BILL ANALYSIS Ó SB 819 Page 1 SENATE THIRD READING SB 819 (Governmental Organization Committee) As Introduced March 14, 2013 Majority vote SENATE VOTE :37-0 GOVERNMENTAL ORGANIZATION 16-0 ----------------------------------------------------------------- |Ayes:|Hall, Nestande, Bigelow, | | | | |Campos, Chesbro, Cooley, | | | | |Gray, Hagman, Roger | | | | |Hernández, Jones, | | | | |Jones-Sawyer, Medina, | | | | |Perea, | | | | |V. Manuel Pérez, Salas, | | | | |Waldron | | | | | | | | ----------------------------------------------------------------- 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 SB 819 Page 2 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 utilized to promote and support the Breeders' Cup. FISCAL EFFECT : Unknown. This bill is keyed non-fiscal by the Legislative Counsel. 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 seven-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 in Kentucky, Santa Anita in California, 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 SB 819 Page 3 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 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 SB 819 Page 4 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. Prior legislation : SB 1072 (Ron 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. California Marketing Committee is generally responsible for promoting horse racing in the state by developing and implementing a marketing plan that will increase SB 819 Page 5 on-track and off-track attendance throughout the state. Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531 FN: 0002012