BILL ANALYSIS Ó
AB 1423
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1423 (Committee on Governmental Organization) - As
Introduced: March 21, 2013
Policy Committee: Governmental
Organization Vote: 16 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill:
1)Removes the January 1, 2021 sunset date for the distribution
of the revenue collected through exchange wagering and instead
sunsets the provisions after the 10th annual distribution of
those funds.
2)Specifies that funds generated at harness race meetings that
are held in trust by the California Exposition and State Fair
(Cal Expo) be distributed in the following manner: 50% to the
harness racing horsemen who participated in the meeting
concluding June 16, 2012, and 50% to Cal Expo.
FISCAL EFFECT
1)Cal Expo is holding approximately $151,000 in trust that
should have been distributed through purses and commissions.
Absent this legislation, that funding will remain in trust.
2)Any local government costs resulting from the mandate in this
measure would not be state-reimbursable because the mandate
only involves the definition of a crime or penalty for
conviction of a crime.
COMMENTS
1)Rationale . According to the Committee on Governmental
Organization, this bill corrects an oversight in previous
legislation to provide that specific money generated at
AB 1423
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harness racing meetings which are being held in trust by Cal
Expo may be distributed in accordance with specified
percentages to the harness horsemen who ran horses at the 2012
race meeting and to the Cal Expo.
The funds are currently being held in escrow because the
defined distribution from Advance Deposit Wagering (ADW)
wagers on harness races requires the money be paid to an
organization that does not have any association with
California's harness industry. The original ADW statute
called for the distribution to be made to the Jockeys' Guild
Welfare Fund even though harness drivers are not a beneficiary
of that fund. This bill corrects this distribution error by
mandating that the monies stay within the harness racing
industry and are split 50/50 between purses and commissions.
The author contends that 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.
Additionally, this bill ensures that distributions from
exchange wagering revenues will continue for a period of 10
years after the implementation of exchange wagering to provide
health and welfare benefits to jockeys and their dependents,
as intended in previous legislation.
2)Exchange Wagering . SB 1072 (Ron Calderon), Chapter 283,
Statutes of 2010, required the California Horse Racing Board
(CHRB) 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 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. 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.
AB 1423
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To date, exchange wagering has not been implemented 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.
3)Related Legislation . Currently, AB 432 (V.M. Perez) requires
any racing association or racing fair receiving distributions
from any exchange provider's exchange revenues to distribute a
portion of that revenue to the official registering agency.
That bill is currently pending before this committee.
SB 1072 (Ron Calderon), Chapter 283, Statutes of 2010,
authorized the California Horse Racing Board (CHRB) to license
entities to operate exchange wagering systems that accept
exchange wagers from individuals residing either within or
outside of this state on horse races run in California or
other states. The bill stated that exchange wagering shall not
become operative until May 1, 2012.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081