BILL ANALYSIS Ó
Bill No: AB
1303
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2013-2014 Regular Session
Staff Analysis
AB 1303 Author: Hall
As Introduced: February 22, 2013
Hearing Date: June 11, 2013
Consultant: Art Terzakis
SUBJECT
Horse Racing
DESCRIPTION
AB 1303 adds a new section to California Horse Racing Law
that requires each racing association or fair to inform
patrons, through the official program, of the takeout being
applied to the handle for the racing meeting.
EXISTING LAW
Existing law provides that the California Horse Racing
Board (CHRB) shall regulate the various forms of horse
racing authorized in this state.
Existing law provides that "pari-mutuel wagering" is a form
of wagering in which bettors either purchase tickets of
various denominations, or issue wagering instructions
leading to the placement of wagers, on the outcome of one
or more horse races. When the outcome of the race or races
has been declared official, the association distributes the
total wagers comprising each pool, less the amounts
retained for purposes specified, to winning bettors.
Existing law requires racing associations to pay out
certain percentages of the total amount wagered and of the
portion deducted from the pari-mutuel pool (the takeout),
for regulation, owner purses, racing association
commissions, and breeding incentive programs. The amounts
vary depending upon the type of breed bet upon
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(Thoroughbred, Quarter Horse, harness, etc.), the type of
bet made (e.g., conventional or exotic), and whether the
wager was made on-track or at a satellite wagering
facility.
Existing law provides that a thoroughbred association or
fair, subject to approval by the CHRB, may deduct from the
total amount handled in the pari-mutuel pool for any type
of wager, an amount of not less than 10% nor more than 25%
at the joint request of the thoroughbred association or
fair and the horsemen's organization for the meeting of the
thoroughbred association or fair accepting the wager.
Existing law permits the CHRB to set the deduction for any
new type of wager introduced after January 1, 2004, in an
amount of not less than 10% nor more than 30% at the joint
request of an association or fair and the horsemen's
organization.
BACKGROUND
Horse Racing Takeout: The horse racing takeout amount is a
percentage deducted from all of the wagers before the
winnings are paid out to bettors. These takeout rates vary
among states. California's current rate is 15.95% for
conventional thoroughbred wagers (win, place, and show
wagers) and 22.68% to 23.68% for exotic thoroughbred wagers
(Exacta, Trifecta, and Pick-6). The money from the takeout
is used for such things as owner purses, racing association
commissions, and breeding incentive programs. In addition,
various funds receive money from the takeout to meet
specific needs of the industry. For example, funds have
been set up for offsite stabling and transporting horses on
race day, to offset the costs of workers compensation, to
establish pension plans and provide a welfare fund for
backstretch personnel, and to fund the California Marketing
Committee (CMC), which promotes horse racing.
Purpose of AB 1303 : This measure requires the publication
of the takeout for every race and every type of bet. Each
racing day, racetracks sell copies of their official racing
program, detailing relevant information about each race
(e.g., ages of horses, names of jockeys, trainers). Racing
fans use the program when placing their bets so they can be
sure that they are wagering on a specific horse in a
designated race either in California or other racing
jurisdictions. While making the wagering, different takeout
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rates apply on California races versus those being
contested in other states and countries. Many racing fans
are unaware of the take-out rates for their favorite
racetrack.
According to the author's office, at one time, takeout
rates used to be included in past performances but that is
not necessarily the case anymore with the influx of
intra-state and out-of-state simulcasting added to the
daily wagering menu. The author's office believes that
when the Breeders' Cup is run, those wagering in California
should know what takeout rates are being applied on the
day's races. It has been reported that some racing fans
have been under the impression that the takeout rates were
the same as the host track while others believed the
Breeders' Cup set its own. The author's office is of the
opinion that takeout rates should be available on the
website of every racetrack and in the programs sold at
racetracks and satellite wagering facilities. Furthermore,
the author's office references the New York State Racing &
Wagering Board which requires its racetracks to publish
their takeout rates with a web link to their current
statutory takeout sections of law. The author's office
emphasizes that racing's patrons drive the pari-mutuel
market and their response to an advertised takeout on any
type of wager might induce the ultimate rate of takeout
which might not only increase daily wagering handle but
lead to a stronger and healthier industry.
Pari-Mutuel Wagering : Means a mutuel wager or "betting
among ourselves." All the money that is wagered worldwide
on a particular race and bet is put into a separate
electronic pool. The race track where the race is being
conducted is merely a broker for the transaction and
deducts a fixed commission or "takeout" from that pool.
The takeout is retained by the track and a percentage of it
becomes "purse money," the money for which the horses
compete. The racetrack has no fiscal interest in the
actual "official" order finish of a race. The track's
share (the takeout) remains the same no matter who wins a
particular race.
PRIOR/RELATED LEGISLATION
SB 1072 (Calderon), Chapter 283, Statutes of 2010. Among
other things, required Thoroughbred racing associations and
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fairs to deduct (takeout) an additional amount of the total
handle on exotic wagering (exacta, trifecta, and
superfecta) for purse augmentation.
SB 517 (Florez), Chapter 636, Statutes of 2009. Allowed a
Thoroughbred association or fair, subject to CHRB approval,
to alter the amount deducted from horse racing wagering.
AB 1308 (Torrico), Chapter 410, Statutes of 2007.
Authorized a Thoroughbred association or fair and the
horsemen's organization, subject to approval by CHRB, to
deduct an amount of not less than 10% nor more than 25%
from the pari-mutuel pool for any type of wager.
AB 2869 (Horton), Chapter 924, Statutes of 2002. Granted
the CHRB the authority to permit a racing association and
the organization representing horsemen to reduce the
portion deducted from the pari-mutuel pool for purses and
commissions, provided that the change only affected funds
available for purses and commissions.
AB 388 (Strickland), Chapter 174, Statutes of 2003.
Authorized the CHRB to set the deduction for any new type
of wager introduced after January 1, 2004, in an amount of
not less than 10% nor more than 30% at the joint request of
an association or fair and the horsemen's organization.
SUPPORT: None on file as of June 7, 2013.
OPPOSE: None on file as of June 7, 2013.
FISCAL COMMITTEE: Senate Appropriations Committee
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