BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 819
                                                                  Page  1

          Date of Hearing:   June 12, 2013

                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                                 Isadore Hall, Chair
                 SB 819 (Committee on Governmental Organization) - As  
                             Introduced:  March 14, 2013

           SENATE VOTE  :   37-0
           
          SUBJECT  :   Horse racing: Breeders' Cup Championship series:  
          payment of purses.

           SUMMARY  :   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  : 

          1)  Provides that the California Horse Racing Board (CHRB) shall  
          regulate the various forms of horse racing authorized in this  
          state.

          2)  Provides that every Thoroughbred racing association or fair  
          that conducts a live race meet shall deduct an additional 2% of  
          the total amount handled on exotic wagers requiring the  
          selection of two wagering interests (e.g., exactas, quinellas)  
          and 3% of the total amount handled on exotic wagers requiring  
          the selection of three or more wagering interests (e.g.,  
          trifectas, superfectas).  (The additional takeout is intended to  
          augment purses.)

          3)  Provides 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.

          4)  Requires 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.  Requires that a written report be made to the  
          CHRB detailing the manner in which the set aside funds were  








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          utilized to promote and support the Breeders' Cup.
           
          FISCAL EFFECT  :   Unknown.

           COMMENTS  :   

           Background  :  

           The Breeders' Cup  :  The Breeders' Cup has established itself as  
          the season-ending championship of Thoroughbred racing.  Since  
          the inaugural races in 1984, the Breeders' Cup has grown from a  
          7-race, $10 million day, to a 15- race, $27 million two-day  
          event which attracts the best horses, trainers, and jockeys from  
          across the globe.  

          The 2013 Breeders' Cup will be held on Friday, November 1 and  
          Saturday, November 2 at Santa Anita Park in Southern California,  
          and the marquee $5 million Breeders' Cup Classic will be  
          broadcast in prime time on the East Coast.  This year's event  
          will be the seventh time that Santa Anita has been picked to  
          host the event and the second time that the track has been  
          selected to host consecutive editions (2012/2013).  At the 2012  
          Breeders' Cup, more than 90,000 fans attended Santa Anita Park  
          over the two-days of championship racing.

          The Breeders' Cup has been staged at 10 different race tracks,  
          including Woodbine Racetrack in Toronto, Canada.  The most  
          frequent venues have been Churchill Downs, Santa Anita and  
          Belmont Park in New York.

          The purses for the races are funded by worldwide nomination fees  
          from the industry's Thoroughbred breeders.  In addition, horses  
          are able to earn automatic starting positions into championship  
          races through the Breeders' Cup Challenge, a series of 68 stakes  
          races held worldwide.  The winning Thoroughbred race horses of  
          these races earn an automatic bid to the Breeders' Cup World  
          Championships.

          The Breeders' Cup Board of Directors directs the affairs of  
          Breeders' Cup Limited, a 501(c)(6) organization.  There are 13  
          Directors on the Breeders' Cup Board.  Directors are elected by  
          the Breeders' Cup Members, a body of 48 individuals, 39 of whom  
          are elected by the Breeders' Cup nominators.

           Purpose of the bill  :  Currently, Horse Racing Law (Section  








                                                                  SB 819
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          19605.74 of the Business and Professions Code) requires a  
          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.  This bill  
          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 bill is 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.  

          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.  

          The State of California is in competition with several other  
          states each year to be the host 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.   
          Santa Anita was selected as the 2013 host over Churchill Downs  
          in Kentucky and Monmouth Park in New Jersey.

          According to a study by Los Angeles County Economic Development  
          Corporation, the Breeders' Cup generated in excess of $60  
          million in economic impact in the Los Angeles area in both 2008  
          and 2009.   

          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 an attractive site  
          for future editions of the richest two-days in sports.

           Hot Off the Press  :  On June 10, 2013, the Breeders' Cup  
          announced that Santa Anita Park was once again selected as the  
          site for the 2014 Breeders' Cup World Championships.  The 31st  
          Breeders' Cup will be held on October 31 and November 1, 2014.   
          The 2014 running of the Breeders' Cup World Championships marks  
          the 11th time that the event will be held in Southern California  
          and the eighth time that Santa Anita Park will host the  
          Breeders' Cup.








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           Suggested amendment  :  The author might want to consider amending  
          the bill to state that "within 90 days after the holding the  
          Breeders' Cup, a written report that also includes a pari-mutuel  
          audit shall be provided to the CHRB detailing the manner in  
          which the set-aside funds were utilized to promote and support  
          the Breeders' Cup, including the payment of purses in Breeders'  
          Cup Championship races."

           Prior 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.  

          AB 1736 (Governmental Organization Committee), Chapter 444,  
          Statutes of 2007.  Extended "sunset" provisions in current law  
          relating to the marketing of the California Horse Racing  
          Industry.

          SB 103 (Maddy), Chapter 10, Statutes of 1998.  Required any  
          association, including fairs, that conducts thoroughbred racing  
          to pay to the owners' organization contracting with the  
          association an additional percentage for a national marketing  
          program, as specified, to promote thoroughbred racing unless the  
          owners' organization chooses not to contribute to the program.    


          SB 27 (Maddy), Chapter 335, Statutes of 1998.  Among its  
          provision, created a private statewide marketing organization  
          for thoroughbred and fair racing that is funded by .4% of the  
          instate off-track handle.  The funds generated from this  
          distribution are used to market California horse racing on a  
          statewide basis.  CMC is generally responsible for promoting  
          horse racing in the state by developing and implementing a  
          marketing plan that will increase on-track and off-track  
          attendance throughout the state.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 








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          Breeders' Cup Limited
          Stronach Group, on behalf Golden Gate Fields and Santa Anita  
          Park
           
            Opposition 
           
          None on file

           
          Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531