BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 2011 Hearing Date: 6/14/2016
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|Author: |Cooper |
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|Version: |2/16/2016 Introduced |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Horse racing: thoroughbred racing: northern zone:
auxiliary offsite stabling, training, and vanning
DIGEST: This bill makes modifications to existing provisions
in Horse Racing Law pertaining to the Stabling and Vanning Fund
(S&V Fund) to help horsemen and horsewomen in the northern zone
defray the costs of having to transport and stable their race
horses at auxiliary training facilities. Specifically, this
bill increases the amount that is required to be deducted by a
racing association or racing fair in the northern zone for the
S&V Fund from an amount not to exceed 1.25% of handle on wagers
made on thoroughbred races at satellite wagering facilities to
an amount not to exceed 2% of the handle. This bill also makes
changes to provisions governing the organization formed to
administer the S&V Fund.
ANALYSIS:
Existing law:
1)Stipulates, pursuant to Article IV, Section 19(b) of the
Constitution of the State of California, the Legislature may
provide for the regulation of horse races and horse race
meetings and wagering on the results.
2)Provides that the California Horse Racing Board (CHRB) shall
regulate the various forms of horse racing authorized in this
state.
AB 2011 (Cooper) Page 2 of ?
3)Divides the state into three geographical zones for purposes
of regulating horse racing - northern zone, central zone and
southern zone.
4)Provides that, when satellite wagering is conducted on
thoroughbred races at associations or fairs in the northern,
central, or southern zone, an amount equal to 1.25% of the
total amount handled by all of those satellite wagering
facilities must be deducted from the take-out for the benefit
of the S&V Fund. Proceeds therein are distributed to the
organization representing the racing associations and horsemen
and horsewomen for the purpose of providing reimbursement for
off-site stabling and vanning at CHRB-approved auxiliary
training facilities of licensed racing associations. This is
to compensate for the additional stalls beyond the number of
usable stalls the association is required to provide under
existing law.
This bill:
1)Increases the amount that is required to be deducted by a
racing association or racing fair in the northern zone for the
S&V Fund from an amount not to exceed 1.25% of the total
amount handled by satellite wagering facilities to an amount
not to exceed 2% of the handle.
2)Provides that this amount, if adjusted by the CHRB, 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.
3)Revises and recasts the provisions governing the organization
formed and operated to administer the S&V Fund to include,
among other things, a 50-50% allocation of voting interests on
the organization's governing board and the use of funds to pay
the organization's expenses and compensate the provider of a
CHRB approved auxiliary facility for offsite stabling and
training of thoroughbred horses in the northern zone.
4)Requires that the governing organization submit its proposed
financial and operational plans for the upcoming calendar year
to the CHRB for review no later than November 1st of the
preceding year.
AB 2011 (Cooper) Page 3 of ?
5)Requires that the funds be used to cover all or part of the
cost of vanning thoroughbred horses in the northern zone from
a CHRB approved auxiliary offsite stabling and training
facility and authorizes the organization to enter into
multiyear contracts for auxiliary facilities in the northern
zone.
6)Authorizes the governing organization to use the funds to pay
back commissions, purses, and owners' premiums to the extent
the deductions made exceed in any year the amount of the funds
necessary to achieve the objectives of the organization.
7)Authorizes 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.
8)Provides that the CHRB shall reserve the right to adjudicate
any disputes that arise regarding costs, or other matters,
relating to the furnishing of offsite stabling, training, or
vanning.
9)Provides that at the request of the CHRB, the organization
shall submit a report detailing all of its receipts and
expenditures over the prior two fiscal years and, upon the
request of any party within the organization, that those
receipts and expenditures be audited by the CHRB.
Background
Horse racing law provides for the S&V Fund to help horsemen and
horsewomen defray the costs of having to transport and stable
their race horses at auxiliary training facilities. The S&V
Fund is divided into northern and southern California accounts,
both of which are administered by similar organizations and
governing boards. These statutes date back to the late 1980s
and early 1990s when wagering at satellite facilities located on
fairgrounds and race tracks was the only form of off-track
parimutuel wagering available. The S&V Fund was financed
exclusively from revenue generated at satellite wagering
facilities in this state. With the advent of advance deposit
wagering (ADW), the parimutuel handle began to migrate from
satellite wagering facilities to online ADW sources. The
subsequent decline in handle at satellite facilities has
resulted in a significant depletion of revenue to the S&V Fund.
AB 2011 (Cooper) Page 4 of ?
In 2013, Hollywood Park race track announced the discontinuance
of racing which created a severe stabling and training problem
for the horse racing industry. The CHRB and the racing industry
were able to negotiate an agreement for Hollywood Park to remain
open for stabling and training through the first quarter of
2014, but had to find other stabling and training facilities to
replace Hollywood Park immediately thereafter.
Industry stakeholders and the CHRB came together to reach
agreements and the necessary commitments were made to preserve
thoroughbred racing in southern California. Specifically, Los
Alamitos race track built 500 new stalls to accommodate
thoroughbred training on a year-round basis; the San Luis Rey
Training Center, located in Bonsall (San Diego County) was
upgraded with an improved track and renovated barns to play a
major stabling role; Fairplex Park, located in Pomona, agreed to
provide stabling and training for a limited time; and, Santa
Anita race track and Del Mar race track continued to operate
race meets and stabling programs.
More recently, due to the decision by Fairplex to discontinue
training and racing, the CHRB granted Galway Downs training
center in Temecula a conditional license to begin providing
stalls and training. The CHRB and the industry are hopeful that
a new training center will eventually be built somewhere in
southern California to accommodate the horse racing industry
which plays a vital role in the state's economy.
In northern California, the two licensed auxiliary offsite
stabling facilities, Alameda County Fair and Golden Gate Fields,
have been operating with deficient balances. In 2014, the
Alameda County Fair lost approximately $300,000 in off-track
stabling operations.
Purpose of AB 2011. According to the author's office, this bill
is intended to address vanning and stabling issues for the
racing industry in northern California. The author's office
emphasizes that northern California's S&V Fund will continue to
operate in the red if it is not restructured.
The author's office notes that current statutory language limits
available funding and decision-making flexibility. This bill
gives the CHRB and the organization governing the S&V Fund more
flexibility in governance and decision-making. Furthermore, it
AB 2011 (Cooper) Page 5 of ?
provides for additional money from purses and commissions to
help stabilize the S&V Fund. The author's office claims that
without these changes the S&V Fund will continue to operate in
the red and the two licensed auxiliary offsite stabling
facilities in northern California will continue to lose money.
Prior/Related Legislation
SB 1240 (Hall, 2016) makes extensive modifications to existing
provisions in Horse Racing Law pertaining to the S&V Fund to
help horsemen and horsewomen in the northern, central, and
southern zones defray the costs of having to transport and
stable their race horses at auxiliary training facilities.
Specifically, this bill increases the amount that is required to
be deducted by a racing association or racing fair in the
northern, central, and southern zones from an amount not to
exceed 1.25% of handle on wagers made on thoroughbred races at
satellite wagering facilities to an amount not to exceed 2% of
the handle and also makes changes to provisions governing the
organization formed to administer the S&V Fund. (Pending in
Assembly policy committee)
AB 650 (Perea, 2015) would have increased the portion of the
take-out used to fund the S&V Fund from 1.25% of handle on
wagers made on thoroughbred races at northern California
satellite facilities to 2% of handle. Also, would have
restructured the organization that governs the S&V Fund.
(Gutted and amended in the Senate on April 14, 2016 to become a
bill relating to regulation of taxicabs.)
SB 766 (Negrete McLeod, Chapter 616, Statutes of 2009), among
other things, authorized the CHRB to shift money around from
various funds dedicated for specific purposes within horse
racing that are in surplus, such as the promotions fund and
workers' compensation fund, to others that are in deficit, such
as the S&V Fund.
SB 1805 (Florez, Chapter 883, Statutes of 2006) provided that
any funds that are not used to defray the cost of workers'
compensation insurance from the supplemental "take-out" may be
used for reimbursing racing organizations for safety
improvements to racing and training surfaces.
AB 2931 (J. Horton, Chapter 922, Statutes of 2002), among other
things, authorized the racing associations to use existing
AB 2011 (Cooper) Page 6 of ?
industry funds (stabling and vanning and promotion funds) to
develop a program to off-set workers' compensation rates for
horse trainers in the state.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT:
California Authority of Racing Fairs
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: Writing in support, the California
Authority of Racing Fairs states, "AB 2011 will give affected
parties more flexibility in governance and decision-making and
allow money from purses and commissions to stabilize the S&V
Fund. Without these changes, the fund will continue to operate
in the red. As a consequence, the two licensed auxiliary
offsite stabling facilities in Northern California, Alameda
County Fair and Golden Gate Fields, will continue to lose
money."