawyer, Levine, | |Hall, Ammiano, Linder, |
| |Medina, Perea, V. Manuel | |Pan, Quirk, Wagner, Weber |
| |Pérez, Salas, Waldron | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
SUMMARY : Extends the operation of the California Marketing
Committee (CMC) and its related funding from July 1, 2014, to
January 1, 2019. Current law authorizes thoroughbred racing
associations, fairs, and the organization responsible for
contracting with thoroughbred racing associations and fairs with
respect to the conduct of racing meetings, to form a private,
statewide marketing organization (CMC) to market and promote
thoroughbred and fair horse racing.
EXISTING LAW :
1)Provides that the California Horse Racing Board (CHRB)
regulates the various forms of horse racing authorized in this
state.
2)Authorizes until January 1, 2014, thoroughbred racing
associations, fairs, and the organization responsible for
contracting with thoroughbred racing associations and fairs
with respect to the conduct of racing meetings, to form a
private, statewide marketing organization to market and
promote thoroughbred and fair horse racing.
3)Requires an amount not to exceed 0.25% of the total amount
handled by each satellite wagering facility to be distributed
to the marketing organization, and imposes certain
requirements on the marketing organization, including that the
AB 1074
Page 2
marketing organization annually submit certain information to
the CHRB.
4)Provides that the organization shall consist of the following
members: two members, one from the northern zone and one from
the combined central and southern zones, appointed by the
thoroughbred racetracks; two members, one from the northern
zone and one from the combined central and southern zones,
appointed by the owners' organization responsible for
contracting with associations and fairs with respect to the
conduct of racing meetings; and two members, one from the
northern zone and one from the combined central and southern
zones, appointed by the organization representing racing and
satellite fairs.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, funding for the CMC comes from the in-state off-track
wagering handle. Of the amount wagered, .4% is provided to the
CMC for marketing horse racing in the state. In 2013, the CMC
will receive approximately $1.8 million for marketing.
Eliminating the sunset would result in continuing the annual
redirection of the handle.
COMMENTS :
Purpose of the bill : According to the author, SB 27 (Maddy),
Chapter 335, Statutes of 1998, among its provision, created a
private statewide marketing organization for thoroughbred and
fair racing that is funded by a percentage of the intra-state
off-track handle. The funds generated from this distribution
are used to market California horse racing on a statewide basis.
The California Marketing Committee (CMC) is generally
responsible for promoting horse racing in the state by
developing and implementing a marketing plan that will increase
on-track and off-track attendance in California.
An underlying assumption of the CMC's Marketing Plan over the
years has been that it is far easier to capture a new fan
through an on-track experience than through an off-track
visitation to a satellite wagering facility.
The author states that this bill will allow the CMC to establish
a long-term marketing plan to promote horse racing in the state.
Past and current legislative sunsets have been somewhat of a
AB 1074
Page 3
hindrance to the CMC because long-term financial commitments
could not be made to support programs which were proven to be
successful in attracting new fans to the sport. In addition,
the CMC will still be required to annually present to the CHRB
at the board's November meeting a verbal report on the statewide
marketing and promotion plan for the upcoming calendar year.
Supporters note that there is enough history and documentation
on the books to extend the legislative sunset from 2014 to 2019.
The CMC through attrition has shown that they are able to make
fiscally responsible business decisions to market and promote
California's racing industry.
Marketing horse racing in California : In 2003, the CMC received
approximately $6.1 million to support its marketing efforts but
due to handle declines it has been reduced to approximately $1.8
million in 2013. Current law provides that the CMC must
annually submit to the CHRB a statewide marketing and promotion
plan for thoroughbred and fair horse racing that encompasses all
geographical zones in the state, including the manner in which
funds were expended in the implementation of the plan for the
previous calendar year.
The 2013 CMC budget includes new categories and eliminated
others that were part of the 2012 budget. The areas of focus
for the upcoming year are "handle generation" and "product
enhancement." The new categories of expenditures in the 2013
budget are the "pick six promotions" and "racing information."
CMC plans to increase its "significant player program" by 29%
and "product enhancement" by 9%. CMC eliminated from the 2013
budget the "branding and new media category." CMC also plans to
reduce "satellite marketing" by 33% and "mini-satellite support"
by 76%. However, administration cost of the CMC did not change.
Deteriorating Status of the Horse Racing Industry in California :
The California horse racing industry's long-term health is
threatened by a combination of factors, including competition
from racing in other states, other forms of gaming within
California, racetrack bankruptcies and the potential for higher
return from development than operating revenues. As resources
shrink, the industry is experiencing deficits in virtually every
one of its revenue sources. Traditional takeout, allocation and
distribution formulas are no longer able to sustain ongoing
operations. As the value of racing operations declines, track
AB 1074
Page 4
ownership is struggling to maximize shareholders' return on the
investment and tempted by alternative uses of the property that
yield higher returns. Consequently, the racing industry is
suffering unprecedented instability and capital flight. Tens of
thousands of industry jobs might be in jeopardy, along with
breeding farms and precious open space in urban centers
throughout California. Also at risk is a substantial amount of
local and state revenue generated both directly and indirectly
by the industry.
Prior legislation : SB 1072 (Ron Calderon), Chapter 283,
Statutes of 2010. Among its provisions, extended the sunset
date from January 1, 2011, to January 1, 2014, in existing law
relating to a private statewide marketing organization to market
and promote thoroughbred and fair horse racing in California, as
defined.
SB 766 (Negrete McLeod), Chapter 616, Statutes of 2009. Allows
uncommitted surplus funds in the CMC Fund or the horse racing
Workers' Compensation Fund, to be reallocated to any other fund
or account created pursuant to the Horse Racing Law.
AB 1736 (Governmental Organization Committee), Chapter 444,
Statutes of 2007. Extends "sunset" provisions in current law
relating to the marketing of the California Horse Racing
Industry.
SB 103 (Maddy), Chapter 10, Statutes of 1998. Requires any
association, including fairs that conducts thoroughbred racing
to pay to the owners' organization contracting with the
association an additional percentage for a national marketing
program, as specified, to promote thoroughbred racing unless the
owners' organization chooses not to contribute to the program.
The bill sunsets January 1, 2004.
SB 27 (Maddy), Chapter 335, Statutes of 1998, Among its
provision, created a private statewide marketing organization
for thoroughbred and fair racing that is funded by .4% of the
instate off-track handle. The funds generated from this
distribution are used to market California horse racing on a
statewide basis. CMC is generally responsible for promoting
horse racing in the state by developing and implementing a
marketing plan that will increase on-track and off-track
attendance throughout the state.
AB 1074
Page 5
AB 1418 (Tucker), Chapter 311, Statutes of 1994. Among various
provisions, stated that cash vouchers that are not redeemed
within 365 days of the close of the racing meeting at which the
voucher was purchased shall be distributed to a nonprofit
organization designated by the board for purposes of maintaining
a data base of horseracing information, as defined.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0000947