BILL ANALYSIS Ó
AB 1423
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Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Hall III, Isadore, Chair
AB 1423 (Committee on Governmental Organization) - As
Introduced: March 21, 2013
SUBJECT : Horse racing: advance deposit wagering and exchange
wagering deductions.
SUMMARY : Corrects a provision in Horse Racing Law relating to
how retroactive distributions for harness racing are to be
distributed by the California Exposition and State Fair prior to
the reenactment of Advance Deposit Wagering in 2008. In
addition, the bill clarifies in law when the 10-year window
begins upon which the jockeys' organization will receive
specified funds for health and welfare benefits from the
implementation of Exchange Wagering in California.
Specifically, this bill :
1) Requires that specific amounts generated at harness race
meetings that are held in trust by the California Exposition and
State Fair to be distributed to the harness racing horsemen who
participated in a certain racing meeting, and to the California
Exposition and State Fair, in accordance with specified
percentages (split 50/50) and requirements.
2) Authorizes exchange wagering, as defined, by an entity
licensed by CHRB, in accordance with specified provisions of
law. Existing law, until January 1, 2021, on an annual basis,
requires a certain amount of exchange revenues collected by
exchange wagering licensees to be distributed to provide health
and welfare benefits to jockeys and their dependents. This bill
would instead repeal those provisions on January 1 following the
year in which the 10th annual distribution of those funds is
made.
3) Makes technical changes.
EXISTING LAW :
1) Provides that the California Horse Racing Board (CHRB)
regulates the various forms of horse racing authorized in this
state.
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2) Authorizes advance deposit wagering to be conducted, with
the approval of the CHRB, in accordance with specified
provisions of law.
3) Requires a certain percentage of the amounts distributed for
advance deposit wagering for racing meetings, except for harness
racing meetings, to be deducted and distributed for the
establishment and administration of a defined contribution
retirement plan for California-licensed jockeys who retire on or
after January 1, 2009, to supplement trainer-administered
pension plans for backstretch personnel, and for distribution to
a welfare fund established for horsemen and backstretch
personnel, as specified.
4) Requires a certain percentage of amounts distributed on
advance deposit wagers for harness racing meetings to be
deducted and distributed to a welfare fund established for the
benefit of horsemen and backstretch personnel, and for any
amounts remaining to be utilized for the benefit of horsemen
pursuant to a written agreement between the racing association
that conducts the live harness race meeting and the organization
representing the horsemen, as specified.
5) Mandates that until January 1, 2021, on an annual basis,
that a specific amount of exchange revenues collected by
exchange wagering licensees to be distributed to provide health
and welfare benefits to jockeys and their dependents.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of the bill : According to the author, this bill
corrects an oversight in previous legislation to provide that
specific monies generated at harness racing meetings which are
being held in trust by the California Exposition and State Fair
may be distributed in accordance with specified percentages to
the harness horsemen who ran horses at the 2012 race meeting and
to the Fair.
By requiring the distribution of the previously escrowed funds
this bill will result in immediate financial assistance to the
horsemen and horsewomen that participated in the prior race
meeting while also providing a benefit to Cal Expo, as the
former operator.
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AB 1423 is important to the welfare of the harness horsemen and
horsewomen and their families. Cal Expo is the only racetrack
in the state that conducts harness racing. This year the
California Exposition and State Fair entered into an agreement
with a private operator to continue the tradition of harness
racing at the facility. The industry is hopeful that the new
operator will be financially successful and secure the long
range future of the sport in California.
Additionally, this bill ensures that distributions from exchange
wagering revenues will continue for a period of ten years after
the implementation of exchange wagering to provide health and
welfare benefits to jockeys and their dependents, as intended in
previous legislation.
Background : SB 1072 (Ron Calderon), Chapter 283, Statutes of
2010, added Business and Professions Code section 19604.5 to
provide that the 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. 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/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 in November 2012 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
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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.
REGISTERED SUPPORT / OPPOSITION :
Support
California Exposition and State Fair
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531