BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1423|
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THIRD READING
Bill No: AB 1423
Author: Assembly Governmental Organization Committee
Amended: As introduced
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 6/25/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De León, Galgiani, Hernandez, Lieu, Padilla
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/12/13
AYES: De León, Gaines, Hill, Lara, Steinberg
NO VOTE RECORDED: Walters, Padilla
ASSEMBLY FLOOR : 77-0, 5/29/13 - See last page for vote
SUBJECT : Horse racing: advance deposit wagering and
exchange wagering deductions
SOURCE : Author
DIGEST : This bill corrects an oversight in existing Horse
Racing Law governing the distribution of funds from advanced
deposit wagering for harness racing by the California Exposition
and State Fair (Cal Expo) and adds clarity with respect to the
timeframe for distribution of exchange wagering revenues that
provide health and welfare benefits to jockeys and their
dependents.
ANALYSIS :
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Existing law:
1. Provides, under the Horse Racing Law, that the California
Horse Racing Board (CHRB) shall regulate the various forms of
horse racing authorized in this state and authorizes advance
deposit wagering to be conducted, with the approval of the
CHRB, in accordance with specified provisions of law.
2. 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.
3. 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.
4. Directs the CHRB to promulgate rules and regulations
governing the conditions under which exchange wagering may be
conducted and allows exchange wagers to be submitted and
accepted by licensed exchange wagering systems in the same
manner as is currently provided for under Advanced Deposit
Wagering (ADW) Law. The law provides that no exchange
wagering licensee may accept wagers prior to May 1, 2012 and
defines "exchange wagering" as a form of parimutuel wagering
in which two or more persons place identically opposing
wagers in a given market. In addition, existing law, until
January 1, 2021, on an annual basis, requires that a specific
amount of exchange wagering revenues, collected by exchange
wagering licensees, be distributed to provide health and
welfare benefits to jockeys and their dependents.
This bill corrects an oversight in existing Horse Racing Law
governing the distribution of funds from advanced deposit
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wagering for harness racing by Cal Expo and adds clarity with
respect to the time frame for distribution of exchange wagering
revenues that provide health and welfare benefits to jockeys and
their dependents. Specifically, this bill:
1. Specifies that funds generated that were deducted from
amounts handled on advance deposit wagering at harness race
meetings that are held in trust by Cal Expo shall be
distributed in the following manner: 50% to the harness
racing horsemen who participated in the meeting concluding
June 16, 2012, in the form of purses, and 50% to Cal Expo, in
the form of commissions.
2. Deletes the January 1, 2021 sunset date for the distribution
of the revenue collected through exchange wagering for health
and welfare benefits to jockeys and instead sunsets the
provisions after the 10th annual distribution of those funds.
3. Makes minor technical and code maintenance changes.
Background
Cal Expo is the only racetrack in the state that conducts
harness racing. This year Cal Expo 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.
"Exchange wagering" is a form of gambling in which two or more
persons place directly opposing wagers on the outcome of horse
races and "sporting events." Typically, exchange wagering
allows a better to "back" or wager on a selected horse to win,
with another bettor "laying" or wagering on that same horse not
to win. A back and a lay become matched when a bettor lays at
the same price at which another bettor backs that same outcome,
with the amount subject to the lay being proportionately
commensurate to the amount subject to the back. Exchange
wagering allows the bettor to name his/her own odds in the hopes
of luring a match. While the potential for positive industry
effects is present with exchange wagering, so too is the
prospect for disaster. Some within the industry believe that
exchange wagering may cannibalize traditional parimutuel
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wagering and actually leave less money in the system for those
responsible for putting on the show (e.g., owners, breeders and
racetracks), thus placing the future of horse racing in
jeopardy.
Existing law requires the CHRB to promulgate administrative
rules and regulations to effectuate exchange wagering. At its
November 2012 regular meeting the CHRB adopted the proposed
addition of Article 27 (Exchange Wagering), which comprises 25
regulations governing the conduct of exchange wagering in
California. The exchange wagering rulemaking file was submitted
to the Office of Administrative Law (OAL) on January 31, 2013.
Two months later (March 31, 2013) OAL disapproved the file. Of
the 25 regulations submitted, the OAL cited necessity, clarity
or consistency issues with eight regulations, as well as certain
procedures of the Administrative Procedures Act. The CHRB has
120 days from the date of the disapproval to correct and
resubmit the rulemaking file.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee, distribution
of approximately $150,000 as follows: 50% to specified horsemen
and 50% to Cal Expo (Trust Fund).
SUPPORT : (Verified 8/14/13)
California Exposition and State Fair
Golden Bear Racing
Jockeys' Guild
ARGUMENTS IN SUPPORT : According to the author's office, this
bill is intended to correct an oversight in previous
legislation. Specifically, it provides that money generated at
harness racing meetings which are being held in trust by Cal
Expo must be distributed in accordance with specified
percentages to the harness horsemen who ran horses at the 2012
race meeting and to Cal Expo. The funds are currently being
held in escrow because the defined distribution from 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
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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 be split 50/50
between purses and commissions. By requiring the distribution
of the previously escrowed funds, this bill is expected to
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 is intended to ensure 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.
ASSEMBLY FLOOR : 77-0, 5/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Chau, Chávez, Chesbro, Conway, Cooley,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,
Jones-Sawyer, Levine, Linder, Logue, 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, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Campos, Holden, Vacancy
MW:k 8/14/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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