BILL ANALYSIS Ó Bill No: SB 819 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2013-2014 Regular Session Staff Analysis SB 819 Author: Committee on Governmental Organization As Introduced: March 14, 2013 Hearing Date: April 23, 2013 Consultant: Art Terzakis SUBJECT Breeders' Cup World Championship Series: payment of purses DESCRIPTION SB 819 modifies an existing provision of Horse Racing Law that requires certain purse account funds be used to promote and support the Breeders' Cup by expanding the use of those funds to include the "payment of purses in Breeders' Cup Championship races." EXISTING LAW Article IV, Section 19(b) of the Constitution of the State of California provides that the Legislature may provide for the regulation of horse races and horse race meetings and wagering on the results. Existing law provides that the California Horse Racing Board (CHRB) shall regulate the various forms of horse racing authorized in this state. Existing law generally provides for the distribution of funds collected from wagers on horse racing in California. In years that the Breeders' Cup Championship series is conducted at a race meeting in California, the law requires that specified amounts that would have otherwise been distributed to a purse account be made available to promote and sponsor the Breeders' Cup. BACKGROUND SB 819 (Committee on Governmental Organization) continuedPage 2 Purpose of SB 819: Currently, Horse Racing Law (Section 19605.74 of the Business and Professions Code) requires the thoroughbred racing association (in this case, Santa Anita) hosting the Breeders' Cup to set-aside and make available certain monies generated from handle on days during which Breeders' Cup races are conducted in California for the purpose of "promoting and supporting" the Breeders' Cup. SB 819 would specify that promoting and supporting the Breeders' Cup includes the "payment of purses in Breeders' Cup Championship races" as a purpose of the funds. This measure is simply intended to improve the business climate for horse racing in California and to encourage the organization operating this prestigious international event to make California its permanent home. Arguments in Support: Proponents reference the fact that the first ever Breeders' Cup was held at Hollywood Park racetrack in 1984 and from that day forward California has played an important role in establishing the Breeders' Cup as the culmination of the thoroughbred-racing season and the multi-million dollar world renowned event it is today. Santa Anita racetrack hosted nearly 90,000 fans during the 2012 Breeders' Cup World Championships. Santa Anita will also be hosting the 2013 Breeders' Cup Championships which will mark the 10th time that the Breeders' Cup has been held in the Golden State. Comments: It is a well-known fact that the California horse racing industry is in distress and has lost favor with the public, primarily due to competition with other forms of gambling and declining popularity of its own product. Yet the horse racing industry in this state remains an important segment of the economy, generating by some estimates almost 50,000 jobs. The State of California is in competition with several other states to be the permanent home of the Breeders' Cup, which is actively looking at a permanent host location as a potential option as part of its ongoing strategic planning initiative. Experts within the industry believe that locating the Breeders' Cup on a permanent basis in California would generate $60 million in economic output and create hundreds of direct and indirect jobs. This proposal is intended to help California attract the world's best horses, trainers and owners to participate in the Breeders' Cup World Championships and make California SB 819 (Committee on Governmental Organization) continuedPage 3 an attractive site for future editions of the richest two days in sports. PRIOR/RELATED LEGISLATION SB 1072 (R. Calderon), Chapter 238, Statutes of 2010. Among other things, authorized the CHRB to license entities to operate "exchange wagering" systems, as defined, which accept exchange wagers from individuals residing either within or outside of this state on horse races run in California or other states. Also, provided that monies that would have been otherwise distributed to a purse account from the increased takeout on Breeders' Cup day(s) shall be available for the purpose of promoting and sponsoring the Breeders' Cup. Additionally, required the host track of the Breeders' Cup to enter into a written agreement with the Breeders' Cup, LTD, in consultation and cooperation with the California Tourism Commission and the statewide marketing organization relative to the manner in which the funds set aside to support and promote the Breeders' Cup are to be expended. SUPPORT: As of April 19, 2013: Breeders' Cup Limited OPPOSE: None on file as of April 19, 2013. FISCAL COMMITTEE: No. **********