BILL ANALYSIS Ó
AB 1539
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Date of Hearing: April 27, 2015
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
AB 1539
(Committee on Governmental Organization) - As Introduced March
26, 2015
SUBJECT: Horse racing: advance deposit wagering: deductions
and distributions: jockey retirement plan
SUMMARY: Provides that a person becomes a participant in a
designed California jockey retirement plan when he or she is
licensed as a jockey in California.
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 jockeys must be licensed by CHRB.
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3) Authorizes Advance Deposit Wagering (ADW) to be conducted,
with the approval of the CHRB.
4) Requires that amounts distributed under advance deposit
wagering provisions be proportionally reduced by an amount equal
to 0.00295 multiplied by the amount handled on advance deposit
wagers originating in California for each racing meeting, except
for harness racing meetings, provided that the amount of this
reduction not exceed $2,000,000. The method used to calculate
the reduction in proportionate share shall be approved by CHRB.
The amount deducted shall be distributed as follows:
a) Fifty percent of the money to CHRB to establish and to
administer jointly with the
organization certified as the majority representative of
California-licensed jockeys pursuant to
Section 19612.9, a defined contribution retirement plan for
California-licensed jockeys
who retired from racing on or after January 1, 2009.
b) The remaining 50 percent of the money shall be distributed
to supplement the trainer-
administered pension plans for backstretch personnel and to the
welfare fund established for
the benefit of horsemen and backstretch personnel, as defined.
5) Requires CHRB to establish safety standards governing the
racetracks, equipment, medical services, and other facilities to
ensure the safety of horses, riders, and workers at the
racetrack.
FISCAL EFFECT: Unknown
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COMMENTS:
Purpose of this bill : AB 765 (Evans), Chapter 613, Statutes of
2007, reauthorized horse racing's ADW law. As part of that
legislation, a portion of the revenue generated by ADW was to be
deposited into a trust jointly managed by the Jockeys' Guild and
the CHRB. All licensed California jockeys are eligible to
participate in the plan. A contribution is made for every race
that a jockey rides. Nearly two hundred California jockeys have
been enrolled in the plan.
The pension fund has no unfunded liability, as it is a defined
contribution plan. The plan is similar to a 401K plan, not a
traditional pension fund, which "owes" retirees a fixed benefit
upon retirement. Each jockey has an individual account, which
becomes active after riding in their first horse race in
California. When jockey retires, he or she receives an annuity
purchased with the balance in their particular account, which
pays them a monthly benefit. The funds are invested by the
trustees and the contributions and earnings are annually
allocated to each jockey on a per race basis. The current
balance in the jockey pension plan is approximately $4.7
million.
According to the author, the purpose of the bill is to ensure
that a jockey shall become a participant in the existing
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retirement plan when he or she is "licensed by the CHRB" to be a
jockey in California. By streamlining the jockey retirement
plan within the licensing process, it will ensure that every
jockey receives his or her fair share of earned benefits.
Background :
What is Advance Deposit Wagering ? The California horse racing
industry entered into a new era in 2002 with the advent of ADW
(AB 471, Chapter 198, Statutes of 2001), which allows customers
to deposit funds into an account in order to wager online and
over the telephone. These wagers are commingled into pools at
the host track where the races are run, and within the
pari-mutuel wagering system regulated by CHRB.
ADW was authorized at a time when California racetracks were
beginning to experience declining attendance and handle figures.
The industry believed that making the product easier to access
not only would expose and market horse racing to potential
customers, but also would make it more convenient for the
existing patrons to wager more often. In general, industry
stakeholders agree that ADW has become an important element to
the financial stability of California's horse racing industry.
Currently, the CHRB has approved three companies (TVG,
Twinspires.com, and XpressBet) to provide ADW services to
California customers.
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ADW constitutes about $600 million in handle for the horse
racing business. It has become an important segment of the
industry - in fact, it is the only segment that has been
growing.
California jockeys are independent contractors : For purposes
other than workers' compensation insurance, jockeys are
independent contractors. California jockeys supply their own
equipment, choose which horses to ride, ride only those races
they elect to ride at race meets they select, and are allowed to
negotiate their own rate of compensation. (California Code of
Regulations, Title 4, Divisions 4, Rule 1632.) The minimum wage
that jockeys receive in a horse race is established by the CHRB
(per regulation) as a minimum riding fee. Jockeys may earn
additional compensation if the horse they are racing is a
winning mount, a second place mount, or a third place mount.
Prior legislation : AB 1226 (Hall), Chapter 434, Statutes of
2013. Required the CHRB not to permit any portion of any entry,
nomination, or other fee paid by any owner to be deducted from a
jockey riding fee unless the entry, nomination, or other fee is
paid exclusively by the owner and not reimbursed by any other
person or entity.
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AB 765 (Evans), Chapter 613, Statutes of 2007. Reauthorized ADW
law in the state, which was set to "sunset" on January 1, 2008,
as specified.
AB 471 (Hertzberg), Chapter 198, Statutes of 2001. Allowed
customers to deposit funds into an account in order to wager
online and over the telephone (ADW). ADW wagers are commingled
into pools at the host track where the races are run, and within
the pari-mutuel wagering system regulated by CHRB. The bill
established a process for the distribution of the revenue
received from ADW to mirror existing distributions for track
commissions, owner purses, and breeder incentive awards.
REGISTERED SUPPORT / OPPOSITION:
Support
Jockeys' Guild
Opposition
None on file
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Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531