BILL ANALYSIS �
SB 721
Page 1
Date of Hearing: August 7, 2013
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Hall III, Isadore, Chair
SB 721 (Padilla) - As Amended: August 5, 2013
SENATE VOTE : 37-0
SUBJECT : Horse racing
SUMMARY : Makes minor code maintenance changes to horse racing
law by repealing obsolete references to license fees for racing
meetings at fairs. In addition, broadens the definition of
"propositional wagering" to include wagers on propositions
approved by the California Horse Racing Board (CHRB) that are
based on the results of a live Thoroughbred horse race, instead
of just quarter horse or harness horse race or races in current
law.
EXISTING LAW :
1) Grants the CHRB the authority to regulate the various forms
of horse racing authorized in this state.
2) Authorizes any county or district agricultural association
fair conducting racing meetings for the first time on or after
January 1, 1979, to retain the applicable state license fee for
payment of a capital expense loan incurred for the purpose of
preparing its facilities for horse racing.
3) Provides the CHRB with the authority to allocate racing
weeks to an applicant pursuant to the provisions of the Horse
Racing Law and to specify such racing days, dates and hours for
horse racing meetings as will be in the public interest.
Existing law (Business & Professions Code Section 19531) also
provides that the CHRB shall make allocation for racing weeks,
including simultaneous racing between zones, as it deems
appropriate.
4) "Pari-mutuel wagering" as a form of wagering on the outcome
of horse races in which those who wager or purchase tickets of
various denominations on a horse or horses in one or more races.
When the outcome of the race or races is determined, the racing
association that is conducting the meet distributes the total
wagers comprising each pool, less the amounts retained for state
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license fees, owner purses, association commissions, breakage,
and breeder and stallion awards, to holders of winning tickets
on the winning horse or horses.
5) "Propositional pari-mutuel pool" as the total wagers on
propositions approved by CHRB that are based on the results of a
live harness or quarter horse race. The total wagers made in
the proposition pool are subject to the same license fee as
exotic wagers on a live harness or quarter horse race, and
commissions and purses shall be distributed in the amounts
mutually agreed upon by the association and the organization
representing the horsemen and women.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of SB 721: According to the author's office, some
sections of California law reference horse racing license fees
in conjunction with California fairs despite enactment of SB
16xx (Ashburn) of 2009. This measure would delete reference to
those license fees.
Additionally, the author's office notes that one of California's
premier horse racing tracks, Hollywood Park, is slated to close
after the 2013 racing season for residential and commercial
development. If the racetrack closes, legislation might be
required to reallocate Hollywood Park's race dates and relocate
horse training and stabling facilities. The author's office
states this bill could be used to address the necessary
statutory changes needed to codify the CHRB's 2014 race date
allocations for live horse racing in California.
In addition, supporters of the bill note that the definition of
propositional wagers in current law is restricted to harness or
quarter horse races only, and suggest that propositional
wagering opportunities should be available on Thoroughbred races
as well. Supporters note that in states where propositional
wagering is allowed, wagers are being accepted on Breeders' Cup
future wagers, where bettors have a prescribed period of time to
wager in advance on selected races with each race offering
150-200 choices. Patrons may also place proposition bets, such
as an over/under bet on how many races a designated jockey may
win on a specific racing day. Supporters also indicate that
propositional wagers are useful as a marketing tool to increase
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public awareness of a special event, such as the Breeders' Cup,
Kentucky Derby or any of the other Triple Crown races.
Background : Legalized 80 years ago in 1933, horse racing has a
rich and storied history in California. Today, horse racing in
California supports over 50,000 jobs and contributes over $2.5
billion to the state's economy.
Prior to the passage and enactment of SB 16xx (Ashburn) of 2009,
license fees assessed from the wagers made on horse racing were
deposited to the credit of the Fair and Exposition (F&E) Fund
which, in addition to providing general support for the annual
budget of the CHRB, supplemented the income of the State's
network of fairs. At that time, the law guaranteed the F&E Fund
would receive $40 million annually from license fees. SB 16xx
eliminated the license fee on wagers as a means of helping the
struggling horse racing industry. In addition, it deleted the
$40 million "guarantee" from law. This amount is, instead,
distributed to the racing associations and horsemen and
horsewomen. The bill also provided that the state funding for
the network of California fairs shall be a continuous
appropriation of $32 million annually from the General Fund.
The $32 million General Fund support for the network of
California fairs was eliminated in the 2011-2012 Budget due to
the state's growing fiscal problems.
Prior legislation : SB 16xx (Ashburn), Chapter 12, Statutes of
2009-10 Second Extraordinary Session. Among other things,
eliminated the $40 million floor on the amount the horse racing
industry is required to pay annually for support of the network
of California fairs, the CHRB, and the Kenneth L. Maddy Equine
Analytical Chemistry Laboratory at UC Davis. Other than the
supplemental 1% assessed against fair meets, it also eliminated
the license fee on horse racing wagers and provided that
beginning on July 1, 2009, and annually thereafter, $32 million
shall be appropriated from the state's General Fund and paid
into the F&E Fund for the financial support of the State's
network of fairs.
SB 1825 (Kelley) Chapter 342, Statutes of 2000. Provided that,
notwithstanding any other provision of law, if the total amount
paid to the state by racing associations and fairs pursuant to
the Horse Racing Law is less than $40 million in any calendar
year, beginning January 1, 2001, and thereafter, all
associations and fairs that conducted live racing during the
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year of shortfall shall remit to the state, on a pro rata basis
according to the amount handled in-state by each association or
fair, the amount necessary to bring the total amount paid to the
state to $40 million.
SB 27 (Maddy), Chapter 335, Statutes of 1998. Among other
things, granted major license fee relief ($40 million annually)
and limited out-of-state full-card simulcasting.
REGISTERED SUPPORT / OPPOSITION :
Support
Del Mar Thoroughbred Club
Oak Tree Racing Association
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531