Amended in Assembly September 6, 2013

Amended in Senate April 1, 2013

Senate Bill No. 398

Introduced by Senator Galgiani

February 20, 2013

An act to amend begin delete Section end delete begin insert Sections end insert 19556 begin insert and 19605.7 end insert of the Business and Professions Code, relating to horse racing.

LEGISLATIVE COUNSEL’S DIGEST

SB 398, as amended, Galgiani. Horse racing: begin delete charity days: end delete distribution of proceeds.

Existing law requires each licensed racing association to designate a certain number of racing days to be conducted as charity days, and requires the net proceeds from those charity days to be distributed to beneficiaries who meet certain qualifications. Existing law also requires distributions to be made to certain nonprofit corporations and organizations, and requires that at least 20% of the distributions go to charities associated with the horse racing industry.

This bill, in addition to those required distributions, would authorize a separate distribution to be made to a nonprofit corporation or trust that has as its sole purpose the support of recognized fairs or the network of California fairs.

begin insert

Existing law requires that the total percentage deducted from wagers at satellite wagering facilities in the northern zone be the same as deductions for wagers at the racetrack where the racing meeting is being conducted. Existing law, until December 31, 2013, requires a certain amount to be distributed to a specified organization formed to operate the audiovisual signal system, with the mutual consent of the racing association, the organization representing the horsemen participating in the meeting, and the board, and, beginning January 1, 2014, provides for a distribution for those purposes in accordance with a revised method of calculation.

end insert begin insert

This bill would extend those dates from December 31, 2013, to December 31, 2019, and from January 1, 2014, to January 1, 2020, respectively.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 19556 of the Business and Professions
Code is amended to read:

19556.  

(a) The distribution shall be made by the distributing
agent to beneficiaries qualified under this article. For purposes of
this article, a beneficiary shall be all of the following:

(1) A nonprofit corporation or organization entitled by law to
receive a distribution made by a distributing agent.

(2) Exempt or entitled to an exemption from taxes measured by
income imposed by this state and the United States.

(3) Engaged in charitable, benevolent, civic, religious,
educational, or veterans’ work similar to that of agencies
recognized by an organized community chest in the State of
California, except that the funds so distributed may be used by the
beneficiary for capital expenditures.

(4) Approved by the board.

(b) At least 20 percent of the distribution shall be made to
charities associated with the horse racing industry. In addition to
this 20 percent of the distribution, another 5 percent of the
distribution shall be paid to a welfare fund described in subdivision
(b) of Section 19641 and another 5 percent of the distribution shall
be paid to a nonprofit corporation, the primary purpose of which
is to assist horsemen, horsewomen, and backstretch personnel who
are being affected adversely as a result of alcohol or substance
abuse. No beneficiary otherwise qualified under this section to
receive charity day net proceeds shall be excluded on the basis
that the beneficiary provides charitable benefits to persons
connected with the care, training, and running of racehorses, except
that type of beneficiary shall make an accounting to the board
within one calendar year of the date of receipt of any distribution.

(c) (1) In addition to the distribution pursuant to subdivision
(b), a separate 20 percent of the distribution shall be made to a
nonprofit corporation or trust, the directors or trustees of which
shall serve without compensation except for reimbursement for
reasonable expenses, and which has as its sole purpose the
accumulation of endowment funds, the income on which shall be
distributed to qualified disabled jockeys.

(2) To receive a distribution under this subdivision, a corporation
or trust must establish objective qualifications for disabled jockeys,
and provide an annual accounting and report to the board on its
activities indicating compliance with the requirements of this
subdivision.

(3) The nonprofit corporation or trust shall, in an amount
proportional to the contributions received pursuant to this
subdivision as a percentage of the total contributions received by
the corporation or trust, give preference in assisting qualified
disabled jockeys to the following:

(A) Jockeys who were disabled while participating in the racing
or training of horses at licensed racing associations or approved
training facilities in California.

(B) Jockeys licensed by the board who were disabled while
participating in the racing or training of horses in a state other than
California.

(d) When the nonprofit corporation or trust described in
subdivision (c) has received distributions in an amount equal to
two million dollars ($2,000,000), the distribution mandated by
subdivision (c) shall cease.

(e) In addition to the distributions pursuant to subdivisions (b)
and (c), a separate distribution may be made to a nonprofit
corporation or trust that has as its sole purpose the support of
recognized fairs or the network of California fairs.

begin insert

begin insert SEC. end insert begin insert 2. end insert   

end insert

begin insert Section 19605.7 of the end insert begin insert Business and Professions Code end insert
begin insert is amended to read: end insert

19605.7.  

The total percentage deducted from wagers at satellite
wagering facilities in the northern zone shall be the same as the
deductions for wagers at the racetrack where the racing meeting
is being conducted and shall be distributed as set forth in this
section. Amounts deducted under this section shall be distributed
as follows:

(a) (1) For thoroughbred meetings, 1.3 percent of the amount
handled by the satellite wagering facility on conventional and
exotic wagers shall be distributed to the racing association for
payment to the state as a license fee, 2 percent shall be distributed
to the satellite wagering facility as a commission for the right to
do business, as a franchise, and this commission is not for the use
of any real property, 0.54 percent shall be deposited with the
official registering agency pursuant to subdivision (a) of Section
19617.2 and shall thereafter be distributed in accordance with
subdivisions (b), (c) and (d) of Section 19617.2, 0.033 percent
shall be distributed to the Center for Equine Health, and 0.067
percent shall be distributed to the California Animal Health and
Food Safety Laboratory, School of Veterinary Medicine, University
of California at Davis. It is the intent of the Legislature that the
0.033 percent of funds distributed to the Center for Equine Health
shall supplement, and not supplant, other funding sources.

(2) (A) In addition to the distributions specified in paragraph
(1), for thoroughbred meetings, an amount not to exceed 4 percent
of the amount handled by the satellite wagering facility on
conventional and exotic wagers shall be distributed to an
organization described in Section 19608.2 with the mutual consent
of the racing association, the organization representing the
horsemen participating in the meeting, and the board from January
1, 2010, until December 31, begin delete 2013 end delete begin insert 2019 end insert . However, the amount
shall be no less than that specified in subparagraph (B), and any
amount greater than the amount specified in subparagraph (B)
shall be approved by the board for no more than 12 months at a
time, and only upon a determination by the board that the greater
amount is in the economic interest of thoroughbred racing.

(B) Commencing January 1, begin delete 2014 end delete begin insert 2020 end insert , an amount not to exceed
the amount of actual operating expenses, as determined by the
board, or 2.5 percent of the amount handled by the satellite
wagering facility on conventional and exotic wagers, whichever
is less, shall be distributed to an organization described in Section
19608.2.

(C) A request to the board for a distribution pursuant to
subparagraph (A) shall be accompanied by a report detailing all
receipts and expenditures over the two prior fiscal years of the
funds affected by the request.

(D) The racing association whose request pursuant to
subparagraph (A) has been approved by the board shall provide
subsequent quarterly reports of receipts and expenditures of the
affected funds if requested by the board.

(b) For harness, quarter horse, Appaloosa, Arabian, or mixed
breed meetings, 0.4 percent of the amount handled by the satellite
wagering facility on conventional and exotic wagers shall be
distributed to the racing association for payment to the state as a
license fee, for fair meetings, 1 percent of the amount handled by
the satellite wagering facility on conventional and exotic wagers
shall be distributed to the fair association for payment to the state
as a license fee, 2 percent shall be distributed to the satellite
wagering facility as a commission for the right to do business, as
a franchise, and this commission is not for the use of any real
property, and 6 percent of the amount handled by the satellite
wagering facility or the amount of actual operating expenses, as
determined by the board, whichever is less, shall be distributed to
an organization described in Section 19608.2. In addition, in the
case of quarter horses, 0.4 percent shall be deposited with the
official registering agency pursuant to subdivision (b) of Section
19617.7 and shall thereafter be distributed in accordance with
subdivisions (c), (d), and (e) of Section 19617.7; in the case of
Appaloosas, 0.4 percent shall be deposited with the official
registering agency pursuant to subdivision (b) of Section 19617.9
and shall thereafter be distributed in accordance with subdivisions
(c), (d), and (e) of Section 19617.9; in the case of Arabians, 0.4
percent shall be held by the association to be deposited with the
official registering agency pursuant to Section 19617.8, and shall
thereafter be distributed in accordance with Section 19617.8; in
the case of standardbreds, 0.4 percent shall be distributed for the
California Standardbred Sires Stakes Program pursuant to Section
19619; in the case of thoroughbreds, 0.48 percent shall be deposited
with the official registering agency pursuant to subdivision (a) of
Section 19617.2 and shall thereafter be distributed in accordance
with subdivisions (b), (c), and (d) of Section 19617.2; 0.033 percent
shall be distributed to the Center for Equine Health; and 0.067
percent shall be distributed to the California Animal Health and
Food Safety Laboratory, School of Veterinary Medicine, University
of California at Davis. It is the intent of the Legislature that the
0.033 percent of funds distributed to the Center for Equine Health
shall supplement, and not supplant, other funding sources.

(c) In addition to the distributions specified in subdivisions (a)
and (b), for mixed breed meetings, 1 percent of the total amount
handled by each satellite wagering facility shall be distributed to
an organization described in Section 19608.2 for promotion of the
program at satellite wagering facilities. For harness meetings, 0.5
percent of the total amount handled by each satellite wagering
facility shall be distributed to an organization described in Section
19608.2 for the promotion of the program at satellite wagering
facilities, and 0.5 percent of the total amount handled by each
satellite wagering facility shall be distributed according to a written
agreement for each race meeting between the licensed racing
association and the organization representing the horsemen
participating in the meeting. If, with respect to harness meetings,
there are funds unexpended from this 1 percent, these funds may
be expended for other purposes with the consent of the horsemen
and the racing association to benefit the horsemen, or the racing
association, or both, pursuant to their agreement. For quarter horse
meetings, 0.5 percent of the total amount handled by each satellite
wagering facility on races run in California shall be distributed to
an organization described in Section 19608.2 for the promotion
of the program at satellite wagering facilities, 0.5 percent of the
total amount handled by each satellite wagering facility on
out-of-state and out-of-country imported races shall be distributed
to the official quarter horse registering agency for begin delete the end delete purposes of
Section 19617.75, and 0.5 percent of the total amount handled by
each satellite wagering facility on all races shall be distributed
according to a written agreement for each race meeting between
the licensed racing association and the organization representing
the horsemen participating in the meeting.

(d) Additionally, for thoroughbred, harness, quarter horse, mixed
breed, and fair meetings, 0.33 percent of the total amount handled
by each satellite wagering facility shall be paid to the city or county
in which the satellite wagering facility is located pursuant to
Section 19610.3 or 19610.4.

(e) Notwithstanding any other begin delete provision of end delete law, a racing
association is responsible for the payment of the state license fee
as required by this section.