BILL ANALYSIS Ó
AB 1074
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1074 (Atkins)
As Amended August 26, 2013
Majority vote
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|ASSEMBLY: |77-0 |(May 29, 2013) |SENATE: |37-0 |(September 3, |
| | | | | |2013) |
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Original Committee Reference: G.O.
SUMMARY : Extends the sunset date by one year for the statewide
marketing organization that is responsible for marketing and
promoting thoroughbred and fair horse racing and also makes
adjustments to existing Horse Racing Law to allow the California
Horse Racing Board (CHRB) to adjust racing dates in the central
and southern zones in order to address the scheduling issues
resulting from the impending closure of Hollywood Park
racetrack.
The Senate amendments :
1)Make conforming changes to specified provisions in order to
update cross references.
2)Delete obsolete provisions of existing Horse Racing Law.
3)Prohibit the allocation of racing dates to a thoroughbred
association in the central zone for the purpose of conducting
racing if a thoroughbred racing association is conducting
racing in the southern zone on the same date during daytime
hours.
4)Provide from the weeks available in the combined central and
southern zones, the CHRB may allocate a maximum of five weeks
per year to a thoroughbred racing association to conduct
thoroughbred racing at a racetrack in the southern zone that
was not used to conduct a thoroughbred race meeting in the
southern zone prior to 2012.
EXISTING LAW :
1)Provides that the California Horse Racing Board (CHRB)
regulates the various forms of horse racing authorized in this
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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
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.
AS PASSED BY THE ASSEMBLY , this bill extended 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.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : This bill, as amended in the Senate is consistent
with Assembly actions.
Purpose of the bill : According to the author, SB 27 (Maddy),
Chapter 335, Statutes of 1998, among its provision, created a
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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 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
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%
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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
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.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0001961