Amended in Senate August 19, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2011

Introduced by Assembly Member Cooper

February 16, 2016

An act to amend Sections begin delete 19607.2 end delete begin insert 19607, 19607.1, 19607.2, end insert and 19607.3 of the Business and Professions Code, relating to horse begin delete racing. end delete begin insert racing, and declaring the urgency thereof, to take effect immediately. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2011, as amended, Cooper. begin delete Horse racing: thoroughbred end delete begin insert Thoroughbred end insert racing: begin delete northern zone: end delete begin insert northern, central, and southern zones: end insert auxiliary offsite stabling, training, and vanning.

(1) The Horse Racing Law requires, when satellite wagering is conducted on thoroughbred races at associations or fairs in the begin delete northern zone, end delete begin insert northern, central, or southern zone, end insert that an amount not to exceed 1.25% of the total amount handled by all of those satellite wagering facilities be deducted from the funds otherwise allocated for distribution as commissions, purses, and owners’ premiums and instead be distributed to an organization formed and operated by thoroughbred racing associations, fairs conducting thoroughbred racing, and the organization representing thoroughbred begin delete horsemen, end delete begin insert horsemen and horsewomen, end insert to administer a fund to provide reimbursement for offsite stabling at California Horse Racing Board-approved auxiliary training facilities for additional stalls beyond the number of usable stalls the association or fair is required to make available and maintain, and for the vanning of starters from these additional stalls on racing days for thoroughbred horses.

This bill would increase the amount that is required to be deducted to an amount not to exceed 2% begin insert in the northern, central, and southern zones, end insert and would provide that this begin delete amount, end delete begin insert amount in the northern zone, end insert if adjusted by the board, may be a different percentage of the handle for different associations and fairs, but only if all the associations and fairs agree to the differing percentages. The bill would establish an auxiliary offsite stabling and training facility and vanning program for thoroughbred races in the begin delete northern zone. end delete begin insert northern, central, and southern zones. end insert The bill would revise and recast the provisions governing the organization formed and operated to administer the fund to include, among other things, a 50-50 percentage allocation of specified voting interests on the board of the organization, the use of funds to pay the organization’s expenses and compensate the provider of a board-approved auxiliary facility for offsite stabling and training of thoroughbred horses in the begin delete northern zone, end delete begin insert northern, central, and southern zones, end insert and the requirement that the organization submit its proposed financial and operational plans for the upcoming calendar year to the board for review no later than November 1 of the preceding year. begin insert The bill would require, at the request of the board, the organization to submit a report detailing all of its receipts and expenditures over the prior 2 fiscal years and, upon request of any party within the organization, that those receipts and expenditures be audited by an independent 3rd party selected by the board at the organization’s expense. end insert

The bill would also require that the funds be used to cover all or part of the cost of vanning thoroughbred horses in the begin delete northern end delete begin insert northern, central, or southern end insert zone from a board-approved auxiliary offsite stabling and training facility and would authorize the organization to enter into multiyear contracts for auxiliary facilities in the begin delete northern end delete begin insert northern, central, or southern end insert zone subject to specified conditions. The bill would authorize the organization to use the funds to pay back commissions, purses, and owners’ premiums to the extent that the deductions made exceed in any year the amount of the funds necessary to achieve the objectives of the organization. The bill would also authorize a thoroughbred racing association or fair in the northern zone to opt out of the auxiliary offsite stabling and training facility and vanning program, as specified. The bill would provide that the board shall reserve the right to adjudicate any disputes that arise regarding costs, or other matters, relating to the furnishing of offsite begin delete stabling, training, end delete begin insert stabling end insert or vanning, as specified.

(2) By expanding the provisions of the Horse Racing Law, a violation of which is a crime, the bill would create new crimes and would thereby impose a state-mandated local program.

(3)  The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

begin insert

(4) This bill would declare that it is to take effect immediately as an urgency statute.

end insert

Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 19607 of the end insert begin insert Business and Professions
Code end insert begin insert is amended to read: end insert

19607.  

begin insert (a) end insert begin insert   end insert Notwithstanding Sections 19605.8 and 19605.9,
when satellite wagering is conducted on thoroughbred races at
associations or fairs in the central or southern zone, an amount not
to exceed begin delete 1.25 percent end delete begin insert 2 percent end insert of the total amount handled by
all of those satellite wagering facilities shall be deducted from the
funds otherwise allocated for distribution as commissions, purses,
and owners’ premiums and instead distributed to an organization
formed and operated by begin delete thoroughbred racing associations, fairs
conducting thoroughbred racing, end delete begin insert one licensed association from
each facility in the central and southern zones at which a
thoroughbred or fair racing meeting is conducted, end insert and the
organization representing thoroughbred horsemen and horsewomen,

begin delete with each party having meaningful representation on the board of
the organization, to administer, pursuant to supervision of the
board, a fund to provide reimbursement for offsite stabling at
board-approved auxiliary training facilities for additional stalls
beyond the number of usable stalls the association or fair is
required to make available and maintain pursuant to Section 19535,
and for the vanning of starters from these additional stalls on racing
days for thoroughbred horses. end delete begin insert for use in accordance with Section
19607.1. end insert

begin insert

(b) A vote of the organization representing thoroughbred
horsemen and horsewomen shall constitute 50 percent of all voting
interests on the board of the organization formed and operated to
administer the fund. The other 50 percent of all voting interests
shall be allocated equally among the other members of the
organization. Any use of funds by the organization shall be
approved by the affirmative vote of both (1) the organization
representing thoroughbred horsemen and horsewomen, and (2)
at least two of the licensed thoroughbred racing associations that
are part of the organization formed pursuant to this section,
provided, however, that, if there are only two licensed
thoroughbred racing associations that are part of the organization
formed pursuant to this section, the vote of at least one of those
two licensed thoroughbred racing associations shall be sufficient.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 19607.1 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19607.1.  

(a)  begin delete The end delete begin insert Notwithstanding Section 19535, the end insert funds
distributed to the organization formed pursuant to Section 19607
shall be used to begin delete reimburse racing associations that are operating
offsite stabling providing additional stalls for the incremental
increase in operating costs directly resulting from providing the
stabling. end delete begin insert pay the expenses of the organization and compensate the
provider of a board-approved auxiliary facility for offsite stabling
and training of thoroughbred horses in the central or southern
zone. The organization administering the offsite stabling and
vanning program shall submit its proposed financial and
operational plans for the upcoming calendar year to the board for
review no later than November 1 of the preceding year. end insert Neither
the organization administering the offsite stabling and vanning
program nor any of the entities forming and operating the
organization, except begin delete the end delete begin insert an end insert entity operating the begin insert auxiliary end insert offsite
stabling facility where the injury occurred, shall be liable for any
injury to any jockey, exercise person, owner, trainer, or any
employee or agent thereof, or any horse occurring at any offsite
stabling facility.

begin delete

(b) The funds shall also be used to reimburse horsemen for the
cost of vanning starting horses from a board-approved auxiliary
training facility operated by a licensed racing association to the
track conducting the racing meeting. Horsemen may use carriers
of their own choice, except that the amount of reimbursement to
horsemen is limited to the amount that the organization determines
is generally charged by carriers for vanning from the auxiliary
training facility to the track conducting the racing meeting. Neither
the organization administering the offsite stabling and vanning
program nor any of the entities forming and operating the
organization, except the entity actually engaged in vanning horses,
is liable for any injury occurring to any individual or horse during
vanning from an offsite stabling facility.

end delete begin insert

(b) The funds shall also be used to cover all or part of the cost
of vanning thoroughbred horses from a board-approved auxiliary
offsite stabling and training facility to start in a thoroughbred race
at a thoroughbred or fair racing meeting in the central or southern
zone. The organization shall determine the extent of and manner
in which compensation will be paid for thoroughbred horses that
are vanned from the auxiliary facility to the track conducting the
thoroughbred or fair racing meeting, but the vanning shall be
made available on a consistent and uniform basis for all
thoroughbred and fair racing meetings in a given year. Neither
the organization administering the offsite stabling and vanning
program nor any of the entities that form and operate the
organization, except an entity actually engaged in vanning horses,
is liable for any injury occurring to any individual or horse during
vanning from an offsite stabling facility.

end insert

(c) The begin delete training end delete begin insert auxiliary offsite stabling end insert facilities and amenities
provided for offsite stabling and training purposes shall be
begin insert substantially end insert equivalent in character to those provided begin delete during
racing meetings of the association. end delete begin insert by the thoroughbred racing
association or fair conducting the racing meeting. end insert

begin delete

(d) Upon the request of any party within the organization, the
board shall adjudicate any dispute regarding costs, or other matters
relating to the furnishing of offsite stabling or vanning. The board
may, if necessary, appoint an independent auditor to assist in the
resolution of disputes. The auditor shall be reimbursed from the
funds of the organization.

end delete begin delete

(e) The organization may maintain a reserve fund of up to 10
percent of the total estimated annual vanning and stabling costs.
In addition to the reserve fund, if the funds generated for offsite
stabling and vanning are insufficient to fully reimburse racing
associations for expenses incurred during the offsite vanning and
stabling program, the organization may accumulate sufficient funds
to fully reimburse those associations for those expenses.

end delete begin insert

(d) In order to ensure the long-term availability of facilities for
offsite stabling and training, the organization may enter into
multiyear contracts for auxiliary facilities in either the central or
southern zone. The organization shall submit to the board for its
approval multiyear contracts it enters into with providers of
auxiliary facilities for the offsite stabling and training. Contracts
not disapproved by the board within 60 days of submittal to the
board shall be deemed to have been approved by the board. Once
a multiyear contract has been approved by the board, it shall be
considered to have been approved for its duration.

end insert begin insert

(e) At the request of the board, the organization shall submit a
report detailing all of its receipts and expenditures over the prior
two fiscal years and, upon request of any party within the
organization, those receipts and expenditures shall be audited by
an independent third party selected by the board at the expense
of the organization.

end insert begin insert

(f) In addition to the uses of funds described in subdivisions (a)
and (b), the organization may use those funds to do both of the
following:

end insert begin insert

(1) Maintain a reserve fund of up to 10 percent of the total
estimated annual vanning and auxiliary offsite stabling costs. In
addition to the reserve fund, if the funds generated for the auxiliary
offsite stabling facilities and vanning are insufficient to fully cover
the expenses incurred, the organization may, in the future,
accumulate sufficient funds to fully cover those expenses.

end insert begin insert

(2) Pay back commissions, purses, and owners’ premiums to
the extent the deductions made pursuant to Section 19607 exceed
in any year the amount of funds necessary to achieve the objectives
of the organization.

end insert begin delete

(f)

end delete

begin insert (g) end insert  The amount initially deducted and distributed to the
organization shall be begin delete 1.25 percent end delete begin insert 2 percent end insert of the total amount
handled by satellite wagering facilities authorized under this article
in the central or southern zone on thoroughbred racing, but that
allocation may be adjusted by the board, in its discretion. However,
the adjusted amount may not exceed begin delete 1.25 percent end delete begin insert 2 percent end insert of the
total amount handled by satellite wagering begin delete facilities, to pay
expenses and maintain the reserve fund for the continuing support
of the program. end delete begin insert facilities. end insert

begin insert

(h) The board shall reserve the right to adjudicate any disputes
that arise regarding costs or other matters relating to the
furnishing of offsite stabling or vanning. Notwithstanding any
other law, the board shall maintain all powers necessary and
proper to ensure that offsite stabling and vanning, as provided for
in this chapter, is conducted in a manner that protects the public
and serves the best interests of horse racing.

end insert

begin delete SECTION 1. end delete

begin insert SEC. 3. end insert   

Section 19607.2 of the Business and Professions Code
is amended to read:

19607.2.  

Notwithstanding Section 19605.8, when satellite
wagering is conducted on thoroughbred races at associations or
fairs in the northern zone, an amount not to exceed 2 percent of
the total amount handled by all of those satellite wagering begin delete facilities, end delete
begin insert facilities end insert shall be deducted from the funds otherwise allocated for
distribution as commissions, purses, and owners’ premiums and
instead be distributed to an organization formed and operated by
thoroughbred racing associations, fairs conducting thoroughbred
racing, and the organization representing thoroughbred horsemen
and horsewomen, for use pursuant to Section 19607.3. A vote of
the organization representing thoroughbred horsemen and
horsewomen shall constitute 50 percent of all voting interests on
the board of the organization formed and operated to administer
the fund. The other 50 percent of all voting interests shall be
allocated among thoroughbred racing associations and fairs
conducting thoroughbred racing in a manner that provides
meaningful representation on the governing board of the
organization for thoroughbred racing associations and fairs
conducting thoroughbred racing, except as provided in subdivision
(h) of Section 19607.3.

begin delete SEC. 2. end delete

begin insert SEC. 4. end insert   

Section 19607.3 of the Business and Professions Code
is amended to read:

19607.3.  

(a) Notwithstanding Section 19535, the funds
distributed to the organization formed pursuant to Section 19607.2
shall be used to pay the begin delete organization’s end delete expenses begin insert of the organization end insert
and compensate the provider of a board-approved auxiliary begin delete offsite end delete
facility for begin delete stabling, training, and vanning end delete begin insert offsite stabling and
training end insert of thoroughbred horses in the northern zone. The
organization administering the begin delete auxiliary end delete offsite stabling begin delete and
training facility end delete and vanning program shall submit its proposed
financial and operational plans for the upcoming calendar year to
the board for review no later than November 1 of the preceding
year. Neither the organization administering the begin delete auxiliary end delete offsite
stabling and begin delete training facility and end delete vanning program nor any of the
entities forming and operating the organization, except begin delete the end delete begin insert an end insert
entity operating the auxiliary offsite stabling begin delete and training end delete facility
where the injury occurred, shall be liable for any injury to any
jockey, exercise person, owner, trainer, or any employee or agent
thereof, or any horse occurring at any begin delete auxiliary end delete offsite stabling
begin delete and training end delete facility.

(b) The funds shall also be used to cover all or part of the cost
of vanning thoroughbred horses from a board-approved auxiliary
offsite stabling and training facility to begin delete the track to end delete start in a
thoroughbred race at a thoroughbred or fair racing meeting in the
northern zone. The organization shall determine the extent of and
manner in which compensation will be paid for thoroughbred
horses that are vanned from the auxiliary facility to the track or
begin delete the end delete fair conducting the thoroughbred or fair racing meeting. Neither
the organization administering the begin delete auxiliary end delete offsite stabling begin delete and
training facility end delete and vanning program nor any of the entities
begin delete forming and operating end delete begin insert that form and operate end insert the organization,
except an entity actually engaged in vanning horses, is liable for
any injury occurring to any individual or horse during vanning
from an offsite stabling begin delete and training end delete facility.

(c) The auxiliary offsite stabling begin delete and training end delete facilities and begin delete the end delete
amenities provided for offsite stabling and training purposes shall
be substantially equivalent in character to those provided by the
thoroughbred racing association or fair conducting the racing
meeting.

(d) In order to ensure the long-term availability of facilities for
offsite stabling and training, the organization may enter into
multiyear contracts for auxiliary facilities in the northern zone.
The organization shall submit to the board for its approval begin delete the end delete
multiyear contracts begin delete that end delete it enters into with providers of auxiliary
facilities for begin insert the end insert offsite stabling and training. Contracts not
disapproved by the board within 60 days of submittal to the board
shall be deemed to have been approved by the board. begin insert Once a
multiyear contract has been approved by the board, it shall be
considered to have been approved for its duration. end insert

(e) At the request of the board, the organization shall submit a
report detailing all of its receipts and expenditures over the prior
two fiscal years and, upon request of any party within the
organization, those receipts and expenditures shall be audited by

begin delete the board. end delete begin insert an independent third party selected by the board at the
expense of the organization. end insert

(f) In addition to the uses of the funds described in subdivisions
(a) and (b), the organization may use begin delete the end delete begin insert those end insert funds begin delete for end delete begin insert to do end insert both
of the following:

(1) Maintain a reserve fund of up to 10 percent of the total
estimated annual vanning and auxiliary offsite stabling begin delete and training
facility end delete costs. In addition to the reserve fund, if the funds generated
for the auxiliary offsite stabling begin delete and training end delete facilities and vanning
are insufficient to fully cover the expenses incurred, the
organization may, in the future, accumulate sufficient funds to
fully cover those expenses.

(2) Pay back commissions, purses, and owners’ premiums to
the extent the deductions made pursuant to Section 19607.2 exceed
in any year the amount of funds necessary to achieve the objectives
of the organization.

(g) The amount initially deducted and distributed to the
organization pursuant to Section 19607.2 may be adjusted by the
board, in its discretion. However, the adjusted amount begin delete may end delete begin insert shall end insert
not exceed 2 percent of the total amount handled by satellite
wagering facilities. The amount deducted and distributed to the
organization as adjusted by the board may be a different percentage
of the handle for different associations and fairs conducting
thoroughbred racing meetings in the northern zone, but only if all
the associations and fairs agree to the differing percentages.

(h) A thoroughbred racing association or fair in the northern
zone that begin insert the board determines end insert is able to provide the minimum
number of stalls required by its racing meeting license without the
use of any auxiliary offsite stabling and training facility and
vanning program may opt out of that program, in which case the
deduction described in Section 19607.2 shall not apply during the
live racing meeting conducted by the association or fair until such
time as the association or fair opts back into the auxiliary offsite
stabling and training facility and vanning program. Any
thoroughbred racing association or fair in the northern zone that
opts out of the auxiliary offsite stabling and training facility and
vanning program shall not have any voting interest therein until
such time as the association or fair opts back into the program.
The organization shall establish reasonable procedures and
timelines for the giving of notice to the organization by a
thoroughbred racing association or fair that elects to opt out of the
auxiliary offsite stabling and training facility and vanning program.

(i) The board shall reserve the right to adjudicate any disputes
that arise regarding costs, or other matters, relating to the furnishing
of offsite begin delete stabling, training, end delete begin insert stabling end insert or vanning. Notwithstanding
any other law, the board shall maintain all powers necessary and
proper to ensure that offsite begin delete stabling, training, end delete begin insert stabling end insert and vanning,
as provided for in this begin delete article, end delete begin insert chapter end insert is conducted in a manner
that protects the public and serves the best interests of horse racing.

begin delete SEC. 3. end delete

begin insert SEC. 5. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

begin insert

begin insert SEC. 6. end insert   

end insert begin insert

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

end insert begin insert

In order to ensure that the horse racing industry may continue,
uninterrupted, to provide offsite stabling and vanning in an
effective manner that protects the public safety, it is necessary that
this act take effect immediately.

end insert