BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1303| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1303 Author: Hall (D) Amended: As introduced Vote: 21 SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 6/11/13 AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa, De León, Galgiani, Hernandez, Lieu, Padilla SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 75-0, 5/9/13 (Consent) - See last page for vote SUBJECT : Horse racing SOURCE : Oak Tree Racing Association DIGEST : This bill 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. ANALYSIS : Existing law: 1.Provides that the California Horse Racing Board (CHRB) shall regulate the various forms of horse racing authorized in this state. CONTINUED AB 1303 Page 2 2.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. 3.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 (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. 4.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. 5.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. This bill 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. Background 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 CONTINUED AB 1303 Page 3 "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. 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, which promotes horse racing. This bill 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 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. Comments 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 CONTINUED AB 1303 Page 4 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 Internet Web site 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 and 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 2/13/14) Oak Tree Racing Association (source) California Authority of Racing Fairs ASSEMBLY FLOOR : 75-0, 5/9/13 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy MW:ej:n 2/13/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED AB 1303 Page 5 CONTINUED