BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2765|
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CONSENT
Bill No: AB 2765
Author: Assembly Governmental Organization Committee
Amended: 6/5/14 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 8-0, 6/10/14
AYES: Correa, Cannella, De León, Galgiani, Hernandez, Padilla,
Torres, Vidak
NO VOTE RECORDED: Berryhill, Lieu, Vacancy
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 78-0, 5/15/14 (Consent) - See last page for
vote
SUBJECT : Horse racing: marketing organization
SOURCE : Author
DIGEST : This bill makes substantive, technical and clarifying
changes to California Horse Racing Law.
ANALYSIS :
Existing law:
1.Stipulates that the Legislature may provide for the regulation
of horse races and horse race meetings and wagering on the
results. Existing Horse Racing Law requires the California
Horse Racing Board (CHRB) to regulate the various forms of
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horse racing authorized in this state.
2.Authorizes, until January 1, 2015, thoroughbred racing
associations, fairs, and the organization responsible for
contracting with thoroughbred racing associations and fairs
with respect to the conduct of racing meetings, to form a
private, statewide marketing organization to market and
promote thoroughbred and fair horse racing. Requires, if a
marketing organization is formed, an amount not to exceed
0.25% of the total amount handled by each satellite wagering
facility to be distributed to the marketing organization, and
imposes certain requirements on the marketing organization,
including that the marketing organization annually submit
certain information to CHRB.
3.Provides that the marketing organization shall consist of the
following six members: two members, one from the northern
zone and one from the combined central and southern zones,
appointed by the thoroughbred racetracks; two members, one
from the northern zone and one from the combined central and
southern zones, appointed by the owners' organization
responsible for contracting with associations and fairs with
respect to the conduct of racing meetings; and two members,
one from the northern zone and one from the combined central
and southern zones, appointed by the organization representing
racing and satellite fairs.
This bill makes the following substantive, clarifying and
technical changes to California Horse Racing Law:
1.Extends the sunset date by four years (from January 1, 2015 to
January 1, 2019) for the statewide marketing organization that
is responsible for marketing and promoting thoroughbred and
fair horse racing.
2.Clarifies that the marketing organization may utilize outside
consultants with horse racing or other related experience,
including experience in other gaming enterprises for purposes
of developing the annual marketing plan.
3.Changes the date for submission of the marketing
organization's annual written report to CHRB from November 1
to October 1 of each year.
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4.Makes minor code maintenance changes.
Background
The author's office references the fact that SB 27 (Maddy,
Chapter 335, Statutes of 1998) among other things, created a
private statewide marketing organization for thoroughbred and
fair racing to be funded by 0.4% of the in-state off-track
handle. The funds generated from this distribution are used to
market California horse racing on a statewide basis. The
California Marketing Committee (CMC) is generally responsible
for promoting horse racing in the state by developing and
implementing a marketing plan that will increase on-track and
off-track attendance throughout the state. An underlying
assumption of CMC's Marketing Plan over the years has been that
it is far easier to capture a new fan through an on-track
experience than through an off-track visitation to a satellite
wagering facility.
Marketing horse racing in California . In 2003, CMC received
approximately $6.1 million to support its marketing efforts but
due to handle declines it has been reduced to approximately $1.8
million in 2013. Existing law provides that CMC must annually
submit to CHRB a statewide marketing and promotion plan for
thoroughbred and fair horse racing that encompasses all
geographical zones in the state, including the manner in which
funds were expended in the implementation of the plan for the
previous calendar year. CMC's 2013 budget included expenditures
relating to product enhancement, significant player program,
satellite marketing, Cal racing Web site, and administration.
Status of the horse racing industry in California . The
industry's long-term health is threatened by a combination of
factors, including competition from racing in other states,
other forms of gaming within California, racetrack bankruptcies
and the potential for a higher return from development of
existing venues rather than operating revenues. As resources
shrink, the industry is experiencing deficits in virtually every
revenue source category and traditional takeout, allocation and
distribution formulas are no longer able to sustain ongoing
operations. As the value of racing operations declines, track
ownership is struggling to maximize shareholders' return on the
investment and confront the temptation for alternative uses of
the property that may yield higher returns. Consequently, the
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racing industry is suffering unprecedented instability and
capital flight. Tens of thousands of industry jobs might be in
jeopardy, along with breeding farms and precious open space in
urban centers throughout California. Also at risk is a
substantial amount of local and state revenue generated both
directly and indirectly by the industry.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 6/24/14)
Del Mar Thoroughbred Club
Oak Tree Racing Association
ARGUMENTS IN SUPPORT : According to the author's office, this
bill allows CMC to utilize outside consultants with horse racing
or other related experience, including involvement with other
gaming enterprises while developing its annual marketing plan.
The author's office believes that CMC should be allowed to
access the knowledge of consultants who have experience in
quantitative marketing research in other gaming related
businesses. The goal of this bill is to give CMC the tools to
gain fresh perspectives and new ideas to generate a
comprehensive marketing plan which will expand California's
horse racing industry into new demographics and markets.
In addition, this bill changes the date for submission of CMC's
annual expenditure report to CHRB from November 1 to October 1.
This modification is intended to provide CHRB staff with more
time to review the annual expenditure plan prior to the CMC's
oral presentation to CHRB before the start of the New Year.
ASSEMBLY FLOOR : 78-0, 5/15/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
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Nestande, Olsen, Pan, Patterson, Perea, John A. Pérez, V.
Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Mansoor, Vacancy
MW:nl 6/24/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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