BILL ANALYSIS Ó
SB 777
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Date of Hearing: February 24, 2014
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
SB 777 (Hernandez) - As Amended: February 4, 2014
SENATE VOTE : Vote not relevant.
SUBJECT : Horse racing: workers' compensation.
SUMMARY : Reestablishes provisions in Horse Racing Law which
sunsetted on January 1, 2014. The provisions required a
Thoroughbred racing association, racing fair, quarter horse
racing association or harness racing association that conducts a
racing meeting to deduct a specified percentage of the total
amount handled in exotic pari-mutuel pools on live races, to be
distributed to a specified organization for the purpose of
defraying costs of workers' compensation insurance for trainers
and owners in connection with live horse racing, as defined.
EXISTING LAW :
1) Authorizes that the California Horse Racing Board (CHRB) to
regulate the various forms of horse racing authorized in this
state.
2) Requires a Thoroughbred association, quarter horse
association, and racing fairs, until January 1, 2014, to deduct
0.5 percent of the total amount handled in exotic pari-mutuel
pools of thoroughbred races in order to defray the costs of
workers' compensation insurance. This additional deduction
shall only be permitted with the approval of the organization
representing horsemen and horsewomen at the applicable racing
association meeting.
3) Requires a harness racing association until January 1, 2014,
to deduct an additional 1 percent of the total amount handled in
conventional pari-mutuel pools of harness races, as defined.
4) Provides that these deductions shall pay for supplemental
premiums that reduce rates, pay for benefits of trainers and
owners of thoroughbred horses, and to reimburse these trainers
and owners for the costs of workers' compensation insurance, as
defined.
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5) Requires that funds not expended on workers' compensation
costs to be carried forward to the subsequent year, or used for
the cost of health and safety programs, research or safety
equipment, or to make capital improvements to prevent workplace
accidents and to increase the safety of jockeys, exercise
riders, backstretch employees, and other racetrack personnel.
6) Requires that the deductions be managed by an organization
formed by the Thoroughbred racing association and the owners of
thoroughbred horses. Requires the organization to account
annually to CHRB with respect to the expenditure and
distribution of funds received by the organization and obtain an
independent audit of funds generated and distributed.
7) Sunsets the deduction for the horse racing workers'
compensation insurance program on December 31, 2013.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of the bill : According to the author, this bill
reinstates Business and Professions Code Sections 19605.75,
19605.76 and 19605.77, which allowed for a deduction from
pari-mutuel wagering on live horse racing, in order to defray
the costs of workers' compensation insurance for horsemen and
horsewomen in California. The specified code sections
inadvertently sunsetted on December 31, 2013. Without these
funds, racing associations and fairs cannot be reimbursed for
costs such as workers' compensation insurance, health and safety
programs, research equipment or capital improvements that are
designed to prevent workplace accidents and increase the safety
of jockeys, exercise riders, backstretch employees and other
racetrack personnel.
Background : Over the years, the California racing industry has
been significantly threatened by the escalating cost of workers'
compensation insurance, in that the costs are not only causing
horses and trainers to leave this state, but also discouraging
owners and trainers from bringing horses into California to
race. In 2004, AB 701 (J. Horton), Chapter 40, Statutes of 2004
was enacted to provide the horse racing industry with some
workers' compensation relief through the redistribution of 0.5
percent of the pari-mutuel handle on exotic wagers for
Thoroughbred associations and live racing fairs.
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The California Thoroughbred Business League (CTBL), a group
comprised of racing associations, horsemen's organizations and
fairs, is responsible for overseeing the funds that are utilized
for providing workers' compensation insurance relief to trainers
and owners. In 2013, approximately $8.1 million was deducted
from pari-mutuel wagering on horse racing for defraying costs.
Industry rates have declined by over 70%, which has helped to
prevent the exodus of trainers and horses from California.
Generated funds have been used to defray the costs of workers'
compensation insurance through the payment of supplemental
premiums that reduce rates, payment to or for the benefit of
trainers and owners of such horses, based on the number of such
horses they start, in order to reimburse them for the costs of
workers' compensation insurance directly or indirectly incurred
by them, and other appropriate payments.
Arguments in support : Proponents state, like other
businesses, the horse racing industry in California has suffered
from the tremendous increases in workers' compensation costs.
As a result, this bill is necessary because it will further help
defray the costs borne by trainers and owners in obtaining
workers' compensation coverage. Moreover, it will prevent
Thoroughbred racehorses from leaving this state. Supporters
feel this bill will help restore California's racing industry to
a level where the best horses race and the best trainers and
jockeys compete.
Prior Legislation : AB 2103 (Plescia), Chapter 443, Statutes of
2008. Extended the sunset date, from January 1, 2009 to January
1, 2014, on a deduction from pari-mutuel wagering on
Thoroughbred horse racing in order to defray the costs of pay or
workers' compensation insurance.
AB1289 (Price), Chapter 430, Statutes of 2008. Extended the
sunset date, from January 1, 2009, to January 1, 2014, on a
program to allow a harness racing association to deduct an
additional one percent of the total amount handled in exotic
pari-mutuel pools to defray the costs of paying for workers'
compensation insurance.
AB 701 (J. Horton), Chapter 40, Statutes of 2004. Provided a
framework for the deduction from the pari-mutuel pools in order
to address increased costs in workers compensation insurance in
the horse racing industry.
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Double-referral : This measure is double-referred to the Assembly
Committee on Insurance.
REGISTERED SUPPORT / OPPOSITION :
Support
California Thoroughbred Breeders Association
California Thoroughbred Trainers
Del Mar Thoroughbred Club
Jockeys' Guild
Los Angeles County Fair, Fairplex
Oak Tree Racing Association
Santa Anita Park
Thoroughbred Owners of California
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531