Amended in Assembly February 25, 2014

Amended in Assembly February 4, 2014

Amended in Senate May 29, 2013

Amended in Senate May 28, 2013

Amended in Senate May 15, 2013

Amended in Senate May 7, 2013

Amended in Senate April 23, 2013

Amended in Senate April 15, 2013

Senate Bill No. 777

Introduced by Senator Hernandez

(Coauthors: Senators Calderon, Cannella, Correa, Evans, Galgiani, Hancock, and Vidak)

(Coauthor: Assembly Member Chesbro)

February 22, 2013

An act to amend Section 19605.75 of, and to add Sections 19605.76, 19605.77, and 19605.78 to, the Business and Professions Code, relating to horse racing begin insert , and declaring the urgency thereof, to take effect immediately end insert .

LEGISLATIVE COUNSEL’S DIGEST

SB 777, as amended, Hernandez. Horse racing: workers’ compensation.

Until January 1, 2014, the provisions of the Horse Racing Law required a thoroughbred racing association and fair that conducts a racing meeting to deduct a percentage of the total amount handled in exotic parimutuel pools of thoroughbred racing, to be distributed to a specified organization for the purpose of defraying costs of workers’ compensation insurance in connection with thoroughbred horse racing. Until January 1, 2014, provisions of the Horse Racing Law authorized similar deductions from the total amount handled for races for quarter horses and other breeds, and for harness races, to be distributed to specified organizations for defraying workers’ compensation for trainers and owners in connection with those races.

This bill would reestablish those provisions requiring the deduction specified above to be made by a thoroughbred racing association, and would reestablish those provisions authorizing the deductions to be made for races for quarter horses and other breeds, and for harness races. Because a violation of the Horse Racing Law is generally a misdemeanor, the bill would create new crimes, thereby imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

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This bill would declare that it is to take effect immediately as an urgency statute.

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Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

Section 19605.75 of the Business and Professions
Code is amended to read:

19605.75.  

(a) The Legislature finds and declares that the
existence of high caliber thoroughbred racing in California is
important to this state’s agricultural economy. The California horse
racing industry is being threatened by the escalating costs of doing
business in California, including, but not limited to, workers’
compensation insurance costs, in that these costs are not only
causing thoroughbred horses and trainers to leave this state, but
are also discouraging owners and trainers from bringing horses
into this state to compete. It is the intent of the Legislature to
provide some relief from these escalating costs through the
redistribution of the parimutuel handle on exotic wagers.

(b) Notwithstanding Section 19610, every thoroughbred
association and fair that conducts a racing meet shall deduct an
additional 0.5 percent of the total amount handled in exotic
parimutuel pools of thoroughbred races.

(c) The funds collected pursuant to subdivision (b) from exotic
parimutuel pools on thoroughbred races within the inclosure of a
thoroughbred association or fair conducting a race meeting, at
satellite wagering facilities within this state, and through advance
deposit wagering by residents of this state, shall be distributed to
the organization described in subdivision (f) to be used in
accordance with subdivision (e).

(d) Any thoroughbred association or fair that authorizes a betting
system located outside of this state to accept exotic wagers on its
races and to combine those wagers in the association’s or fair’s
exotic parimutuel pools, including, but not limited to, a
multijurisdictional wagering hub as to exotic wagers made by
residents other than those of this state, shall deduct the amount
specified in subdivision (b) in addition to any other applicable
deductions specified in law. The amount deducted pursuant to this
subdivision shall be distributed to the organization described in
subdivision (f) to be used in accordance with subdivision (e). This
additional deduction shall not be included in the amount on which
license fees are determined pursuant to Section 19602.

(e) The amounts distributed to the organization described in
subdivision (f) shall be deposited by that organization in a separate
account to defray the costs of workers’ compensation insurance
incurred in connection with thoroughbred horses that race in this
state at thoroughbred associations and racing fairs through the
payment of supplemental premiums that reduce rates, payment to
or for the benefit of trainers and owners of such thoroughbreds,
based on the number of such thoroughbreds they start, in order to
reimburse them for the costs of workers’ compensation insurance
directly or indirectly incurred by them, and other appropriate
payments. Any funds that are not used for the purposes set forth
in this subdivision shall, after an affirmative vote of at least 25 of
the voting interests of the organization described in subdivision
(f), either be carried forward to the subsequent year, or be used to
reimburse racing associations for the actual cost of health and
safety programs, research or safety equipment, or making capital
improvements that are designed to prevent workplace accidents
and increase the safety of jockeys, exercise riders, backstretch
employees, and other racetrack personnel. Those capital
improvements shall include, but not be limited to, safety
improvements to racing and training surfaces. All requests for
reimbursements shall be approved by the board. In developing
proposals for approval by the board, the association shall confer
with their horsemen’s organizations and all affected labor
organizations or associations.

(f) The thoroughbred racing associations and the owners’
organization described in subdivision (b) of Section 19613 shall
form an organization to which funds shall be distributed pursuant
to subdivisions (c) and (d). This organization shall have a total of
34 voting interests, of which 16 shall be allocated to the
organization representing thoroughbred owners pursuant to Section
19613, one shall be allocated to the official registering agency for
thoroughbreds in California, and one shall be allocated to the
organization representing thoroughbred trainers pursuant to Section
19613. The remaining 16 votes shall be allocated among the
licensed racing associations and racing fairs in the state. Each
racing association and fair shall receive the portion of these
remaining votes represented by the sum of exotic wagering on its
races divided by the statewide total of exotic wagering in the
preceding calendar year, excluding Breeders’ Cup races. Fractional
voting shall be permitted. Any decision of this organization with
respect to the allocation of funds pursuant to subdivisions (c) and
(d) shall require the affirmative vote of 25 of these voting interests.
In the event that the required number of affirmative votes cannot
be obtained, the matter shall be submitted to the board for a
decision consistent with subdivision (e), and the decision of the
board shall be final.

(g) The organization formed pursuant to this section shall
account annually to the board with respect to the expenditure and
distribution of funds received by the organization pursuant to
subdivisions (c) and (d), and shall obtain an independent audit of
fund generation and distribution. A copy of the completed audit
shall be forwarded to the board within 45 days of its receipt by the
organization.

SEC. 2.  

Section 19605.76 is added to the Business and
Professions Code, to read:

19605.76.  

(a) Notwithstanding Section 19610, a quarter horse
racing association may deduct an additional 0.5 percent of the total
amount handled in its exotic parimutuel pools. This additional
deduction shall only be permitted with the approval of the
organization representing quarter begin insert horse end insert horsemen and horsewomen
at the applicable racing association meet.

(b) Any funds collected pursuant to subdivision (a) from exotic
parimutuel pools on races within the inclosure of a racetrack, at
satellite wagering facilities within this state, and through advance
deposit wagering by residents of this state, shall be distributed to
the organization described in subdivision (e) to be used in
accordance with subdivision (d).

(c) Any quarter horse racing association that authorizes a betting
system located outside of this state to accept exotic wagers on its
races and to combine those wagers in the association’s exotic
parimutuel pools, including, but not limited to, a multijurisdictional
wagering hub as to exotic wagers made by residents other than
those of this state, may deduct the amount specified in subdivision
(a) in addition to any other applicable deductions specified in law.
Any amount deducted pursuant to this subdivision shall be
distributed to the organization described in subdivision (e) to be
used in accordance with the provisions of subdivision (d). This
additional deduction shall not be included in the amount on which
license fees are determined pursuant to Section 19602.

(d) The amounts distributed to the organization described in
subdivision (e) shall be deposited by that organization in a separate
account to defray workers’ compensation insurance costs for
trainers and owners who are racing horses at the applicable quarter
horse racing association meet. Any funds not expended for this
purpose in the calendar year in which they are collected may either
be used for the following year’s workers’ compensation costs, as
specified above, or to benefit the purse pools at the track where
the funds are generated. Funds to benefit purse pools shall be
allocated by breed, in the same proportions as each breed generated
in deductions under this section at the track in the year the funds
were collected.

(e) The quarter horse racing association and the organization
representing quarter begin insert horse end insert horsemen and horsewomen shall form
an organization to which any funds deducted pursuant to
subdivisions (b) and (c) shall be distributed. The quarter horse
associations collectively shall have representation equal to that of
the organization representing quarter begin insert horse end insert horsemen and
horsewomen on the governing board of the organization formed
pursuant to this subdivision.

(f) If the quarter horse racing association and the organization
representing quarter begin insert horse end insert horsemen and horsewomen cannot agree
on the manner for distributing these funds to defray the costs of
workers’ compensation insurance, the matter shall be submitted
to the board for a decision consistent with subdivision (d), and the
decision of the board shall be final.

SEC. 3.  

Section 19605.77 is added to the Business and
Professions Code, to read:

19605.77.  

(a) Notwithstanding Section 19610, a harness racing
association may deduct an additional 1 percent of the total amount
handled in conventional parimutuel pools of harness races. This
additional deduction shall only be permitted with the approval of
the organization representing harness horsemen and horsewomen
at the applicable racing association meeting.

(b) Any funds collected pursuant to subdivision (a) from
conventional parimutuel pools on harness races within the inclosure
of a racetrack, at satellite wagering facilities within this state, and
through advance deposit wagering by residents of this state, shall
be distributed to the organization described in subdivision (e) to
be used in accordance with subdivision (d).

(c) Any harness racing association that authorizes a betting
system located outside of this state to accept conventional wagers
on its races and to combine those wagers in the association’s
conventional parimutuel pools, including, but not limited to, a
multijurisdictional wagering hub as to conventional wagers made
by residents other than those of this state, may deduct the amount
specified in subdivision (a) in addition to any other applicable
deductions specified in law. Any amount deducted pursuant to this
subdivision shall be distributed to the organization described in
subdivision (e) to be used in accordance with the provisions of
subdivision (d). This additional deduction shall not be included in
the amount on which license fees are determined pursuant to
Section 19602.

(d) The amounts distributed to the organization described in
subdivision (e) shall be deposited by that organization in a separate
account and used to reduce the workers’ compensation insurance
costs for trainers who are racing horses at the applicable harness
racing association meet. Any funds not expended for this purpose
in the calendar year in which they are collected may either be used
for the following year’s workers’ compensation costs, as specified
above, or to benefit the harness purse pool at the track where the
funds are generated.

(e) The harness racing association and the organization
representing harness horsemen and horsewomen shall form an
organization to which any funds deducted pursuant to subdivisions
(b) and (c) shall be distributed. The harness associations
collectively shall have representation equal to that of the
organization representing harness horsemen and horsewomen on
the governing board of the organization formed pursuant to this
subdivision.

(f) If the harness racing association and the organization
representing harness horsemen and horsewomen cannot agree on
the manner for distributing these funds to defray the costs of
workers’ compensation insurance, the matter shall be submitted
to the board for a decision consistent with subdivision (d), and the
decision of the board shall be final.

SEC. 4.  

Section 19605.78 is added to the Business and
Professions Code, to read:

19605.78.  

(a) Notwithstanding Section 19610 and in addition
to the deduction specified in subdivision (b) of Section 19605.75,
a fair may deduct an additional 0.5 percent of the total amount
handled in exotic parimutuel pools of races for any breed, other
than races solely for thoroughbreds. This additional deduction
shall only be permitted for a breed’s races with the approval of the
organization representing the horsemen and horsewomen of that
breed at the fair.

(b) Any funds collected pursuant to subdivision (a) from exotic
parimutuel pools on races within the inclosure of a racetrack, at
satellite wagering facilities within this state, and through advance
deposit wagering by residents of this state, shall be distributed to
the organization described in subdivision (e) to be used in
accordance with subdivision (d).

(c) Any fair that authorizes a betting system located outside of
this state to accept exotic wagers on its races and to combine those
wagers in the association’s exotic parimutuel pools, including, but
not limited to, a multijurisdictional wagering hub as to exotic
wagers made by residents other than those of this state, may deduct
the amount specified in subdivision (a) in addition to any other
applicable deductions specified in law. Any amount deducted
pursuant to this subdivision shall be distributed to the organization
described in subdivision (e) to be used in accordance with the
provisions of subdivision (d). This additional deduction shall not
be included in the amount on which license fees are determined
pursuant to Section 19602.

(d) The amounts distributed to the organization described in
subdivision (e) shall be deposited by that organization in a separate
account to defray workers’ compensation insurance costs for
trainers and owners who are racing breeds other than thoroughbreds
at the applicable fair. Any funds not expended for this purpose in
the calendar year in which they are collected may either be used
for the following year’s workers’ compensation costs, as specified
above, or to benefit the purse pool of each breed at the particular
fair where the funds are generated in the same proportions as each
breed generated at that fair in the year the funds are collected.

(e) The fairs and the organizations representing the horsemen
and horsewomen of each breed for which deductions have been
approved under subdivision (a) shall form an organization to which
any funds deducted pursuant to subdivisions (b) and (c) shall be
distributed. The fairs collectively shall have representation equal
to the collective representation of the organizations representing
horsemen and horsewomen on the governing board of the
organization formed pursuant to this subdivision.

(f) If the fairs and the organizations representing horsemen and
horsewomen cannot agree on the manner for distributing these
funds to defray the costs of workers’ compensation insurance, the
matter shall be submitted to the board for a decision consistent
with subdivision (d), and the decision of the board shall be final.

SEC. 5.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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begin insert SEC. 6. end insert   

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This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

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In order to ensure that trainers and owners of certain horse
racing breeds receive assistance in defraying workers’
compensation insurance costs, it is necessary that this bill take
immediate effect.

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